179
ANNUAL REPORT 2016
NOTES TOTHE FINANCIAL STATEMENTS
30 JUNE 2016
(Continued)
38. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
(iv) Foreign currency risk
Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument would fluctuate because of changes
in foreign exchange rates.
Subsidiaries operating in Singapore, Vietnam and Indonesia have assets and liabilities together with expected cash flows from
anticipated transactions denominated in foreign currencies that give rise to foreign exchange exposures.
The Group maintains a natural hedge, where possible, by borrowing in the currency of the country in which the investment is located
or by borrowing in currencies that match the future revenue stream to be generated from its investments.
The Group also holds cash and bank balances denominated in foreign currencies for working capital purposes. At the end of each
reporting period, such foreign currency balances (in Singapore Dollar and other currencies) amounted to RM45,192,000 (2015:
RM31,614,000) (see Note 16(c) to the financial statements) for the Group.
The Group did not enter into any material forward foreign exchange contract in the current financial year.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity analysis of the Group and the Company to a reasonably possible change in the
Singapore Dollar (“SGD”), U.S. Dollar (“USD”), Vietnamese Dong (“VND”) and Indonesia Rupiah (“IDR”) exchange rates against the
respective functional currencies of the Group entities, with all other variables held constant:
Group
Company
Profit after tax
2016
RM’000
2015
RM’000
2016
RM’000
2015
RM’000
SGD/RM - strengthen by 3% (2015: 3%)
-875
-377
-119
-152
- weaken by 3% (2015: 3%)
+875
+377
+119
+152
USD/RM - strengthen by 3% (2015: 3%)
+250
+291
-
-
- weaken by 3% (2015: 3%)
-250
-291
-
-
VND/RM - strengthen by 3% (2015: 3%)
+61
+113
-
-
- weaken by 3% (2015: 3%)
-61
-113
-
-
IDR/RM - strengthen by 3% (2015: 3%)
+322
-139
-
-
- weaken by 3% (2015: 3%)
-322
+139
-
-
