131
A N N U A L R E P O R T 2 0 1 6
For the Financial Year Ended 31 March 2016
NOTES TO THE
FINANCIAL STATEMENTS
33.
Financial risk management objectives and policies (cont¡¯d)
(c)
Interest rate risk (cont¡¯d)
Sensitivity analysis
At the end of the reporting period, if interest rates had been 100 (2015: 100) basis points lower/higher with all other variables held
constant, the Group¡¯s profit would have been $69,000 (2015: $108,000) lower/higher, arising mainly as a result of lower/higher interest
income/expense on floating 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 significantly 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 21% (2015: 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 profit before tax.
The Group
2016
2015
$¡¯000
$¡¯000
Thai Baht - strengthened 5% (2015: 5%)
(23)
(22)
- weakened 5% (2015: 5%)
23
22
Malaysian
Ringgit
- strengthened 5% (2015: 5%)
2
40
- weakened 5% (2015: 5%)
(2)
(40)
