NOTES TO THE FINANCIAL STATEMENTS For the financial year ended 31 December 2025 31. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D) 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 100% (2024: 99%) of the Group’s sales and approximately 87% (2024: 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% (2024: 99%) and 96% (2024: 93%) 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. Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Group’s profit before tax to a 1% (2024: 1%) change in the USD, GBP, AUD, EUR, NZD and SGD remain exchange rates against the respective functional currencies of the Group entities, with all other variables held constant. Group Profit before tax 2025 2024 $’000 $’000 USD/SGD Strengthened (749) (220) Weakened 749 220 GBP/SGD Strengthened (40) (55) Weakened 40 55 AUD/SGD Strengthened (260) (115) Weakened 260 115 EUR/SGD Strengthened 3 1 Weakened (3) (1) NZD/SGD Strengthened (21) (22) Weakened 21 22 Credit risk Credit risk is the risk of loss that may arise on outstanding financial instruments should a counterparty default on its obligations. The Group’s and the Company’s exposure to credit risk arises primarily from trade and other receivables and contract assets. For other financial assets (including other investment and cash and bank balances), the Group minimises credit risk by dealing exclusively with high credit rating counterparties. In respect of credit risk arising from the inability of customers of the Group to make payments when their receivables fall due, it is the Group’s policy to provide credit terms to creditworthy and reputable customers. These receivables are monitored on an ongoing basis to ensure that issues arising from non-collectability are minimised. ANNUAL REPORT 2025 177
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