119
HG METAL MANUFACTURING LIMITED
ANNUAL REPORT 2014
NOTES TO THE
FINANCIAL STATEMENTS
for the financial year ended 31 December 2014
34.
FINANCIAL RISK MANAGEMENT (CONT’D)
(a)
Credit risk (cont’d)
Concentration risk
Concentration risk arises when a number of counterparties are engaged in similar business
activities, or activities in the same geographical region, or have economic features that
would cause their ability to meet contractual obligations to be similarly affected by changes
in economic, political or other conditions. Concentrations indicate the relative sensitivity of
the Group’s performance to developments affecting a particular industry.
In order to avoid excessive concentrations of risk, the Group’s policies and procedures include
specific guidelines to focus on maintaining a diversified portfolio. Identified concentrations of
credit risks are controlled and managed accordingly.
Exposure to credit risk
At the balance sheet date, the Group’s and the Company’s maximum exposure to credit
risk is represented by:
–
the carrying amount of each class of financial assets recognised in the balance sheets.
–
a nominal amount of $13,404,000 (2013: $32,986,000) relating to corporate
guarantees provided by the Company to banks on its subsidiaries’ borrowings and
other banking facilities.
