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AFRICAN DAWN ANNUAL REPORT 14

Notes to the Financial Statements Group Company 2012 2011 2012 2011 R '000 R '000 R '000 R '000 34. Risk management continued The maximum liquidity risk is calculated below assuming that the convertible bonds are settled for cash. Current within Current within Non-current After 5 6 moths 6 to 12 months 2 to 5 years years Borrowings 1,091 7,558 8,088 - Lease commitments 2,160 - - - Trade and other payables 6,198 - - - Tax 9,113 9,113 - - 18,562 16,671 8,088 - Interest rate risk (Financial risk) Interest rate risk is the risk that the fair value of future cash flows of a financial instrument (financial asset or financial liability) will fluctuate because of changes in market interest rates. The group manages the risk by minimising the effect of long term borrowings linked to prime by keeping the rate at a lower rate to the interest that is charged to debtors. At 28 February 2014, the group is exposed to changes in market interest rates (Prime) through borrowings at variable interest rates linked to prime. The current effect of interest rate risk is assessed as being immaterial, supported by the fact that that the group’s borrowings and receivables are subject to similar interest rate risks. The table in note 16 illustrates the sensitivity of profit to a reasonably possible change in interest rates of +/-1% on liabilities. These changes are considered to be reasonably possible based on observation of current market conditions. The calculations are based on a change in the average market interest rate for each period, and the financial instruments held at each reporting date that are sensitive to changes in interest rates. All other variables are held constant. The effect on the assets of an increase or decrease in the prime interest rate by 1% is calculated as profit R117,370 or loss (R117,370) respectively. AFRICAN DAWN 7 0 ANNUAL REPORT 2014


AFRICAN DAWN ANNUAL REPORT 14
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