CITY DEVELOPMENTS LIMITED ANNUAL REPORT 2021 FINANCIALS 218 219 NOTES TO THE FINANCIAL STATEMENTS NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2021 YEAR ENDED 31 DECEMBER 2021 41 FINANCIAL INSTRUMENTS (CONT’D) (i) Credit risk (cont’d) Impairment losses on trade and other receivables and debt investment recognised/(reversed) in profit or loss were as follows: Group Note 2021 2020 $’000 $’000 Other receivables 9 6,104 323,942 Debt investment 10 – 288,000 Trade receivables (2,448) 11,222 3,656 623,164 Trade and other receivables and contract assets The Group has a credit policy in place and the exposure to credit risk is monitored on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. The Group does not require collateral in respect of these financial assets. The Group limits its exposure to credit risk from trade receivables by collecting deposits as collateral, where possible. For trade receivables and contract assets relating to sale of development properties, if a purchaser defaults on payments, the Group may enforce payments via legal proceedings or if the purchaser is assessed to be insolvent, the Group may take possession of the units, retain a portion of the sales consideration, and resell the property. In monitoring customer credit risk, the Group considers the trade history of the customers with the Group, aging profile, maturity and existence of previous financial difficulties. Exposure to credit risk The maximum exposure to credit risk for trade and other receivables and contract assets at the reporting date by business segment is set out below: Group Company 2021 2020 2021 2020 $’000 $’000 $’000 $’000 Property development 1,813,907 1,944,732 5,146,585 5,326,041 Hotel operations 179,976 131,053 1,635,335 1,579,703 Investment properties 102,646 95,749 1,734,717 1,674,929 Others 112,034 60,680 3,911,800 3,757,528 2,208,563 2,232,214 12,428,437 12,338,201 Expected credit loss assessment on trade receivables The Group uses an allowance matrix to measure the ECLs of trade receivables from individual customers, which comprise a very large number of small balances. Loss rates are based on actual credit loss experience over the past 3 years (2020: 3 years). These rates are adjusted to reflect differences between economic conditions during the period over which the historic data has been collected, current conditions and the Group’s view of economic conditions over the expected lives of the receivables. The exposure to credit risk and ECL for trade receivables as at 31 December 2021 and 31 December 2020 is insignificant. 41 FINANCIAL INSTRUMENTS (CONT’D) (i) Credit risk (cont’d) The following table provides information about the exposure to credit risk and ECLs for trade receivables as at reporting date: Group Company Gross carrying amount Impairment loss allowance Gross carrying amount Impairment loss allowance $’000 $’000 $’000 $’000 2021 Current (not past due) 99,892 15 15 11 1 – 30 days past due 29,166 557 628 44 31 – 60 days past due 4,816 95 118 10 61 – 90 days past due 3,446 30 21 3 More than 90 days past due 47,007 16,328 528 67 184,327 17,025 1,310 135 2020 Current (not past due) 92,607 515 92 – 1 – 30 days past due 21,781 961 672 311 31 – 60 days past due 12,395 1,062 588 142 61 – 90 days past due 5,394 553 50 27 More than 90 days past due 40,108 22,121 1,112 236 172,285 25,212 2,514 716 Movements in allowance for impairment in respect of trade and other receivables The movements in the allowance for impairment in respect of trade and other receivables (excluding amounts owing by subsidiaries (note 7) and joint ventures (note 9)) during the year are as follows: Group Company Lifetime ECL Lifetime ECL 2021 2020 2021 2020 $’000 $’000 $’000 $’000 Allowance for impairment on trade receivables At 1 January 25,212 14,301 716 7 Impairment loss (reversed)/ recognised (2,448) 11,222 (431) 709 Impairment loss utilised (5,796) (798) (150) – Translation differences on consolidation 57 487 – – At 31 December 17,025 25,212 135 716 Impairment losses (reversed)/recognised on trade receivables were included in “other operating expenses”.
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