(a)

Categories of financial instruments

The following table sets out the financial instruments as at the end of the reporting period:


	December 31, 2021		December 31, 2020
	S$’000		S$’000
Financial assets
Financial assets at amortized cost		426,620		119,739
Financial assets measured at fair value through profit or loss		23,983		—
		450,603		119,739

Financial liabilities
Financial liabilities at amortized cost		53,447		76,345
Lease liabilities		35,911		32,487

(b)

Financial risk management policies and objectives

The Group’s overall risk management policy seeks to minimize potential adverse effects on financial performance of the Group. There has been no change to the Group’s exposure to these financial risks or the manner in which it manages and measures the risk. The risks associated with these financial instruments and the policies to mitigate these risks are set out below.

(i)

Credit risk management

Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group’s credit risk is primarily attributable to its cash and cash equivalents and trade receivables, contract assets and other receivables.

As at December 31, 2021, approximately 80% of the Group’s trade receivable arose from 3 customers (2020: approximately 65% of the Group’s trade receivable arose from 4 customers). Apart from this, the Group does not have significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The Group defines counterparties as having similar characteristics if they are related entities.

Cash

and cash equivalents are placed with credit-worthy financial institutions with high credit ratings assigned by international credit-rating agencies and therefore credit risk is limited. The Group has adopted procedures in extending credit terms to customers and monitoring its credit risk. Credit evaluations are performed on customers requiring credit over a certain amount. Before accepting any new customer, the Group carries out research on the credit risk of the new customer and assesses the potential customer’s credit quality and defines credit limits by customer. Limits attributed to customers are reviewed when necessary.

The Group’s current credit risk grading framework comprises the following categories:


Category	Description	Basis for recognising ECL
Performing	The counterparty has a low risk of default and does not have any past-due amounts.	12-month ECL

Doubtful	Amount is more than 90 days past due or there has been a significant increase in credit risk since initial recognition.	Lifetime ECL— not credit-impaired

In default	Amount is more than 120 days past due or there is evidence indicating the asset is credit-impaired.	Lifetime ECL— credit-impaired

Write-off	There is evidence indicating that the debtor is in severe financial difficulty and the Group has no realistic prospect of recovery.	Amount is written off

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The table below details the credit quality of the Group’s financial assets (excluding cash and cash equivalents) and contract assets, as well as maximum exposure to credit risk by credit risk rating grades:


	Note		Internal credit rating	12-month or lifetime ECL	Gross carrying amount		Loss allowance		Net carrying amount
					S$’000		S$’000		S$’000
2021
Trade receivables		9	(a)	Lifetime ECL (Simplified approach)		92,561		—		92,561
Contract assets		1 0	(a)	Lifetime ECL (Simplified approach)		49,365		—		49,365
Other receivables		1 1	Performing	12-month ECL		11,596		—		11,596

								—

2020
Trade receivables		9	(a)	Lifetime ECL (Simplified approach)		36,919		—		36,919
Contract assets		1 0	(a)	Lifetime ECL (Simplified approach)		46,842		—		46,842
Other receivables		1 1	Performing	12-month ECL		12,909		—		12,909

								—

(a)

The Group determines the expected credit losses on these items by using an allowance matrix, estimated based on historical credit loss experience based on the past due status of the debtors, adjusted as appropriate to reflect current conditions and estimates of future economic conditions. Accordingly, the credit risk profile of these assets is presented based on their past due status.

(ii)

Interest rate risk management

Interest rate risk arises from the potential changes in interest rates that may have an adverse effect on the Group in the current reporting period and future years.

The Group’s primary interest rate relates to interest-bearing bank loans. The interest rate and terms of repayment of bank loans are disclosed in Note 16 of the financial statements.

The sensitivity analysis has been determined based on the exposure to interest rates for

non-derivative

instruments at the end of the reporting period and the stipulated change taking place at the beginning of the financial year and held constant throughout the reporting period in the case of instruments that have floating rates. A 50 basis point increase or decrease is used and represents management’s assessment of the reasonably possible change in interest rates.

