Page 89 - Inegrated Annual Report 2020-Eng

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS | 31 DECEMBER 2020

Foreign currency risk

Foreign currency risk is the risk that financial instrument will fluctuate due to change in foreign exchange rates.
Assets are typically funded in the same currency as that of the business being transacted to eliminate exchange
exposures. Management believes that there is a minimal risk of significant loss due to exchange rate fluctuations
and consequently the Group does not hedge its foreign currency exposure.

2019 2019
Liabilities Assets Liabilities Assets
AED’000 AED’000 AED’000 AED’000
Egyptian Pound (EGP) 152,632 671,162 68,099 435,232
Bahraini Dinar (BHD) 7,625 94,988 53,791 2,001
Euro 320 319,319 - 38
Saudi Riyal (SAR) 168,145 179,437 141,866 137,591
Indian Rupees (INR) 3,890 60,184 3,968 61,318
Others - 642 - -

332,612 1,325,732 267,724 636,180
The Group’s major transactions in foreign currencies are in Egyptian Pound (EGP), Bahraini Dinar (BHD), Euro
and Indian Rupees (INR).

Equity price risk
The Group’s listed equity securities are susceptible to market price arising from uncertainties about future values
of the investment securities. The Group manages equity price risk through diversification and placing limits on
individual and total equity investments. The Group’s management reviews and approves all investment decisions.

The following demonstrates the senisitivity of the cumulative changes in fair value to reasonably possible fair
value changes in equity prices, with all variables held constant. The effect of the decreases in equity prices is
expected to be equal and opposite to the effect of the increases shown.

Effect on profit AED’000
Investments carried at fair value through profit or loss
2020
5% change in variables 1,389
2019
5% change in variables 1,355
Investments carried at fair value through other comprehensive income
2020
5% change in variables -
2019
5% change in variables 1,583

Capital management

The primary objective of the Group’s capital management is to ensure that it maintains a strong credit rating and
healthy capital ratios in order to support its business and maximise shareholder value.
The Group manages its capital structure and makes adjustments to it in light of changes in business conditions.
No changes were made in the objectives, policies or processes during the years ended 31 December 2020 and
31 December 2019. Capital comprises share capital, share premium, reserves, retained earnings, and proposed
dividend and is measured at AED 3,829,070 thousand as at 31 December 2020 (2019: AED 3,542,901 thousand).

2020 Integrated Annual Report 89