Strength & Stability - ECS Holdings Limited

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29 Financial Risk Management (Cont’d) Credit Risk (Group) The Group has a credit policy in place which establishes credit limits for customers and monitors their balances on an ongoing basis. Credit evaluations are performed on all customers requiring credit over a certain amount. If the customers are independently rated, these ratings are used. Otherwise, the credit quality of customers is assessed after taking into account its financial position and past experience with the customers. The Group establishes an allowance for impairment that represents its estimate of incurred losses in respect of trade and other receivables. The main components of this allowance are a specific loss component that relates to individually significant exposures. The allowance account in respect of trade and other receivables is used to record impairment losses unless the Group is satisfied that no recovery of the amount owing is possible. At that point, the financial asset is considered irrecoverable and the amount charged to the allowance account is written off against the carrying amount of the impaired financial asset. Cash and fixed deposits are placed with banks and financial institutions which are regulated. Liquidity Risk The Group monitors its liquidity risk and maintains a level of cash and cash equivalents deemed adequate by management to finance the Group’s operations and to mitigate the effects of fluctuations in cash flows. Typically the Group ensures that it has sufficient cash on demand to meet expected operational expenses for a period of 60 days, including the servicing of financial obligations; this excludes the potential impact of extreme circumstances that cannot reasonably be predicted, such as natural disasters. In addition, as at 31 December 2008, the Group maintains various lines of credit amounting to $434 million, of these, $353 million of the credit facilities are unsecured. Market Risk Market risk is the risk that changes in market prices, such as interest rates, foreign exchange rates and equity prices will affect the Group’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Foreign Currency Risk The Group incurs foreign currency risk mainly from foreign currency denominated sales, purchases and borrowings that are denominated in currencies other than the various functional currencies of Group entities. The currencies giving rise to this risk are primarily the United States dollar (“USD”), Thai Baht (“THB”), Chinese Renminbi (“RMB”) and Ringgit Malaysia (“RM”). Movements in their exchange rates against the Singapore dollar could result in the Group incurring foreign exchange losses/gains. The Group recognises that any significant fluctuations in the USD dollar may affect the Group’s foreign currency risk. As a result, the Group actively monitors its exposure and uses forward foreign exchange contracts and currency swaps to hedge against USD dollar exposures, as and when necessary and where possible. In view of the nature of the Group’s business which spans several countries, foreign exchange risks will continue to be an integral aspect of the Group’s risk profile in the future. p. 90 Notes to the Financial Statements These notes form an integral part of the financial statements. ECS Holdings Limited
29 Financial Risk Management (Cont’d) Foreign Currency Risk (Cont’d) At 31 December, the Group has outstanding forward exchange contracts with a total notional amount of approximately $15,369,000 (2007: $12,158,000). In 2007, the Group also entered into a hybrid swap contract to hedge against US dollar exposure and floating rate interest risks, with notional principal value of US$40,000,000 which commenced in 2005 and has expired in 28 January 2008. Exposure to currency risk The Group’s financial assets and liabilities are denominated in the following currencies: SGD USD RMB THB RM Others $’000 $’000 $’000 $’000 $’000 $’000 2008 Trade receivables 31,268 36,248 200,439 65,628 50,890 199 Loan receivable from associate 323 666 - - - - Unsecured bank loans/trade financing (14,500) (99,938) (28,604) (23,800) (26,350) - Trade payables (15,129) (31,384) (141,901) (21,434) (20,773) (17) Forward exchange contracts and hybrid swap - - - (7,450) (7,919) - 1,962 (94,408) 29,934 12,944 (4,152) 182 2007 Trade receivables 44,252 40,576 200,113 68,026 50,274 216 Loan receivable from associate 1,576 748 - - - - Unsecured bank loans/trade financing (7,000) (82,042) (26,358) (37,872) (30,910) - Trade payables (30,577) (34,290) (111,645) (15,902) (25,217) - Forward exchange contracts and hybrid swap - 58,000 - (4,574) (7,584) - 8,251 (17,008) 62,110 9,678 (13,437) 216 Notes to the Financial Statements These notes form an integral part of the financial statements. Annual Report 2008 p. 91
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ECS HOLDINGS LIMITED Annual Report
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ECS Holdings Limited (“ECS” or
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Annual Report 2008 p. 03
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Dear Stakeholders I am pleased to p
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AN OVERVIEW FY2008 distinguishes it
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We believe that by honing these ope
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Stroll down memory lane and re-live
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SHAREHOLDERS’ EQUITY ($ million)
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1. CHAIRMAN Mr Li Jia Lin was appoi
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1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.
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7. President (The Value Systems Co.
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2008 AWARDS Group • ECS Holdings
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Financial Contents Corporate Govern
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The Board intends to hold about fou
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Level and Mix of Remuneration; Disc
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Audit Committee Principle 11 : The
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D) COMMUNICATION WITH SHAREHOLDERS
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