ST Engineering Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CURRENCY – SINGAPORE DOLLARS UNLESS OTHERWISE STATED) C14 Financial risk management objectives and policies (continued) Exposure to credit risk As at 31 December 2020, 25% (2019: 31%) of trade receivables and contract assets relate to three major customers of the Group. The table below analyses the trade receivables and contract assets by the Group’s main reportable segments: Carrying amount Group 2020 2019 $’000 $’000 Aerospace 656,342 956,963 Electronics 1,074,597 1,186,326 Land Systems 293,452 231,774 Marine 165,531 118,246 Others 12,638 447 2,202,560 2,493,756 A summary of the Group’s exposures to credit risk for trade receivables and contract assets is as follows: 2020 2019 Group Not credit impaired Credit impaired Not credit impaired Credit impaired $’000 $’000 $’000 $’000 Receivables measured at lifetime ECL: Trade receivables and contract assets 2,202,560 104,648 2,493,756 97,749 Loss allowance – (104,648) – (97,749) Total 2,202,560 – 2,493,756 – Expected credit loss assessment Trade receivables and contract assets For specific trade receivables and contract assets identified by the Group to be credit impaired, the Group recognised a loss allowance equal to lifetime expected credit loss. Hence, the recoverability of these balances are assessed separately from the allowance matrix. For the remaining trade receivables and contract assets, the Group uses an allowance matrix to measure the expected credit loss (ECL) of trade receivables and contract assets from its customers. Loss rates are calculated using a ‘roll rate’ method based on the probability of a receivable progressing through successive stages of delinquency to write-off. Roll rates are calculated separately for exposures in different segments based on the common credit risk characteristics. / ST ENG I NEER I NG 208