183 Annual Report 2024 31. Financial risk management objectives and policies The Group’s principal financial instruments comprise bank loans, cash and bank balances. The main purpose of these financial instruments is to finance the Group’s operations. All financial transactions with the banks are governed by banking facilities duly accepted with Board of Directors resolutions and banking mandates which define the permitted financial instruments and facilities limits, approved by the Board of Directors. All financial transactions require dual signatories. The Group has various other financial assets and liabilities such as trade receivables, trade payables, and lease liabilities which arise directly from its operations. The Group is exposed to changes in market interest rate as the Group has floating interest rate borrowings. In order to minimise the adverse effects on the financial performance of the Group, derivative financial instruments, such as interest rate swap are used to hedge the interest rate risk. The following sections provide details regarding the Group’s and Company’s exposure to the above-mentioned financial risks and the objectives, policies and processes for the management of these risks. Foreign currency risk The Group has transactional currency exposures arising from sales or purchases that are denominated in a currency other than the respective functional currencies of Group entities, primarily Singapore Dollar (SGD), United States Dollar (USD), British Pound (GBP), Euro (EUR), New Zealand Dollar (NZD) and Australia Dollar (AUD). Approximately 99% (2023: 99%) of the Group’s sales and approximately 86% (2023: 86%) of costs including taxes are denominated in the respective functional currencies of the Group entities. The Group’s trade receivables and trade payables balances at the end of the reporting period have similar exposures with 99% (2023: 95%) and 93% (2023: 89%) denominated in their respective functional currencies. The Group and the Company also hold cash and bank balances and loans and borrowings denominated in foreign currencies of respective entities for working capital purposes. At the end of the reporting period, such foreign currency balances are mainly in USD, GBP, EUR, AUD, NZD and SGD. The Group is also exposed to currency translation risk arising from its net investments in foreign operations. The Group’s net investments in foreign subsidiaries are not hedged as the currency positions in the respective countries are considered to be long-term in nature. NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2024
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