91
waikato-tainui
annual report 2014
(iii) Price risk
The Group is exposed to equity securities price risk. This arises from investments held by the Group that are classified at fair
value through profit or loss. Neither the Group nor the Parent are exposed to commodity price risk.
Sensitivity analysis
The table below summarises the impact of increases/(decreases) of the New Zealand equity index on the Group (Parent for 2014
and 2013: nil) and the Group’s profit and equity for the year. The analysis is based on the assumption that should the equity
indexes increase/(decrease) by 10% (2013: 10%) with all other variables held constant and all the Group’s equity instruments
move according to the historical correlation with the index.
Impact on profit
Impact on equity
2014
2013
2014
2013
$'000
$'000
$'000
$'000
CONSOLIDATED
Financial assets at fair value through profit or loss
196
243
196
243
Financial assets at fair value through profit or loss
(196)
(243)
(196)
(243)
Profit for the year would increase/(decrease) as a result of gains/(losses) on shares in listed companies classified as at fair value
through profit or loss. Equity would further increase/(decrease) as a result of gains/(losses) on shares in listed companies
classified as at fair value through profit or loss.
Price risk in relation to Aotearoa Fisheries Limited (AFL) income shares
A movement in the enterprise value of 1% would result in a gain/(loss) in the Groups equity interest in AFL income shares of
$0.1m (2013: $0.1m) and a movement in the multiple of 1.0 would result in a gain/(loss) in the Groups equity interest in AFL
income shares of $1.4m (2013: $1.7m).
The price risk for other unlisted securities is immaterial in terms of the possible impact on profit or loss or total equity. It has
therefore not been included in the sensitivity analysis.
(c) Financial risk management strategies relating to agricultural activities
The Group undertakes agricultural activities through its farm operations and forestry land. These operations are exposed to
business risks, including the volatility of revenue and valuation of its assets.
The Group utilises the skills of appropriately qualified and experienced farm consultants, farm managers and sharemilkers to
mitigate the financial risk relating to farming activities.
The Group utilises the skills of appropriately qualified and experienced forestry consultants and forestry contractors to mitigate
the financial risk relating to forestry activities.
(d) Liquidity risk
Liquidity risk is the risk that the Trust and Group will encounter difficulty raising liquid funds to meet commitments as they
fall due. The Trust and Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing
facilities by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and
liabilities.
