133 / 152
Notes to the
financial statements
For the financial year ended 31 December 2018
131
A N N U A L R E P O R T
2 0 1 8
27.
Financial risk management objectives and policies (cont’d)
(c)
Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations
resulting in financial loss to the Group. The Group has adopted a pro–active approach in
the extension of credit terms to trade customers, monitors its exposure to credit risk on an
ongoing basis and only transacts with creditworthy institutions.
The carrying amount of financial assets recorded in the financial statements, grossed up for
any allowances for losses, represents the Group’s maximum exposure to credit risk without
taking into account the value of any collateral obtained.
i.
Trade receivables
The Group provides for lifetime expected credit losses for all trade receivables using
a provision matrix. The provision rates are determined based on the Group’s historical
observed default rates analysed in accordance to days past due. Information regarding
loss allowance movement of trade receivables are disclosed in Note 18.
Concentration of credit risk
The Group determines concentrations of credit risk by monitoring the country profile of its
trade receivables on an ongoing basis. The credit risk concentration profile of the Group’s
trade receivables at the end of the reporting period is as follows:
Group
31.12.2018
31.12.2017
1.1.2017
$’000
% $’000
% $’000
%
By country
Singapore
821
4 216
13 2,323
56
China
41
–
–
–
1,031
25
Middle East
3,730
17 1,432
84
748
18
Asia Pacific (excluding
China and Singapore)
15,117
71
35
2
30
1
Others
1,614
8
19
1
–
–
21,323 100 1,702
100 4,132
100
At the end of the reporting period, approximately:
–
70% (2017: 92%) of the Group’s trade receivables were due from 3 (2017: 3) major
customers who are located in Singapore and Asia Pacific.
–
A nominal amount of approximately $45,012,000 (2017: $43,956,000) relating to a
corporate guarantee provided by the Company to banks for its subsidiaries’ banking
facilities.