Annual Report 2016
125
Notes to the Financial Statements
(Cont’d.)
28. Financial instruments ( continued)
28.6 Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates will affect
the Group’s and the Company’s financial position or cash flows.
28.6.1 Currency risk
The Group and the Company are exposed to foreign currency risk arising from transactions that are denominated
in a currency other than the respective functional currencies of the Group entities. The currency giving rise to
this risk is primarily US Dollars.
The management does not view the exposure to other currencies to be significant.
Risk management objectives, policies and processes for managing the risk
The Group’s and the Company’s foreign exchange management policies are to minimise exposures arising from
currency movements. The Group monitors currency movements closely and may enter into foreign currency
swaps, forward foreign currency contracts and options to limit its exposure when the needs arise.
Exposure to foreign currency risk
The Group’s main 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 USD
2016 2015
RM’000 RM’000
Group
Trade receivables 24,265 43,663
Unsecured bank loans (9,787) (8,858)
Trade payables (9,554) (3,578)
Forward exchange contracts (34,101) (19,819)
Cross currency swap 12,280 21,490
Cash and cash equivalents 20,499 4,765
Net exposure
3,602 37,663
Company
Advances to subsidiaries 205,579 149,015
Unsecured bank loans (15,676) (25,935)
Cross currency swap 12,280 21,490
Net exposure
202,183 144,570
