Annual Report 2023
China Merchants China Direct Investments Limited Annual Report 2023 123 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2023 5. FINANCIAL INSTRUMENTS (CONTINUED) Credit risk and impairment assessment Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group’s financial assets include financial assets at FVTPL, other receivables, and cash and cash equivalents. The Group performed impairment assessment for financial assets under ECL model. Information about the Group’s credit risk management, maximum credit risk exposures and the related impairment assessment, if applicable, are summarised as below: Although the cash and cash equivalents are concentrated with certain counterparties, the credit risk on liquid funds is limited because the counterparties are banks with good credit ratings assigned by international credit rating agencies. In this regard, the management considers that the Group’s credit risk on such authorised institutions is low. Accordingly, cash and cash equivalents are subject to 12m ECL assessment. In the opinion of the management, the 12m ECL’s balance is not significant. For the purpose of internal credit risk management, the Group uses past due information and available financial background of the debtors to assess whether credit risk has increased significantly since initial recognition of other receivables of US$68,700 (2022: US$38,517). As such balance is not past due, the Group considers there is no significant change in credit risks of these balances since initial recognition. Accordingly, they are subject to 12m ECL assessment. In the opinion of the management, the 12m ECL balance is not significant. The table below details the credit risk exposures of the Group’s financial assets, which are subject to ECL assessment: 2023 2022 Notes External credit rating 12m or lifetime ECL Gross carrying amount Gross carrying amount US$ US$ Cash and cash equivalents 17 A 12m ECL 8,627,649 25,489,216 Other receivables 16 N/A 12m ECL 68,700 38,517 The Group has concentration of credit risk in the PRC.
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