166 167
17.
Financial risk management objectives and policies (continued)
(b)
Credit risk
Credit risk is the potential financial loss resulting from the failure of a customer or a counterparty to settle its financial
and contractual obligations to the Company, as and when they fall due. In managing credit risk exposure, credit
review and approval processes as well as monitoring mechanism are applied.
For trade receivables, the Company adopts the policy of dealing only with customers of appropriate credit history,
and obtaining sufficient security where appropriate to mitigate credit risk. For other receivables, the Company deals
only with high credit quality counterparties.
The maximum exposure to credit risk is represented by the carrying amount of that class of financial instruments
presented on the balance sheet.
(i)
Financial assets that are neither past due nor impaired
Trade receivables that are neither past due nor impaired are receivables from a-iTrust which represent the
Company’s maximum exposure to credit risk. a-iTrust has a relatively healthy financial position and management
does not expect a-iTrust to fail to meet its obligations.
(ii)
Financial assets that are past due and/or impaired
There are no financial assets that are either past due and/or impaired.
(c)
Liquidity risk
Excess cash in the Company will be transferred to the intermediate holding company for efficient cash management.
To meet payment obligations in a timely manner, the intermediate holding company makes fund transfers back to
the Company as and when the need arises.
The Company’s financial assets and liabilities based on contractual undiscounted cash flows, are due within 1 year
from the balance sheet date.
(d)
Capital risk
The Company’s objectives when managing capital are to safeguard the Company’s ability to continue as a going
concern and to maintain an optimal capital structure so as to maximise shareholder value. In order to maintain or
achieve an optimal capital structure, the Company may adjust the amount of dividend payment, return capital to
shareholder, issue new shares, obtain new borrowings or sell assets to reduce borrowings.
Management monitors capital based on the debt equity ratio, which is calculated as total external borrowings divided
by total equity. As at balance sheet date, the Company does not have any external borrowings.
The Company is not subject to any externally imposed capital requirements for the financial years ended 31 March 2015
and 2014.
