HAW PAR CORPORATION LIMITED
96
NOTES TO THE FINANCIAL STATEMENTS
(CONTINUED)
For the financial year ended 31 December 2014
26. FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group’s activities expose it to market risk (including currency risk, price risk and interest rate risk), liquidity
risk and credit risk. The Group’s overall risk management strategy seeks to minimise adverse effects from the
unpredictability of financial markets on the Group’s financial performance.
The Board of Directors is responsible for setting the objectives and underlying principles of financial risk management
for the Group. The Investment Committee then establishes the detailed policies, such as authority levels, oversight
responsibilities, risk identification and measurement, exposure limits and hedging strategies, in accordance with
the objectives and underlying principles approved by the Board of Directors.
Regular reports that contain the Group’s exposure to each type of financial risks are submitted to Investment Committee.
(a)
Market risk
The Group is exposed to market risk, including primarily changes in currency exchange rates and market
prices of securities.
(1) Foreign currency risk
The Group operates in Asia and through distributors in other parts of the world, with its principal
operations in Singapore. Entities in the Group regularly transact in currencies other than their respective
functional currencies (“foreign currencies”). Currency risk arises when transactions are denominated
in foreign currencies such as United States Dollar (“USD”), Hong Kong Dollar (“HKD”), Euro and
Japanese Yen (“JPY”) (2013: USD, HKD and Euro).
In addition, the Group is also exposed to currency translation risks arising from its foreign currency
denominated net financial assets, which are not significant.
The Group manages its foreign currency exposures by a policy of matching, as far as possible, receipts
and payments in each individual currency. The surplus of convertible currencies are either further
matched with future foreign currency requirements or exchanged for Singapore Dollar.
The Group also has available forward contract facilities to hedge future foreign exchange exposure.
The foreign currency exposure of the Group’s net investment in overseas subsidiaries is managed under
the guidance of the Investment Committee.
