| |
|
| a. |
Market risk (cont'd) |
| ii. |
Foreign currency risk
The Group operates globally and is exposed to foreign currency exchange rate volatility primarily for United States dollars (“USD”), pounds sterling (“GBP”), euros (“EURO”), Australian dollars (“AUD”) and Chinese renminbi (“RMB”) on sales and purchases of assets and liabilities, which arise from the daily course of operations. Such risks are hedged either by forward foreign exchange contracts in respect of actual or forecasted currency exposures which are reasonably certain or hedged naturally by a matching sale or purchase of a matching asset or liability of the same currency and amount.
The Group’s exposure to foreign currencies is as follows: |
| |
|
| |
|
SGD |
USD |
GBP |
EURO |
Others |
|
S$’000 |
S$’000 |
S$’000 |
S$’000 |
S$’000 |
|
|
|
|
|
|
Group |
|
|
|
|
|
2008 |
|
|
|
|
|
Financial assets |
|
|
|
|
|
Cash and cash equivalents |
98,220 |
928,866 |
98 |
71,687 |
12,088 |
Trade and other receivables |
14,239 |
339,173 |
5,205 |
27,535 |
10,964 |
Other financial assets |
— |
2,365 |
— |
(23) |
1,990 |
|
112,459 |
1,270,404 |
5,303 |
99,199 |
25,042 |
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
Trade and other payables* |
101,965 |
273,561 |
3,875 |
44,655 |
8,881 |
Interest-bearing borrowings |
— |
139,235 |
1,912 |
— |
1,937 |
|
101,965 |
412,796 |
5,787 |
44,655 |
10,818 |
|
|
|
|
|
|
Net financial assets / (liabilities) |
10,494 |
857,608 |
(484) |
54,544 |
14,224 |
|
| |
|
| |
|
SGD |
USD |
GBP |
EURO |
Others |
|
S$’000 |
S$’000 |
S$’000 |
S$’000 |
S$’000 |
|
|
|
|
|
|
Group |
|
|
|
|
|
2007 |
|
|
|
|
|
Financial assets |
|
|
|
|
|
Cash and cash equivalents |
41,217 |
305,687 |
37,924 |
114,767 |
22,335 |
Trade and other receivables |
15,366 |
134,976 |
125 |
4,975 |
20,105 |
Other financial assets |
— |
69,847 |
— |
— |
15,291 |
|
56,583 |
510,510 |
38,049 |
119,742 |
57,731 |
|
|
|
|
|
|
Financial liabilities |
|
|
|
|
|
Trade and other payables* |
169,239 |
208,659 |
40,141 |
48,108 |
19,248 |
Interest-bearing borrowing |
— |
66,171 |
— |
— |
11,567 |
|
169,239 |
274,830 |
40,141 |
48,108 |
30,815 |
|
|
|
|
|
|
Net financial (liabilities) / assets |
(112,656) |
235,680 |
(2,092) |
71,634 |
26,916 |
* Excludes share of net liability of an associate |
| |
|
| |
Company
The Company’s financial assets and liabilities are predominantly denominated in Singapore dollars at balance sheet dates.
Notional amount
At the balance sheet date, the Group had foreign exchange contracts with the following notional amounts:
|
Group |
|
2008 |
2007 |
|
Notional amount |
Notional amount |
|
S$'000 |
S$'000 |
|
|
|
Foreign exchange forward contracts |
2,980,835 |
915,499 |
Foreign exchange swap agreements |
175,811 |
107,287 |
|
3,156,646 |
1,022,786 |
Sensitivity analysis
A 10% strengthening of the following currencies against the functional currencies of the Company and its subsidiaries at the balance sheet date would have increased / (decreased) equity and profit before income tax by the amounts shown below. The analysis assumes that all other variables, in particular interest rates, remain constant. The analysis is performed on the same basis for 2007.
|
Group |
|
Equity |
Profit before income tax |
|
S$’000 |
S$’000 |
|
|
|
2008 |
|
|
SGD |
6,106 |
63,485 |
USD |
202,810 |
44,577 |
EURO |
517 |
5,858 |
Others |
(198) |
1,192 |
|
|
|
2007 |
|
|
SGD |
— |
11,266 |
USD |
39,869 |
(54,262) |
EURO |
1,608 |
7,163 |
Others |
— |
2,483 |
A 10% weakening of the above currencies against the functional currencies of the Company and its subsidiaries at the balance sheet date would have had the equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remain constant. |
| |
|
| iii. |
Price risk
Equity securities price risk
The Group is exposed to equity securities price risk because of the investments held by the Group which are classified on the consolidated balance sheet either as available-for-sale or at fair value through profit or loss.
Sensitivity analysis
If prices for equity securities increase by 10% with all other variables held constant, the increase in equity and profit before income tax will be: |
| |
|
| |
|
Group |
|
2008 |
2007 |
|
S$’000 |
S$’000 |
|
|
|
Equity |
14,605 |
70,102 |
Profit before income tax |
3 |
7 |
|
| |
|
| |
A 10% decrease in the underlying equity prices would have had the equal but opposite effect to the amounts shown above. The analysis is performed on the same basis for 2007 and assumes that all other variables remain constant.
Commodity risk
The Group hedges against fluctuations in commodity prices that affect revenue and cost. Exposures are managed via swaps, options, contracts for difference, fixed price and forward contracts.
Contracts for differences are entered into with a counterparty at a strike price, with or without fixing the quantity upfront, to hedge against adverse price movements on the sale of electricity. Naphtha swaps are entered into for fixed quantity to hedge revenue indexed to naphtha. Exposure to price fluctuations arising on the purchase of fuel is managed via fuel oil swaps where the price of fuel is indexed to a benchmark fuel price index, for example Singapore High Sulphur Fuel Oil (“HSFO”) 180 CST fuel oil.
For precious metal commodities, such as gold, exposures to fluctuations in price are hedged through the use of forward contracts or options that fix the purchases at an agreed price. The quantum of commitment is based on actual or forecasted requirements.
Sensitivity analysis
If prices for commodities increase by 10% with all other variables held constant, the increase in equity and profit before income tax will be: |
| |
|
| |
|
Group |
|
2008 |
2007 |
|
S$’000 |
S$’000 |
|
|
|
Equity |
4,637 |
15,178 |
Profit before income tax |
— |
559 |
|
| |
|
| |
A 10% decrease in the prices for commodities would have had the equal but opposite effect to the amounts shown above. The analysis is performed on the same basis for 2007 and assumes that all other variables remain constant.
Notional amount
At the balance sheet date, the Group had financial instruments with the following notional contract amounts: |
| |
|
| |
|
2008 |
2007 |
|
Notional amount |
Notional amount |
|
S$’000 |
S$’000 |
|
|
|
Group |
|
|
Fuel oil swap agreements |
199,483 |
155,682 |
Power swap contracts |
116,053 |
95,856 |
Commodity contracts |
— |
6,775 |
|
315,536 |
258,313 |
|
|
|
|
|
|
