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17. Financial risk management
objectives and policies
The Company’s activities expose it to market risk
(including foreign currency risk, price risk and interest
rate risk), credit risk, liquidity risk and capital risk. The
Company’s overall risk management strategy seeks
to minimise adverse effects from the unpredictability
of fnancial markets on the Company’s fnancial
performance. The Company sets policies, strategies and
mechanism, which aim at effective management of these
risks within its operating environment.
Risk management is carried out in accordance with
established policies and guidelines approved by the board
of directors. Management continually monitors the
Company’s risk management process to ensure that an
appropriate balance between risk and control is achieved.
Risk management objectives and policies are reviewed
regularly to refect changes in market conditions and the
Company’s activities.
a) Market risk
i) Foreign currency risk
The Company’s exposure to currency risk is
minimal as its revenue, expenses, assets and
liabilities are substantially denominated in SGD.
ii) Price risk
As at 31 March 2014, the Company has available-
for-sale investment in equity securities listed in
Singapore and is exposed to price risk.
Sensitivity analysis for price risk
If prices for the equity securities listed in
Singapore change by the percentages indicated
below with all other variables including tax rates
being held constant, the effects on proft after
tax and equity will be as follows:
iii) Interest rate risk
The Company is not exposed to any interest rate
risk as its fnancial assets and liabilities are not
interest-bearing.
b) Credit risk
Credit risk is the potential fnancial loss resulting from
the failure of a customer or a counterparty to settle its
fnancial and contractual obligations to the Company,
as and when they fall due. In managing credit risk
exposure, credit review and approval processes as
well as monitoring mechanism are applied.
For trade receivables, the Company adopts the
policy of dealing only with customers of appropriate
credit history, and obtaining suffcient security
where appropriate to mitigate credit risk. For other
receivables, the Company deals only with high credit
quality counterparties.
The maximum exposure to credit risk is represented
by the carrying amount of that class of fnancial
instruments presented on the balance sheet.
i) Financial assets that are neither past due
nor impaired
Trade receivables that are neither past due nor
impaired are receivables from a-iTrust which
represent the Company’s maximum exposure to
credit risk. a-iTrust has a relatively healthy fnancial
position and management does not expect
a-iTrust to fail to meet its obligations.
ii) Financial assets that are past due and/or impaired
There are no fnancial assets that are either past
due and/or impaired.
c) Liquidity risk
Excess cash in the Company will be transferred to
the intermediate holding company for effcient cash
management. To meet payment obligations in a timely
manner, the intermediate holding company makes
fund transfers back to the Company as and when the
need arises.
The Company’s fnancial assets and liabilities based on
contractual undiscounted cash fows, are due within 1
year from the balance sheet date.
Proft Proft
AfterTax Equity AfterTax Equity
$’000 $’000 $’000 $’000
Equity securities
Listed in Singapore
Increased by 22%
(2013: 17%) - 4,629 - 3,203
Decreased by 22%
(2013: 17%) - (4,629) - (3,203)
2014 2013
œÌià ̜ Ì i w˜>˜Vˆ> ÃÌ>Ìi“i˜ÌÃ
For the fnancial year ended 31 March 2014