Lenovo 2012 Annual Report Download - page 130

2011/12 Annual Report Lenovo Group Limited
128
NOTES TO THE FINANCIAL STATEMENTS
3 Financial risk management (continued)
(a) Financial risk factors (continued)
(iv) Liquidity risk (continued)
Company
Repayable
on demand
or 3 months
or less
Over
3 months
to 1 year
Over 1 to
3 years
Over 3 to
5 years Total
US$’000 US$’000 US$’000 US$’000 US$’000
At March 31, 2012
Accruals and other payables –31,637 – – 31,637
Amounts due to subsidiaries 1,104,471 –––1,104,471
Contingent considerations – – 1,500 275,000 276,500
At March 31, 2011
Bank loans –200,000 – – 200,000
Accruals and other payables –39,319 – – 39,319
Amounts due to subsidiaries 549,503 –––549,503
Derivatives settled in net:
Forward foreign exchange
contracts 4,545 – – – 4,545
Interest rate swap contracts 476 544 – – 1,020
Derivatives settled in gross:
Forward foreign exchange
contracts
– outflow 4,496 – – – 4,496
– inflow (4,497) –––(4,497)
(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, 2012, if United States dollar had weakened/strengthened by one percent against the major currencies
with all other variables held constant, post-tax profit for the year would have been US$1.69 million higher/
lower (2011: US$0.92 million lower/higher), mainly as a result of foreign exchange gains/losses on translation of
unhedged portion 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
Cash flow interest rate risk on United States dollar-denominated long-term borrowings is mitigated through the use
of floating-to fixed interest rate swaps as hedges. Borrowings in other currencies are insignificant. Accordingly, no
interest rate sensitivity analysis on borrowings is presented.
At March 31, 2012, if interest rates on the global channel financing program had been 25 basis points higher/
lower with all other variables held constant, post-tax profit for the year would have been US$1.6 million (2011:
US$1.32 million) lower/higher. This analysis 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.