113
FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT 2014
NOTES TO THE
FINANCIAL STATEMENTS
(cont’d)
27. FINANCIAL INSTRUMENTS (CONT’D)
(a)
Financial Risk Management Policies (Cont’d)
(i)
Foreign currency risk (Cont’d)
Foreign currency risk sensitivity analysis
The following table details the sensitivity analysis on profit after taxation/equity to a reasonably
possible change in the foreign currencies as at the end of the reporting period, with all other
variables held constant:-
The Group
The Company
2014
2013
2014
2013
Increase/
Increase/
Increase/
Increase/
(Decrease)
(Decrease)
(Decrease)
(Decrease)
RM
RM
RM
RM
Effects on profit after
taxation/equity
Singapore Dollar:-
- strengthened by 5% (21,524)
92,113
(293,420)
(283,690)
- weakened by 5%
21,524
(92,113)
293,420
283,690
New Taiwan Dollar
- strengthened by 5%
1,727
2,706
1,727
2,706
- weakened by 5%
(1,727)
(2,706)
(1,727)
(2,706)
United States Dollar
- strengthened by 5% 2,018,600
928,321
(424,986)
–
- weakened by 5% (2,018,600)
(928,321)
424,986
–
Others*
- strengthened by 5%
432
–
120,110
110,963
- weakened by 5%
(432)
–
(120,110)
(110,963)
* Denominated in Euro, Great Britain Pound, Chinese Renminbi and Indonesian Rupiah.
(ii)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will
fluctuate because of changes in market interest rates. The Group’s exposure to interest rate risk
arises mainly from interest-bearing financial assets and liabilities. The Group’s policy is to obtain
the most favourable interest rates available. Any surplus funds of the Group will be placed with
licensed financial institutions to generate interest income.
Information relating to the Company’s exposure to the interest rate risk of the financial liabilities
is disclosed in Note 27(a)(v) to the financial statements.
Interest rate risk sensitivity analysis
The Group and the Company do not account for any fixed rate financial assets and liabilities at
fair value through profit or loss, a 100 basis points strengthening in the interest rate as at the end
of the reporting period would have decreased profit after taxation/equity by RM229,692 (2013 :
RM219,440) and RM59,071 (2013 : NIL) respectively. A 100 basis points weakening would have
had an equal but opposite effect on the profit after taxation/equity. This assumes that all other
variables remain constant.
