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Gamuda Berhad (29579-T) • Annual Report 2012
43. Fair value of financial instruments (cont’d.)
Level 1
RM’000
At 31 July 2012
Group
Assets
Financial assets at fair value through profit and loss;
Investment securities (Note 24)
279,104
Company
Assets
Financial assets at fair value through profit and loss;
Investment securities (Note 24)
1,474
There were no material transfers between Level 1, Level 2 and Level 3 during the current financial year.
The Group and the Company do not have any financial instruments classified as Level 2 and Level 3 as at 31 July
2012.
44. Financial risk management objectives and policies
The Group and the Company are exposed to financial risks arising from their operations and the use of financial
instruments. The key financial risks include credit risk, liquidity risk, interest rate risk, market risk and foreign currency
risk.
The Group operates within clearly defined guidelines that are approved by the Board.
The following sections provide details regarding the Group’s and Company’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 and the Company’s exposure to credit risk arises primarily from trade and
other receivables. For other financial assets (including investment securities, cash and bank balances and
derivatives), the Group and the Company minimise credit risk by dealing exclusively with high credit rating
counterparties.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased
credit risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s
policy that all customers who wish to trade on credit terms are subject to credit verification procedures. In
addition, receivable balances are monitored on an ongoing basis with the result that the Group’s exposure to
bad debts is not significant.
NoTES To ThE FINANCIAL STATEMENTS
31 July 2012