2013 — Page 109

Hong Kong Ferry (Holdings) Company Limited Annual Report 2013

Notes to the Accounts (Continued)

24 FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL

INSTRUMENTS (Continued)

(a)

Credit risk (Continued)

Cash is deposited with financial institutions with sound credit ratings and the Group has exposure limit to any

single financial institution. Given their high credit ratings, management does not expect any of these financial

institutions will fail to meet their obligations.

In respect of trade and other receivables, individual credit evaluations are performed on all customers requiring

credit over a certain amount. These evaluations focus on the customer's past history of making payments when

due and current ability to pay, and take into account information specific to the customer as well as pertaining

to the economic environment in which the customer operates. Trade receivables are due ranging from 7 to 45

days from the date of billing. Debtors with balances that are more than 60 days overdue are requested to settle all outstanding balances before any further credit is granted. Normally, the Group does not obtain collateral

from customers.

The Group's exposure to credit risk is not influenced by the individual characteristics of each customer as the Group does not have a certain concentration of credit risk of the total trade and other receivables.

The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheets. Except for the financial guarantees given by the Group as set out in note 27, the Group does not provide any other guarantees to third parties which would expose the Group to credit risk.

Further quantitative disclosures in respect of the Group's exposure to credit risk arising from trade and other

receivables are set out in note 19.

(b)

Liquidity risk

The treasury functions of the Group is centralised at the head office. Individual operating entities within the Group are responsible for their own cash management, including the short term investment of cash surpluses and the raising of loan to cover expected cash demands, subject to approval by the Company's board when the borrowings exceed certain predetermined levels of authority. The Group's policy is to regularly monitor its liquidity requirements, to ensure that it maintains sufficient reserves of cash from major financial institutions to meet its liquidity requirements in the short and longer term.

107