Integrated Reports Senwes Financial Review 2018 - Page 43

FINANCIAL REVIEW 21.1.1.4 The following line items on the statement of financial position are affected by commodity price risk: GROUP Inventory Notes 2018 R’m 2017 R’m 7 253 146 (21) 24 Derivative financial instruments: assets 17.1 Trade and other (payables)/receivables 8, 14 Derivative financial instruments: liabilities 17.2 Total (13) 4 The potential impact of changes in Safex prices is illustrated below: GROUP Increase of R250 Increase of R100 Decrease of R100 Decrease of R250 Decrease of R40 2 1.1.1.2 2018 R’m 2017 R’m 70 34 52 32 17 (2) 5 (32) (47) (84) (19) Funding The group is naturally hedged against fluctuating interest rates to a large extent since interest-bearing debt is mainly utilised for assets earning interest at fluctuating rates. GROUP 2018 (167) 256 Increase of R400 Interest rate risk 1 37 (57) Trading risk 43 Interest rate risk Note Non- interest- Interest- earning earning Assets assets assets R’m R’m R’m Property, plant and equipment 567 567 - Investment in joint ventures 265 265 - Investment in associate 27 27 - Other non-current assets 38 38 - 995 995 - Trade and other receivables (current) 2 828 48 2 780 Loans and other receivables (non-current) 1 079 - 1 079 Inventory held to satisfy firm sales 144 144 - Other current assets 187 6 181 6 130 2 090 4 040 Inventory Total Interest-bearing liabilities 4.2 Net exposure to interest rate risk (limited to Rnil) 3 031 - Market risk with regards to trading relates to the potential losses in the trading portfolio due to market fluctuations such as interest rates, spread between current and future prices of commodities, volatility of these markets and changes in market liquidity. Risk limits are set to govern trading within the risk appetite of the group via forward purchase and sales contracts. 21.1.1.3 Foreign exchange risk The group has minimal exposure to fluctuations in mainly the rand/US dollar exchange rate in respect of imports and exports. Foreign currency transactions are mainly con- cluded for the purchasing and selling of inventory. Foreign exchange contracts are con- cluded for specific transactions to hedge against fluctuations in exchange rates. The currency risk on group level was Rnil as at 30 April 2018 (2017: Rnil). The fair value adjustment on foreign exchange contracts is recognised through profit and loss. A sen- sitivity analysis is not indicated since the amount is not material. FINANCIAL REVIEW Forward purchase contracts represent contracts with producers for the procurement of physical commodities in the future. The forward sales contracts represent contracts with clients for the sale of physical commodities in the future.