SCC Holdings Berhad Annual Report 2017

SCC Holdings Berhad (511477-A) | Annual Report 2017 77 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2017 (CONT’D) 30. Financial Instruments (Cont’d) (b) Financial risk management objectives and policies (cont’d) (i) Credit risk (cont’d) The Group has adopted a policy of only dealing with creditworthy counterparties. Management has a credit policy in place to control credit risk by dealing with creditworthy counterparties and deposit with banks and financial institutions with good credit rating. The exposure to credit risk is monitored on an ongoing basis and action will be taken for long outstanding debts. The carrying amounts of the financial assets recorded on the statements of financial position at the end of the financial year represents the Group’s and the Company’s maximum exposure to credit risk except for financial guarantees provided to banks for banking facilities granted to a subsidiary company. The Company’s maximum exposure in this respect is RM276,000 (2016: RM71,000), representing the outstanding banking facilities of the subsidiary company as at the end of the reporting period. There was no indication that the subsidiary company would default on repayment as at the end of the reporting period. The Group’s major concentration of credit risk relates to the amounts owing by 1 customer (2016: 2 customers) which constituted approximately 10% (2016: 24%) of its trade receivables at the end of the reporting period. (ii) Liquidity risk Liquidity risk refers to the risk that the Group will encounter difficulty in meeting its financial obligations as they fall due. The Group’s exposure to liquidity risk arises primarily from its various payables. The Group actively manages its operating cash flows and the availability of funding so as to ensure that all repayment and funding needs are met. As part of its overall prudent liquidity management, the Group maintains sufficient levels of cash and cash equivalents to meet its working capital requirements and prudently balances its portfolio of short term and long term funding requirements. The following table analyses the remaining contractual maturity for financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group and the Company can be required to pay. On demand or within 1 year 1 to 2 years Total contractual cash flows Total carrying amount RM’000 RM’000 RM’000 RM’000 Group 2017 Non-derivative financial liabilities Trade payables 3,731 - 3,731 3,731 Other payables 3,518 - 3,518 3,757 Finance lease liabilities 25 - 25 25 Bank borrowings 276 - 276 276 7,550 - 7,550 7,789 2016 Non-derivative financial liabilities Trade payables 4,922 - 4,922 4,922 Other payables 3,459 - 3,459 3,594 Finance lease liabilities 69 25 94 92 Bank borrowings 71 - 71 71 8,521 25 8,546 8,679