141
INDOFOOD AGRI RESOURCES LTD
ANNUAL REPORT 2014
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2014
34. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)
(d)
Credit risk (cont’d)
Plasma Receivables
As disclosed in Notes 2.9 and 31(a), plasma receivables represent costs incurred for plasma plantation development
which include costs for plasma plantations funded by the banks and temporarily self funded by the subsidiaries
awaiting banks’ funding.
Plasma receivables also include advances to plasma farmers for topping up loan instalments to the banks, advances
for fertilisers and other agriculture supplies. These advances shall be reimbursed by the plasma farmers and the
collateral in form of titles of ownership of the plasma plantations will be handed over to the plasma farmers once
the plasma receivables have been fully repaid.
The Group through partnership scheme also provides technical assistance to the plasma farmers to maintain the
productivity of plasma plantations as part of the Group’s strategy to strengthen relationship with plasma farmers
which is expected to improve the repayments of plasma receivables.
At the end of the reporting period, the Group’s maximum exposure to credit risk is represented by the carrying
amount of each class of financial assets recognised in the balance sheets.
(e)
Liquidity risk
Liquidity risk is the risk that the Group will encounter difficulty in meeting financial obligations due to shortage of
funds. The Group’s exposure to liquidity risk arises primarily from mismatches of maturities in its financial assets
and liabilities. The Group manages its liquidity profile to be able to finance its capital expenditure and service its
maturing debts by maintaining sufficient cash and marketable securities, and the availability of funding through
an adequate amount of committed credit facilities.
The Group regularly evaluates its projected and actual cash flow information and continuously assesses conditions
in the financial markets for opportunities to pursue fund
-
raising initiatives. These initiatives may include bank
loans and borrowings and equity market issues.
