119
ANNUAL REPORT 2015/2016
Notes to Financial Statements
32
FINANCIAL RISK MANAGEMENT (CONT’D)
(a)
Foreign currency risk (cont’d)
For the Company, if the AUD and NZD change against Singapore Dollars by 5% (2015: 5%)
with all other variables including tax rate being held constant, the net currency position
PO UIF $PNQBOZōT FRVJUZ XPVME JODSFBTF EFDSFBTF CZ BQQSPYJNBUFMZ
$11,500,000). At the Group level, $10,000,000 (2015: $11,500,000) would be reclassified to
other comprehensive income on consolidation as they relate to exchange differences on
foreign currency loan that form part of the Group’s net investment in foreign operations.
Management is of the view that the above sensitivity analysis may not be representative of the
inherent foreign exchange risk as year-end exposures may not reflect the actual exposure and
circumstances during the year.
(b)
Interest rate risk
The Group obtains additional financing through bank borrowings. There is exposure to interest
rate risk for financial instruments with floating interest rates that is reset as market rates change.
The Group’s policy is to obtain the most favourable interest rates available.
The Group’s borrowings at variable rates on which effective hedges have not been entered
into are denominated mainly in AUD and NZD. If the AUD and NZD interest rates had been
JODSFBTFE EFDSFBTFE CZ
XJUI BMM PUIFS WBSJBCMFT CFJOH IFME DPOTUBOU UIF QSPGJU
CFGPSF UBY XPVME IBWF CFFO MPXFS IJHIFS CZ BQQSPYJNBUFMZ
BT B
SFTVMU PG IJHIFS MPXFS JOUFSFTU FYQFOTF PO CPSSPXJOHT
Management is of the view that the above effective interest rates are unrepresentative of the
inherent interest rate risk as the historical exposure does not necessarily reflect the exposure
in future.
(c)
-JRVJEJUZ SJTL
The Group’s funding is primarily handled by the Company on the basis of the subsidiaries’
JOWFTUJOH BOE PQFSBUJPOBM MJRVJEJUZ SFRVJSFNFOUT 5IF TVCTJEJBSJFTō FYDFTT MJRVJEJUZ JT FRVBMJTFE
internally through inter-company accounts.
5IF (SPVQōT MJRVJEJUZ SFTFSWFT DPOTJTU PG CBOL EFQPTJUT BT XFMM BT DPNNJUUFE BOE VODPNNJUUFE
DSFEJU GBDJMJUJFT XJUI NBKPS GJOBODJBM JOTUJUVUJPOT 5P TPNF FYUFOU MJRVJE GVOET BSF JO TPNF
periods placed in money market instruments or bonds.
The following table shows the contractual undiscounted cash flows of the Group and
the Company’s non-derivative financial liabilities on the basis of their earliest possible
contractual maturities.
