. 12 4
NOTESTOTHE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
BAKER
TECHNOLOGY
L IMI TED
THE BE ST
I N US
25.
FINANCIALRISKMANAGEMENTOBJECTIVESANDPOLICIES (CONT’D)
Credit risk
Credit risk is the riskof loss thatmayariseonoutstanding financial instrumentsshouldacounterpartydefault
on its obligations. TheGroup’s exposure to credit risk arises primarily from trade andother receivables. For
other financial assets (including cash and short-term deposits), theGroupminimises credit risk by dealing
exclusivelywithhighcredit ratingcounterparties.
TheGroup’sobjective is toseekcontinual revenuegrowthwhileminimising losses incurreddue to increased
credit risk exposure. TheGroup trades onlywith recognised and creditworthy thirdparties. It is theGroup’s
policy that all customerswhowish to tradeon credit terms are subject to credit verificationprocedures. In
addition, receivable balances aremonitoredon anongoing basiswith the result that theGroup’s exposure
tobaddebts is not significant.
Credit risk concentrationprofile
TheGroupdeterminesconcentrationsof credit riskbymonitoring thecountryprofileof its trade receivables
on anongoingbasis. Thecredit risk concentrationprofileof theGroup’s trade receivables at theendof the
reportingperiod is as follows:
Group
2017
2016
$’000
%
$’000
%
Bycountry
Singapore
216
13
2,323
56
China
–
–
1,031
25
MiddleEast
1,432
84
748
18
AsiaPacific (excludingChina and Singapore)
35
2
30
1
Others
19
1
–
–
1,702
100
4,132
100
At theendof the reportingperiod, approximately:
– 92% (2016: 94%)of theGroup’s trade receivablesweredue from3 (2016: 4)majorcustomerswhoare
located in Singapore andMiddleEast.
– A nominal amount of approximately $63,956,000 (2016: $88,083,000) relating to a corporate
guaranteeprovidedby theCompany tobanks for its subsidiaries’ banking facilities.
Financial assets that areneither past duenor impaired
Tradeandother receivables thatareneitherpastduenor impairedarecreditworthydebtorswithgoodpayment
recordwith theGroup.Cashand short-termdeposits that areneitherpastduenor impairedareplacedwithor
entered intowith reputable financial institutionswithhighcredit ratings andnohistoryof default.
