33. Financial risk management objectives and policies (cont’d)
(a) Market risk (cont’d)
(i)
Interest rate risk (cont’d)
Sensitivity analysis
For the Group’s and Company’s borrowings at variable rates on which effective
hedges have not been entered into, an increase of 0.5% (2014: 0.5%) in interest
rate at 30 June would have decreased profit before tax by the amounts shown
below. A decrease of 0.5% (2014: 0.5%) in interest rate at 30 June would have
an equal but opposite effect. The analysis assumes that all other variables, in
particular foreign currency exchange rates, remain constant.
Group
Company
2015 2014 2015 2014
Profit
Profit
Profit
Profit
before tax before tax before tax before tax
$’000 $’000 $’000 $’000
Floating rate
instruments
1,300 2,097
–
–
(ii) Foreign currency risk
The Group has transactional currency exposures arising from sales or
purchases that are denominated in a currency other than the respective
functional currencies of Group entities, primarily United States Dollar (“USD”),
Euro (“EUR”), Indonesia Rupiah (“IDR”), and Chinese Renminbi (“RMB”).
The Group’s trade receivable and trade payable balances at the end of the
reporting period have similar exposures.
The Group and the Company also hold cash and bank balances denominated
in foreign currencies for working capital purposes. At the end of the reporting
period, such foreign currency balances are mainly in USD, EUR and IDR.
Such risks are hedged either by forward foreign exchange contracts in respect
of actual or forecasted currency exposures which are reasonably certain
or hedged naturally by a matching sale or purchase of a matching asset or
liability of the same currency and amount.
The Group is also exposed to currency translation risk arising from its net
investments in foreign operations, including People’s Republic of China (PRC),
Indonesia and Netherlands.
NOTES TO THE FINANCIAL
STATEMENTS
For the financial year ended 30 June 2015
ASL Marine Holdings Ltd. /Annual Report 2015
149
