31 FINANCIAL RISK MANAGEMENT
(CONT’D)
(a)
Market Risk
(cont’d)
(i)
Currency risk (cont’d)
If the SGD, RMB, HKD, Sterling and MYR changed against the USD by 5% with all other
variables, including tax rates, being held constant, the effects arising from the net financial
assets/liabilities position will be as follows:
Group
Company
Increase/(Decrease)
Increase/(Decrease)
Profit
after tax
Profit
after tax
Profit
after tax
Profit
after tax
2014
2013
2014
2013
US$’000
US$’000
US$’000
US$’000
SGD against USD
– strengthened
4
7
–
–
– weakened
(4)
(7)
–
–
RMB against USD
– strengthened
(156)
(185)
–
–
– weakened
156
185
–
–
HKD against USD
– strengthened
(3)
(4)
–
–
– weakened
3
4
–
–
Sterling against USD
– strengthened
144
110
516
511
– weakened
(144)
(110)
(516)
(511)
MYR against USD
– strengthened
–
–
50
–
– weakened
–
–
(50)
–
(ii)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s and the
Company’s financial instruments will fluctuate because of changes in market interest rates. The
Group’s exposure to interest rate risk arises primarily from its borrowings. Information relating
to the Group’s interest rate exposure is disclosed in Note 25 on the Group’s borrowings.
The Group usually obtains additional financing through bank borrowings and its policy is to
obtain the most favourable interest rates available. Surplus funds are placed with reputable
banks for better yield returns than cash at banks and/or to satisfy conditions for banking facilities
granted to the Group.
The sensitivity analysis to a reasonably possible change in interest rates, with all other variables
held constant, of the Group’s profit after tax has not been disclosed as the Group’s exposure
to changes in market interest rates is not significant.
NOTES TO THE FINANCIAL STATEMENTS
31 December 2014
GLOBAL INVACOM GROUP LIMITED
ANNUAL REPORT 2014
94
