120
NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 March 2015
(In Singapore dollars)
32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)
(a)
Credit risk (cont’d)
Financial assets that are neither past due or impaired
Trade and other receivables that are neither past due nor impaired are with creditworthy debtors with
good payment record with the Group. Cash and cash equivalents and quoted investment securities that
are neither past due nor impaired are placed with or entered into with reputable financial institutions or
companies with high credit ratings and no history of default.
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed in Note 17 (Trade
and other receivables).
(b)
Foreign currency risk
The Group has transactional currency exposures arising from sales or purchases that are denominated in
a currency other than the respective functional currencies of Group entities, primarily SGD and Australian
dollar (AUD). The foreign currencies in which these transactions are denominated are mainly United States
dollars (USD), British Pounds (GBP), AUD and SGD. The Group's trade receivable and trade payable
balances at the end of the reporting period have similar exposures. As at 31 March 2015, approximately
21% (2014: 38%) of the Group’s trade and other receivables and 42% (2014: 31%) of the Group’s trade and
other payables are denominated in foreign currencies.
The Group and the Company also hold cash and cash equivalents denominated in foreign currencies for
working capital purposes. The currency mix of the cash and cash equivalents of the Group and Company
as at the end of the reporting period are set out in Note 18.
The Group enters into foreign exchange forward contracts and holds foreign currencies where appropriate, to
hedge against its foreign exchange risk in anticipated purchase or sale transactions denominated in foreign
currencies. The Group’s treasury policy prescribes only “plain vanilla” or treasury hedging instruments
with limited downside risk, namely foreign exchange spot and forward contracts, or holder of options (“the
Permitted Transactions”). These instruments are generic in nature with no embedded or leverage features
and any deviation from these instruments would require specific approval from the Board. Any complex
foreign exchange or derivatives transactions involving any combination of the Permitted Transactions or
any combination of the Permitted Transactions and other derivatives transactions are prohibited.
It is the Group's policy not to engage in foreign exchange and/or derivatives speculation or trading nor any
of the treasury transactions for profit purpose. It is not in the interest of the Group to engage in trading for
profit or to speculate or trade in treasury instruments. The purpose of engaging in treasury transactions is
solely for hedging.
In addition to transactional exposure, the Group is also exposed to foreign currency exchange movements
arising from its net investment in foreign operations. The Group does not have any formal policy with
respect to such foreign currency exposure as its investments are long term in nature, and management of
such foreign currency exposure is considered on a case-by-case basis.
