NOTES TO FINANCIAL STATEMENTS
30 June 2016
117
Karin Technology Holdings Limited
Annual Report 2016
36. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(continued)
(c)
CREDIT RISK
The carrying amounts of trade receivables included in the consolidated statement of financial position
represents the Group’s maximum exposure to credit risk in relation to the Group’s financial assets. The
Group has no significant concentration of credit risk in relation to trade receivables due to the Group’s
large customer base. Concentrations of credit risk are analysed by customer/counterparty, by geographical
region and by industry sector.
The Group performs ongoing credit evaluations of its customers’ financial condition and requires no
collateral from its customers. The allowance for doubtful debts is based upon a review of the expected
collectability of all trade receivables. In this regard, the directors of the Company consider that the Group’s
credit risk is minimal. Further quantitative data in respect of the Group’s exposure to credit risk arising
from trade receivables are disclosed in note 18 to the financial statements.
With respect to credit risk arising from the other financial assets of the Group, which comprise bank balances
and other receivables, the Group’s exposure to credit risk arises from default of the counterparty, with
a maximum exposure being equal to the carrying amounts of these instruments. There is no significant
concentration of credit risk within the Group in relation to these other financial assets.
(d)
LIQUIDITY RISK
The Group monitors its risk to a shortage of funds using a recurring liquidity planning tool. This tool
considers the maturity of both its financial liabilities and financial assets (e.g., trade receivables) and
projected cash flows from operations.
The Group adopts a prudent liquidity risk management which implies maintaining sufficient cash and the
ability to apply for bank loan facilities if necessary.
The Group’s financial liabilities as at 30 June 2016, based on the contractual undiscounted payments,
of HK$373,326,000 (2015: HK$426,257,000) and HK$3,341,000 (2015: HK$1,278,000) would mature
within one year and over one year, respectively. Further details of the financial liabilities of the Group
are set out in note 35 to the financial statements. The balances due within one year and over one year
approximate to their carrying balances as the impact of the discount is not significant. In addition, as at
30 June 2016, the Group had a bank guarantee given in lieu of a utility deposit of HK$207,000 (2015:
HK$207,000), which was repayable on demand.
The Company’s financial liabilities as at 30 June 2016, based on the contractual undiscounted payments,
of HK$1,116,000 (2015: HK$3,434,000) would mature within one year. Further details of the financial
liabilities of the Company are set out in note 35 to the financial statements. The balances due within one
year from the end of the reporting period approximate to their carrying balances as the impact of the
discount is not significant. In addition, the Company is also exposed to liquidity risk through the granting
of financial guarantees. At 30 June 2016, the Company had guarantees given to banks and suppliers
in connection with facilities granted to subsidiaries and utilised as to an aggregate of HK$158,774,000
(2015: HK$237,028,000) which were repayable on demand, further details of which are disclosed in note
31 to the financial statements.
