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annual report | 2012 Gunung Capital Berhad (330171-P) 92 NOTES TO THE FINANCIAL STATEMENTS (cont’d) 31 DECEMBER 2012 38 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d) (b) Credit Risk (cont’d) The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables as appropriate. Impairment is determined by management based on prior experience and the current economic environment. Credit risk concentration profile The Group’s major concentration of credit risk relates to the amounts owing by two customers which constituted approximately 89% of its trade receivables as at the end of the reporting period. Exposure to credit risk As the Group does not hold any collateral, the maximum exposure to credit risk is represented by the carrying amounts of the financial assets as at the end of the reporting period. Information regarding credit enhancements for trade receivables is disclosed in Note 10. Further information regarding the corporate guarantees provided by the Company is disclosed in Note 34. (c) Liquidity Risk Liquidity risk is the risk that the Group and the Company will encounter difficulties in meeting financial obligations due to shortage of funds. The Group and the Company practice prudent liquidity risk management to minimise the mismatch of financial assets and liabilities and to maintain sufficient credit facilities for contingent funding requirement of working capital. The Group and the Company reviews its cash flow position regularly to manage its exposure to fluctuations in future cash flows associated with its monetary financial instruments. The following table sets out the maturity profile of the financial liabilities as at the end of the reporting period based on contractual undiscounted cash flows (including interest payments computed using contractual rates, or, if floating, based on the rates at end of the reporting period): Group 2012 Carrying amount RM Contractual undiscounted cash flows RM On demand or within one year RM One to five years RM Financial liabilities Trade payables 1,568,010 1,568,010 1,568,010 - Other payables 11,198,955 11,198,955 11,198,955 - Finance lease and hire purchase payables 41,558,083 45,171,450 19,553,106 25,618,344 Bank borrowings - - - - Shareholder’s advance 1,726,811 1,726,811 - 1,726,811 2011 56,051,859 59,665,226 32,320,071 27,345,155 Financial liabilities Trade payables 2,363,185 2,363,185 2,363,185 - Other payables 32,317,554 32,317,554 32,317,554 - Finance lease and hire purchase payables 53,421,325 59,806,900 20,387,564 39,419,336 Bank borrowings 3,943,546 3,943,546 3,943,546 - Shareholder’s advance 6,231,949 6,231,949 - 6,231,949 98,277,559 104,663,134 59,011,849 45,651,285
NOTES TO THE FINANCIAL STATEMENTS (cont’d) 31 DECEMBER 2012 38 FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d) (c) Liquidity Risk (cont’d) Company 2012 Carrying amount RM Contractual undiscounted cash flows RM On demand or within one year RM One to five years RM Financial liabilities Other payables 2,377,948 2,377,948 2,377,948 - Amount owing to subsidiaries - - - - 2011 2,377,948 2,377,948 2,377,948 - Financial liabilities Other payables 14,711,038 14,711,038 14,711,038 - Amount owing to subsidiaries 87,789 87,789 87,789 - 14,798,827 14,798,827 14,798,827 - As at the end of the reporting period, the counterparty to the financial guarantees as disclosed in Note 34 does not have a right to demand cash as the default has not occurred. Accordingly, the financial guarantees are not included in the above maturity profile analysis. 39 FAIR VALUE OF FINANCIAL INSTRUMENTS Determination of Fair Value Financial instruments that are not carried at fair value and whose carrying amounts are not reasonable approximation of fair value Group Company Carrying amount 2012 RM Fair value 2012 RM Carrying amount 2011 RM Fair value 2012 RM Financial liabilities Shareholder’s advance 1,726,811 1,726,811 6,231,949 6,817,236 In the previous financial year, the fair value of shareholder’s advance is estimated using discounted cash flow analysis based on the financing rate of the leasing facility in which the shareholder’s loan is subordinated and assumed repayment together will accumulated interests would be made at the end of the leasing facility. In the current financial year, since the shareholder’s advance is no longer subordinated, the carrying amount of the shareholder’s advance, which has been transferred to other payables, is considered as reasonable approximation of fair value. Gunung Capital Berhad (330171-P) 93 annual report | 2012
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