Frontken Berhad Annual Report 2017

114 Frontken Corporation Berhad (651020-T) ANNUAL REPORT 2017 27. FINANCIAL INSTRUMENTS (CONT’D) (a) Financial Risk Management Policies (Cont’d) (iii) Equity price risk The Group’s principal exposure to equity price risk arises mainly from changes in quoted investment prices. The Group manages its exposure to equity price risk by maintaining a portfolio of equities with different risk profiles. Equity price risk sensitivity analysis If prices for quoted investments at the end of the reporting period strengthened by 10%with all other variables being held constant, the Group’s profit after taxation or other comprehensive income would have increase by RM350,843 (2016 : RM899,623). A 10% weakening in the quoted prices would have had an equal but opposite effect on the Group’s profit after taxation or equity. (iv) Credit risk The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of the trade and other receivables as appropriate. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified (where applicable). Impairment is estimated by management based on prior experience and the current economic environment. The Company provides corporate guarantee to financial institutions for credit facilities granted to certain subsidiaries. The Company monitors the results of these subsidiaries regularly and repayments made by the subsidiaries. Credit risk concentration profile The Group’s major concentration of credit risk relates to the amount owing by 1 (2016: 1) customer which constituted approximately 16% (2016: 18%) of its total trade receivables as at the end of the reporting period. Exposure to credit risk At the end of the reporting period, the maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position of the Group and of the Company after deducting any allowance for impairment losses (where applicable). In addition, the Company’s maximum exposure to credit risk also includes corporate guarantees provided to its subsidiaries as disclosed under the ‘Maturity Analysis’ of item (v) below, representing the outstanding banking facilities of the subsidiaries as at the end of the reporting period. As at the end of the reporting period, there was no indication that any subsidiary would default on repayment. Notes To The Financial Statements (cont’d)