48
MIGHT Directors’ Report And Audited Financial Statements 2020
23. CAPITAL AND FINANCIAL RISK MANAGEMENT (continued)
Financial risk management (continued) (b)
Credit risk (continued)
(i)
Exposure to credit risk
At the end of the reporting period, the maximum exposure of the Group to credit risk is represented by the carrying amount of each class of financial asset recognised in the statements of the financial position.
Information regarding credit enhancements for trade and other receivables is disclosed in Note 9 to the financial statements.
Interest rate risk
(ii)
Interest rate risk is the risk that the fair value or future cash flows of the financial instruments of the Group will fluctuate because of changes in market interest rates.
The exposure of the Group to changes in interest rates relates primarily to the deposits with licensed banks and lease liabilities of the Group. The Group does not use derivative financial instruments to hedge its risk but regularly reviews its debt portfolio to enable it to source low interest funding.
The interest rate profile and sensitivity analysis of interest rate risk have been disclosed in Note 10 and Note 15 to the financial statements respectively.
Foreign currency risk
(iii)
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument would fluctuate because of changes in foreign exchange rates.
The foreign currency profile and sensitivity analysis of foreign currency risk have been disclosed in Note 9 and Note 16 to the financial statements respectively.
Liquidity and cash flow risks
(iv)
Liquidity and cash flow risk is the risk that the Group is unable to service its cash obligations in the future. To mitigate this risk, the management monitors and maintains a level of cash and cash equivalents deemed adequate to finance the activities of the Group.
The analysis of financial instruments by remaining contractual maturities has been disclosed in Note 15 and Note 16 to the financial statements respectively.
24. DISTRIBUTIONS
Under Clause 4(a) of the Memorandum of Association (the Constitution) of the Company, no portion of the income and property of the Company shall be paid or transferred directly or indirectly by way of dividends, bonus or by way of profit to the members of the Company.
At least seventy percent (70%) of all income, contributions and donations received must be utilised towards achieving the objective of the Company.
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