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HG METAL MANUFACTURING LIMITED
ANNUAL REPORT 2014
NOTES TO THE
FINANCIAL STATEMENTS
for the financial year ended 31 December 2014
34.
FINANCIAL RISK MANAGEMENT (CONT’D)
(e)
Market price risk
Market price risk is the risk that fair value or future cash flows of the Group’s financial
instruments will fluctuate because of changes in market prices (other than interest or
exchange rates). The Group is exposed to equity price risk arising from its investment in
quoted equity instruments. These instruments are quoted on the SGX-ST in Singapore and
are classified as held for trading.
Sensitivity analysis for equity price risk
At the balance sheet date, if the STI had been 2% (2013: 2%) higher/lower with all other
variables held constant, this would have given rise to higher/lower fair value gains in held for
trading equity instruments and the Group’s profit before tax would have been $2,200 higher/
lower (2013: $1,060).
35.
CAPITAL MANAGEMENT
Capital includes debt and equity items as disclosed in the table below.
The primary objective of the Group’s capital management is to ensure that it maintains strong credit
worthiness and healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic
conditions. To maintain or adjust the capital structure, the Group may adjust the dividend payment
to shareholders, return capital to shareholders or issue new shares. No changes were made in the
objectives, policies or processes during the year ended 31 December 2014 and 31 December 2013.
The Group monitors capital using a gearing ratio, which is net debt divided by total capital plus net
debt. The Group’s policy is to keep the gearing ratio below 70%. The Group includes within net debt,
loans and borrowings and finance lease payables less cash and cash equivalents. Capital includes
equity attributable to the owners of the Company.
