Annual Report 2019

FAR EAST CONSORTIUM INTERNATIONAL LIMITED 252 For the year ended 31 March 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 47. FINANCIAL INSTRUMENTS (continued) b. Financial risk management objectives and policies (continued) Credit risk and impairment assessment (continued) Notes: (continued) 1. Trade debtors and contract assets (continued) During the year ended 31 March 2019, the Group provided HK$5,763,000 impairment allowance for trade debtors, based on the provision matrix. Impairment allowance of HK$2,278,000 were made on credit impaired debtors. Contract assets are the unbilled amount resulting from sales of properties when revenue exceeds the amount billed to the buyers. The directors of the Company consider the exposure of credit risk of contract assets is low after taking into account the value of the underlying properties, historical settlement of the counterparties and other forward-looking information. The fair value for the underlying properties is higher than the outstanding amount of the contract assets at the end of the reporting period. The loss given default of the contract assets is considered as insignificant to the Group, and no allowance of credit loss is provided for the contract assets. 2. Loan receivables/amounts due from related parties/customers’ deposits under escrow/other receivables For the purposes of internal credit risk management, the Group uses internal credit rating to assess whether credit risk has increased significantly since initial recognition. Loan receivables are secured by property interests. The directors of the Company consider the exposure to credit risk of these loan receivables is low after taking into account the value of the collateral, historical settlements of loan interests and other forward-looking information. The fair value of the collateral is higher than the outstanding amount of these receivables at the end of the reporting period. The loss given default and 12-month ECL of these loan receivables is considered as insignificant to the Group, and no allowance of credit loss is provided for these loan receivables. For amounts due from related parties, the directors of the Company consider the exposure to credit risk of these amounts is low after taking into consideration of the fair values of the underlying assets held by the related parties, the outlook of their future operations and the expected operating cash flows of the related parties.