86
SUNMOON FOOD COMPANY LIMITED
ANNUAL REPORT 2015
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
25.
FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT
(CONTINUED)
25.1 Credit risks
Credit risks refer to the risk that counterparty will default on its contractual obligations resulting in a loss
to the Group and the Company. The Group and the Company have adopted a policy of only dealing
with creditworthy counterparties. The Group and the Company perform ongoing credit evaluation of its
counterparties’ financial condition and generally do not require a collateral.
The Group has significant concentration of credit risk. The top 5 customers accounted for approximately
63% (2014: 54%) of the total trade receivables as at 31 December 2015. The Company has no significant
concentration of credit risk.
The carrying amounts of financial assets recorded in the financial statements, grossed up for any allowances
for impairment losses, represents the Group’s and Company’s maximum exposure to credit risks. The Group
and Company do not hold any collateral.
The Group’s major classes of financial assets are cash and cash equivalents, trade and other receivables
and held-for-trading financial asset. The Company’s major classes of financial assets are cash and cash
equivalents.
Cash and cash equivalents are placed with banks and financial institutions which are regulated.
Trade receivables that are neither past due nor impaired are substantially companies with good collection
track record with the Group and the Company. The Group’s and the Company’s historical experience in the
collection of receivables falls within the credit terms granted.
As stated in Note 16, included in trade receivables of the Group as at 31 December 2015 are balances due
from certain customers totalling $2.69 million intended for conversion to equity investments either directly in
these customers or entities identified for the purpose. The age analysis of trade receivables excluding the
balances intended for conversion into investments as at the end of the reporting period that are past due
but not impaired is as follows:
Group
2015
2014
$’000
$’000
Past due 0 to 30 days
1,298
2,373
Past due 31 to 60 days
593
1,144
Past due 61 to 90 days
133
364
Past due over 90 days
608
703
