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169
Maxis Berhad
Annual Report 2014
Notes to the
Financial Statements
31 December 2014
33 FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk (continued)
(i) Foreign exchange risk (continued)
The sensitivity of the Group’s and of the Company’s profit before tax for the financial year and equity to a reasonably
possible change in the USD exchange rate against the Group’s and the Company’s functional currency, RM, with all other
factors remaining constant and based on the composition of assets and liabilities at the reporting date are set out as below.
Impact on profit before tax for the financial year
Impact on equity
(1)
Group
Company
Group and Company
2014
RM’000
2013
RM’000
2014
RM’000
2013
RM’000
2014
RM’000
2013
RM’000
USD/RM
- strengthened 5% (2013: 5%)
(31,845)
(12,598)
-
-
6,785
8,930
- weakened 5% (2013: 5%)
31,845
12,598
-
-
(6,785)
(8,930)
Note:
(1)
Represents cash flow hedging reserve
The impacts on profit before tax for the financial year are mainly as a result of foreign currency gains/losses on translation
of USD denominated receivables, deposits, bank balances and payables. For USD denominated borrowings, as these are
effectively hedged, the foreign currency movements will not have any impact on the statement of profit or loss.
Other balances denominated in foreign currencies are not significant and hence, profit is not materially impacted.
(ii) Interest rate risk
The Group’s and the Company’s interest rate risk arises from deposits with licensed banks, deferred payment creditors,
borrowings, loan from a related party and inter-company loans carrying fixed and variable interest rates. The objectives
of the Group’s and of the Company’s interest rate risk management policies are to allow the Group and the Company to
effectively manage the interest rate fluctuation through the use of fixed and floating interest rates debt and derivative
financial instruments. The Group and the Company adopt a non-speculative stance which favours predictability over
interest rate fluctuations. The interest rate profile of the Group’s and of the Company’s borrowings are also regularly
reviewed against prevailing and anticipated market interest rates to determine whether refinancing or early repayment is
warranted.
The Group and the Company manage their cash flow interest rate risk by using cross currency interest rate swap contracts
and interest rate swap contracts. Such swaps have the economic effect of converting certain borrowings from floating
rates to fixed rates.
