69
4. Financial Instruments, Financial Risks and Capital Assets
Management (cont’d)
(b) Financial risk management policies and objectives (cont’d)
(i) Foreign exchange risk management (cont’d)
Foreign currency sensitivity
The following table details the sensitivity to a 10% increase and decrease in the relevant foreign currencies against
the functional currency of each Group entity. 10% is the sensitivity rate used when reporting foreign currency
risk internally to key management personnel and represents management’s assessment of the reasonably possible
change in foreign exchange rates. The sensitivity analysis includes only outstanding foreign currency denominated
monetary items and adjusts their translation at the period end for a 10% change in foreign currency rates.
If the relevant foreign currency strengthens by 10% against the functional currency of each Group entity, profit or
loss and net equity will increase (decrease) by:
If the relevant foreign currency weakens by 10% against the functional currency of each Group entity, the impact
will be reversed.
This is mainly attributable to the exposure from investments denominated in foreign currencies and outstanding
receivables and payables at the end of the reporting period.
In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the
period end exposure does not reflect the exposure during the period.
(ii) Liquidity risk management
The Group adopts prudent liquidity risk management by maintaining sufficient cash and marketable securities
to finance their activities. The Group finances its operations through internally generated cash flows.
(iii) Interest rate risk management
The Group’s exposure to changes in interest rates relates primarily to interest-earning financial assets and
interest-bearing financial liabilities. Interest rate risk is managed by the Group on an on-going basis with the
primary objective of limiting the extent to which net interest expense could be affected by an adverse movement
in interest rates. The Group does not use derivative financial instruments to hedge against such risk exposure.
The related interest rates for interest-earning financial assets and interest-bearing financial liabilities are as
disclosed in Notes 6, 10, 12, 14 and 17 respectively.
December 31,
2014
December 31,
2013
$’000
$’000
Foreign currency impact
United States dollar
3,383
356
Hong Kong dollar
172
1,018
Indonesian rupiah
-
74
European euro
1,991
251
Swiss franc
414
168
Sterling pound
432
146
Australian dollar
(4)
(107)
Swedish krona
181
-
Notes to Financial Statements
December 31, 2014
GROUP and CO-OPERATIVE
