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DYNA-MAC HOLDINGS LTD.
2016 ANNUAL REPORT
101
Performance At A Glance
Financial Report
Corporate Governance and Transparency
Sustainable Growth
Year in Review
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31 December 2016
31.
FINANCIAL RISK MANAGEMENT
(CONT’D)
(b) 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 major classes of financial assets of the Group are trade receivables.
For other financial assets, the Group adopts the policy of dealing only with high credit quality
counterparties.
The Group’s objective is to seek continual revenue growth while minimising losses incurred due to
increased credit risk exposure. The Group contracts only with recognised and creditworthy third
parties. It is the Group’s policy that all customers are required to provide security or advance payment
upon the signing of a new contract. In addition, progress billings which are issued according to the
stages of project completion are monitored on an ongoing basis to ensure that the Group’s exposure
to bad debts is not significant.
The credit risk for trade receivables based on the information provided to senior management is as
follows:
Group
2016
2015
$’000
$’000
By types of customers
Related parties
1,147
288
Non-related parties – Multi-national companies
42,866
77,571
44,013
77,859
The trade receivables of the Group comprise 6 debtors (2015: 4 debtors) that represented 61% (2015:
82%) of trade receivables.
As the Group and Company do not hold any collateral, the maximum exposure to credit risk for each
class of financial instruments is the carrying amount of that class of financial instruments presented
on the balance sheet.
(i)
Financial assets that are neither past due nor impaired
Bank deposits that are neither past due nor impaired are mainly deposits with banks with
high credit-ratings assigned by international credit-rating agencies. Trade receivables that are
neither past due nor impaired are substantially due from companies with a good collection track
record with the Group. The Group has no trade receivables past due or impaired that were re-
negotiated during the financial year.
(ii) Financial assets that are past due and/or impaired
There is no other class of financial assets that is past due and/or impaired except for trade
receivables.