NOTES TO THE FINANCIAL STATEMENTS
31 December 2014
35. Financial risk management objectives and policies (cont’d)
(b) Credit risk
Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its
obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables. For
other financial assets (including investment securities and cash and short term deposits), the Group and the Company
minimise credit risk by dealing exclusively with high credit rating counterparties.
The Group trades only with recognised and creditworthy third parties or government authorities. It is the Group’s policy
that all customers who wish to trade on credit terms are subject to credit verification procedures. In addition, receivable
balances are monitored on an ongoing basis with the result that the Group’s exposure to bad debts is not significant.
Exposure to credit risk
As at the end of the reporting period, the Group’s and the Company’s maximum exposure to credit risk is represented by
the carrying amount of each class of financial assets recognised in the balance sheets.
Since the Group trades only with recognised and creditworthy third parties or government authorities, there is no
requirement for collateral.
Financial assets that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are creditworthy debtors with good payment record
with the Group. Cash and short term deposits and investment securities that are neither past due nor impaired are placed
with or entered into with reputable financial institutions or companies with high credit ratings and no history of default.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 17 (Trade receivables).
Hock Lian Seng Holdings Limited
Annual report 2014
87
