Creative 2014 Annual Report Download - page 54

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54
CREATIVE TECHNOLOGY LTD AND ITS SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
For the nancial year ended 30 June 2014
Equity
10% increase 10% decrease
US$’000 US$’000
Group
2014
Quoted equity securies 1,367 (1,367)
2013
Quoted equity securies 1,406 (1,406)
(ii) Interest rate risk
The Group has balances placed with reputable banks and nancial institutions. The Group manages its interest rate risks
on its interest income by placing the cash balances in varying maturities and interest rate terms with due consideration to
operating cash ow requirements and optimising yield.
(iii) Currency risk
The functional currency of the Company is predominantly the US dollar and accordingly, gains and losses resulting from the
translation of nancial assets and liabilities denominated in currencies other than the US dollar are reected in the determination
of net prot (loss). From time to time, the Group enters into forward exchange contracts to reduce its exposure to currency
translation gains and losses. Forward exchange contracts are marked to market each period and the resulting gains and losses
are included in the determination of net prot (loss). No forward exchange contracts were outstanding as at 30 June 2014 and
30 June 2013.
USD SGD EUR GBP Others Total
US$’000 US$’000 US$’000 US$’000 US$’000 US$’000
Group
2014
Financial assets
Cash and cash equivalents 28,510 65,017 20,208 4,433 6,470 124,638
Financial assets, available-for-sale 13,495 8,113 – – – 21,608
Trade receivables 6,407 657 2,434 254 807 10,559
Other receivables 274 97 2 1 112 486
Other nancial assets-deposits 87 232 66 28 67 480
48,773 74,116 22,710 4,716 7,456 157,771
Financial liabilies
Financial liabilies (31,761) (8,624) (6,091) (117) (689) (47,282)
Net nancial assets 17,012 65,492 16,619 4,599 6,767 110,489
The Group’s currency exposure is as follows:
(a) Market risk
(i) Price risk
As part of its long-term business strategy, from time to time, the Group makes strategic equity investments in companies
that can provide the Group with technologies or products that management believes will give the Group a competitive
advantage in the markets in which the Group competes. The Group has strategic investments in quoted equity shares. The
Group manages the risk of unfavourable changes by cautious review of the investments before investing and continuous
monitoring of the performance of investments held and assessing market risk relevant to which the investments operate.
The market value of these investments will uctuate with market conditions. The table below summarises the impact to the
Group’s fair value reserve in equity arising as a result of a 10% increase/decrease in prices of quoted equity securities. This
analysis assumes that all other variables remain constant.
29. FINANCIAL RISK MANAGEMENT (cont’d)