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Notes to the
financial statements
For the financial year ended 31 December 2018
132
B A K E R T E C H N O L O G Y
L I M I T E D
27.
Financial risk management objectives and policies (cont’d)
(c)
Credit risk (cont’d)
Financial assets that are neither past due nor impaired
Trade and other receivables that are neither past due nor impaired are creditworthy debtors
with good payment record with the Group. Cash and short-term deposits that are neither
past due nor impaired are placed with or entered into with reputable financial institutions
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 18.
(d)
Foreign currency risk
The Group has transactional currency exposures arising from sales or purchases that are
denominated in a currencies other than Singapore Dollars (SGD). The foreign currency in
which these transactions are denominated are mainly US Dollars (USD). Approximately 99%
(2017: 99%) of the Group’s sales are denominated in foreign currencies whilst about 47%
(2017: 16%) of costs are denominated in foreign currencies. The Group’s trade receivable
and trade payable balances that are denominated in foreign currencies at the end of the
reporting period, as disclosed in Notes 18 and 21 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
in Note 20.
The Group and the Company’s investment in quoted corporate bonds that are denominated
in USD amount to approximately $817,000 (2017: $1,877,000).
To minimise foreign exchange risks, the Group practices natural hedging as much as possible.
The Group also monitors movement in foreign exchange closely so as to capitalise on
favourable exchange rates to convert excess foreign currencies back to SGD where possible.
The Group does not apply hedge accounting for such foreign currency denominated sales
and purchases.