Creative 2013 Annual Report Download - page 56

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56
CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
(b) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in nancial loss to the
Group. Financial instruments that potentially subject the Group to signicant concentrations of credit risk consist principally
of cash and cash equivalents and trade receivables. The Group deals only with nancial institutions with high credit ratings
and limits the amount of credit exposure to any one nancial institution. The Group sells its products to original equipment
manufacturers, distributors and key retailers. The Group believes that the concentration of credit risk in its trade receivables
is substantially mitigated due to performance of ongoing credit evaluations of its customers’ nancial condition, use of short
collection terms, use of letters of credit in certain circumstances, procurement of credit insurance coverage and the geographical
dispersion of sales. The Group establishes allowances for doubtful accounts, returns and discounts for specically identied
doubtful accounts, returns and discounts based on credit proles of its customers, current economic trends, contractual terms
and conditions and historical payment, returns and discount experience.
The maximum exposure to credit risk for each class of nancial instruments is the carrying amount of that class of nancial
instruments presented on the balance sheet.
As at 30 June 2013, there were no signicant concentrations of credit risk and only one customer (2012: Nil) individually
accounted for 10% or more of net accounts receivable.
Bank deposits that are neither past due nor impaired are mainly deposits with banks with high credit-ratings assigned by
international credit-rating agencies. Trade receivables that are neither past due nor impaired are substantially companies with
a good collection track record with the Group.
There is no other class of nancial assets that is past due and/or impaired except for trade receivables.
The age analysis of trade receivables past due but not impaired is as follows:
NOTES TO THE FINANCIAL STATEMENTS
For the nancial year ended 30 June 2013
29. FINANCIAL RISK MANAGEMENT (cont’d)
Group
2013 2012
US$’000 US$’000
Past due 1 to 60 days 1,724 1,183
Past due 61 to 120 days 106 70
Past due over 120 days  2,532
2,724 3,785
The carrying amount of trade receivables individually determined to be impaired and the movements in the related allowance
for impairment are as follows:
Group
2013 2012
US$’000 US$’000
Past due 1 to 60 days  684
Past due 61 to 120 days 1 225
Past due over 120 days 4,212 4,603
 5,512
Less: Allowance for impairment  (4,914)
– 598
Beginning of nancial year  5,120
Currency translaon dierences 6 3
Liquidaon/disposal of subsidiaries – (27)
Allowance write-back  (16)
Allowance ulised  (166)
End of nancial year  4,914
The impaired trade receivables arose mainly from sales to customers who signicantly delayed their payments.