Annual Report 2019

FAR EAST CONSORTIUM INTERNATIONAL LIMITED 248 For the year ended 31 March 2019 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 47. FINANCIAL INSTRUMENTS (continued) b. Financial risk management objectives and policies (continued) Market risk (continued) Foreign currency risk Certain group entities have transactions denominated in foreign currencies which expose the Group to foreign currency risk. The Group manages the foreign currency risk by entering into forward foreign exchange contracts and cross-currency swap contracts to mitigate the impact of fluctuating foreign currency rates. The carrying amount of the Group’s foreign currency denominated monetary items, at the end of the reporting period are as follows: 2019 2018 HK$’000 HK$’000 Assets A$ 14,309 244,109 Japanese Yen (“JPY”) 5,123 5,123 RMB 946 1,006 US$ 752 7,661 EUR 81,871 105,643 S$ 104,654 53,907 GBP 159,822 211,546 Foreign currency sensitivity analysis The Group’s exposure to foreign currency risk is mainly on currencies other than US$ for the individual group entity in Hong Kong since HK$ are pegged to US$ under the Linked Exchange Rate System and the management does not expect any significant exposure in relation to the exchange rate fluctuation between HK$ and US$. The following table details the Group’s sensitivity to a 10% (2018: 10%) weakening in the HK$ against the relevant foreign currencies other than US$, while all other variables are held constant. 10% is the sensitivity rate used when reporting foreign currency risk internally to key management personnel and represents the management’s assessment of the reasonably possible change in foreign exchange rates. The sensitivity analysis includes only outstanding monetary items denominated in foreign currencies and adjusts their translation at the year end if HK$ weakens 10% against the relevant foreign currency. For a 10% strengthens in HK$ against the relevant foreign currencies, these would be an equal and opposite impact on profit. Increase in profit after tax 2019 2018 HK$’000 HK$’000 A$ 1,002 17,088 JPY 428 428 RMB 71 75 US$ 63 640 EUR 6,836 8,821 S$ 8,686 4,474 GBP 12,786 16,924 In the management’s opinion, the sensitivity analysis is unrepresentative of the foreign currency risk as the year end exposure does not reflect the exposure during the year.