Page 156 - Interloop Annual Report 2018-2019

NOTES TO THE UNCONSOLIDATED NOTES TO THE UNCONSOLIDATED

FINANCIAL STATEMENTS FINANCIAL STATEMENTS

FOR THE YEAR ENDED JUNE 30, 2019 FOR THE YEAR ENDED JUNE 30, 2019

49. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES 2019 2018
Rupees in ‘000
The Company finances its operations through equity, borrowings and management of working capital with a view to maintain an appropriate mix between
various sources of finance to minimize risk. The Company follows an effective cash management and planning policy and maintains flexibility in funding by
keeping committed credit lines available. Market risks are managed by the Company through the adoption of appropriate policies to cover currency risks and Effect on profit and loss of an increase in interest rate for loan to director 144 -
interest rate risks.
Effect on profit and loss of an increase in interest rate for receivables from IL Bangla Limited 786 -
The Company has exposures to the following risks from its use of financial instruments:
Effect on profit and loss of an increase in interest rate for long term financing 14,696 15,188
- Market risk Effect on profit and loss of an increase in interest rate for liabilities against assets subject to
- Credit risk - 10
- Liquidity risk finance lease

49.1 Market risk Effect on profit and loss of an increase in interest rate for short term borrowings 81,834 61,542
97,460 76,740
Market risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in market prices. Market
risk comprises interest rate risk, currency risk and other price risk such as equity risk. The sensitivity analysis in the following sections relate to the
position as at June 30, 2019 and 2018. Decrease in interest rates at June 30 would have had the equal but opposite effect of these amounts. Sensitivity analysis has been prepared on
symmetric basis.
49.1.1 Interest rate risk:
49.1.2 Currency risk / Foreign Exchange risk:
Interest rate risk represents the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest
rates. Majority of the interest rate exposure arises from investments in term deposit receipts, long term and short term loans, short term borrowings, Currency risk is the risk that the fair value or future cash flows of a financial instrument, will fluctuate because of changes in foreign exchange rates.
long term financing and liabilities against assets subject to finance lease. Foreign currency risk arises mainly where receivables and payables exist due to foreign currency transactions.
Exposure to Currency Risk
At the balance sheet date, the interest rate profile of the Company’s interest bearing financial instruments is as follows:
The Company’s exposure to currency risk is restricted to the amounts receivable from/payable to the foreign entities and bank balances which are
2019 2018 denominated in currency other than the functional currency of the Company. The Company’s exposure to currency risk is as follows:

2019 2018
Fixed rate instruments Particulars Currency
F.Currency Rupees F.Currency Rupees
Short term investments (Rupees in '000) 1,076,355 - Amount in ‘000
Loan to Metis International (Pvt) Limited - Secured (Rupees in '000) 9,560 33,414
Foreign currency bank accounts US $ 390.39 64,024 261.55 31,752
EUR 38.84 7,239 4.71 666
Long term financing - Secured (Rupees in '000) 2,639,611 814,286
71,263 32,418
Variable rate instruments
Trade debts US $ 47,649.90 7,814,583 57,364.98 6,964,108
Loan to director - Secured (Rupees in '000) 25,750 -
Effective interest rate in percentage 6.07 - Loans and advances US $ 58.48 9,560 275.00 33,414
Receivables from IL Bangla Limited (Rupees in '000) 82,766 - Less: Payables - Creditors US $ 332.28 54,661 467.42 56,744
Effective interest rate in percentage 7.53 - EUR 152.36 28,490 89.78 12,688
CNY 0.93 23 - -
Long term financing from financial institutions - Secured (Rupees in '000) 2,236,325 2,402,190 CHF 0.45 75 0.35 43
Effective interest rate in percentage 13.35 7.33 83,249 69,475
On Balance sheet Exposure 7,812,157 6,960,465
Liabilities against assets subject to finance lease - Secured (Rupees in '000) - 847
Effective interest rate in percentage - 7.94
Under letter of credit US $ 4,160.32 684,373 1,971.64 239,357
EUR 4,271.95 798,812 5,297.17 748,650
Short term borrowings from financial institutions - Secured (Rupees in '000) 11,726,000 15,034,364 JPY ¥ 21,776.31 33,285 3,100.00 3,402
Effective interest rate in percentage 2.30 4.17 GBP £ 27.00 5,628 - -
CHF - - 21.75 2,656
Fair value sensitivity analysis for fixed rate instruments
Off Balance Sheet Exposure 1,522,098 994,065
The Company does not account for any fixed rate financial assets and liabilities at fair value through profit or loss. Therefore, a change in interest
rate at the balance sheet date would not affect statement of profit or loss of the Company.
Cash flow sensitivity analysis for variable rate instruments 2018 - 19
Interloop Limited If interest rates on loan, receivables, long term financing, liabilities against assets subject to finance lease and short term borrowings from banks, Annual Report
at the year end date, fluctuate by 100 bps higher / lower with all other variables, in particularly foreign exchange rates held constant, profit before
taxation for the year 2019 and 2018 would have been affected as follows:

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