88
SUNMOON FOOD COMPANY LIMITED
ANNUAL REPORT 2015
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE FINANCIAL YEAR ENDED 31 DECEMBER 2015
25.
FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL MANAGEMENT
(CONTINUED)
25.2 Market risks
(Continued)
(ii)
Interest rate risks
The Group’s exposure to market risks for changes in interest rates relates primarily to interest-bearing
bank borrowings as shown in Note 20 to the financial statements. The Company has no exposure to
market risk for changes in interest rates as it does not have interest-bearing borrowings.
The Group’s results are affected by changes in interest rates due to the impact of such changes on
interest expenses from interest-bearing bank borrowings which are at floating interest rates. It is the
Group’s policy to obtain quotes from reputable banks to ensure that the most favourable rates are
made available to the Group.
Interest rate sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to interest rate risks
for financial liabilities at the end of the reporting period. For floating rate liabilities, the analysis
is prepared assuming the amount of liability outstanding at the end of the reporting period was
outstanding for the whole year. The sensitivity analysis assumes an instantaneous 0.5% change in
the interest rates from the end of the reporting period, with all variables held constant.
If the interest rate increases or decreases by 0.5%, the Group’s profit or loss, will increase or decrease by:
Profit or loss
2015
2014
$’000
$’000
Bank borrowings
3
13
(iii)
Equity price risks
The Group are exposed to equity price risk arising from quoted equity security classified as
held-for-trading financial asset. The quoted equity security is held for trading purposes. Further details
of this quoted equity security are set out in Note 15 to the financial statements.
Equity price sensitivity analysis
The sensitivity analysis below has been determined based on the exposure to equity price risks at
the end of the reporting period.
The sensitivity analysis assumes an instantaneous 20% increase or decrease in the equity prices
from the end of the reporting period, with all variables held constant, the Group’s profit or loss will,
increase or decrease by:
Profit or loss
2015
2014
$’000
$’000
Held-for-trading financial asset
10
48
