Note 02
Financial risk management
The Group’s principal financial instruments
comprise receivables, payables, bonds, cash,
short term deposits and derivatives. The
carrying amount equates to the fair value of
the financial instruments. These activities
expose the Group to interest rate risk, credit
risk, foreign exchange risk and liquidity risk.
Financial risk management is performed by
the finance division ensuring compliance
with policies and procedures approved by
the Board of Directors. The finance division
identifies, evaluates and manages financial
risks in close co‑operation with the Group’s
operating units.
The main risks arising from the Group’s financial
instruments are interest rate risk, credit risk and
liquidity risk. Methods used in managing risk
include monitoring levels of exposure to interest
rate risk, utilising interest rate swap hedges as
the primary tool to manage the interest rate risk
on long term borrowings. Assessment of market
forecasts for interest rate movements; monitoring
and managing credit risk against investments
using the Treasury Policy and Cash Management
Procedure; and managing liquidity risk through
forecasting systems to monitor cash flow
requirements, including managing the Group’s
receivables and payables using aged analysis and
maintaining customer and supplier relationships.
The Group holds the following financial instruments:
Consolidated
2012
2011
$’000
$’000
Financial assets
Cash and cash equivalents
45,924
123,627
Held‑to‑maturity investments
-
20,418
Trade and other receivables
102,870
144,821
Derivative financial instruments – foreign exchange
175
-
148,969
288,866
Financial liabilities
Trade and other payables
157,893
192,155
Bond Issue
498,927
200,000
Borrowings
20,002
-
Derivative financial instruments – foreign exchange
33
11
Derivative financial instruments – interest rate swap
5,446
-
Other financial liabilities
625
834
682,926
393,000
70
