Sustainability and Governance Report
Notes to the FINANCIAL STATEMENTS
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27. Related party transactions (cont'd)
(d) Advances to a related party
During the financial year ended 31 March 2020, a subsidiary of the Group advanced $736,000 to a director-related company, out of which $638,000 remained
outstanding as at 31 March 2020. The outstanding amount as at 31 March 2020 has been repaid as at the date of these financial statements.
28. Financial risk management objectives and policies
The Group and the Company are exposed to financial risks arising from its operations and financial instruments. The key financial risks include foreign currency risk, interest
rate risk, credit risk and liquidity risk. The Group's risk management approach seeks to minimise the potential material adverse effects from these risk exposures. The
management manages and monitors these exposures and ensures appropriate measures are implemented on a timely and effective manner. The Audit Committee provides
independent oversight to the effectiveness of the risk management process. It is and has been throughout the current and previous financial years, the Group's policy that
no trading in derivatives for speculated purposes shall be undertaken.
The Group's principal financial instruments comprise bank borrowings, bills payable and cash and deposits. The main purpose of these financial instruments is to finance
the Company's operations. The Group has various other financial assets and liabilities such as trade and other receivables, trade and other payables, lease liabilities and
related party balances which arise directly from its operations.
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.
(a) Foreign currency risk
The Group has transactional currency exposures arising from sales or purchases that are denominated in currencies other than the respective functional currencies of
the Group entities, primarily SGD, Malaysian Ringgit (RM) and New Taiwan Dollars (NTD). The foreign currencies in which these transactions are denominated are mainly
United States Dollars (USD), Euro (EUR), Chinese Renminbi (RMB) and Japanese Yen (JPY). However, this type of exposure is minimal since substantially all of the
Group's sales are denominated in the functional currency of the operating unit making the sale and operating costs substantially denominated in the unit's functional
currency. The Group's trade receivable and trade payable balances at the end of the reporting period have similar exposures.
The Group and the Company also hold cash and cash equivalents denominated in foreign currencies for working capital purposes. At the end of the reporting period,
such foreign currency balances at the end of the reporting period are disclosed in Note 14.
The Group is also exposed to currency translation risk arising from its net investments in foreign operations, including Malaysia and Taiwan, which are not hedged.
No sensitivity analysis on the foreign currency risk has been presented as its impact is not significant to the profit or loss and equity of the Group.
The management considers the Group's exposure to foreign currency risks to be minimal.
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