Page 93 - Stellar IAR2015

31. RISK MANAGEMENTCapital risk managementThe Group manages its capital so as to ensure that it is able to continue as a going concern in order to maximise the return to sharehold- ers and for the bene t of all other stakeholders.Capital is comprised of ordinary share capital, preference share capital and retained earnings. Neither the Company nor any of its Consolidated Subsidiaries are subject to externally imposed capital requirements.Financial risk managementThe Group’s activities expose it to a variety of nancial risks: market risk (cash ow and fair value interest rate risk, price risk and foreign currency risk), liquidity risk and credit risk.Interest rate riskInterest rate risk arises from the uctuations in prevailing market interest rates and impacts the fair value of xed interest-bearing nancial instruments and the future cash ows of variable interest-bearing nancial instruments. As part of the process of managing the Group’s exposure to interest rate risk, interest rate characteristics of amounts advanced and any new borrowings are positioned according to expected movements in interest rates.Cash ow interest rate riskThe Group’s cash ow interest rate risk arises from loans and receivables with variable interest rates (including the loan investments, loans to portfolio companies and other nancial assets), cash and cash equivalents and preference shares in issue.The following carrying values re ect the Group’s exposure to cash ow interest rate risk:R’000Loans and receivablesCash and cash equivalentsPreference shares - liability componentGroupCompany201562 325 797 760 (548 478)2014201410 331 2 338 - 12 669If interest rates had been 100 basis points higher/lower and all other variables were held constant, the Group’s pro t before tax for the year ended 30 November 2015 would decrease/increase by R0.7 million (2014: Rnil).Fair value interest rate riskThe Group’s fair value interest rate risk arises from loans and receivables with xed interest rates (including the loan investments, loans to portfolio companies and other nancial assets).The following carrying values re ect the Group’s exposure fair value interest rate risk:R’000Loans and receivablesGroupCompany2015167 777167 77710 331 3 334 -13 6652014201462 00062 00062 00062 325 711 409 (548 478)311 607225 2562015167 77762 000167 777STELLAR CAPITAL PARTNERS | 892015