Ni Hsin Berhad Annual Report 2017
24. Financial instruments (continued) 24.6 Market risk Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and other prices will affect the Group’s financial position or cash flows. 24.6.1 Currency risk The Group is exposed to foreign currency risk arising from transactions that are denominated in currencies other than the respective functional currencies of Group entities. The currencies giving rise to this risk are primarily U.S. Dollar (“USD”), Japanese Yen (“JPY”), Euro (“EUR”) and Singapore Dollar (“SGD”). Risk management objectives, policies and processes for managing the risk The Group does not have a fixed policy to hedge its sales and purchases via forward contracts. However, the exposure to foreign currency risk is monitored from time to time by management. Exposure to foreign currency risk The Group’s exposure to foreign currency (a currency which is other than the functional currency of the Group entities) risk, based on carrying amounts as at the end of the reporting period was: Denominated in USD EUR SGD JPY RM’000 RM’000 RM’000 RM’000 Group 2017 Trade and other receivables 1,023 224 - 165 Trade payables (219) (66) - - Net exposure 804 158 - 165 2016 Trade and other receivables 2,395 534 292 349 Trade payables (829) (350) - - Net exposure 1,566 184 292 349 Company The Company does not have any exposure to foreign currency risk at the end of the reporting period. Currency risk sensitivity analysis Foreign currency risk arises from Group entities which have a RM functional currency. The exposure to currency risk of Group entities which do not have a RM functional currency is not material and hence, sensitivity analysis is not presented. A 10% (2016: 10%) strengthening of the RM against the following currencies at the end of the reporting period would have increased/(decreased) post-tax profit or loss by the amounts shown below. This analysis is based on foreign currency exchange rate variances that the Group considered to be reasonably possible at the end of the reporting period. This analysis assumes that all other variables, in particular interest rates, remained constant and ignores any impact of forecasted sales and purchases. Notes to the financial statements (continued) Annual Report 2017 86
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