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188

NOTES TO THE
FINANCIAL STATEMENTS

YEAR ENDED 31 DECEMBER 2015

29 Financial Risk Management (continued)

The following table indicates the periods in which the cash flow hedges are expected to affect profit or loss:

Group and Company Within After 1 year Total
2015 1 year but within $m
5 years
Interest rate swaps $m $m 0.5
– Assets
0.4 0.1

Group and Company Within After 1 year Total
2014 1 year but within $m
5 years
Interest rate swaps $m $m 1.7
– Liabilities
1.5 0.2

Interest rate risk
The Group’s exposure to market risk for changes in interest rates relates primarily to the Group’s debt obligations.

The Group adopts a policy of ensuring that at least 50 percent of its exposure to changes in interest rates on bank loans is on
a fixed rate basis. Interest rate swaps, denominated in Singapore dollars, have been entered into to achieve this purpose.

At 31 December 2015, the Group had outstanding interest rate swap agreements with notional principal amounts totalling
$145.0 million (2014: $335.0 million) in cash flow hedges against borrowings. These interest rate swaps will mature over the
remaining term ranging from 0.6 year to 1.4 years (2014: 0.1 year to 2.4 years) to match the underlying hedged cash flows arising
on the borrowings consisting of semi-annual interest payments. The fixed interest payable are at interest rates ranging from
0.86% to 1.45% per annum (2014: 0.86% to 2.25% per annum).

Sensitivity analysis
The Group’s and the Company’s borrowings are denominated in Singapore dollars. An increase/decrease in the interest rates by

100 basis points, with all other variables remaining constant, does not have a material impact in the Group’s and the Company’s
profit before taxation (2014: $0.1 million).

Foreign currency risk
The Group incurs foreign exchange risk on sales and purchases that are denominated in currencies other than Singapore Dollar.

The currency giving rise to this risk is primarily the United States Dollar.

The Group’s and the Company’s exposures to United States Dollar are as follows:

Group Company

2015 2014 2015 2014
$m $m $m $m

Trade and other receivables 63.1 31.5 9.3 7.6
Cash and cash equivalents 108.0 39.4 104.1 27.1
Trade and other payables (132.2) (145.1) (35.7) (63.4)
(74.2) (28.7)
38.9 77.7

For operations with significant expenditure denominated in foreign currencies, forward exchange contracts are entered into to
hedge the foreign currency risk on forecasted payment obligations. At 31 December 2015, the Group and the Company have
outstanding forward exchange contracts with notional principal amounts of approximately $105.1 million (2014: Nil).

In respect of other monetary liabilities held in foreign currencies, the Group ensures that the net exposure is kept to an
acceptable level by buying foreign currencies at spot rates where necessary to address any shortfalls.