Notes to the Financial Statements
(Cont’d)
For the financial year ended 30 April 2016
(In Singapore Dollar)
STAMFORD TYRES CORPORATION LIMITED
98 |
DRIVING IT UP
35.
Financial risk management objectives and policies (cont’d)
(a)
Foreign currency risk (cont’d)
Sensitivity analysis for foreign currency risk
A 5% fluctuation of certain foreign currencies against the underlying functional currencies of the
Group’s entities at the end of each reporting period would have an impact on the Group’s profit net
of tax by the amounts shown below. The analysis assumes all other variables, in particular, interest
rates, remained constant. The analysis is performed on the same basis for the financial year ended
30 April 2015.
(Decrease)/increase in
profit net of tax
2016
2015
$’000
$’000
USD – strengthened by 5% against SGD (2015: 5%)
(117)
(274)
– weakened by 5% against SGD (2015: 5%)
117
274
ZAR – strengthened by 5% against SGD (2015: 5%)
219
550
– weakened by 5% against SGD (2015: 5%)
(219)
(550)
MYR – strengthened by 5% against SGD (2015: 5%)
126
111
– weakened by 5% against SGD (2015: 5%)
(126)
(111)
(b)
Interest rate risk
Interest rate risk is the risk that changes in interest rates will have an adverse financial effect on
the Group’s financial conditions and results. The primary source of the Group’s interest rate risk
is its borrowings from banks and other financial institutions primarily in Singapore, Malaysia and
Thailand. The Group ensures that it obtains borrowings at competitive interest rates under the
most favourable terms and conditions. Where appropriate, the Group uses interest rate swaps to
hedge its interest rate exposure for specific underlying debt obligations. Risk variables are based on
volatility in interest rates. This analysis assumes that all other variables, in particular foreign currency
rates and tax rates remain constant. Information relating to the interest rate is disclosed in Notes
22, 24, 25 and 27. At the end of the reporting period, approximately 2% (2015: 9%) of the Group’s
borrowings are at fixed rates of interest. Cash and bank balances are excluded from the table
below as fluctuations of interest rates are determined to have no significant impact on the Group’s
profit net of tax. Included in the table below are the Group’s interest-bearing financial instruments,
categorised by the earlier contractual re-pricing or maturity dates.
