N o t e s t o t h e f i n a n c i a l s t a t e m e n t s
Year ended 31 March 2015
15 Derivative financial instruments (continued)
The Group enters into interest rate swaps to manage its exposure to interest rate movements on its floating rate interest-
bearing borrowings by swapping the interest expense on these borrowings from floating rates to fixed rates.
The Group held interest rate swaps with a total notional amount of $1,338.2 million (2014: $1,245.2 million) to provide fixed
rate funding for terms of less than 1 year to 10 years (2014: 1 year to 6 years). Included in the above are forward start interest
rate swaps of $150.0 million (2014: $Nil) for the purpose of extending some of the expiring interest rate swaps for another
5 years. The Group also held floating rates interest rate swaps with an aggregate notional amount of $200.0 million (2014:
$457.0 million) to mainly mitigate the effects arising from the unmatched floating for fixed interest rate swaps for efficient
portfolio management. These offsetting interest rate swaps have terms of more than 7 years (2014: 1 year to 8 years).
Where the interest rate swaps are designated as hedging instruments in qualifying cash flow hedges, the changes in fair
value of the interest rate swaps relating to the effective portion are recorded in Unitholders’ funds. For the financial year
ended 31 March 2015, a net change in fair value of $5.6 million (2014: $17.3 million) relating to the effective portion of
cash flow hedges were recognised in Unitholders’ funds. Fair value changes relating to the ineffective portion are recognised
in the Statement of Total Return.
Hedge accounting was discontinued in respect of interest rate swaps with a total notional amount of $257.0 million (2014:
$217.7 million), which expired during the financial year. The changes in the fair value of these interest rate swaps, amounting
to a loss of $2.3 million (2014: $4.0 million), were reclassified from Unitholders’ funds to the Statement of Total Return.
The Group enters into cross currency swaps (“CCS”) to manage its foreign currency risk arising from its JPY, HKD and
EUR denominated borrowings. As at 31 March 2015, the Group held CCS with notional amounts of JPY24.6 billion and
HKD1.26 billion (2014: JPY24.6 billion and EUR197.5 million) respectively to provide Singapore dollar funding for terms
of 1 to 14.5 years (2014: 1 to 10 years). On maturity, an aggregate of $567.2 million (2014: $759.4 million) payable will
be swapped into JPY24.6 billion and HKD1.26 billion (2014: JPY24.6 billion and EUR197.5 million) for the repayment of
the underlying foreign currency borrowings.
Offsetting financial assets and financial liabilities
The disclosures set out in the tables below include derivative assets and derivative liabilities that are subject to an enforceable
master netting arrangement or similar agreement that covers similar financial instruments, irrespective of whether they are
offset in the Balance Sheet.
The Group entered into International Swaps and Derivatives Association (ISDA) Master Agreements with various bank
counterparties (“ISDA Master Agreement”). In certain circumstances, following the occurrence of a termination event as
set out in the ISDA Master Agreement, all outstanding transactions under such ISDA Master Agreement may be terminated
and the early termination amount payable to one party under such agreements may be offset against amounts payable to
the other party such that only a single net amount is due or payable in settlement of all transactions.
In accordance with accounting standards, the swaps presented below are not offset in the Balance Sheet as the right of
set–off of recognised amounts is enforceable only following the occurrence of a termination event as set out in such ISDA
Master Agreement. In addition, the Group and its counterparties do not intend to settle on a net basis or to realise the
assets and settle the liabilities simultaneously.
168 169
