Excel Force MSC Berhad Annual Report 2016

EXCEL FORCE MSC BERHAD ANNUAL REPORT 2016 109 Notes to the Financial Statements 31 December 2016 (cont’d) 32. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d) (iv) Foreign currency risk Foreign currency risk is the risk that the fair value or future cash flows of a financial instrument would fluctuate because of changes in foreign exchange rates. The Group and the Company are exposed to foreign currency risk on transactions that are denominated in currencies other than the functional currencies of the operating entities. The Group also holds cash and bank balances denominated in foreign currencies for working capital purposes. At the end of the reporting period, such foreign currency balances in United States Dollar amounted to RM517,375 (2015: RM419,542), in Singapore Dollar amounted to RM4,465 (2015: RM8,328) for the Group. Sensitivity analysis for foreign currency risk The following table demonstrates the sensitivity of the Group’s profit net of tax to a reasonably possible change in the United States Dollar (‘USD’) and Singapore Dollar (‘SGD’) exchange rates against the functional currency of the Group’s entities, with all other variables held constant. Group and Company 2016 2015 RM RM Profit after tax USD/RM -strengthen by 2% (2015: 2%) 8,107 6,293 -weaken by 2% (2015: 2%) (8,107) (6,293) SGD/RM -strengthen by 2% (2015: 2%) 2,304 8,289 -weaken by 2% (2015: 2%) (2,304) (8,289)