ENRICHING LIVES EXPANDING HORIZONS - Maxis

180
Financial Statements
NOTES TO THE
FINANCIAL STATEMENTS
31 December 2011
Continued
33 FINANCIAL RISK MANAGEMENT (CONTINUED)
(a) Market risk (continued)
(i) Foreign exchange risk (continued)
IMPACT ON PROFIT BEFORE TAX FOR THE YEAR IMPACT ON EQUITY (1)
GROUP AND
GROUP COMPANY COMPANY
2011 2010 2011 2010 2011 2010
RM’000 RM’000 RM’000 RM’000 RM’000 RM’000
USD/RM
- strengthened 5%
(2010: 5%) (9,648) (6,049) 0 0 13,268 10,860
- weakened 5%
(2010: 5%) 9,648 6,049 0 0 (13,268) (10,860)
(1)
Represents cash flow hedging reserve
The impacts on profit before tax for the 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 income statement.
Other balances denominated in foreign currencies are not significant and hence, profit is not materially impacted.
(ii) Interest rate risk
The Group’s interest rate risk arises from deposits with licensed banks, deferred payment creditors, borrowings and loan
from a related party carrying fixed and variable interest rates. The objectives of the Group’s interest risk management
policies are to allow the Group to effectively manage the interest rate fluctuation through the use of fixed and floating
interest rate debt and derivative financial instruments. The Group adopts a non-speculative stance which favours
predictability over short-term interest rate fluctuations. The interest rate profile of the Group’s borrowings is also
regularly reviewed against prevailing and anticipated market interest rates to determine whether refinancing or early
repayment is warranted.
The Group manages its cash flow interest rate risk by using cross currency interest rate swaps. Such swaps have the
economic effect of converting certain borrowings from floating rates to fixed rates.