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61
VTech Holdings Ltd Annual Report 2012
19 Financial Risk Management and Fair Values
(Continued)
(c) Interest rate risk
At 31 March 2011 and 31 March 2012, the Group had no bank
borrowings.
The Group is exposed to interest rate risk through the impact of
interest rates changes on income-earning financial assets, the
following table indicates their effective interest rates at the balance
sheet date and the periods in which they reprice or the maturity
dates, if earlier.
Deposits and Cash
2012 2011
Effective
Interest Rate Within
one year
US$ million
Effective
Interest Rate Within
one year
US$ million
Floating 0.46% 176.5 0.21% 108.7
Fixed 1.57% 150.0 0.76% 224.4
Interest rate sensitivity
At the respective balance sheet dates, if interest rates had been
increased by 25 basis points and all other variables were held
constant, the Group’s profit after tax and total equity would
increase by approximately US$0.8 million and US$0.8 million for
the years ended 31 March 2011 and 31 March 2012, respectively.
This is mainly attributable to the Group’s exposure to interest rate
changes on its variable rate income-earning financial assets
including floating and fixed deposits and cash.
(d) Liquidity risk
Cash management of the Company and wholly-owned subsidiaries
of the Group are substantially centralised at the Group level. The
Group’s policy is to regularly monitor current and expected
liquidity requirements to ensure that it maintains sufficient reserves
of cash and adequate committed lines of funding from major
financial institutions to meet its liquidity requirements in the short
and longer term.
The following tables detail the remaining contractual maturities at the balance sheet date of the Group’s derivative and non-derivative
financial liabilities, which are based on contractual undiscounted cash flows and the earliest date of the Group can be required to pay:
Contractual undiscounted cash flows
Carrying
amount Total
Within
1 year or
on demand
More than
1 year but
less than
2 years
More than
2 years but
less than
5 years More than
5 years
US$ million US$ million US$ million US$ million US$ million US$ million
The Group
At 31 March 2012
Creditors and accruals 314.9 314.9 314.9 – – –
Derivatives settled gross:
Forward foreign exchange contracts –
at fair value through profit or loss
– outflow 13.9 13.9 – – –
– inflow (13.9) (13.9) – – –
Derivatives settled gross:
Forward foreign exchange contracts –
cash flow hedge
– outflow 150.6 150.6 – – –
– inflow (152.0) (152.0) – – –
The Company
At 31 March 2012
Creditors and accruals 0.4 0.4 0.4 – – –
Contractual undiscounted cash flows
Carrying
amount Total
Within
1 year or
on demand
More than
1 year but
less than
2 years
More than
2 years but
less than
5 years More than
5 years
US$ million US$ million US$ million US$ million US$ million US$ million
The Group
At 31 March 2011
Creditors and accruals 284.9 284.9 284.9 – – –
Derivatives settled gross:
Forward foreign exchange contracts –
at fair value through profit or loss
– outflow 90.8 90.8 – – –
– inflow (90.9) (90.9) – – –
Derivatives settled gross:
Forward foreign exchange contracts –
cash flow hedge
– outflow 73.1 73.1 – – –
– inflow (73.4) (73.4) – – –
The Company
At 31 March 2011
Creditors and accruals 0.5 0.5 0.5 – – –