| |
| |
| Notes to the Consolidated Financial Statements |
| 43. |
Financial instruments (continued) |
|
Financial risk management (continued) |
|
Interest rate risk |
|
During the year, the position of the Group alternated between having surplus cash and being in a borrowed position. The
size of the Group's position, be it either short cash or long cash, exposes it to interest rate risk. This risk is managed through
the term structure utilised when placing deposits or taking out borrowings. Furthermore, when appropriate, the Group may
also cover these exposures by means of derivative financial instruments subject to the approval of the Executive Committee.
During the period, the Group did not use any forward rate agreements to manage this risk.
The carrying amount of the Group's financial assets and liabilities at balance sheet date that are subject to interest rate risk
is as follows: |
| |
|
Subject to interest rate
movement |
Non-interest
bearing |
Total |
Fixed
Rm |
Floating
Rm |
Rm |
Rm |
|
2007 |
|
|
|
|
|
Financial assets |
|
|
|
|
|
Investment held by environmental trusts |
— |
120 |
— |
120 |
|
Other financial assets |
— |
116 |
— |
116 |
|
Accounts receivable |
— |
— |
4,246 |
4,246 |
|
Derivative financial assets |
— |
— |
3 |
3 |
|
Cash and cash equivalents |
— |
4,079 |
— |
4,079 |
| |
|
— |
4,315 |
4,249 |
8,564 |
|
Financial liabilities |
|
|
|
|
|
Obligations due under finance leases |
— |
(490) |
— |
(490) |
|
Interest-bearing borrowings |
— |
(7,465) |
— |
(7,465) |
|
Accounts payable |
— |
— |
(3,508) |
(3,508) |
| |
|
— |
(7,955) |
(3,508) |
(11,463) |
|
2006 |
|
|
|
|
|
Financial assets |
|
|
|
|
|
Other financial assets |
— |
110 |
— |
110 |
|
Accounts receivable |
— |
— |
4,605 |
4,605 |
|
Derivative financial assets |
— |
— |
5 |
5 |
|
Cash and cash equivalents |
— |
4,988 |
— |
4,988 |
| |
|
— |
5,098 |
4,610 |
9,708 |
|
Financial liabilities |
|
|
|
|
|
Obligations due under finance leases |
— |
(475) |
— |
(475) |
|
Interest-bearing borrowings |
— |
(100) |
— |
(100) |
|
Accounts payable |
— |
— |
(4,173) |
(4,173) |
| |
|
— |
(575) |
(4,173) |
(4,748) |
|
Interest rate sensitivity |
|
The Group is sensitive to the movements in the ZAR and US dollar interest rates which are the primary interest rates
to which the Group is exposed. The rates of sensitivity are the rates used when reporting the currency risk to the Executive
Committee of the Group and represents management's assessment of the possible change in interest rates.
If the ZAR interest rate decreased by 50 basis points (2006: 50 basis points) and the USD interest rate decreased by
75 basis points (2006: 25 basis points) at year end, then income for the year would have increased by R32 million
(2006: decreased by R11 million) and decreased by R21 million (2006: R3 million) respectively. |
|
|
|
|
|
|
