32 FINANCIAL RISK MANAGEMENT
(continued)
Effective interest rate and repricing analysis
(continued)
Sensitivity analysis
The Group’s borrowings and cash and cash equivalents at variable rates on which effective hedges have not been entered
into, are denominated mainly in Singapore Dollars. If the interest rates increase/(decrease) by 100 basis point with all other
variables being held constant, the profit before tax will be higher/(lower) by the amounts shown below.
Income statement
100 bp
increase
100 bp
decrease
$’000
$’000
Group
31 December 2015
Short-term bank deposits
59
(59)
Borrowings
(195)
195
(136)
136
31 December 2014
Short-term bank deposits
29
(29)
Borrowings
(200)
200
(171)
171
Company
31 December 2015
Borrowings
(100)
100
31 December 2014
Borrowings
(100)
100
Foreign currency risk
The Group is exposed to foreign currency risk in respect of bank deposits as well as sales and purchases that are denominated
in a currency other than the Group entities’ functional currencies. The currencies giving rise to this risk are primarily the Ringgit
Malaysia (“RM”) and the US dollar (“USD”). The risk arises mainly from timing mismatches between such sales and purchases
denominated in these currencies. The Group ensures that its net exposure is kept to an acceptable level by buying or selling
foreign currencies at spot rates when necessary to address short-term imbalances.
The Company’s investments and long-term loan to its subsidiaries are not hedged as those currency positions are considered
to be long-term in nature.
114
TELECHOICE INTERNATIONAL LIMITED
2015 ANNUAL REPORT
NOTES TO THE
FINANCIAL STATEMENTS
