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GHL Systems Berhad
(293040-D)
Annual report 2015
Notes to the Financial Statements
31 December 2015 (continued)
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
The financial risk management policy of the Group and of the Company is to ensure that adequate
financial resources are available for the development of the operations of the Group and of the Company
whilst managing its financial risks, including credit risk, liquidity risk and cash flow risk, interest rate risk and
foreign currency exchange risk. The Group and the Company operate within clearly defined guidelines that
are approved by the Board and the Group’s and the Company’s policy is not to engage in speculative
transactions.
(a) Credit risk
Cash deposits and trade and other receivables could give rise to credit risk which requires the loss to
be recognised if a counter party fails to perform as contracted. The counter parties are creditworthy
counterparties. It is the policy of the Group to monitor the financial standing of these counter parties
on an ongoing basis to ensure that the Group is exposed to minimal credit risk.
Exposure to credit risk
The primary exposure of the Group to credit risk arises through its trade receivables. The trading terms
of the Group with its customers are mainly on credit, except for new customers, where deposits in
advance are normally required. Overdue balances are reviewed regularly by senior management.
At the end of each reporting period, the maximum exposure of the Group and of the Company to
credit risk is represented by the carrying amount of each class of financial assets recognised in the
statements of financial position.
Credit risk concentration profile
The Group determines concentration of credit risk by monitoring the country profiles of its trade
receivables on an ongoing basis. The credit risk concentration profile of the trade receivables of the
Group at the end of each reporting period are as follows:
2015
2014
RM % of total
RM % of total
By country
Malaysia
23,193,725
68 27,629,291
78
Philippines
8,679,621
25 5,764,292
16
Thailand
2,078,644
6
740,008
4
Australia
127,034
1
585,320
2
34,079,024
100 34,718,911
100
At the end of each reporting period, approximately twenty-one percent (21%) (2014: 34%) of the trade
receivables of the Group were due from five (5) (2014: 5) customers.
At the end of each reporting period, the Company does not have significant concentration of credit
risk other than amounts owing by subsidiaries of RM54,850,432 (2014: RM46,108,216), which contributes
95% (2014: 96%) of total receivables.