SCI Annual Report 2015

SCI ELECTRIC PUBLIC COMPANY LIMITED AND ITS SUBSIDIARIES
(FORMERLY KNOW AS “SCI ELECTRIC MANUFACTURER COMPANY LIMITED”)
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE TEAR ENDED 31 DECEMBER 2015
All assets and liabilities for which fair value is measured or disclosed in the financial statements are
categorised with in the fair value hierarchy into three levels based on categorise of input to be used in fair
value measurement as follows:
Level 1 - Use of quoted market prices in an observable active market for such assets or liabilities;
Level 2 - Use of other observable inputs for such assets or liabilities, whether directly or indirectly;
Level 3 - Use of unobservable inputs such as estimates of future cash flows.
Annual Report 2015
At the end of each reporting period, the Company and its subsidiaries determine whether transfers
have occurred between levels within the fair value hierarchy for assets and liabilities held at the end of the
reporting period that are measured at fair value on a recurring basis.
4 Financial Risk Management
4.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks: market risk, credit risk and liquidity risk. The Group’s
overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise
potential adverse effects on the Group’s financial performance.
Risk management is carried out by a central treasury department under policies approved by the Board
of Directors. The Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the
Group’s operating units. The Board provides written principles for overall risk management, as well as written
policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative
and non-derivative financial instruments, and investment excess liquidity.
Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to US Dollar. Foreign exchange risk arises from future commercial transactions,
recognised assets and liabilities and net investments in foreign operations.
Interest rate risk
The Group’s income and operating cash flows are substantially independent of changes in market interest rates.
The Group has no significant interest-bearing assets. The Group policy is to maintain approximately the rate of
MLR of its borrowings in fixed rate instruments.
Credit risk
The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of
products and services are made to customers with an appropriate credit history.
Liquidity risk
Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate
amount of committed credit facilities, and the ability to close out market positions. Due to the dynamic nature of
the underlying business, the Group Treasury aims at maintaining flexibility in funding by keeping committed credit
lines available.
4.2 Fair value estimation
The face values less any estimated credit adjustments for financial assets and liabilities with a maturity of less than
one year are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is
estimated by discounting the future contractual cash flows at the current market interest rate available to the Group/
Company for similar financial instruments.
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