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2008/09 Annual Report Lenovo Group Limited
98
NOTES TO THE FINANCIAL STATEMENTS (Continued)
3 Financial risk management (continued)
(b) Market risks sensitivity analysis
HKFRS 7 “Financial instruments: Disclosures” requires the disclosure of a sensitivity analysis for market risks that show
the effects of a hypothetical change in the relevant market risk variable to which the Group is exposed to at the balance
sheet date on profit or loss and total equity.
The sensitivity analysis for each type of market risks does not reflect inter-dependencies between risk variables. The
sensitivity analysis assumes that a hypothetical change of the relevant risk variable had occurred at the balance sheet
date and had been applied to the relevant risk variable in existence on that date. The bases and assumptions adopted
in the preparation of the analyses will by definition, seldom equal to the related actual results.
The disclosure of the sensitivity analysis on market risks is solely for compliance with HKFRS 7 disclosure requirements
in respect of financial instruments, and are for illustration purposes only; and it should be noted that the hypothetical
amounts so generated do not represent a projection of likely future events and profits or losses of the Group.
(i) Foreign currency exchange rate sensitivity analysis
At March 31, 2009, if United States dollar had weakened/strengthened by 1 percent against all other currencies
with all other variables held constant, post-tax loss for the year (2008: post-tax profit) would have been US$4.37
million (2008: US$2.13 million) higher/lower, mainly as a result of foreign exchange gains/losses on translation of
receivable and payable balances.
The analysis above is based on the assumption that United States dollar weakened or strengthened against all
other currencies in the same direction and magnitude, but it may not be necessarily true in reality.
(ii) Interest rate sensitivity analysis
At March 31, 2009, if interest rates on United States dollar-denominated borrowings had been 25 basis points
higher/lower with all other variables held constant, other components of equity would have been US$1.28 million
(2008: US$2.17 million) higher/lower mainly as a result of a increase/decrease in the fair value of the interest rate
swaps.
At March 31, 2009, if interest rates on the global channel financing program had been 25 basis points higher/lower
with all other variables held constant, post-tax loss for the year (2008: post-tax profit) would have been US$1.05
million (2008: US$1.28 million) lower/higher. The calculation is based on the assumption that the interest rates of
all the currencies covered by the global channel financing program go up and down at the same time and with the
same magnitude; however, such assumptions may not be necessarily true in reality.