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HG METAL MANUFACTURING LIMITED
ANNUAL REPORT 2014
CORPORATE
GOVERNANCE
The Group performs credit check and approval before granting credit to customers and imposes
a credit limit and credit term on each customer. All credit accounts are subject to monthly review.
In addition, the Group is not dependant on any single customer or any single country. The Group
has more than 1500 customers. Hence, the Group is not exposed to significant credit risk posed
by any single customer.
Foreign exchange exposure
The purchases of the Group are mainly denominated in US$ and its sales are mainly denominated
in S$. As a result, the Group is exposed to fluctuations in foreign exchange rates. For FY2014,
approximately 88% of its total purchases were made in US$, whilst approximately 72% and 20% of
its total sales were denominated in S$ and US$ respectively. Hence, the Group may be exposed to
a significant fluctuation of the US$.
The Group monitors the US$ exchange rates closely and will enter into forward contracts on case
to case basis to reduce its exposure.
Expansion and investment risk
In view of the Group’s plan to expand beyond the Singapore market, the Group is constantly seeking
opportunities to diversify into new areas or expand to regional markets such as Malaysia, Indonesia
and other Southeast Asian countries to pursue sustainable growth. Hence, the Group is exposed
to expansion and investment risk from new investments such as joint ventures, acquisitions or new
businesses.
The Group is adopting the practice of conducting due diligence assessments and other business
analyses for any investment proposal in order to minimise any potential risk exposure. All investment
proposals are to subject to approval from the Board before implementation.
