KUWAIT ENERGY plc GROUP
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
For the year ended 31 December 2013
F-68
29.
FINANCIAL INSTRUMENTS (CONTINUED)
Interest rate risk management
The Group is exposed to interest rate risk as it has borrowed funds from banks and financial institutions and has
placed funds in interest bearing time deposits with banks during the year.
The Group is exposed to interest rate risk because the entities within the Group borrow funds at both floating and
fixed interest rates. This risk is mitigated by the Group by maintaining an appropriate mix of floating and fixed
rate borrowing.
The Group’s exposure to interest rates on financial assets and liabilities are detailed in the liquidity risk
management section of this note.
The following table illustrates the sensitivity of the profit for the year to a reasonably possible change in interest
rates of + 1% with effect from the beginning of the year. These changes are considered to be reasonably possible
based on observation of current market conditions. The calculations are based on the Group’s financial
instruments held at each consolidated statement of financial position date. All other variables are held constant.
There has been no change in the methods and the assumptions used in the preparation of the sensitivity analysis.
A positive number below indicates an increase in profit and negative number indicates decrease in profit. A 1%
decrease in the interest rates would have the opposite effect.
2013
2012
USD 000’s
USD 000’s
Impact on consolidated statement of income
(1,645)
(600)
Exposure to credit risk
The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure to
credit risk at the reporting date was:
2013
2012
USD 000’s
USD 000’s
Trade and other receivables
156,845
208,103
Bank balances
131,563
48,384
288,408
256,487
The maximum exposure to credit risk for trade receivables at the reporting date by geographic region was:
2013
2012
USD 000’s
USD 000’s
Egypt
115,824
163,891
Yemen
8,961
1,649
Ukraine
-
470
Oman
3,182
3,404
Russia
-
13
127,967
169,427
Liquidity risk management
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity
