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## NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (RMB AND US$ AMOUNTS EXPRESSED IN THOUSANDS, EXCEPT PER SHARE DATA) 

## 31. Financial risk management objectives and policies (cont’d) 

## Credit risk (cont’d) 

The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures, and a collective loss component established for groups of similar assets in respect of losses that have been incurred but not yet identified. The collective loss allowance is determined based on historical data of payment statistic for similar financial assets. 

The allowance account in respect of trade and other receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired financial asset. 

At December 31, 2013, the Group had approximately top 20 customers (2012: top 20 customers) that owed the Group more than Rmb 292.0 million (US$47.7 million) (2012: Rmb 246.4 million) and accounted for approximately 71% (2012: 56%) of accounts receivables (excluding bills receivables) owing respectively. These customers are located in the PRC. 

There were 26 customers (2012: 35 customers) with balances greater than Rmb 1.0 million (US$0.2 million) accounting for just over 95.4% (2012: 81.3%) of total accounts receivable (excluding bills receivables). The maximum exposure to credit risk at the reporting date is the carrying value of each class of financial assets mentioned in Note 19. The Group does not hold collateral as security. 

Cash and fixed deposits are placed with banks and financial institutions which are regulated. 

## Liquidity risk 

The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows, and having adequate amounts of committed credit facilities. 

The table below summarizes the maturity profile of the Group’s financial assets and liabilities based on contractual undiscounted payments. 

<img src='content_image/279419.jpg'>

