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Wool Stocktake : AWI Annual Report 2009-10
Parent entity sensitivity The parent entity operates predominantly in Australia and has no significant exposure to foreign exchange risk. (ii) Cash flow and fair value interest rate risk The Group's main interest rate risk arises from cash and term deposit investments. The company's investment policy is to maintain a prudent and conservative investment profile that is risk averse. As at reporting date, the Group's exposure to interest rate risk and the effective weighted average interest rates are as follows: 30 June 2009 Weighted average interest rate Balance % $'000 Cash on hand -- interest bearing 3.17% 656 Cash on hand -- non-interest bearing* 5,814 Funds invested -- term deposits 3.97% 46,772 Net exposure to cash flow interest rate risk 53,242 *The majority of the non-interest bearing cash is held in overseas jurisdictions where restrictions for repatriation and low interest regimes exist. Group sensitivity At 30 June 2010, if interest rates had changed by -/+100 basis points from the year end rates with all other variables held constant, post tax profit for the year would have been $609,000 lower/higher (2009 - change of 100 bps: $468,000 lower/higher) or post tax (loss) for the year would have been $609,000 higher/lower (2009 - change of 100 bps: $468,000 higher/lower), mainly as a result of lower/higher interest income from cash and cash equivalents and held-to- maturity investments. Parent entity sensitivity The parent entity's main interest rate risk arises from cash and cash equivalents and held-to-maturity investments. At 30 June 2010, if interest rates had changed by -/+ 100 basis points from the year end rates with all other variables held constant, post tax profit for the year would have been $605,000 lower/higher (2009 - change of 100 bps: $467,000 lower/higher) or post tax (loss) for the year would have been $605,000 higher/lower (2009 - change of 100 bps: $467,000 higher/lower), as a result of lower/higher interest income from these financial assets. The Group has no significant concentrations of credit risk and credit risk is managed on a Group basis. Credit risk arises from cash and cash equivalents, deposits with banks and financial institutions, as well as credit exposures to customers, including outstanding receivables and committed transactions. Customers risk rating is assessed by the credit quality of the customer, taking into account its financial position, past experience and other factors. Individual risk limits are set based on internal ratings and compliance with credit limits by customers is regularly monitored by management. Australian Wool Innovation Limited's funds investment policy is conservative and designed to minimise principal, interest rate and currency risk. Risk of principal amounts invested is minimised by only investing in deposits with Standard & Poor's ratings AAA, AA+, AA and AA- for long term and A.1+ for short term. Risk of loss due to adverse interest rate movements is minimised by investing in term deposits for terms per the AWI investment policy. Funds invested at 30 June 2010 were predominantly in Australian dollars thereby minimising any foreign exchange risk. FINANCIAL REPORT
AWI Annual Report 2008-09
AWI Annual Report 2010-11