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
31 Financial risk management (continued)
Market risk
Market risk is the risk that changes in market prices, such as interest rates and foreign exchange rates, will affect the
Group’s income and its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return on risk.
Currency risk
As at 31 March 2015, the Group’s exposure to fluctuations in foreign currency rates relates primarily to its medium term
notes and CCS that are denominated in a currency other than the functional currency of the Trust. The currencies giving
rise to this risk are Euro (EUR), Japanese Yen (JPY) and Hong Kong Dollar (HKD). In relation to foreign currency risk arising
from EUR, JPY and HKD denominated medium term notes, the Group and the Trust had concurrently entered into CCS of
notional amount JPY24.6 billion (2014: JPY24.6 billion) and HKD1.26 billion (2014: Nil) to hedge the risk. In addition, as at
31 March 2014, the Group had issued a EUR 197.5 million term note and concurrently entered into CCS of notional amount
of EUR 197.5 million to hedge the risk.
Sensitivity analysis
A 5% (2014: 5%) strengthening of Singapore dollars against EUR, JPY and HKD at reporting date would increase/(decrease)
total return (before any tax effects) by the amounts shown in the table below. This analysis assumes that all other variables,
in particular interest rates, remain constant.
Increase/(decrease) in total return
EUR
HKD
JPY
$’000
$’000
$’000
Group
2015
Medium term notes
–
11,151
14,071
Cross currency swaps
– (12,402)
(16,136)
–
(1,251)
(2,065)
2014 (Restated)
Medium term notes
–
–
15,055
Term notes
17,123
–
–
Cross currency swaps
(17,114)
–
(17,226)
9
–
(2,171)
Trust
2015
Medium term notes
–
11,151
14,071
Cross currency swaps
– (12,402)
(16,136)
–
(1,251)
(2,065)
2014
Medium term notes
–
–
15,055
Cross currency swaps
–
–
(17,226)
–
–
(2,171)
A 5% (2014: 5%) weakening of Singapore dollars against EUR, JPY and HKD would have had the equal but opposite effect
on the amounts shown above, on the basis that all other variables remain constant.
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