Page 104 - Forterra

102 FORTERRA
ANNUAL REPORT 2012
NOTES TO THE
FINANCIAL STATEMENTS
28 FINANCIAL RISK MANAGEMENT (CONTINUED)
(c) Market risk (Continued)
Foreign currency risk
The Group incurs foreign currency risk as a result of its operations in the PRC and interest-
bearing liabilities. The currency giving rise to this risk at the balance sheet date is primarily
the USD. Exposures to significant foreign currency risk are as follows:
US Dollar
$’000
Group
As at 31 December 2012
Cash and cash equivalents 14,086
Derivative financial liabilities (1,294)
Interest-bearing borrowings (597,217)
(584,425)
As at 31 December 2011
Derivative financial assets 4
Cash and cash equivalents 18,134
Derivative financial liabilities (126)
Interest-bearing borrowings (627,279)
(609,267)
Sensitivity analysis
A strengthening of the respective functional currencies of the Group’s operations, as indicated
below, against the US Dollar at 31 December, would have increased/(decreased) profit or
loss (before any tax effects) by the amounts shown below. This analysis is based on foreign
currency exchange rates variances that the Group considered to be reasonably possible at
the end of the reporting period. The analysis assumes that all other variables, in particular
interest rates, remain constant and ignores any impact of forecasted sales and purchases.
The analysis is performed on the same basis for 2011, as indicated below:
Profit or loss
$’000
Group
As at 31 December 2012
US Dollar 58,442
As at 31 December 2011
US Dollar 60,927
A weakening of the foreign exchange rates at 31 December would have had the equal but
opposite effect on the above currencies to the amounts shown above, on the basis that all
other variables remain constant.