Megachem Limited Annual Report 2015 116 Notes to the Financial Statements 31 December 2015 25. Financial instruments: information on financial risks (cont’d) 25C. Foreign currency risk (cont’d) The following table demonstrates the sensitivity of the Group’s and Company’s net profit after tax and equity to changes in foreign currency movement (assuming all other variables are consistent): 2015 2014 Increase / (Decrease) Profit after tax Equity Profit after tax Equity $’000 $’000 $’000 $’000 Group USD : strengthen by 1% 17 12 6 (9) USD : weaken by 1% (17) (12) (6) 9 Company USD : strengthen by 1% 48 48 (3) (3) USD : weaken by 1% (48) (48) 3 3 25D. Equity price risk The Group is exposed to equity security market risk because of the investments held by the Group which are classified as financial assets at fair value through profit or loss. These investments are listed on the Stock Exchange of Singapore. The effect on post tax profit is not significant. 25E. Interest rate risk Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Fair value interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. As the Group has no significant interest-bearing assets, the Group’s income and operating cash flows are substantially independent of changes in market interest rates. The Group’s interest rate risk mainly arises from bills payable to banks and short term bank loans at floating interest rates. The Group manages its interest rate risk by keeping bills payable and short term bank loans to the minimum required to sustain the operations of the Group. The following table demonstrates the sensitivity of the Group’s and Company’s net profit after tax and equity to changes in interest rates movement (assuming all other variables are consistent): 2015 2014 Increase / (Decrease) Profit after tax Equity Profit after tax Equity $’000 $’000 $’000 $’000 Group Increased by 1-percentage point (137) (135) (181) (180) Decreased by 1-percentage point 137 135 181 180
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