97
TEHO INTERNATIONAL INC LTD.
Annual Report 2016
NOTES
TO THE FINANCIAL STATEMENTS
Year ended 30 June 2016
29 FINANCIAL INSTRUMENTS: INFORMATIONON FINANCIAL RISKS (CONT’D)
Interest rate risk
Interest rate risk refers to the risk that the fair value or future cash flows of a financial
instrument will fluctuate because of changes in market interest rates. The Group’s and
the Company’s exposures to interest rate risk relates primarily to the Group’s interest-
bearing assets and liabilities. The Group do not enter into interest rate swaps to manage
its interest rate risk. These exposures are managed partly using natural hedges that
arise from offsetting interest rate sensitive assets and liabilities.
Exposure to interest rate risk
The table below sets out the Group’s and the Company’s exposure to interest rate risks:
Group
Company
2016
2015
2016
2015
$
$
$
$
Fixed rate instruments
Financial assets
13,000 13,000 1,586,120 1,942,841
Financial liabilities
(6,593,079) (2,044,148) (1,586,120) (1,942,841)
(6,580,079) (2,031,148)
–
–
Group
Company
2016
2015
2016
2015
$
$
$
$
Variable rate instruments
Financial assets
7,767,233 13,713,315 306,921
145,810
Financial liabilities
(37,107,637) (60,489,256)
–
–
(29,340,404) (46,775,941)
306,921
145,810
29 FINANCIAL INSTRUMENTS: INFORMATIONON FINANCIAL RISKS (CONT’D)
Interest rate risk (cont’d)
Sensitivity analysis for fixed rate instruments
The Group does not account for any fixed rate financial assets and liabilities at fair value
through profit or loss. Therefore a change in interest rates at the reporting date would
not affect profit or loss.
Sensitivity analysis for variable rate instruments
The variable rate debt obligations are with interest rates that are re-set regularly at
one, three or six month intervals. A change of 100 basis points in interest rates at the
reporting date would have increased/(decreased) equity and loss before tax by the
amounts shown below. There is no impact on other components of equity. This analysis
assumes that all other variables, in particular foreign currency rates, remain constant.
Loss before tax
100 bp
100 bp
increase decrease
$
$
Group
30 June 2016
Variable rate instruments
(293,404)
293,404
30 June 2015
Variable rate instruments
(467,759)
467,759
Company
30 June 2016
Variable rate instruments
3,069
(3,069)
30 June 2015
Variable rate instruments
1,458
(1,458)
