Page 65 - Sun Resources 2014 Annual Report

19 Financial Risk Management (continued)
The Group holds the following financial instruments:
Consolidated
Financial Assets
2014
$
2013
$
Cash and cash equivalents 2,657,972 3,550,749
Other receivables 3,296,130 342,046
5,954,102 3,892,795
Financial Liabilities at amortised cost
Payables 5,328,594 6,107,815
a Market risk
i Foreign exchange risk
The Group operates internationally and is exposed to foreign exchange risk arising from various currency
exposures, primarily with respect to the US dollar.
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities
denominated in a currency that is not the entity’s functional currency. The risk is measured using sensitivity
analysis and cash flow forecasting.
Management have established a policy requiring Group companies to manage their foreign exchange risk
against their functional currency and hold money in bank accounts in the country and currency where significant
expenditure is expected to be incurred.
The Group’s exposure to foreign currency risk at the reporting date was as follows:
2014
USD
2013
USD
Group
Cash and cash equivalents 1,672,715 2,354,847
Receivables 2,994,109 307,478
Group sensitivity
Based on the financial instruments held at the 30 June 2014 as listed above, had the Australian Dollar
weakened/strengthened by 10% against the US dollar with all other variables held constant, the Group’s post-
tax loss for the year would have been $494,403 lower/higher (2013: $291,096 lower/higher), mainly as a result
of foreign exchange gains/ losses on translation of US dollar denominated financial instruments as detailed in
the above table. The Group has used 10% based on historical averages as reasonable.
ii Price Risk
The Group is exposed to equity securities price risk. This arises from investments held by the Group and
classified on the Statement of Financial Position either as available-for-sale or at fair value through profit or loss.
The Group is also exposed to commodity price risk based on the prevailing price of oil and gas.
Available for sale investments
To manage its price risk arising from investments in equity securities, the Group diversifies its portfolio where possible.
The majority of the Group’s equity investments are publicly traded on the ASX Limited.
Currently (for 2014 and 2013) the price risk for listed securities is immaterial in terms of the possible impact on
profit and loss or total equity. No sensitivity analysis has therefore been included in the financial report.
iii Cash flow and fair value interest rate risk.
Group
To ensure that the Group has adequate liquidity, detailed cash flow analysis is completed on a monthly basis.
The Group’s main interest rate risk arises from cash and cash equivalents held, which were $2,657,972
(2013: $3,550,749). These funds are held at various financial institutions at different interest rates as detailed in
the tables under liquidity risk. Interest received on these balances were $123,641 (2013: $69,050).
Group sensitivity
Based on the cash and cash equivalent balances held at the 30 June 2014, and assuming that the allocation
between term deposits and other cash balances was maintained had the interest rates weakened/strengthened
by 10% and all other variables held constant, the Group’s post-tax loss for the year would have been $12,364
lower/higher (2013: $6,905 lower/higher). The Group has used 10% based on historical averages as reasonable.
NOTES TO AND FORMING PART OF THE CONSOLIDATED
FINANCIAL STATEMENTS
SUN RESOURCES ANNUAL REPORT 2014  63