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NOTES TO FINANCIAL STATEMENTS
For the fnancial year ended 31 March 2014
33. Financial risk management objectives and policies (cont’d)
(c) Interest rate risk (cont’d)
Interests on fnancial instruments at fxed rates are fxed until the maturity of the instrument. The other fnancial instruments of the
Group that are not included in the above table are not subject to interest rate risks.
Sensitivity analysis
At the end of the reporting period, if interest rates had been 100 (2013: 100) basis points lower/higher with all other variables held
constant, the Group’s proft would have been $155,040 (2013: $122,980) lower/higher, arising mainly as a result of lower/higher
interest income/expense on foating rate bank loans and bank balances. The assumed movement in basis points for interest rate
sensitivity analysis is based on the currently observable market environment, showing a signifcantly higher volatility as in prior years.
(d) Foreign currency risk
The Group has transactional currency exposures arising from purchases that are denominated in a currency other than the functional
currency, SGD. The foreign currencies in which these transactions are denominated are mainly Thai Baht (“THB”) and Malaysian
Ringgit (“ MYR”). Approximately 24% (2013: 23%) of the Group’s purchases are denominated in foreign currencies.
The Group does not have a formal hedging policy with respect to foreign currency exposure. Exposure to foreign currency risk is
monitored on an on-going basis and management seeks to keep the net exposure to an acceptable level.
Sensitivity analysis
The following table demonstrates the sensitivity to a reasonably possible change in the THB and MYR exchange rate (against SGD),
with all other variables held constant, of the Group’s proft before tax.
The Group
2014 2013
$’000 $’000
Thai Baht - strengthened 5% (2013: 5%) (23) (13)
- weakened 5% (2013: 5%) 23 13
Malaysian Ringgit - strengthened 5% (2013: 5%) 70 14
- weakened 5% (2013: 5%) (70) (14)
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Annual Report 2014 •