FGV Annual Report 2012

40 Felda Global Ventures Holdings Berhad 4 FINANCIAL RISK MANAGEMENT (continued) (a) Financial risk management policies (continued) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulties in meeting obligations due to shortage of funds. The Group maintains a sufficient level of cash and cash equivalents to meet the Group’s working capital requirements by closely monitoring its cash flow. Due to the nature of its business, the Group has adopted prudent liquidity risk management in maintaining and obtaining sufficient credit facilities from financial institutions. Cash flow forecasting is performed in the operating entities of the Group and then aggregated by Management. Management monitors rolling forecasts of the Group’s liquidity requirements to ensure it has sufficient cash to meet operational needs while maintaining sufficient headroom on its undrawn committed borrowing facilities at all times so that the Group does not breach borrowing limits or covenants (where applicable) on any of its borrowing facilities. Such forecasting takes into consideration the Group’s debt financing plans, covenant compliance, compliance with internal statements of financial position ratio targets and, if applicable external regulatory or legal requirements – for example, currency restrictions. Surplus cash held by the operating entities over and above balance required for working capital management is transferred to the Group’s centralised treasury function. Surplus cash is invested in profit bearing current accounts, time deposits, money market deposits and marketable securities, choosing instruments with appropriate maturities or sufficient liquidity to provide sufficient headroom as determined by the above-mentioned forecasts. At the reporting date, the Group held cash investment of RM5,464,772,000 (2011: RM1,506,997,000) and other liquid assets of RM223,600,000 (2011: RM271,133,000) that are expected to readily generate cash inflows for managing liquidity risk. At the reporting date, the Company held cash investment of RM4,179,612,000 (2011: RM459,300,000) and other liquid assets of RM4,093,000 (2011: RM712,000) that are expected to readily generate cash inflows for managing liquidity risk. The table below analyses the Group’s non-derivative financial liabilities and net-settled derivative financial liabilities into relevant maturity groupings based on the remaining maturity periods at the reporting date to the contractual maturity date. Derivative financial liabilities are included in the analysis if their contractual maturities are essential for an understanding of the timing of the cash flows. The table below summaries the maturity profile of the Group’s and Company’s financial liabilities based on the remaining maturity periods at the statement of financial position date.The amounts disclosed in the table are based on contractual undiscounted cash flows. Group Less than Between 1 Between 2 Over 1 year and 2 years and 5 years 5 years Total RM’000 RM’000 RM’000 RM’000 RM’000 At 31 December 2012 Loan due to a significant shareholder 297,694 359,607 780,738 797,615 2,235,654 LLA liability 496,938 489,467 1,441,288 114,470,458 116,898,151 Amount due to associate 69,510 – – – 69,510 Amount due to a significant shareholder 93,826 – – – 93,826 Amounts due to other related companies 755,023 – – – 755,023 Derivative financial liabilities 106,680 – – – 106,680 Borrowings 599,410 255 254 – 599,919 Payables 348,688 – – – 348,688 Total undiscounted financial liabilities 2,767,769 849,329 2,222,280 115,268,073 121,107,451 At 31 December 2011 Loan due to a significant shareholder 5,448 394,316 844,818 1,093,142 2,337,724 Amount due to an associate 21 – – – 21 Amount due to jointly controlled entity 35,091 – – – 35,091 Amounts due to other related companies 217,699 – – – 217,699 Borrowings 761,974 41,733 – – 803,707 Payables 247,955 – – – 247,955 Total undiscounted financial liabilities 1,268,188 436,049 844,818 1,093,142 3,642,197 Notes to the Financial Statements for the financial year ended 31 December 2012