Annual Report 2019

NOTESTOTHE CONSOLIDATED FINANCIAL STATEMENTS For the year ended 31 December 2019 139 The United Laboratories International Holdings Limited Annual Report 2019 41. FINANCIAL INSTRUMENTS (Continued) Financial risk management objectives and policies (Continued) Market risk (Continued) Foreign currency risk (Continued) Foreign currency sensitivity analysis The following table details the Group’s sensitivity to a 5% (2018: 5%) increase and decrease in RMB against USD, Euro and HK$. 5% is the sensitivity rate used which represents management’s assessment of the reasonably possible change in foreign currency rate. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the end of the reporting period for 5% change in foreign currency rates. A positive (negative) number below indicates an increase (decrease) in post-tax profit for both years where RMB strengthens 5% against USD, Euro and HK$. For a 5% weakening of RMB against USD, Euro and HK$, there would be an equal but opposite impact on the profit for both years. 2019 2018 RMB’000 RMB’000 USD 28,909 12,927 Euro 26,634 6,645 HK$ 43,655 39,179 In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the exposure during both years. Fair value and cash flow interest rate risks The Group has significant borrowings which bear interest-rate risk. Floating rate borrowings, bank deposits and bank balances expose the Group to cash flow interest-rate risk. Borrowings, leases liabilities, obligations under finance leases and convertible bonds issued at fixed rates expose the Group to fair value interest-rate risk. During the year, the Group has not hedged its cash flow and fair value interest rate risk.