Annual Report 2016
107
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED MARCH 31, 2016
5.
F I NANC I AL I NSTRUMENTS , F I NANC I AL R I SKS AND CAP I TAL
MANAGEMENT
– continued
(b)
Financial risk management policies and objectives
– continued
(ii)
Interest rate risk management
Interest rate risk arises from the potential changes in interest rates that may have
adverse effects on the Group’s results. The interest rates and terms of repayment of
the trust receipt loans and bank borrowings of the Group are disclosed in Notes 22
and 25 respectively.
The directors of the Company consider the Group’s or the Company’s exposure on
bank deposits is not significant as the interest rates have no material fluctuation during
the year.
Interest rate sensitivity
The sensitivity analyses below have been determined based on the exposure to
interest rates for variable-rate bank borrowings and trust receipt loans at the end
of the reporting period. The analysis is prepared assuming the financial instruments
outstanding at the end of the reporting period were outstanding for the whole
year. A 50 basis point (2015: 50 basis points) increase or decrease is used when
reporting interest rate risk internally to key management personnel and represents
management’s assessment of the reasonably possible change in interest rates.
If interest rates had been 50 basis points (2015: 50 basis points) higher or lower and
all other variables were held constant, the Group’s post-tax profit for the year ended
March 31, 2016 would decrease or increase by HK$2,840,000 (2015: decrease or
increase by HK$2,585,000).
