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Notes to the Financial Statements (cont’d)
For the financial year ended 31 December 2011
38. Financial risk management objectives and policies (cont’d)
156
(b) Foreign currency risk (cont’d)
The cash flow hedges of the expected future sales were assessed to be highly effective and a net unrealised loss of
RM119,000 (2010: net unrealized gain of RM950,000) with a deferred tax asset of RM30,000 (2010: deferred tax liability
of RM238,000) relating to the hedging instruments is included in other comprehensive income (see Note 34(i)).
The amounts retained in other comprehensive income at 31 December 2011 are expected to mature and affect profit or
loss by a loss of RM89,000 (2010: gain of RM712,000) (see Note 31) in 2012.
The following table demonstrates the sensitivity of the Group’s profit net of tax and equity at the reporting date to a
possible reasonable change in the United States Dollar (“USD”), Indonesia Rupiah (“IDR”) and Australia Dollar (“AUD”).
Building on Success: Developing Resources for the Future
2011 2010
Profit net of
Profit net of
tax Equity
tax Equity
RM’000 RM’000 RM’000 RM’000
USD strengthened 5% (3,896) (1,881) 2,167 4,760
weakened 5% 3,718 1,801 (740) (4,758)
AUD strengthened 5% 18 – 34 192
weakened 5% (18) – (34) (189)
IDR strengthened 5% (401) (400) (408) (408)
weakened 5% 443 442 450 450
(c) Liquidity risk
Liquidity risk is the risk that the Group or the Company will encounter difficulty in meeting financial obligations due to
shortage of funds. The Group’s and the Company’s exposure to liquidity risk arises primarily from mismatches of the
maturities of financial assets and liabilities.
The Group manages its debt maturity profile, operating cash flows and the availability of funding so as to ensure that all
refinancing, repayment and funding needs are met. As part of its overall prudent liquidity risk management, the Group
maintains sufficient levels of cash or cash convertible investments to meet its working capital requirements. In addition,
the Group strives to maintain available banking facilities of a reasonable level to its overall debt position. As far as
possible, the Group raises committed funding from financial institutions and prudently balances its portfolio with some
short term funding so as to achieve overall cost effectiveness.
Analysis of financial instruments by remaining contractual maturities
The table below summarises the maturity profile of the Group’s and the Company’s financial assets and liabilities at the
end of the reporting period based on contractual undiscounted repayment obligations.