Page 146 - China Mobile Limited - Annual Report 2012

China Mobile Limited
Annual Report 2012
140
Notes to the Financial Statements
(Expressed in Renminbi unless otherwise indicated)
38 Financial Risk Management and Fair Values
Exposure to credit, liquidity, interest rate and foreign currency risks arises in the normal course of the Group’s
business. The Group’s exposure to these risks and the financial risk management policies and practices used by the
Group to manage these risks are described below:
(a) Credit risk and concentration risk
The Group’s credit risk is primarily attributable to the financial assets in the balance sheet, which mainly include
deposits with banks, accounts receivable and other receivables. The maximum exposure to credit risk is
represented by the carrying amount of the financial assets.
Substantially all the Group’s cash and cash equivalents are deposited in financial institutions in Hong Kong and
Mainland China. The credit risk on liquid funds is limited as the majority of counterparties are financial institutions
with high credit ratings assigned by international credit-rating agencies and large state-controlled financial
institutions.
The accounts receivable of the Group are primarily comprised of receivables due from customers and
telecommunications operators. Accounts receivable from customers are spread among an extensive number of
customers and the majority of the receivables from customers are due for payment within one month from the
date of billing. Other receivables primarily comprise interest receivable from banks, utilities deposits and rental
deposits. Management has a credit policy in place and the exposures to these credit risks are monitored on an
ongoing basis, taking into account the counter parties’ financial position, the Group’s past experience and other
factors. As such, management considers the aggregate risks arising from the possibility of credit losses is limited
and to be acceptable.
Concentrations of credit risk with respect to accounts receivable are limited due to the Group’s customer base
being large and unrelated. As such, management does not expect any significant losses of accounts receivable
that have not been provided for by way of allowances as shown in note 25(c).
(b) Liquidity risk
Liquidity risk refers to that funds will not be available to meet liabilities as they fall due, and results from timing
and amount mismatches of cash inflow and outflow. The Group manages liquidity risk by maintaining sufficient
cash balances to meet its funding needs, including working capital, principal and interest payments on debts,
dividend payments and capital expenditures.