Sasbadi Annual Report 2017

NOTES TO THE FINANCIAL STATEMENTS 122 SASBADI HOLDINGS BERHAD (1022660-T) I BER AD (10 2 60-T) 23. Financial instruments (continued) 23.3 Financial risk management The Group has exposures to the following risks from its use of financial instruments: x Credit risk x Liquidity risk x Market risk 23.4 Credit risk Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group ’s exposure to credit risk arises principally from its receivables from customers, w hilst the Company’s credit exposure arises principally from its loan s and advances to its subsidiaries. Receivables Risk management objectives, policies and processes for managing the risk Management has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on customers requiring credit over a certain amount. Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statements of financial position. As at 31 August 2017, the Group has significant concentration of credit risk in the form of outstanding balances from 5 trade customers which amounted to RM11,448,000 (2016: RM9,900,000) representing 24% (2016: 22%) of total trade receivables. The Directors are of the opinion that the outstanding balances from these customers are fully recoverable based on the following: x Significant payments have subsequently been received from 4 customers after the reporting period; and x The Directors have made assessments that all these customers have the ability to repay the balances outstanding.