142 / 156
NOTES TO THE FINANCIAL STATEMENTS
continued
for the year ended 30 June 2015
36. Financial risk management
The group’s financial instruments consist mainly of deposits with banks, loans from banks, loan and trade receivables, interest rate
swaps, payables and foreign currency investments. In respect of the above-mentioned financial instruments, book values approximate
fair value. Exposure to interest rate, credit, liquidity, market, price and currency risks occur in the normal course of business.
Interest rate risk
The group is exposed to interest rate risk due to material interest-bearing borrowings. The risk is managed by maintaining an
appropriate mix between fixed and floating rate borrowings and by the use of interest rate swaps.
Interest rate sensitivity analysis
The sensitivity analysis includes the exposure to interest rates for both derivatives and non-derivative instruments at the end of the
financial year.
For floating rate liabilities it is assumed that the liability outstanding at the end of the year was outstanding for the whole year.
A 150 basis point increase or decrease in interest rates was used in the analysis.
If interest rates had increased/decreased by 150 basis points and all other variables were held constant, the group’s profit for the year
ended 30 June 2015 would increase/decrease by R5,6 million (based on year-end floating debt) and the company’s profit for the year
ended 30 June 2015 would increase/decrease by R2,2 million (based on year-end floating debt).
The group’s sensitivity to interest rates has decreased during the current year due to an increase in the proportion of fixed debt to
95% of total debt (2014: 71%).
Fixed rate agreements and interest swaps
Refer to note 18 and 19 for further detail in respect of fixed rate agreements and interest rate swaps.
The group’s exposure to interest rate risk and interest rates on financial instruments at the reporting date was as follows:
Liquidity and interest rate risk
Group
Note
Weighted
average
effective
interest rate
%
One year
or less
R000
One to
five years
R000
More than
five years
R000
Total
R000
Year ended 30 June 2015
Financial assets
Derivative instruments
19
53 132
53 132
Loans receivable
10
53 757
2 258 125
2 311 882
Receivables
11
87 152
87 152
Cash and cash equivalents
12
83 841
83 841
Total financial assets
224 750
2 311 257
2 536 007
Financial liabilities
Borrowings
18
7,12
772 000 5 919 909
6 691 909
Payables
21
377 917
377 917
Derivative instruments
19
2 629
40 123
42 752
Total financial liabilities
1 152 546 5 960 032
7 112 578
140
Hyprop Investments Limited
Integrated Report 2015
FINANCIAL STATEMENTS