Page 135 - One Report Thai Final_ENG_2021

Tycoons Worldwide Group (Thailand) Plc.

Derivatives not designated as hedging instruments

The Company uses foreign exchange forward contracts to manage some of its transaction
exposures. The contracts are entered into for periods consistent with foreign currency
exposure of the underlying transactions, generally 6 months.

28.2 Financial risk management objectives and policies

The Group’s financial instruments principally comprise cash and cash equivalents, trade
accounts receivable, investments, short-term and long-term loans. The financial risks

associated with these financial instruments and how they are managed is described below.

Credit risk

The Group is exposed to credit risk primarily with respect to loan, deposits with banks and
financial institutions and other financial instruments. The maximum exposure to credit risk
is limited to the carrying amounts as stated in the statement of financial position. The
Company’s maximum exposure relating to derivatives is noted in the liquidity risk topic.

Trade receivables

The Company manages the risk by adopting appropriate credit control policies and

procedures and therefore does not expect to incur material financial losses. Outstanding
trade receivables are regularly monitored and any shipments to major customers are
generally covered by letters of guarantee or other forms of credit insurance obtained from
reputable banks and other financial institutions. In addition, the Company does not have
high concentrations of credit risk since it has a large customer base.

An impairment analysis is performed at each reporting date to measure expected credit

losses. The provision rates are based on days past due for groupings of various customer
segments with similar credit risks. The Company classifies customer segments by customer
type and coverage by letters of guarantee and other forms of credit insurance are considered
an integral part of trade receivables and taken into account in the calculation of impairment.
The calculation reflects the probability-weighted outcome, the time value of money and

reasonable and supportable information that is available at the reporting date about past
events, current conditions and forecasts of future economic conditions.

Interest rate risk

The Group’s exposure to interest rate risk relates primarily to its cash at banks, short-term and
long-term borrowings. Most of the Company’s financial assets and liabilities bear floating interest
rates or fixed interest rates which are close to the market rate.

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