181 ANNUAL REPORT 2024 NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2024 (cont’d) 35. FINANCIAL INSTRUMENTS (CONT’D) 35.1 FINANCIAL RISK MANAGEMENT POLICIES (CONT’D) (b) Credit Risk The exposure to credit risk, or the risk of counterparties defaulting, arises mainly from trade and other receivables. The Group manages its exposure to credit risk by the application of credit approvals, credit limits and monitoring procedures on an ongoing basis. For other financial assets (including cash and bank balances and derivatives), the Group minimises credit risk by dealing exclusively with high credit rating counterparties. (i) Credit Risk Concentration Profile At the end of the reporting period, the Group’s major concentration of credit risk relates to the amounts owing by 3 (2023 - 4) customers which constituted approximately 60.52% (2023 - 76.29%) of its trade receivables, net of loss allowance. (ii) Maximum Exposure to Credit Risk At the end of the reporting period, the maximum exposure to credit risk is represented by the carrying amount of each class of financial assets recognised in the statement of financial position of the Group after deducting any allowance for impairment losses (where applicable). (iii) Assessment of Impairment Losses The Group has an informal credit policy in place and the exposure to credit risk is monitored on an on-going basis through periodic review of the ageing of the trade receivables. The Group closely monitors the trade receivables’ financial strength to reduce the risk of loss. At each reporting date, the Group evaluates whether any of the financial assets at amortised cost are credit impaired. The gross carrying amounts of financial assets are written off against the associated impairment, if any, when there is no reasonable expectation of recovery despite the fact that they are still subject to enforcement activities. A financial asset is credit impaired when any of following events have a detrimental impact on the estimated future cash flows of the financial asset have occurred: - Significant financial difficult of the receivable; - A breach of contract, such as a default or past due event; - Restructuring of a debt in relation to the receivable’s financial difficulty; or - It is becoming probable that the receivable will enter bankruptcy or other financial reorganisation. The Group considers a receivable to be in default when the receivable is unlikely to repay its debt to the group in full or it is more than 180 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate. The Group uses a more lagging past due criterion for certain trade receivables when it is more appropriate to reflect their loss patterns. Trade Receivables The Group applies the simplified approach to measure expected credit losses using a lifetime expected credit loss allowance for all trade receivables.
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