for the year ended 31 December 2016
NOTES TO THE
FINANCIAL STATEMENTS
Baker Technology Limited
-
129
-
25.
Financialriskmanagementobjectivesandpolicies (cont’d)
Credit risk (cont’d)
Financial assets that are either past due or impaired
Information regarding financial assets that are either past due or impaired is disclosed inNote 17 (Trade and
other receivables).
Foreign currency risk
The Group has transactional currency exposures arising from sales or purchases that are denominated in a
currency other than SGD. The foreign currency inwhich these transactions are denominated aremainlyUS
Dollars (USD).Approximately 96% (2015: 99%) of theGroup’s sales are denominated in foreign currencies
whilst about 51% (2015: 51%) of costs are denominated in foreign currency. The Group’s trade receivable
and trade payable balances that are denominated in foreign currencies at the end of the reporting period, as
disclosed inNotes 17 and 20 respectively, have similar exposures.
The Group also holds cash and short-term deposits denominated in foreign currencies for working capital
purposes. These balances at the end of the reporting period are disclosed inNote 19.
TheGroup and theCompany’s investment inquoted corporatebonds that aredenominated inUSD amount to
approximately $5,260,000 (2015: $5,454,000).
Tominimise foreignexchange risks, theGrouppractisesnatural hedgingasmuchaspossible. TheGroupalso
monitors movement in foreign exchange closely so as to capitalise on favourable exchange rates to convert
excess foreign currencies back toSGDwhere possible.
TheGroup does not apply hedge accounting for such foreign currency denominated sales and purchases.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible
change in theUSD exchange rate against SGD, with all other variables held constant.
Group
2016
2015
$’000
$’000
Net profit
Net profit
USD / SGD – strengthened 3% (2015: 3%)
+1,461
+1,296
– weakened 3% (2015: 3%)
–1,461
–1,296
