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NOTES TO THE FINANCIAL STATEMENTS
(cont’d)
For the year ended 31 December 2012
37. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (cont’d)
(d) Foreign currency risk
The Group has transactional currency exposures arising from sales, purchases or operating costs by operating units in
currencies other than the unit’s functional currency. Approximately 1.7% (2011: 1.6%) of the Group’s sales are denominated
in currencies other than the functional currency of the operating unit making the sale, whilst 86.2% (2011: 88.1%) of
purchases and operating costs are denominated in the unit’s functional currency.
The management ensures that the net exposure is maintained at an acceptable level by buying and selling foreign currencies
at spot rates where necessary to address short-term fluctuations.
Sensitivity analysis for foreign currency risk
The following table demonstrates the sensitivity to a reasonably possible change in the USD, SGD, EURO, Malaysia Ringgit
(RM), Sterling Pound (GBP), Ukrainian Hryvnia (UAH) and Renminbi (RMB) against the respective functional currencies of the
Group entities, with all variables held constant, of the Group’s profit before tax.
Group
Profit before tax
2012
2011
US$’000
US$’000
SGD/USD
- strengthened 5% (2011: 5%)
82
42
- weakened 5% (2011: 5%)
(82)
(42)
EURO/USD
- strengthened 5% (2011: 5%)
33
32
- weakened 5% (2011: 5%)
(33)
(32)
RM/USD
- strengthened 5% (2011: 5%)
238
200
- weakened 5% (2011: 5%)
(238)
(200)
GBP/USD
- strengthened 5% (2011: 5%)
–
9
- weakened 5% (2011: 5%)
–
(9)
UAH/USD
- strengthened 5% (2011: 5%)
559
–
- weakened 5% (2011: 5%)
(559)
–
RMB/USD
- strengthened 5% (2011: 5%)
5
–
- weakened 5% (2011: 5%)
(5)
–
38. Capital management
The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and healthy capital
ratios in order to support its business and maximize shareholder value.
The Group manages its capital structure and makes adjustments to it, in light of changes in economic conditions. To maintain
or adjust the capital structure, the Group may adjust the dividend payment to shareholders, return capital to shareholders or
issue new shares. No changes were made in the objectives, policies or processes during the years ended 31 December 2012 and
31 December 2011.
141
Food Empire Holdings Limited Annual Report 2012