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Notes To The Financial Statements

VITROX CORPORATION BERHAD

[649966-K]

For The Financial Year Ended 31 December 2008

26. FINANCIAL RISK MANAGEMENT (Cont’d)

Currency Risk

The Group’s exposure to currency risk arises mainly from transactions entered into by individual entities within the Group in

currencies other than their functional currencies. Such exposure is partly mitigated in the following ways:-

(i)

The Group’s foreign currency sales and purchases provide a natural hedge against fluctuations in foreign currencies.

(ii)

The Group maintains part of its cash and bank balances in foreign currency accounts to meet future obligations in foreign

currencies.

Credit Risk

The Group’s exposure to credit risk arises mainly from receivables. The maximum credit risk exposure is best represented by

the total carrying amount of these financial assets in the balance sheet. An approximately 75% of the total trade receivables

of the Group as at the balance sheet date was due from five major customers.

The Group manages its exposure to credit risk by assessing counter parties’ financial standings on an ongoing basis, setting

and monitoring counter parties’ limits and credit terms.

Liquidity Risk

The Group practises prudent liquidity risk management to minimise the mismatch of financial assets and liabilities and aims

to maintain sufficient liquidity and cash flows at all times.