NOTES TO THE FINANCIAL STATEMENTS 31 March 2024 27. FINANCIAL RISK MANAGEMENT (CONT’D) (a) Market risk (i) Currency risk The University’s operations are not exposed to significant currency risk as most of its transactions are transacted or invested in Singapore Dollar (“SGD”) except for its investment portfolio. The University’s currency profile from its investment portfolio is as follows: 2024 2023 $’000 $’000 Financial assets at fair value through profit or loss – SGD 609,414 602,213 – Non-SGD 779,466 671,897 Total 1,388,880 1,274,110 Currency derivatives are entered into by the fund manager to manage the foreign currency risk exposure of the University’s investment portfolio. The currency profile above has taken into consideration the effects of currency forwards. At 31 March 2024, if foreign currencies (i.e. currencies other than those denominated in SGD) had strengthened/ weakened by 3% (2023 : 3%) against the SGD with all other variables being held constant, it will result in a $23,384,000 increase/decrease in the net surplus (2023 : $20,157,000 increase/decrease in the net surplus). (ii) Interest rate risk The University has interest-bearing assets in cash and cash equivalents. These financial assets are short-term in nature, therefore, any future variations in interest rates will not have a material impact on the income of the University. The University’s investments in financial assets at fair value through profit or loss as at 31 March 2024 include interest-bearing debt instruments amounting to $413,164,000 (2023 : $374,376,000) which are exposed to interest rate risk. Changes in interest rates will have an impact on the fair values of these investments. With all other variables held constant, 50 (2023 : 50) basis points increase/decrease in interest rates will result in approximately $8,231,000 (2023 : $9,239,000) decrease/increase in the fair value of financial assets at fair value through profit or loss and the net surplus. (iii) Price risk The University is exposed to price risk arising from the investments, invested either directly or through externally managed funds. To manage this risk, the University diversifies its investment portfolio across different markets in accordance with the investment guidelines set by the Investment Committee. The University is exposed to price risk arising from the financial assets at fair value through profit or loss. The geographical information of the investment portfolio comprising quoted debt securities, quoted unit trusts (based on geographical area of underlying securities), quoted equity securities and other investments provided to key management is as follows: Financial assets at fair value through profit or loss 2024 2023 % % By geographical area Singapore 31 39 Asia Pacific (excluding Singapore) 18 19 Europe 8 7 United States and Latin America 42 33 Middle East and Africa 1 2 Total 100 100 p. 87 ANNUAL REPORT 2023/24
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