ANNUAL%20REPORT%202015%20eng

Notes to Consolidated Financial Statements
30 FINANCIAL RISK MANAGEMENT AND FAIR VALUE OF FINANCIAL
INSTRUMENTS
(a)
Financial risk management objectives and policies
Management has adopted certain policies on financial risk management with the objective of:
(i)
(ii)
ensuring that appropriate funding strategies are adopted to meet the Group’s short-term and
long-term funding requirements taking into consideration the cost of funding, gearing levels and
cash flow projections of each project and that of the Group; and
ensuring that appropriate strategies are also adopted to manage related interest and currency risk
funding.
(b)
Credit risk
The Group’s credit risk is primarily attributable to cash at bank, trade and other receivables.
Management monitors the exposures to these credit risks on an ongoing basis.
Substantially all of the Group’s cash at bank are deposited in the reputable banks which management
assessed the credit risk to be insignificant.
Trade receivables are presented net of allowance for doubtful debts. In order to minimise the credit
risk, the credit management committee, comprising the senior management team of the Group, has
established a policy for determining credit limits, credit approvals and other monitoring procedures
to ensure that follow-up action is taken to recover overdue debts. The credit management committee
also evaluates and reviews the credit quality and the recoverable amount of each individual trade
debt on an ongoing basis. These evaluations and reviews focus on the customer’s past history of
making payments when due and current ability to pay, and take into account information specific to
the customer as well as pertaining to the economic environment in which the customer operates. The
Group establishes an allowance for doubtful debts that represents its estimate of losses in respect
of trade receivables. The components of this allowance are a specific loss component that relates to
individually significant exposures, and a collective loss component established for groups of similar
assets. At the balance sheet date, the Group believes that adequate allowance for doubtful debts has
been made in the consolidated financial statements. In this regard, the directors consider that the
Group’s credit risk is significantly reduced. The Group does not hold any collateral as security for these
receivables. The Group has a certain concentration credit risk as three customers accounted for 90.5%
(2014: 56.5%) of the total trade receivables as at 31 December 2015.
The Group closely monitors the amount due from related parties.
Annual Report 2015
183