NOTE 10
FINANCIAL RISK MANAGEMENT
(CONTINUED)
(b) Credit risk
(i) Risk management
The Group’s exposure to credit risk arises from potential default of the counterparty, with a
maximum exposure equal to the carrying amount. Credit risk is managed on a Group basis. Credit risk
arises predominantly from derivatives and trade and other receivable. The Group does not hold any
credit derivatives to offset its credit exposure.
The Group’s Treasury Policy outlines the approach to the management of counterparty credit risk as
approved by the Board. A number of criteria are utilised to manage and spread the level of risk such
as: minimum credit rating of counterparty (investment grade), maximum credit exposure to any one
counterparty and consideration of counterparty concentration risk.
The Group’s policy is that all customers enter into access agreements meeting the terms and
conditions as set out in the agreement before entering the Group’s rail network and receiving any
trade credit facilities.
The Group’s exposure to bad debts has been historically low and statistically insignificant, therefore
no collective loss provision is determined. The Group does have significant concentration of credit
risk associated with major customers providing a high proportion of access revenue, therefore any
bad debt provisions required are assessed on an individual basis.
(ii) Credit quality
Allowance for impairment
The ageing analysis of trade receivables as at 30 June 2015 are listed below and include $2.9m
(2014: $19.7m) of trade receivables that are past due but not impaired. These relate to a number
of independent customers for whom there is no recent history of default. The $32.9m (2014:
$32.9m) of trade receivables is neither past due nor impaired and based on the credit history of
these customers it is expected that these amounts will be received when due.
The ageing of trade receivables is as follows:
Consolidated
2015
$’000
2014
$’000
Neither past due nor impaired
32,940
32,896
Past due but not impaired
< 30 days
-
270
30 - 60 days
2,788
18,693
61 - 90 days
95
245
> 90 days
60
528
Total
35,883
52,632
90
