Singapore Airlines 2008 Annual Report Download - page 149

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Singapore Airlines Annual Report 2007-08
147
37 Financial Risk Management Objectives and Policies (continued)
(e) Counterparty risk
Surplus funds are invested in interest-bearing bank deposits and other high quality short-term liquid investments.
Counterparty risks are managed by limiting aggregated exposure on all outstanding financial instruments to any
individual counterparty, taking into account its credit rating. Such counterparty exposures are regularly reviewed,
and adjusted as necessary. This mitigates the risk of material loss arising in the event of non-performance by
counterparties.
The Group determines concentrations of credit risk by monitoring the industry, country and credit rating of its
counterparties. The table below shows an analysis of credit risk exposures of balances that exceed 5% of the financial
assets of the Group and the Company as at 31 March:
The Group The Company
Percentage of Percentage of
Outstanding balance total financial assets Outstanding balance total financial assets
2008 2007 2008 2007 2008 2007 2008 2007
Counterparty profiles
By industry:
Travel agencies 882.0 562.5 10.9% 7.1% 512.7 548.1 7.7% 7.8%
Airlines 257.7 575.9 3.2% 7.3% 167.8 164.5 2.5% 2.4%
Financial institutions 6,197.5 5,860.6 76.4% 73.9% 5,144.8 5,265.5 77.4% 75.3%
Others 289.9 452.3 3.6% 5.7% 539.3 368.4 8.1% 5.3%
7,627.1 7,451.3 94.1% 94.0% 6,364.6 6,346.5 95.7% 90.8%
By region:
East Asia 3,282.1 2,446.2 40.5% 30.9% 2,280.4 1,379.7 34.3% 19.8%
Europe 3,140.7 3,330.8 38.7% 42.0% 3,047.4 3,469.9 45.8% 49.6%
South West Pacific 492.6 221.8 6.1% 2.8% 464.6 126.5 7.0% 1.8%
Americas 639.8 1,393.6 7.9% 17.6% 529.8 1,325.4 8.0% 19.0%
West Asia and Africa 71.9 58.9 0.9% 0.7% 42.4 45.0 0.6% 0.6%
7,627.1 7,451.3 94.1% 94.0% 6,364.6 6,346.5 95.7% 90.8%
By Moody’s credit ratings:
Investment grade (A to Aaa) 6,050.1 5,894.5 74.6% 74.4% 5,144.6 5,263.7 77.4% 75.3%
Investment grade (Baa) 0.1 0.9 0.0% 0.0% 0.1 0.9 0.0% 0.0%
Non-rated 1,576.9 1,555.9 19.5% 19.6% 1,219.9 1,081.9 18.3% 15.5%
7,627.1 7,451.3 94.1% 94.0% 6,364.6 6,346.5 95.7% 90.8%
(f) Liquidity risk
At 31 March 2008, the Group had at its disposal, cash and short-term deposits amounting to $5,119.0 million (2007:
$5,117.6 million). In addition, the Group had available short-term credit facilities of about $200 million (2007:
$880.6 million). The Group also has Medium Term Note Programmes under which it may issue notes up to $1,500
million (2007: $1,500 million). Under these Programmes, notes issued by the Company may have maturities as may
be agreed with the relevant financial institutions, and notes issued by one of its subsidiary companies may have
maturities between one month and ten years.
The Group’s holdings of cash and short-term deposits, together with committed funding facilities and net cash flow
from operations, are expected to be sufficient to cover the cost of all firm aircraft deliveries due in the next financial
year. It is expected that any shortfall would be met by bank borrowings or public market funding. Due to the necessity
to plan aircraft orders well in advance of delivery, it is not economical for the Group to have committed funding in
place at present for all outstanding orders, many of which relate to aircraft which will not be delivered for several
years. The Group’s policies in this regard are in line with the funding policies of other major airlines.
NOTES TO THE FINANCIAL STATEMENTS
31 March 2008