Singapore Airlines 2012 Annual Report Download - page 182

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180 SINGAPORE AIRLINES
Notes to the Financial Statements
31 March 2012
38 Financial Risk Management Objectives and Policies (in $ million) (continued)
(c) Interest rate risk (continued)
Interest rate sensitivity analysis
The interest rate sensitivity analysis is based on the following assumptions:
•฀ ฀ Changes฀in฀market฀interest฀rates฀affect฀the฀interest฀income฀or฀nance฀charges฀of฀variable฀interest฀nancial฀instruments.
•฀ ฀ Changes฀in฀market฀interest฀rates฀affect฀the฀fair฀value฀of฀derivative฀nancial฀instruments฀designated฀as฀hedging฀
instruments and all interest rate hedges are expected to be highly effective.
•฀ ฀ Changes฀ in฀ the฀ fair฀ values฀ of฀ derivative฀ nancial฀ instruments฀ and฀ other฀ nancial฀ assets฀ and฀ liabilities฀ are฀
estimated by discounting the future cash flows to net present values using appropriate market rates prevailing at
the end of the reporting period.
Under these assumptions, an increase or decrease in market interest rates of one basis point for all currencies in
which the Group has derivative financial instruments and variable rate assets and liabilities at 31 March 2012 will
have the effects as set out in the table below.
Sensitivity analysis:
The Group
31 March
2012 2011
Effect on Effect on
Effect on profit before Effect on profit before
equity R1 taxation R2 equity R1 taxation R2
Increase in one basis point in market interest rates 0.1 0.5 0.1 0.7
Decrease in one basis point in market interest rates (0.1) (0.5) (0.1) (0.7)
The Company
31 March
2012 2011
Effect on Effect on
Effect on profit before Effect on profit before
equity R1 taxation R2 equity R1 taxation R2
Increase in one basis point in market interest rates 0.1 0.3 0.1 0.6
Decrease in one basis point in market interest rates (0.1) (0.3) (0.1) (0.6)
R1 Sensitivity analysis on derivative financial instruments.
R2 Sensitivity analysis on variable rate assets and liabilities.