Rangatira Investments Annual Report 2021 - Report - Page 62
Ran ga tira Annua l R ep or t 2 0 2 1
Notes to the Consolidated
Financial Statements (continued)
For the year ended 31 March 2021
Note 22 Financial Instruments (continued)
(e) Interest Rate Risk
The Group has long term variable rate borrowings, which are used to fund ongoing activities. Management monitors the level of
interest rates on an ongoing basis, and from time to time, will lock in fixed rates. The notional principal or contract amounts of the
Group’s long term variable rate borrowings at balance date were $5,706,000 (2020: $8,831,000).
(f) Credit Risk And Concentrations Of Credit Risk
The Group incurs credit risk from trade debtors and transactions with financial institutions. The risk associated with trade debtors is
managed with a credit policy, which includes performing credit evaluations on customers. The risk associated with financial institutions
is managed by placing cash and short-term investments with registered New Zealand and Australian banks.
The Group also incurs credit risk from holding loans and receivables with third parties as investments. These loans and receivables
have been recorded at cost less the expected credit loss (ECL) as prescribed by IFRS 9. The maximum credit risk is capped at the
maximum carrying value of the loan as per note 9.
(g) Listed Equity Price Risk And Other Price Risk Sensitivity Analysis
The Group is exposed to listed equity price risks arising from listed equity investments. The fair value through OCI investments are
held for strategic rather than trading purposes. The Group does not actively trade these investments.
A sensitivity analysis of the exposure to listed equity price risks at reporting date shows if the market price had been 1% higher/lower,
while all other variables were held constant, the investment held at fair value reserve would have increased/decreased by $739,000,
and the financial assets at fair value through profit and loss by $40,000.
Investments in unlisted equity securities are, by their nature, less liquid. For the unlisted equity investments carried at fair value, a
movement in the net asset valuations of 1% changes the value of the investments held at fair value reserve by $521,000, and the
financial assets at fair value through profit and loss by $14,000.