34. Financial risk management objectives and policies (cont’d.)
(iv) 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 cash and bank balances), the Group and
the Company minimise credit risk by dealing exclusively with high credit rating counterparties.
TheGroup seeks to control credit risk by setting credit limits, obtainingbank guaranteeswhere appropriate;
ensuring that sales are made to customers with appropriate credit history and conducting periodic review
on financial standing of customers. Further, sales to customers are reviewed when deliveries exceed
guaranteed amounts or set credit limits.
Exposure to credit risk
At the reporting date, the Group’s and the Company’s maximum exposure to credit risk is represented by
the carrying amount of each class of financial assets recognised in the statements of financial position.
The Group and the Company have no concentration of credit risk on any one particular customer or group
of related customers.
Information regarding credit enhancements for trade and other receivables is disclosed in Note 19.
Financial assets that are neither past due nor impaired
Information regarding trade and other receivables that are neither past due nor impaired is disclosed in
Note 19.
Amounts due from Subsidiaries and related companies
There is minimal risk of default as these companies are either profitable or prospectively profitable except
for Subsidiaries for which allowances have been made in respect of amounts estimated to be not
recoverable as disclosed in Note 19. The credit standing of these companies are periodically monitored
and reviewed.
Financial assets that are past due but not impaired
Information regarding financial assets that are past due but not impaired is disclosed in Note 19.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 19.
(v) Market price risk
The Group is exposed to commodity price risk arising from fluctuations in the price of crude palm oil and
palm kernel. The Group adopts the strategy of having a mix of spot and forward sales at any one time to
mitigate this risk. Forward sales policies are periodically reviewed by Management.
n otes to th e f i nan c i a l statements
Bo ustead plantati o ns Berhad
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