37. Financial risk management objectives and policies (cont’d.) (d) 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 exposure to credit risk arises primarily from its operating activities (mainly for trade receivables) and from its finance activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. Credit risk from balances with banks and financial institutions is managed by Group Treasury in accordance with the Group’s policy. The Group Treasury Investment Guideline defines the parameters within which the investment activities shall operate to achieve the Group’s investment objective of preserving capital and generating optimal returns. In accordance with the guideline, investment of surplus funds are made only with highly credit rated counterparties. At the reporting date, the Group’s maximum exposure to credit risk is represented by the carrying amount of each class of financial assets mentioned in Notes 18(a) and 21, and is recognised in the statements of financial position. The Group does not hold any collateral as security. Trade receivables The Group and the Corporation determine concentrations of credit risk by monitoring the industry sector profile of their receivables on an ongoing basis. The credit risk concentration profile of the Group’s and the Corporation’s trade receivables due from third parties at the reporting date are as follows: Group Corporation 2016 2015 2016 2015 RM’000 RM’000 RM’000 RM’000 LNG 29,369 13,240 161,543 9,804 Petroleum 435,362 418,558 6,415 19,076 Offshore 1,482,297 568,649 13,589 19,914 Heavy Engineering 193,280 325,324 – – Others 37,741 124,922 18,812 6,358 2,178,049 1,450,693 200,359 55,152 Financial Statements 317
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