SINGAPORE WINDSOR HOLDINGS LIMITED
| Annual Report 2015
77
Year ended 31 March 2015
NOTES TO THE
FINANCIAL STATEMENTS
27. Financial instruments: information on financial risks (cont’d)
27B. Financial risk management
The main market risks subject to exposure are interest rates and foreign exchange. There is also exposure to
credit risk and liquidity risk. Credit risk on cash balances and derivative financial instruments is limited because
the counter-parties are banks with high credit ratings. The Executive Director (Finance and Administrative) who
monitors the procedures reports to the board.
The management has certain strategies for the management of financial risks and action to be taken in order to
manage the financial risks. The following guidelines are followed:
1.
Minimise interest rate, currency, credit and market risks for all kinds of transactions.
2.
Maximise the use of “natural hedge”: favouring as much as possible the natural off-setting of sales and
costs and payables and receivables denominated in the same currency and therefore put in place hedging
strategies only for the excess balance. The same strategy is pursued with regard to interest rate risk.
3.
All financial risk management activities are carried out and monitored by senior management staff.
4.
All financial risk management activities are carried out following good market practices.
27C. Fair values of financial instruments
The analyses of financial instruments that are measured subsequent to initial recognition at fair value, grouped
into Levels 1 to 3. These include both the significant financial instruments stated at amortised cost and at fair value
in the statement of financial position. The carrying values of current financial instruments approximate their fair
values due to the short-term maturity of these instruments and the disclosures of fair value are not made when the
carrying amount of current financial instruments is a reasonable approximation of the fair value.
27D. Credit risk on financial assets
Financial assets that are potentially subject to concentrations of credit risk and failures by counter-parties
to discharge their obligations in full or in a timely manner consist principally of cash balances with banks, cash
equivalents and receivables, and certain other financial assets. The maximum exposure to credit risk is: the total
of the fair value of the financial assets; the maximum amount the entity could have to pay if the guarantee is
called on; and the full amount of any payable commitments at the end of the reporting year. Credit risk on cash
balances with banks and any other financial instruments is limited because the counter-parties are entities with
acceptable credit ratings. Credit risk on other financial assets is limited because the other parties are entities with
acceptable credit ratings. For credit risk on receivables an ongoing credit evaluation is performed on the financial
condition of the debtors and a loss from impairment is recognised in profit or loss. The exposure to credit risk with
customers is controlled by setting limits on the exposure to individual customers and these are disseminated to the
relevant persons concerned and compliance is monitored by management. There is no significant concentration of
credit risk on receivables, as the exposure is spread over a large number of counter-parties and customers unless
otherwise disclosed in the notes to the financial statements below.
Note 21 discloses the maturity of the cash and cash equivalents balances.
As part of the process of setting customer credit limits, different credit terms are used. The average credit period
generally granted to trade receivable customers is about 60 days (2014: 60 days). Certain customers may also be
given credit period of 5 to 24 months. But some customers may take a longer period to settle the amounts.
