China XLX Fertiliser Ltd

NOTES TO THE FINANCIAL STATEMENTS31 December 200829. Financial risk management objectives and policies (cont’d)(c)Interest rate risk (cont’d)Cash flow sensitivity analysis for variable rate instrumentsFor variable rate financial assets and liabilities, the Group has determined that the carrying amountsof cash and short-term deposits based on their notional amounts, reasonably approximate their fairvalues because these are mostly short term in nature or are repriced frequently. For interest-bearingloans and borrowings, a change in interest rate at the reporting date would increase/(decrease)profit or loss by the amounts shown below. This analysis assumes that all other variables, in particularforeign currency rates, remain constant.Increase/decrease inbasis pointsEffect on profitnet of taxRmb’000Group2008 2007Effect on profitnet of taxRmb’000Interest expenseRMB +10 – (105)USD +50 (219) –Interest incomeRMB +10 36 54SGD +10 22 457USD +50 710 1(d)Foreign currency riskThe Group and the Company hold cash and cash equivalents denominated in foreign currencies forworking capital purposes. At the balance sheet date, such foreign currency balances (mainly in SGDand USD) are as follows:GroupCompany2008 2007 2008 2007Rmb’000 Rmb’000 Rmb’000 Rmb’000SGD 22,077 456,635 22,077 440,313USD 142,031 19 961 19164,108 456,654 23,038 440,332China XLX Fertiliser Ltd.85