TAN CHONG MOTOR HOLDINGS BERHAD
Annual Report 2014
112
NOTES TO THE FINANCIAL STATEMENTS
33. Financial instruments (continued)
33.4 Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial instrument fails to
meet its contractual obligations. The Group’s exposure to credit risk arises principally from its receivables from
customers. The Company’s exposure to credit risk arises principally from loans and advances to subsidiaries.
Receivables
Risk management objectives, policies and processes for managing the risk
Credit risk in relation to the Group’s core business activities are managed by the respective operating units where
credit policies that are specific to their respective industries are in place.
New vehicles sales are mainly financed by finance companies, with the remainder financed by TC Capital Resources
Sdn. Bhd. (“TCCR”) and as such, the Group’s collection risk rests mainly with these finance companies. The Group
also extends credit to used car dealers, spare part dealers and selective corporate purchasers. Bank guarantees
are required on a selective basis to secure the line of credit from the Group. For used car dealers, spare part
dealers and selective corporate purchasers, the Group has an informal credit policy in place and the exposure is
monitored on an ongoing basis. In respect of hire purchase business financed via TCCR, credit evaluations are
performed on all customers requiring financing from the Group and the Group has ownership claims over the
vehicles under financing.
Exposure to credit risk, credit quality and collateral
As at the end of the reporting period, the maximum exposure to credit risk arising from receivables is represented
by the carrying amounts in the statement of financial position.
Management has taken reasonable steps to ensure that receivables that are neither past due nor impaired are
stated at their realisable values. A significant portion of these receivables are hire purchase receivables of the
Group. The Group uses ageing analysis to monitor the credit quality of the receivables. Any receivables having
significant balances past due more than 90 days, which are deemed to have higher credit risk, are monitored
individually.
Impairment losses
(a) Trade receivables
The ageing of trade receivables as at the end of the reporting period was:
Gross
Individual
impairment
Collective
impairment
Net
RM’000
RM’000
RM’000
RM’000
Group
2014
Not past due
278,922
-
(441)
278,481
Past due 1 - 30 days
52,594
(106)
(4)
52,484
Past due 31 - 90 days
44,369
(3,528)
-
40,841
Past due more than 90 days
69,091
(9,867)
(28)
59,196
444,976
(13,501)
(473)
431,002
