NOTES TO THE FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
131
ANNUAL REPORT 2015
40.
FINANCIAL RISK MANAGEMENT (CONT’D)
(a)
Foreign exchange risk (cont’d)
At the end of the reporting period, approximately:
(i)
42% (2014: 37%) of the Group’s trade and other receivables as well as 63% (2014: 23%) of the Group’s trade
and other payables are denominated in foreign currencies other than the functional currencies of the
respective Group entities, mainly in United States Dollar, Japanese Yen and Australian Dollar.
(ii)
12% (2014: 4%) of the Group’s cash and cash equivalents are denominated in foreign currencies other than
the functional currencies of the respective Group entities, mainly in Singapore Dollar, United States Dollar
and Australian Dollar.
(iii)
8% (2014: 6%) of the Group’s borrowings are denominated in foreign currencies other than the functional
currencies of the respective Group entities, mainly in United States Dollar, Japanese Yen and Australian Dollar.
(b)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the Company’s financial
instruments will fluctuate because of changes in market interest rates. The Group’s exposure to market risk for
changes in interest rates relates primarily to its cash deposits and debt obligations.
The Group’s policy is to manage its interest cost using a combination of fixed and floating rate debts and also
derivative financial instruments such as interest rate swaps and cross currency swaps to hedge interest rate risks.
Surplus funds are placed with reputable banks to generate interest income for the Group.
The table below demonstrates the sensitivity to a reasonably possible change in interest rates with all other variables
held constant, of the Group’s profit after tax through the impact on interest income from bank deposits and interest
expense on floating rate borrowings:
Group
Increase/
decrease
in basis point
Effect on
profit
after tax
$’000
31 December 2015
– Singapore Dollar
+25
244
–25
(244)
– Malaysian Ringgit
+25
(154)
–25
154
– Chinese Renminbi
+25
(107)
–25
107
– Japanese Yen
+25
(75)
–25
75
