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Notes To The Consolidated Financial Statements
(Expressed in Renminbi)
Annual Report 2011 /
1
43 Financial risk management and fair values
(continued)
(e) Equity price risk
The Group is exposed to equity price changes arising from equity investments classified as available-
for-sale securities (see note 25). Other than unquoted securities held for strategic purpose, all of these
investments are listed.
The Group’s listed investments are listed on the Shanghai Stock Exchange and Shenzhen Stock
Exchange. Listed investments held in the available-for-sale portfolio have been chosen based on their
longer term growth potential and are monitored regularly for performance against expectations.
The Group is also exposed to equity price risk arising from changes in the Company’s own share price
to the extent that the Company’s own equity instruments underlie the fair values of other financial
liabilities of the Group. As at the balance sheet date the Group is exposed to this risk through the share
appreciation rights scheme issued by the Company as disclosed in note 40.
At 31 December 2011, it is estimated that an increase/(decrease) of 5% (2010: 5%) in the relevant
share price (for listed investments) or the Company’s own share price (for the share appreciation rights
scheme) as applicable, with all other variables held constant, would have increased/(decreased) the
Group’s profit after tax (and retained profits) and other components of consolidated equity as follows:
The Group
2011
2010
Increase/
(decrease)
in foreign
exchange
rates
Effect
on profit
after tax
and retained
profits
Effect
on other
components
of equity
Increase/
(decrease)
in foreign
exchange
rates
Effect
on profit
after tax
and retained
profits
Effect
on other
components
of equity
‘000
‘000
‘000
‘000
Changes in the relevant equity
price risk variable:
Increase
5% (4,640)
1,300
5% (5,016)
1,916
Decrease
(5)% 4,640
(1,300)
(5)% 5,016
(1,916)
The sensitivity analysis indicates the instantaneous change in the Group’s profit after tax (and retained
profits) and other components of consolidated equity that would arise assuming that the changes in
the share price or other relevant risk variables had occurred at the balance sheet date and had been
applied to re-measure those financial instruments held by the Group which expose the Group to
equity price risk at the balance sheet date. It is also assumed that the fair values of the Group’s equity
investments would change in accordance with the historical correlation with the relevant risk variables,
that none of the Group’s available-for-sale investments would be considered impaired as a result of the
decrease in the share price or other relevant risk variables, and that all other variables remain constant.
The analysis is performed on the same basis for 2010.