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313

UEM EDGENTA BERHAD

2016 ANNUAL REPORT

ABOUT

UEM EDGENTA

STRIVING

FOR GROWTH

PERFORMANCE

REVIEW

CORPORATE

FRAMEWORK

LEADERSHIP

SUSTAINABILITY

STATEMENT

TRANSPARENCY

FINANCIAL

REVIEW

ACCOUNTABILITY

41. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES

The Group is exposed to financial risks arising from their operations and the use of financial instruments. The key

financial risks include credit risk, liquidity risk, foreign currency risk, interest rate risk and market price risk.

The Group’s financial risk management policy seeks to ensure that adequate financial resources are available for the

development of the Group’s businesses whilst managing its interest rate risks (both fair value and cash flow), foreign

currency risk, liquidity risk and credit risk. The Board of Directors reviews and agrees policies and procedures for the

management of these risks. The audit committee provides independent oversight to the effectiveness of the risk

management process.

It is, and has been throughout the current and previous financial year, the Group’s policy that no derivatives shall be

undertaken except for the use as hedging instruments where appropriate and cost-efficient.

The following sections provide details regarding the Group’s exposure to the above-mentioned financial risks and the

objectives, policies and processes for the management of these risks.

(a) Credit risk

Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on

its obligations. The Group’s exposure to credit risk arises primarily from trade and other receivables. For other

financial assets (including investment securities, cash and bank balances, derivatives and non-current investments),

the Group minimises credit risk by dealing exclusively with high credit rating counterparties.

The Group controls its credit risk by the application of credit approvals, limits and monitoring procedures. Credit

evaluations are performed on all customers requiring credit over a certain amount and strictly limiting the Group’s

associations to business partners with high credit worthiness. Trade receivables are monitored on an ongoing basis.

The Group’s receivables are monitored on an ongoing basis and the status of major receivables are reported to

the Board of Directors.

Exposure to credit risk

At the reporting date, the Group’s maximum exposure to credit risk is represented by the carrying amount of each

class of financial assets recognised in the statements of financial position.