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Frontken Corporation Berhad (651020-T)
ANNUAL REPORT
2016
26. FINANCIAL INSTRUMENTS (CONT’D)
(a) Financial Risk Management Policies (Cont’d)
(iii) Equity price risk
The Group’s principal exposure to equity price risk arises mainly from changes in quoted investment prices.
The Group manages its exposure to equity price risk by maintaining a portfolio of equities with different risk
profiles.
Equity price risk sensitivity analysis
If prices for quoted investments at the end of the reporting period strengthened by 10%with all other variables
being held constant, the Group’s profit after taxation or other comprehensive income would have increase by
RM899,623 (2015: NIL). A 10% weakening in the quoted prices would have had an equal but opposite effect
on the Group’s profit after taxation or other comprehensive income.
(iv) Credit risk
The Group’s exposure to credit risk, or the risk of counterparties defaulting, arises mainly from receivables. The
Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring
procedures on an ongoing basis.
The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect
of the trade and other receivables as appropriate. The main components of this allowance are a specific loss
component that relates to individually significant exposures, and a collective loss component established for
groups of similar assets in respect of losses that have been incurred but not yet identified (where applicable).
Impairment is estimated by management based on prior experience and the current economic environment.
The Company provides financial guarantee to financial institutions for credit facilities granted to certain
subsidiaries. The Company monitors the results of these subsidiaries regularly and repayments made by the
subsidiaries.
Credit risk concentration profile
The Group’s major concentration of credit risk relates to the amount owing by 1 (2015: NIL) customer which
constituted approximately 18% (2015: NIL) of its total trade receivables as at the end of the reporting period.
Exposure to credit risk
At the end of the reporting period, the maximum exposure to credit risk is represented by the carrying amount
of each class of financial assets recognised in the statement of financial position of the Group and of the
Company after deducting any allowance for impairment losses (where applicable).
Notes To The Financial Statements
(cont’d)