BAKERTECHNOLOGYLIMITED
ANNUALREPORT2013
129
Notes to the
Financial Statements
for the financial year ended 31December 2013
30. Financial riskmanagementobjectivesandpolicies (cont’d)
Foreign currency risk
TheGrouphas transactional currency exposures arising from sales or purchases that aredenominated in a currency other than SGD.
The foreign currencies in which these transactions are denominated are mainly US Dollars (USD) and Euro. Approximately 99%
(2012: 99%) of theGroup’s sales are denominated in foreign currencies whilst about 65% (2012: 61%) of costs are denominated
in foreign currencies. The Group’s trade receivable and trade payable balances at the end of the reporting period have similar
exposures.
The Group also holds cash and short-term deposits denominated in foreign currencies for working capital purposes. At the end
of the reporting period, such foreign currency balances (mainly in USD and Euro) amount to approximately $67,496,000 (2012:
$4,247,000) for theGroup.
Tominimise foreign exchange risks, theGroup practises natural hedging asmuch as possible. TheGroup alsomonitorsmovement
in foreign exchange closely so as to capitalise on favourable exchange rates to convert excess foreign currencies back to SGDwhere
possible.
Sensitivity analysis for foreign currency risk
The following tabledemonstrates the sensitivityof theGroup’s profit net of tax toa reasonablypossible change in theUSDandEuro
exchange rates against SGD, with all other variables held constant.
Group
2013
2012
$’000
$’000
Net profit
Net profit
USD/SGD
– strengthened 3% (2012: 3%)
+1,676
+457
–weakened 3% (2012: 3%)
–1,676
–457
Euro/SGD
– strengthened 3% (2012: 3%)
+289
+333
–weakened 3% (2012: 3%)
–289
–333
