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40. Financial risk management policies (cont’d.)
(b) Credit risk
Credit risk is the risk of financial loss to the Group and Company if a customer or a counter party to a financial instrument fails
to meet its contractual obligations and arises principally from the Group’s and Company’s receivables from customers, cash
and cash equivalents and financial assets (derivative instruments).
The Group’s and Company’s exposure to credit risks or the risk of counterparties defaulting arises mainly from various deposits
and bank balances, receivables and derivative financial instruments. As the Group and Company does not hold collateral, the
maximum exposure to credit risks is represented by the total carrying amount of these financial assets in the balance sheet.
Credit risks are controlled by the application of credit approvals, limits and monitoring procedures. Credit risks are minimised
by monitoring receivables regularly. In addition, credit risks are also controlled as majority of the Group’s and Company’s
deposits and bank balances and derivative financial instruments are placed or transacted with major financial institutions
and reputable parties. The Directors are of the view that the possibility of non-performance by the majority of these financial
institutions is remote on the basis of their financial strength and support of their respective governments. The credit quality of
financial assets that are neither past due nor impaired are disclosed in Note 39(b) to the financial statements.
The Group and Company generally has no concentration of credit risk arising from trade receivables.
(c) Liquidity and cash flow risk
The Group’s and Company’s policy on liquidity risk management is to maintain sufficient cash and cash equivalents and to have
available funding through adequate amounts of committed credit facilities and credit lines for working capital requirements.
The Directors are committed to ensuring that the Group and Company will have sufficient funds to enable the Group and
Company to meet their liabilities as they fall due and to carry on their business without significant curtailment of operations,
including raising funds from the market. During the financial year, the Company increased its issued share capital by
559,000,000 new ordinary shares of RM0.10 each as disclosed in Note 33 to the financial statements. The new shares were
issued at RM1.80 each for a total cash consideration of RM1.0 billion.
The table below analyses the Group’s and Company’s payables, non-derivative financial liabilities, gross-settled and net-
settled derivative financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date
to the contractual maturity date. The amounts disclosed in the table below are the contractual undiscounted cash flows.
Less than
1 year
RM’mil
1 - 2 years
RM’mil
2 - 5 years
RM’mil
Over
5 years
RM’mil
Group
At 31 December 2017
Term loans
1,870
1,447
3,549
2,300
Finance lease liabilities
174
126
459
–
Commodity Murabahah Finance
84
85
206
263
Revolving credit
–
–
–
–
Trade and other payables
2,148
222
–
–
Amounts due to associates
59
–
–
86
Amounts due to related parties
94
–
–
11
4,429
1,880
4,214
2,660
[ ]
355
AirAsia Berhad
REPORTS AND FINANCIAL STATEMENTS