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Annual Report 2014 | S P SETIA BERHAD GROUP | 197

NOTES TO THE FINANCIAL STATEMENTS

For the year ended 31 October 2014

V. FINANCIAL STATEMENTS

44. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONT’D)

(b) Credit risk

Credit risk arises from the possibility that a counter party may be unable to meet the terms of a contract in which the Group and the

Company has a gain position.

The Group and the Company minimise and monitor its credit risk by dealing with credit worthy counter-parties and applying credit

approval controls for material contracts. If necessary, the Group and the Company may obtain collaterals from counter-parties as a

means of mitigating losses in the event of default.

In respect of trade receivables arising from the sale of development properties, the Group and the Company mitigate its credit risk

by maintaining its name as the registered owner of the development properties until full settlement by the purchaser of the self-

financed portion of the purchase consideration or upon undertaking of end-financing by the purchaser’s end-financier.

At the reporting date, the Group did not have any significant concentration of credit risk that may arise from exposure to a single

debtor or to group of debtors.

The ageing analysis of receivables which are trade in nature is disclosed in note 18 to the financial statements. Deposits with

banks and other financial institutions that are neither past due nor impaired are placed with or entered into with reputable financial

institutions with high credit ratings and no history of default.

(c) Foreign currency exchange risk

The Group is exposed to currency translation risk arising from its net investments in foreign operations, mainly United Kingdom,

Australia, Singapore and China.

Sensitivity analysis for foreign currency risk

The closing rates used in translation are as follows:

2014

2013

Sterling Pound

5.262

5.061

Australian Dollar

2.893

2.992

Singapore Dollar

2.574

2.545

Chinese Yuan

0.536

-

The following table demonstrates the sensitivity of the Group’s equity to a reasonably possible change in the Sterling Pound,

Australian Dollar, Singapore Dollar and Chinese Yuan exchange rates, with all other variables held constant.

Group

2014

2013

RM’000

RM’000

Restated

Sterling Pound/RM

- strengthened by 5%

28,986

19,682

- weakened by 5%

(28,986)

(19,682)

Australian Dollar/RM

- strengthened by 5%

2,212

12,949

- weakened by 5%

(2,212)

(12,949)

Singapore Dollar/RM

- strengthened by 5%

15,966

14,218

- weakened by 5%

(15,966)

(14,218)

Chinese Yuan/RM

- strengthened by 5%

4,705

-

- weakened by 5%

(4,705)

-