ST Engineering Annual Report 2020

Available 2019 15.2 Utilised 2019 3.7 FINANCIAL REVIEW / ST ENG I NEER I NG 64 TREASURY MANAGEMENT Given its international operations, the Group is exposed to various financial risks including foreign exchange, liquidity, interest rate and credit risks. The Group has established treasury policies and guidelines to mitigate these risks. Treasury activities are handled by the Group’s wholly owned treasury entity, ST Engineering Treasury Pte. Ltd. (STET), to ensure effective management of the Group’s liquidity and financial risk exposures. To support its long-term strategy to enhance shareholder value, the Group, through its wholly-owned subsidiaries, ST Engineering RHQ Ltd. (STE RHQ) and STET, established a S$5b Multicurrency Medium Term Note Programme (the Programme) guaranteed by the parent company, ST Engineering (the Guarantor) on 18 March 2020. Under the Programme, the subsidiary nominated by the Guarantor (Issuer or New Issuer) may from time to time issue notes (the Notes) denominated in any currency agreed between the relevant Issuer and the relevant dealer(s) for each issue of the Notes. On 29 April 2020, STE RHQ issued a US$750m 1.50% Notes due 2025. The net proceeds of this issue were used mainly to refinance the Group's outstanding U.S. Commercial Paper (USCP). The Group has achieved several major milestones from its funding initiatives since September 2019: 1. The first non-bank Singapore company to set up a USCP programme. 2. The lowest bond coupon/yield achieved for a 5-year U.S. dollar bond issuance by a Singapore corporate. 3. The first engine-backed securitisation originated by a lessor headquartered in Asia Pacific. The funding solutions allowed the Group to react swiftly to potential opportunities around the globe and to generate substantial savings on financing cost. With the demonstration of exceptional best practice, innovation, and delivering real business impact with its funding solutions, ST Engineering clinched the Best Funding Solution award at the Adam Smith Awards Asia 2020. Banking Facilities The Group has banking facilities of approximately $16.6b (2019: $15.2b) as at 31 December 2020 to support business operations in the areas of trade finance, hedging and credit. As at 31 December 2020, the Group has utilised $3.7b or 22% of its total available facilities (2019: $3.7b or 24%) with $12.9b or 78% (2019: $11.5b or 76%) remaining available. BANKING FACILITIES* ($b) * excludes US$0.7b committed revolving credit facility to backstop USCP 16,0 Foreign Exchange Trade Finance Interest Rates Swaps & Cross Currency Swaps Loans 4.0 0 8.0 12.0 Available 2020 16.6 Utilised 2020 3.7