. 12 5
ANNUAL
REPORT
20 1 7
THE BE ST
I N US
NOTESTOTHE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2017
25.
FINANCIALRISKMANAGEMENTOBJECTIVESANDPOLICIES (CONT’D)
Credit risk (cont’d)
Financial assets that areeither past dueor impaired
Information regarding financial assets that areeither past dueor impaired isdisclosed inNote17 (Tradeand
other receivables).
Foreigncurrency risk
TheGrouphas transactional currency exposures arising from sales or purchases that are denominated in a
currencyother than SGD. The foreigncurrency inwhich these transactions aredenominated aremainlyUS
Dollars (USD). Approximately 99% (2016: 96%) of the Group’s sales are denominated in foreign currencies
whilst about 16% (2016: 51%) of costs are denominated in foreign currency. The Group’s trade receivable
and tradepayablebalances that aredenominated in foreigncurrencies at theendof the reportingperiod, as
disclosed inNotes 17 and20 respectively, have similar exposures.
TheGroup also holds cash and short-term deposits denominated in foreign currencies for working capital
purposes. Thesebalances at theendof the reportingperiod aredisclosed inNote19.
TheGroupand theCompany’s investment inquotedcorporatebonds that aredenominated inUSDamount
to approximately $1,877,000 (2016: $5,260,000).
Tominimise foreign exchange risks, the Group practises natural hedging as much as possible. The Group
alsomonitors movement in foreign exchange closely so as to capitalise on favourable exchange rates to
convert excess foreigncurrencies back to SGDwherepossible.
TheGroupdoes not applyhedge accounting for such foreigncurrencydenominated sales andpurchases.
Sensitivity analysis for foreigncurrency risk
The following table demonstrates the sensitivity of the Group’s loss net of tax to a reasonably possible
change in theUSDexchange rate against SGD, with all other variables heldconstant.
Group
2017
2016
$’000
$’000
Net loss
Net loss
USD / SGD – strengthened3% (2016: 3%)
-1,412
-1,461
–weakened3% (2016: 3%)
+1,412
+1,461
