70 The Group does not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group has no significant concentrations of credit risks. 80 percent of the trade receivables has the best credit scoring under the credit rating system used by the Group. Other monitoring procedures are also in place to ensure that follow-up action is taken to recover overdue debts. Furthermore, the calculation reflects the probability-weighted outcome, the time value of money and reasonable and supportable information that is available at the reporting date about past events, current conditions and forecasts of future economic conditions. Generally, trade receivables are written-off if past due for more than one year and not subject to enforcement activity. The Group reviews the recoverable amount of each trade receivable on an individual basis at the end of the reporting period to ensure that adequate loss allowance is made for irrecoverable amounts. Financial instruments and cash deposits The credit risk on cash at banks and derivatives is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies. Market risk There are 3 types of market risk comprising foreign currency risk, interest rate risk and commodity price risk. The Group enters into a variety of derivatives to manage its risk exposures, including: - Foreign exchange forward contracts to hedge the foreign currency risk arising on the export or import of goods and raw materials, including foreign currency loans - Interest rate swaps to mitigate the risk of interest rates fluctuation - Commodity derivative contracts to mitigate the price risk of purchased inventory Foreign currency risk The Group’s exposure to the foreign currency risk relates primarily to its trading transactions and loans that are denominated in foreign currencies. The Group seeks to reduce this risk by entering into foreign exchange forward contracts when it considers appropriate. Generally, the forward contracts mature within 5 years. As at 31 December 2023 and 2022, the material balances of financial assets and liabilities denominated in foreign currencies are summarised below. Foreign currency Financial assets Financial liabilities Average exchange rate 2023 2022 2023 2022 2023 2022 (Million) (Million) (Million) (Million) (Baht per 1 foreign currency unit) US dollar 214 162 70 122 34.22 34.56 Yen - - 23 - 0.24 0.26 Euro - - 1 - 38.03 36.83 363 56-1 ONE REPORT 2023 Notes to the Consolidate Financial Statements
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