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notes to the financial Statements
for the year ended 31 March 2012
If interest rates had been 100 basis points higher/lower and all other variables were held constant, both the
Group’s and Company’s:
Profit for the year ended 31 March 2012 would decrease/increase by $69,999 (2011: decrease/increase
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by $114,500). This is mainly attributable to the Group’s exposure to interest rates on its variable rate
borrowings; and
Other equity reserves would decrease by $1,323,540 if rates were higher and decrease by $1,392,004 if
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rates were lower (2011: decrease by $773,513 if rates were higher and decrease by $773,224 if rates were
lower).
The Group’s sensitivity to interest rates has increased during the current period mainly due to the increase in
variable rate debt instruments.
b) Credit risk management
The Group’s principal financial assets are cash and cash equivalents, trade and other receivables and related
party loans, which represent the Group’s maximum exposure to credit risk in relation to financial assets. Credit
risk refers to the risk that a counter party will default on its contractual obligations resulting in financial loss to
the Group.
The Group’s credit risk is primarily attributable to its trade receivables. The amounts presented in the Balance
Sheet are net of allowances for doubtful receivables, estimated by the Group’s management based on prior
experience and their assessment of the current economic environment.
The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are
banks with high credit-ratings assigned by international credit-rating agencies.
The Group has no significant concentration of credit risk, with exposure spread over a large number of
counterparties and customers.
Details of the significant accounting policies and methods adopted, including the criteria for recognition, the
basis of measurement and the basis on which income and expenses are recognised, in respect of each class of
financial asset, financial liability and equity instrument are disclosed in note 2(m) to the financial statements.
c) Electricity price risk
The Group is exposed to electricity price risk on its electricity generation activities. To manage its price risks
the Group utilises electricity price derivatives, where the Group sells and buys electricity forward at a fixed
price. Electricity price derivatives are in place to economically hedge changes in the price of electricity over the
period to 31 December 2014. Because there is no minimum volume specified in the contracts, the derivatives
have no fair value.
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