Annual Report 2016
121
Notes to the Financial Statements
(Cont’d.)
28. Financial instruments (Cont’d)
28.4 Credit risk (Cont’d)
Financial guarantees
Risk management objectives, policies and processes for managing the risk
The Company provides financial guarantees to banks in respect of banking facilities granted to certain
subsidiaries. The Company monitors on an ongoing basis the results of the subsidiaries and repayments made
by the subsidiaries.
Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, there was no indication that any subsidiary would default on repayment.
The financial guarantees have not been recognised since the fair value on initial recognition was not material.
Inter-company balances
Risk management objectives, policies and processes for managing the risk
The Company provides unsecured advances to subsidiaries. The Company monitors the results of the
subsidiaries regularly.
Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk is represented by their carrying amounts
in the statements of financial position.
Impairment losses
As at the end of the reporting period, there was no indication that the advances to the subsidiaries are not
recoverable. The Company does not specifically monitor the ageing of the advances to subsidiaries. Nevertheless,
non-current advances to subsidiaries are not overdue and the remaining advances are repayable on demand.
28.5 Liquidity risk
Liquidity risk is the risk that the Group and the Company will not be able to meet its financial obligations as they
fall due. The Group’s and the Company’s exposure to liquidity risk arises principally from its various payables,
loans and borrowings.
The Group and the Company maintain a level of cash and cash equivalents and bank facilities deemed adequate
by the management to ensure, as far as possible, that it will have sufficient liquidity to meet its liabilities when
they fall due.
It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or at
significantly different amounts.