As at December 31, 2021 it is estimated that a 50 basis point change in interest rates will affect the Group’s profit before tax by S$0.06 million (2020: S$0.2 million).

(iii)

Foreign currency risk management

The Group has operations in different jurisdictions and transacts in various foreign currencies. At the end of reporting periods, the carrying amounts of significant monetary assets and monetary liabilities denominated in currencies other than the respective Group entities’ functional currencies are as follows:


	Assets				Liabilities
	2021		2020		2021		2020
	S$’000		S$’000		S$’000		S$’000
United States Dollar		122,833		75,104		46,566		18,785

The sensitivity rate used when reporting foreign currency risk to key management personnel is 5%, which is the change in foreign exchange rate that management deems reasonably possible which will affect outstanding foreign currency denominated monetary items at period end. If the respective Group entities’ functional currencies strengthen/weaken by 5% against the United States Dollar (“USD”), profit or loss will (decrease)/increase by S$3.8 million (2020: S$2.8 million).

The increase in carrying amount of monetary assets is due to an increase in outstanding trade receivables primarily driven by the increase in revenue and the increase in monetary liabilities denominated in USD is due to the expansion of the Group’s business in regions that transact in USD.

(iv)

Liquidity risk management

Liquidity risk is managed by matching the payment and receipt cycle. The Group maintains sufficient cash and cash equivalents and internally generated cash flows to finance its operations. The Group mitigates liquidity risk by maintaining some standby credit lines available.

The

Group has access to financing facilities of which S$

21.9

million (2020: S$

2.4

million) were unused at the reporting date.

Non-derivative

financial liabilities

The

following table details the remaining contractual maturity for

non-derivative

financial liabilities. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. Contractual undiscounted cash flows in the table below includes both interest and principal cash flows.


	Weighted average interest rate	On demand or within 1 year		Within 2 to 3 years		Within 3 to 5 years		5 years onwards		Total contractual undiscounted cash flows		Adjustment			Carrying amount
	%	S$’000		S$’000		S$’000		S$’000		S$’000		S$’000			S$’000
December 31, 2021
Non-interest bearing	—		36,637		—		—		—		36,637		—			36,637
Variable interest rate instruments	1.7% to 3.3%		12,091		—		—		—		12,091		—			12,091
Fixed interest rate Instruments	2.5% to 4.85%		1,837		2,317		747		—		4,901		(182	)		4,719
Lease liabilities (fixed rate)	1.6% to 8.8%		15,884		19,210		3,104		—		38,198		(2,287	)		35,911

December 31, 2020
Non-interest bearing	—		36,039		—		—		—		36,039		—			36,039
Variable interest rate instruments	1.6% to 4.7%		23,736		7,463		5,051		—		36,250		(955	)		35,295
Fixed interest rate Instruments	2.5%		1,043		1,200		3,065		—		5,308		(297	)		5,011
Lease liabilities (fixed rate)	1.6% to 8.8%		15,968		14,860		4,278		69		35,175		(2,688	)		32,487

Non-derivative

financial assets

All

non-derivative

financial assets of the Group as at December 31, 2021 and 2020 are repayable on demand or due within one year from the end of the reporting period, and are

non-interest

bearing, except for fixed deposits and other receivables as disclosed in Notes 8 and 11 respectively.

(v)

Fair value of financial assets and financial liabilities

The carrying amounts of financial assets and liabilities on the statement of financial position approximate their respective fair values due to the relatively short-term maturity of these financial instruments. The fair values of other classes of financial assets and liabilities are disclosed in the respective notes to financial statements.

(c)

Capital risk management policies and objectives

Management reviews the capital structure at least annually to ensure that the Group will be able to continue as a going concern. The capital structure comprises only issued capital, reserves and retained earnings. The Group’s overall strategy remains unchanged.