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NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)

24 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 currency giving rise to this risk is primarily Renminbi.

In respect of cash and bank balances denominated in 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 end of the reporting period 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

Renminbi

2014

2013

Increase/

Increase/

(decrease)

Effect on profit

(decrease)

Effect on profit

in foreign

exchange rates

after tax and

retained profits

in foreign

after tax and

exchange rates

retained profits

HK$'000

HK$'000

10%

(10%)

4

10%

12,797

(4)

(10%)

(12,797)

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 end of the reporting period for presentation purposes.

The sensitivity analysis assumes that the change in foreign exchange rates had been applied to re-measure those financial instruments held by the Group which expose the Group to foreign currency risk at the end of the reporting period. The analysis is performed on the same basis for 2013.

Hong Kong Ferry (Holdings) Company Limited Annual Report 2014

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