Page 66 - ar2013

6 4
Annual Report 2013 LifeBrandz Ltd
Notes to the Financial Statements
31 July 2013
30. Financial risk management objectives and policies (cont’d)
(a) Credit risk
Credit risk is the risk of loss that may arise on outstanding fnancial instruments should a counterparty default
on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other
receivables. For other fnancial assets (including cash and cash equivalents), the Group and the Company minimise
credit risk by dealing exclusively with high credit rating counterparties.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to increased credit
risk exposure. The Group trades only with recognised and creditworthy third parties. It is the Group’s policy that all
customers who wish to trade on credit terms are subject to credit verifcation procedures. In addition, receivable
balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not signifcant.
Exposure to credit risk
At the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is represented
by the carrying amounts of each class of fnancial assets recognised in the statements of fnancial position.
Credit risk concentration profle
The Group has no signifcant concentration of credit risk.
Financial assets that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment
record with the Group. Cash and cash equivalents that are neither past due nor impaired are placed with or entered
into with reputable fnancial institutions or companies with high credit ratings and no history of default.
Financial assets that are either past due or impaired
Information regarding fnancial assets that are either past due or impaired is disclosed in Note 16 (Trade and
other receivables).
(b) Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter diffculty in meeting fnancial obligations due
to shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily frommismatches of
the maturities of fnancial assets and liabilities. The Group’s and the Company’s objective is to maintain suffcient
level of cash and short-term deposits to meet its working capital requirements. The Group maintains a balance
between continuity of funding and fexibility through exploring on the use of stand-by fnancial and credit facilities.
The Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to
fnance the operations of the Group and to mitigate the effects of fuctuations in cash fows.
Short-term funding may be obtained from short-term loans where necessary without incurring unacceptable
losses or risking damage to the Group’s reputation.