34.
FINANCIAL RISK MANAGEMENT (CONTINUED)
(c)
Interest rate risk (continued)
Sensitivity analysis for interest rate risk
At the balance sheet date, if interest rates had been 50 (2014: 50) basis points lower/higher
with all other variables held constant, the Group’s income and equity would have been
approximately $81,000 (2014: $64,000) higher/lower, arising mainly as a result of lower/
higher interest expense on debt obligations with financial institutions.
A similar change in interest rates would have increased/decreased the Company’s income and
equity by approximately $31,000 (2014: $64,000).
(d)
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 the Group
entities, primarily the Singapore Dollar (“SGD”), United States Dollar (“USD”) and Malaysian
Ringgit (“MYR”).
The Group is exposed to currency translation risk arising from its net investments in foreign
operations, including Malaysia and Indonesia. The Group’s net investments in Malaysia and
Indonesia are not hedged as currency positions in MYR and USD are considered to be long-
term in nature.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity of the Group’s profit before tax to a
reasonably possible change in the USD, MYR and SGD exchange rates against the respective
functional currencies of the Group entities, with all other variables held constant.
124
NOTES TO THE
FINANCIAL STATEMENTS
For the financial year ended 31 December 2015
HG METAL MANUFACTURING LIMITED
ANNUAL REPORT 2015
