Epson 2015 Annual Report Download - page 107

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106
Foreign Exchange Sensitivity Analysis
In cases where each currency other than the functional currency that denominates the financial instruments held by
Epson as of March 31, 2015 increases by 10% in value against the functional currency, the impact on profit before
tax in the consolidated statement of comprehensive income was as follows.
The impact from the translation of functional currency-denominated financial instruments, and assets, liabilities,
income and expenses of foreign operations into Japanese yen is not included. Also, it is based on the assumption
that currencies other than the currencies used for the calculation do not fluctuate.
(6) Interest Rate Risk
Epson’ s interest rate risk arises from cash equivalents and interest-bearing debt. Borrowings and bonds issued with
floating rates are subject to the effects of changes in future cash flows caused by the fluctuation of market interest
rates; while, borrowings and bonds issued with fixed rates are subject to the effects of changes in the fair value
caused by the fluctuation of market interest rates.
In response to the fluctuation of market interest rates, Epson reduces the interest rate risk by implementing an
interest rate swap and adjusting appropriate proportion of financing between floating rates and fixed rates.
In accordance with Epson’ s Capital Management Regulation, the interest rate swap is approved by the finance
officer of the Company.
Interest Rate Sensitivity Analysis
In cases where the interest rate of financial instruments held by Epson as of March 31, 2015 increases by 100bp,
the impact on profit before tax in the consolidated statement of comprehensive income was as follows:
The analysis included financial instruments affected by interest rate fluctuation and based on the assumption that
other factors, including the impacts of foreign exchange fluctuation, were constant.
(7) Market Price Fluctuation Risk
With respect to equity securities, Epson regularly assesses the fair value and financial conditions of the issuers, and
reviews the portfolio held by taking into account the relationship with counterparty entities in accordance with
Epson’ s Securities Operation Regulation.
Epson intends to hold equity instruments not for short-term trading but for long-term investment. Therefore, Epson
does not sell the instruments actively. The equity price fluctuation risks are calculated based on the price of equity
instruments at the fiscal year end. In cases where the equity price changes by 5% in value, the impact on other
comprehensive income before tax effects as of March 31, 2015 was ¥986 million ($8,205 thousand) due to the
changes in the fair value.
Millions of yen
Thousands of
U.S. dollars
March 31,
March 31,
2015
2015
Profit before tax
1,389
11,558
Millions of yen
Thousands of
U.S. dollars
March 31,
March 31,
2015
2015
Profit before tax
700
5,825