Annual Report 2020

China Merchants China Direct Investments Limited Annual Report 2020 109 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the year ended 31 December 2020 5. FINANCIAL INSTRUMENTS (CONTINUED) Credit risk and impairment assessment (continued) 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$1,983,595 (2019: US$988,993). As such balance is not past due, the Group considers there is no significant change in credit risks of these balances since initial recognition. Accordingly, they are subject to 12m ECL assessment. In the opinion of the management, the 12m ECL balance is not significant. The table below details the credit risk exposures of the Group’s financial assets, which are subject to ECL assessment: Notes External credit rating 12m or lifetime ECL 2020 Gross carrying amount 2019 Gross carrying amount US$ US$ Cash and cash equivalents 17 A 12m ECL 60,363,011 64,143,034 Other receivables 16 N/A 12m ECL 1,983,595 988,993 The Group has concentration of credit risk in the PRC. Liquidity risk Liquidity risk is the risk that the Group is unable to meet their payment obligations associated with its financial liabilities when they fall due. The Group manages liquidity risk by maintaining adequate reserves, as well as continuously monitoring forecast and actual cash flows. Internally generated cash flow is the main source of funds to finance the operations of the Group. The Group regularly reviews the major funding positions to ensure adequate financial resources are available to meet its financial obligations. The Group’s financial liabilities represent other payables (management fee payable, performance fee payable, partial consideration received on disposal of investment and other payables) and financial liabilities designated at FVTPL related to sub-participation agreements. Apart from financial liabilities designated at FVTPL which is repayable upon realisation of the corresponding investments, the other financial liabilities are all interest free and repayable on demand. In the opinion of the management, the liquidity risk of the Group is not significant.