ST Engineering Annual Report 2020

NOTES TO THE FINANCIAL STATEMENTS 31 DECEMBER 2020 (CURRENCY – SINGAPORE DOLLARS UNLESS OTHERWISE STATED) C14 Financial risk management objectives and policies (continued) Foreign exchange risk The Group is exposed to foreign exchange risk from its global operations and revenues, costs and borrowings denominated in a currency other than the respective entities’ functional currencies. The Group’s foreign exchange exposures are primarily from USD and Euro, and manages its exposure through forward currency contracts and embedded derivatives. The Group’s centralised Treasury Unit monitors the current and projected foreign currency cash flows within the Group and aims to reduce the exposure of the net position by transacting with the banks where appropriate. No foreign exchange sensitivity analysis was disclosed as a reasonable change in the exchange rates would not result in any significant impact on the Group’s results. Market risk The Group has strategic investments in unquoted equity shares. The market value of these investments will fluctuate with market conditions. No sensitivity analysis was disclosed as a reasonable change in the market value of these investments would not result in any significant impact on the Group’s results. Liquidity risk To manage liquidity risk, the Group monitors its net operating cash flows and maintains an adequate level of cash and cash equivalents and secured committed funding facilities from financial institutions. In assessing the adequacy of these funding facilities, management reviews its working capital requirements regularly. The table below analyses the maturity profile of the Group’s financial liabilities based on the contractual undiscountedcash flows includingestimated interest payments andexcluding impact of nettingarrangements. 20 5 ANNUAL REPORT 2 0 2 0 / CORPORATE OVERVI EW PERFORMANCE REVI EW SUSTAINABI L ITY CORPORATE GOVERNANCE F INANCIAL REPORT