Serba Dinamik Annual Report 2016

2016 Annual Report 149 NOTES TO THE FINANCIAL STATEMENTS (Cont’d) 24. FINANCIAL INSTRUMENTS (CONT’D) 24.2 Net gains and losses arising from financial instruments The table below provides an analysis of financial instruments categorised as follows: 25.05.2016 - 31.12.2016 Group RM Net gains/(losses) on: Loans and receivables 2,277,715 Financial liabilities measured at amortised cost (19,790,227) (17,512,512) 24.3 Financial risk management The Group and the Company are exposed to the following risks from its use of financial instruments: • Credit risk • Liquidity risk; and • Market risk (a) Credit risk Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from trade customers. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries and financial guarantees given to banks for credit facilities granted to subsidiaries. Receivables from external parties (i) Risk management objectives, policies and processes for managing the risk The customers of the Group are principally involved in the oil and gas industry. The Group uses ageing analysis to monitor the credit quality of the receivables. (ii) Exposure to credit risk, credit quality and collateral As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented by the carrying amounts in the statement of financial position. Cash and cash equivalents are only placed with licensed banks/institutions. Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are stated at their realisable values. A significant portion of these receivables are regular customers that have been transacting with the Company. The Company uses ageing analysis to monitor the credit quality of the receivables. Any receivables having significant balances past due more than 120 days, which are deemed to have higher credit risk, are monitored individually.