30.
FINANCIAL RISK MANAGEMENT (CONT'D)
30.3
Interest rate risk
The Group’s fixed rate deposits and borrowings are exposed to a risk of change in their fair value
due to changes in interest rates. The Group does not have any floating rate borrowings.
The interest rate profile of the Group’s interest-bearing financial instruments based on the carrying
amount as at the end of the reporting period is as follows:
GROUP
2014
2013
RM
RM
Fixed rate instruments
Financial assets
4,000
-
Financial liabilities
188,408
6,695,274
The Group does not account for any fixed rate financial assets and financial liabilities at fair value
through profit or loss, and the Group does not designate derivatives as hedging instruments under a
fair value hedge accounting model. Therefore, a change in interest rates at the end of the reporting
period would not affect profit or loss.
30.4
Foreign currency risk
The Group is exposed to foreign currency risk as a result of its normal trading activities whereby
sales and purchases are principally transacted in US Dollar (“USD”) and Singapore Dollar (“SGD”).
The Group mitigates the exposure to this risk by maintaining USD and SGD denominated bank
accounts and enters into foreign currency forward contracts.
The Group’s exposure to the aforementioned currencies, based on carrying amounts as at the end
of the reporting period is as follows:
Denominated in USD Denominated in SGD
2014
2013
2014
2013
RM
RM
RM
RM
Trade receivables
10,806,333
5,083,543
1,493,155
296,722
Cash and bank balances
1,087,313
1,547,507
198,875
148,547
Trade payables
(120,878)
(1,687,630)
(130,545)
(250,680)
Net exposure
11,772,768
4,943,420
1,561,485
194,589
Sensitivity analysis for foreign currency risk
Below demonstrates the sensitivity to a reasonably possible change in the foreign currency exchange
rates against Ringgit Malaysia, with all other variables held constant, of the Group’s profit before
taxation. A 5% strengthening of the RM against the following currencies at the end of the reporting
period would have decreased profit before taxation by the amount shown below and a corresponding
decrease would have an equal but opposite effect.
NOTES TO THE FINANCIAL STATEMENTS
31 DECEMBER 2014 (CONT’D)
•
Pentamaster Corporation Berhad
(572307-U)
Annual Report 2014
87
