Fraser & Neave Holdings Bhd Annual Report 2019

WWW . F N . C O M . M Y 202 F R A S E R & N E A V E H O L D I N G S B H D NOTES TO THE FINANCIAL STATEMENTS 29. FINANCIAL INSTRUMENTS (CONTINUED) (F) MARKET RISK (CONTINUED) (i) Currency risk (continued) 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 Group USD RM’000 SGD RM’000 2019 Cash and cash equivalents 5,754 7,954 Receivables 74,844 21,751 Payables (1,709) (4,963) Net exposure 78,889 24,742 2018 Cash and cash equivalents 7,883 8,649 Receivables 31,757 5,660 Payables – (3,677) Net exposure 39,640 10,632 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% (2018: 10%) strengthening of the following currencies against RM at the end of the reporting period would have increased or decreased, respectively pre-tax profit or loss by the amounts shown below. This analysis assumes that all other variables remained constant. Group 2019 RM’000 2018 RM’000 USD 8,060 3,964 SGD 2,474 1,063 A 10% (2018: 10%) weakening of the above currencies against RM at the end of the reporting period would have had equal but opposite effect on the above currencies to the amounts shown above, on the basis that all other variables remained constant. (ii) Interest rate risk The Group’s investments in fixed rate debt securities and its fixed rate borrowings are exposed to a risk of change in their fair value due to changes in interest rates. The Group’s variable rate borrowings are exposed to a risk of change in cash flows due to changes in interest rates. Investments in equity securities and short-term receivables and payables are not significantly exposed to interest rate risk. Exposure to interest rate risk The Group has no exposure to significant interest rate risk as the fixed rate debts were entered into by the Group in order to minimise cash flow risk. However, the Company has exposure to interest rate risk from its loan to a subsidiary amounting to RM465,318,000 (2018: RM348,318,000). Interest rate risk sensitivity analysis A change in 100 basis points in interest rates would have decreased or increased pre-tax profit or loss of the Company by RM4,653,000 (2018: RM3,483,000).