For the financial year ended 31 December 2015
101
ANNUAL REPORT 2015
27. FINANCIAL RISK MANAGEMENT
(CONTINUED)
(a)
Market risk
(continued)
(2) Foreign currency risk (continued)
A 10% (2014: 10%) strengthening of Singapore Dollar against the above currencies would have had the
equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other
variables remain constant.
(3) Interest rate risk
The Group does not have financial assets and financial liabilities that are exposed to significant interest rate
risks. The Company periodically reviews its liabilities and monitors interest rate fluctuations to ensure that
the exposure to interest rate risk is within acceptable levels.
The Group does not expect to incur material losses due to changes in interest rate of the bank borrowings.
(b) Liquidity risk
As at 31 December 2015, the Group has available cash and short term bank deposits totalling $314.2 million
(2014: $223.1 million). The cash and deposits, together with the available unutilised credit facilities are expected
to be sufficient to meet the funding requirements of the Group’s operations.
The Group does not have any material financial liabilities maturing more than 12 months from 31 December 2015.
(c) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss
to the Group.
The maximum exposure of the Group and the Company to credit risk in the event that the counterparties fail to
perform their obligations as of 31 December 2015 and 2014 in relation to each class of recognised financial assets
is the carrying amount of those assets as indicated in the statements of financial position with the exception that
the Company has the following additional exposure to credit risk:
The Company
2015
2014
$’000
$’000
Corporate guarantees provided to banks on subsidiaries’ obligations
–
68
The Group’s and Company’s major classes of financial assets that are subject to credit risk are short-term bank
deposits and trade receivables.
It is the Group’s policy to transact with creditworthy counterparties. In addition, the granting of material credit
limits to counterparties is reviewed and approved by senior management. The Group does not expect to incur
material credit losses on its financial assets or other financial instruments.
NOT E S TO T H E F I NAN C I A L S TAT EME N T S
(CONTINUED)
