annual report 2011

IOOF | annual report 2011
Notes to the financial statements (cont’d)
For the year ended 30 June 2011
Financial assets
Consolidated Parent
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Cash and cash equivalents 152,999 132,780 45,959 617
Receivables 73,068 67,668 14,342 11,547
Loans and other receivables 23,967 18,096 61,819 35,106
Financial assets at fair value through profit or loss 8,029 6,479 - -
Available-for-sale financial assets 28,577 23,179 - -
Investments in equity-accounted investees 14,739 12,891 864 -
Investments in subsidiaries - - 849,796 849,796
301,379 261,093 972,780 897,066
Financial liabilities
Payables 50,664 48,401 70 80
Borrowings 38 14,628 10,000 10,000
Share buy-back liabilities 43,112 37,357 - -
93,814 100,386 10,070 10,080
The Group does not hold derivative financial instruments to hedge other market risk exposures, and does not hold or trade derivative
financial instruments for speculative purposes.
Financial risks for the Group include market risk (including price risk, foreign exchange risk and cash flow and fair value interest rate
risk), credit risk, liquidity risk, and life insurance risk.
(a) Market risk
(i)
Price risk
Price risk is the risk that the fair value or future earnings of
a financial instrument will fluctuate because of changes in
market prices (other than from interest rate risk or currency risk,
as described later). The financial instruments managed by the
Group that are impacted by price risk consist of investment
units held in trusts, available for sale financial assets and the
share buy-back liability.
The price risk associated with the units held in trusts is that the
fair value of those units will fluctuate with movements in the
redemption value of those units, which in turn is based on the
fair value of the underlying assets held by the trusts. This risk is
managed by choosing to invest in a mix of trusts operated by
the Group that will provide an overall diversified portfolio that
consists of cash, fixed income securities, equities, and listed
property securities; in a mix that provides the Group consistent
cash plus returns, benchmarked to exceed the UBSA Bank Bill
Index, as well as some participation in opportunities for capital
growth over the longer term.
The share buy-back liability recorded at balance date is
reflective of the fair value of the underlying shares of certain
Perennial subsidiaries. The price risk associated with this liability
is that the fair value of the particular equities could change
as a result of a change in the projected profitability of those
subsidiaries. It is considered impractical to manage the price
risk associated with this liability, and it is worth noting that the
more successful the Group is in growing its business in the
relevant sectors, the greater this liability will grow.
The Parent has no exposure to price risk.
Group sensitivity
At 30 June 2011 had the price of the units / shares held by the
Group in unlisted unit trusts / shares in other entities increased
/ decreased by 1% (2010: 1%) with all other variables held
constant, post-tax profit for the year would increase / decrease
by $21,000 (2010: $17,000) as a result of gains / losses recorded
through profit or loss and available-for-sale reserves would
increase / decrease by $286,000 (2010: $162,000).
At 30 June 2011, had the value of the underlying equity in
relation to the share buy-back liabilities increased/decreased
by 1% (2010: 1%) with all other variables held constant, group
equity would decrease/increase by $431,000 (2010: $374,000).
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