For the financial year ended 31 December 2015
98
HAW PAR CORPORATION LIMITED
27. FINANCIAL RISK MANAGEMENT
Financial risk factors
The Group’s activities expose it to market risk (including price risk, currency risk and interest rate risk), liquidity risk and
credit risk. The Group’s overall risk management strategy seeks to minimise adverse effects from the unpredictability of
financial markets on the Group’s financial performance.
The Board of Directors is responsible for setting the objectives and underlying principles of financial risk management
for the Group. The Investment Committee then establishes the detailed policies, such as authority levels, oversight
responsibilities, risk identification and measurement, exposure limits and hedging strategies, in accordance with the
objectives and underlying principles approved by the Board of Directors.
Regular reports that contain the Group’s exposure to each type of financial risks are submitted to Investment Committee.
(a) Market risk
The Group is exposed to market risk, including primarily changes in market prices of listed securities and in
currency exchange rates.
(1) Market price risk
The Group has substantial investments carried at fair value of $2,080.6 million (2014: $2,311.5 million) held
in various forms of securities as of 31 December 2015 and have been accounted for in accordance with the
accounting policy stated in Note 2(i). These securities are mainly listed in Singapore.
The fair value of financial instruments traded in active markets (such as available-for-sale securities) is based
on quoted market prices at the end of the reporting period. The quoted market price used for financial
assets held by the Group is the current bid price. These instruments are categorised as Level 1 under the fair
value hierarchy as set out in the relevant accounting standard.
The market price risk associated with these investments is the potential loss in fair value resulting from
the decrease in market prices of securities. If prices for equity and debt securities listed in Singapore and
elsewhere change by 10% (2014: 10%) with all other variables including tax rate being held constant, the
equity and other comprehensive income will be affected by:
Group
2015
2014
$’000
$’000
Listed in Singapore
- increased by
179,070
216,104
- decreased by
(179,070)
(216,104)
Listed overseas
- increased by
22,599
7,136
- decreased by
(22,599)
(7,136)
The above prior year figure excludes investments in associated companies that could be traded in an active
market but are accounted for in accordance with the accounting policies stated in Note 2(c).
NOT E S TO T H E F I NAN C I A L S TAT EME N T S
(CONTINUED)
