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Hong Kong Ferry (Holdings) Company Limited Annual Report 2013
Notes to the Accounts (Continued)
FINANCIAL RISK MANAGEMENT AND FAIR VALUES OF FINANCIAL INSTRUMENTS (Continued)
(c)
Currency risk
The Group is exposed to currency risk primarily through cash and bank balances that are denominated in a currency other than the Hong Kong dollars. The currencies giving rise to this risk are primarily Australian dollars
and Renminbi.
In respect of cash and bank balances denominated in Australian dollars and Renminbi, the Group ensures that
the net exposure is kept to an acceptable level, by buying or selling foreign currencies at spot rates where necessary to address short-term imbalances.
Other than the above, the Group has no significant exposure to foreign currency risk given its large asset base
and operational cash flow primarily denominated in Hong Kong dollars.
Sensitivity analysis
The following table indicates the instantaneous change in the Group's profit after tax (and retained profits) and other components of consolidated equity that would arise if foreign exchange rates to which the Group has significant exposure at the balance sheet date had changed at that date, assuming all other risk variables remained constant. In this respect, it is assumed that the pegged rate between the Hong Kong dollar and the United States dollar would be materially unaffected by any changes in movement in value of the United States
dollar against other currencies.
The Group
2013
Increase/
(decrease)
in foreign
exchange
rates
Effect
on profit
after tax
and retained
profits
HK$'000
2012
Increase/
(decrease)
in foreign
Effect
on profit
after tax
exchange
and retained
rates
profits
HK$'000
Australian dollars
10%
(10%)
10%
23,570
(10%)
(23,570)
Renminbi
10%
(10%)
12,797
10%
7,933
(12,797)
(10%)
(7,933)
Results of the analysis as presented in the above table represent an aggregation of the instantaneous effects on each of the Group entities' profits after tax and equity measured in the respective functional currencies, translated into Hong Kong dollars at the exchange rate ruling at the balance sheet date for presentation
purposes.
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