KIM HENG OFFSHORE & MARINE HOLDINGS LIMITED
ANNUAL REPORT 2014
89
NOTES
TO THE FINANCIAL STATEMENTS
16
FINANCIAL RISK MANAGEMENT (Cont’d)
Fair value sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets or liabilities at fair value through profit
or loss. Therefore a change in interest rates at the reporting date would not affect profit or loss.
Cash flow sensitivity analysis for variable rate instruments
A change of 100 basis points in interest rates at the reporting date would have increased/
(decreased) profit before tax by the amounts shown below. This analysis assumes that all other
variables, in particular foreign currency rates, remain constant. The analysis is performed on the
same basis for 2013 and 2014.
Group
2014
2013
$’000
$’000
100 bp increase
Variable rate instruments
2,263
35
100 bp decrease
Variable rate instruments
(2,263)
(35)
Estimations of the fair value
The following summarises the significant methods and assumptions used in estimating the fair values
of financial assets and liabilities of the Group.
Non-derivative financial liabilities (non-current)
Fair value, which is determined for disclosure purposes, is calculated based on the present value of
future principal and interest cash flows, discounted at the market rate of interest at the reporting date.
For finance leases and term loans, the market rate of interest is determined by reference to similar
lease and loan agreements respectively.
The carrying amounts of floating interest non-current loans and borrowings, where interest rates
reprices within 1 year from reporting date, are assumed to reflect the corresponding fair values of the
financial liabilities, given the short repricing period.
Other financial assets and liabilities
The carrying amounts of financial assets and liabilities with a maturity of less than one year (including
trade and other receivables, cash and cash equivalents, loans and borrowings, and trade and other
payables) are assumed to approximate their fair values due to the short period to maturity.
