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FRONTKEN CORPORATION BERHAD
(651020-T)
ANNUAL REPORT
2015
26.
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 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
2015
2014
2015
2014
Increase/
Increase/
Increase/
Increase/
(Decrease)
(Decrease)
(Decrease)
(Decrease)
RM
RM
RM
RM
Effects on profit after taxation
Singapore Dollar:-
- strengthened by 5%
(25,863)
(21,524)
(190,733)
(293,420)
- weakened by 5%
25,863
21,524
190,733
293,420
New Taiwan Dollar
- strengthened by 5%
48,988
1,727
49,478
1,727
- weakened by 5%
(48,988)
(1,727)
(49,478)
(1,727)
United States Dollar
- strengthened by 5%
3,033,045
2,018,600
(25,000)
(424,986)
- weakened by 5%
(3,033,045)
(2,018,600)
25,000
424,986
Others*
- strengthened by 5%
(238)
432
137,578
120,110
- weakened by 5%
238
(432)
(137,578)
(120,110)
* Denominated in Euro, Great Britain Pound 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
long-term borrowings with variable rates. The Group’s policy is to obtain the most favourable interest rates
available and by maintaining a balanced portfolio of mix of fixed and floating rate borrowings.
The Group’s fixed deposits with licensed banks and borrowings are carried at amortised cost. Therefore, they
are not subject to interest rate risk as defined MFRS 7 since neither the carrying amount nor the future cash
flows will fluctuate because of a change in market interest rates.
The Group’s exposure to interest rate risk that based on the carrying amounts of the financial instruments at
the end of the reporting period is disclosed in Notes 22 and 25 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 by RM361,416 (2014 : RM229,692) and RM45,490 (2014 :
RM59,071) respectively. A 100 basis points weakening would have had an equal but opposite effect on the
profit after taxation. This assumes that all other variables remain constant.
NOTES TO THE FINANCIAL STATEMENTS
(cont’d)