Megachem Limited Annual Report 2015 117 Notes to the Financial Statements 31 December 2015 25. Financial instruments: information on financial risks (cont’d) 25E. Interest rate risk (cont’d) 2015 2014 Increase / (Decrease) Profit after tax Equity Profit after tax Equity $’000 $’000 $’000 $’000 Company Increased by 1-percentage point (82) (82) (125) (125) Decreased by 1-percentage point 82 82 125 125 25F. Credit risk on financial assets Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. For trade receivables, the Group adopts the policy of dealing only with customers of appropriate credit history, and obtaining sufficient security and/or credit insurance where appropriate to mitigate credit risk. For other financial assets such as advances to suppliers, interest bearing deposits and bank balances, the Group adopts the policy of dealing only with high credit quality counterparties. As the Group and Company does not hold any collateral, the maximum exposure to credit risk for each class of financial instruments is the carrying amount of that class of financial instruments presented on the statement of financial position except for corporate guarantees provided to banks (Note 26). (i) Concentration of credit risk The Group’s and Company’s major classes of financial assets are bank deposits and trade receivables. The number of debtors that individually represented 5-10% of non-related party trade receivables are as follows: Group Company 2015 2014 2015 2014 Number of debtors that represent: 5-10% of non-related party trade receivables 1 1 1 1
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