98
TEHO INTERNATIONAL INC LTD.
Annual Report 2016
NOTES
TO THE FINANCIAL STATEMENTS
Year ended 30 June 2016
29 FINANCIAL INSTRUMENTS: INFORMATIONON FINANCIAL RISKS (CONT’D)
Foreign currency risk
Foreign currency risk refers to the risk that the fair value of future cash flows of
a financial instrument will fluctuate because of changes in foreign exchange rates.
The Group is exposed to foreign currency risk on sales, purchases and borrowings,
including inter-company sales, purchases and inter-company balances that are
denominated in a currency other than the respective functional currencies of Group
entities. The currencies in which these transactions primarily are denominated are the
Singapore dollar (SGD), US dollar (USD) and Euro (EUR).
Interest on borrowings is denominated in the currency of the borrowing. Generally,
borrowings are denominated in currencies that match the cash flows generated
by the underlying operations of the Group, primarily SGD, but also USD and EUR.
This provides an economic hedge without derivatives being entered into and therefore
hedge accounting is not applied in these circumstances.
In respect of other monetary assets and liabilities denominated in foreign currencies,
the Group’s policy is to ensure that its net exposure is kept to an acceptable level by
buying or selling foreign currencies at spot rates when necessary to address short-term
imbalances.
The Company has a number of investments in foreign subsidiaries whose net assets are
exposed to currency translation risk. The Group does not currently designate its foreign
currency denominated debt as a hedging instrument for the purpose of hedging the
translation of its foreign operations.
29 FINANCIAL INSTRUMENTS: INFORMATIONON FINANCIAL RISKS (CONT’D)
Foreign currency risk (cont’d)
Exposure to foreign currency risk
The summary of quantitative data about the Group’s exposure to foreign currency risk
is as follows:
USD
EUR
Others
Total
$
$
$
$
Group
At 30 June 2016
Financial assets
Cash and cash equivalents
2,732,620 909,939
80,193 3,722,752
Trade and other receivables
1,571,749 1,328,907 230,375 3,131,031
Total financial assets
4,304,369 2,238,846 310,568 6,853,783
Financial liabilities
Trade and other payables
(2,285,152)
(278,565)
(371,288) (2,935,005)
Total financial liabilities
(2,285,152)
(278,565)
(371,288) (2,935,005)
Net financial assets/
(liabilities) at end of the year 2,019,217 1,960,281
(60,720)
3,918,778
At 30 June 2015
Financial assets
Cash and cash equivalents
2,501,572 1,159,748
53,146 3,714,466
Trade and other receivables
2,094,327 905,538 87,300 3,087,165
Total financial assets
4,595,899 2,065,286 140,446 6,801,631
Financial liabilities
Trade and other payables
(2,362,806)
(236,191)
(89,453) (2,688,450)
Total financial liabilities
(2,362,806)
(236,191)
(89,453) (2,688,450)
Net financial assets
at end of the year
2,233,093 1,829,095
50,993 4,113,181
