FGV Annual Report 2017

ANNUAL INTEGRATED REPORT 2017 FINANCIAL STATEMENTS 175 NOTES TO THE FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017 4 FINANCIAL RISK MANAGEMENT (CONTINUED) (a) Financial risk management policies (continued) Credit risk (continued) Financial assets RM’000 Collateral held as security RM’000 Net exposure RM’000 2016 Company Other receivables and deposits 21,936 - 21,936 Amount due from a significant shareholder 20 - 20 Amounts due from subsidiaries 609,851 - 609,851 Amounts due from other related companies 216 - 216 Loan due from a subsidiary 206,013 - 206,013 Receivables, amounts due from a significant shareholder, an associate, joint ventures and other related companies exposure are closely monitored and continuously followed up. The Group generally has no significant concentration of credit risk due to the Group’s large number of customers other than sales transactions made to certain related parties as disclosed in Note 26 and Note 54. The Group’s deposits, cash and bank balances were largely placed with major financial institutions in Malaysia. The Directors are of the view that the possibility of non-performance by these financial institutions, including those non- rated financial institutions, is remote on the basis of their financial strength. 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 flows. 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. As at 31 December 2017, the Group has undrawn committed borrowing facilities amounting to RM617 million (2016: RM785 million).