3) FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
(Cont’d)
Market risk
(Cont’d)
The Group has in place policies to manage its competitive risks from its competitors in providing
better alternatives in terms of better services.
i)
Foreign currency exchange risk
Foreign currency risk is that the fair value of future cash flows of a financial instrument will
fluctuate because of changes in foreign currency exchange rates. The Group has exposure
to foreign currency fluctuation arising from revenue or expense that are denominated in
currency other than the functional currency of the Group.
However as at 31st December 2014, the Group’s exposure to foreign currency risk is not
significant. The Group has not entered into any forward foreign exchange contracts as at
31st December 2014.
Currency risk sensitivity analysis
No sensitivity analysis is prepared as the Group do not expect any material effect on the
Group’s loss net of tax and equity arising from the effect of reasonably possible changes
to exchange rates on the foreign currency denominated monetary assets and monetary
liabilities at the end of the reporting period.
ii)
Interest rate risk
Interest rate risk is the risk that the fair value or future cash flows of the Group’s financial
instruments will fluctuate because of changes in market interest rates.
The Group’s investment in financial assets are mainly short term in nature and mostly
placed in financial deposits.
Interest rate risk sensitivity
The following demonstrates the sensitivity of the Group’s loss before tax to a 100 basis
point increase/decrease in interest rates with all other variables held constant:
GROUP
2014
RM
Increase/Decrease in loss before tax
15,000
Credit risk
Credit risk is the risk of a financial loss to the Group if a customer or counterparty to a financial
instrument fails to meet its contractual obligations. The Group’s exposure to credit risk arises
principally from its receivables from customers. The Company’s exposure to credit risk arises
principally from loans and advances to subsidiary.
Asia Media Group Berhad Annual Report 2014
80
NOTES TO THE FINANCIAL STATEMENTS
(Cont’d)
