Annual Report 2009 - Greentown China Holdings Limited

Notes to the Consolidated Financial Statements
For The Year Ended 31 December 2009
6. FINANCIAL INSTRUMENTS (Continued)
(b)
Financial risk management objectives and policies (Continued)
Credit risk (Continued)
In order to minimise the credit risk, the management of the Group has delegated a team responsible for
determination of credit limits, credit approvals and other monitoring procedures to ensure that followup
action is taken to recover overdue trade debts and amounts due from related parties. In addition, the
Group reviews the recoverable amount of each overdue debt at the end of the reporting period to ensure
that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the
Company consider that the Group’s credit risk is significantly reduced.
The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings
assigned by international credit-rating agencies or with a good reputation.
The Group’s concentration of credit risk by geographical locations is mainly in the PRC. The Group has
no significant concentration of credit risk, with exposure spread over a number of counterparties and
customers.
Liquidity risk
In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash
equivalents deemed adequate by the management to finance the Group’s operations and mitigate the
effects of fluctuations in cash flows. The management monitors the utilisation of bank borrowings and
ensures compliance with loan covenants.
The Group relies on bank and other borrowings, convertible bonds and senior notes as a significant
source of liquidity.
The following table details the Group’s remaining contractual maturity for its non-derivative financial
liabilities based on the agreed repayment terms. The table has been drawn up based on the undiscounted
cash flows of financial liabilities based on the earliest date on which the Group can be required to pay.
The table includes both interest and principal cash flows.
In addition, the following table details the Group’s liquidity analysis for its derivative financial
instruments. The table has been drawn up based on the undiscounted contractual net cash inflows and
outflows on derivative instruments that are settled on a net basis. The liquidity analysis for the Group’s
derivative financial instruments are prepared based on the contractual maturities as the management
consider that the contractual maturities are essential for an understanding of the timing of the cash flows
of derivatives.
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Greentown China Holdings Limited Annual Report 2009