WILLAS-ARRAY ELECTRONICS (HOLDINGS) LIMITED
108
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2016
5.
F I NANC I AL I NSTRUMENTS , F I NANC I AL R I SKS AND CAP I TAL
MANAGEMENT
– continued
(b)
Financial risk management policies and objectives
– continued
(iii) Credit risk management
As at March 31, 2016 and 2015, the Group’s maximum exposure to credit risk which
will cause a financial loss to the Group due to failure to discharge an obligation by the
counterparties and financial guarantees provided by the Group is arising from:
• the carrying amount of the respective recognised financial assets as stated in
the consolidated statement of financial position; and
• the amount of contingent liabilities in relation to financial guarantee issued by the
Group as disclosed in Note 39.
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 follow-up action is taken to recover overdue
debts. In addition, the management reviews the recoverable amount of each individual
trade debt at the end of each 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 reputable
banks.
Other than concentration of credit risk on liquid funds which are deposited with several
reputable banks, the Group has concentration of credit risk as 4% and 7% of the total
trade receivables were due from the Group’s largest customer as at March 31, 2016
and 2015, respectively.
