BRADKEN LIMITED ANNUAL REPORT 2014 l 48
Notes to the consolidated financial statements
30 June 2014
(continued)
3 Financial risk management
(a) Credit risk
(b) Liquidity risk
Payables
Borrowings (excluding finance leases)
Finance leases liabilities
Net settled interest rate swaps and caps
Payables
Borrowings (excluding finance leases)
Finance leases liabilities
Net settled interest rate swaps and caps
(c) Market risk
(i)
Cash flow and fair value interest rate risk
The standard terms and conditions on sale of goods includes a clause which allows Bradken to repossess goods which have not
been consumed should Bradken require it necessary to recoup unpaid debts owed to them.
Bradken's global customer base is large and diverse and subject to strict credit application and assessment criteria to minimise
impairment risk.
Details on the past due but not impaired trade receivables are disclosed at note 10(b).
341,263
165,111
47,910
16,649
69,981
-
The Group's activities expose it to a variety of financial risks; market risk (including currency risk, cash flow and fair value interest
rate risk and price risk), credit risk and liquidity risk. The Group's overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the financial performance of the Group.
The Group uses derivative financial instruments such as foreign exchange contracts and interest rate swaps to hedge certain risk
exposures. Derivatives are exclusively used as hedging instruments, not as trading or other speculative instruments. The Group
uses different methods to measure different types of risk to which is it exposed. These methods include sensitivity analysis in the
case of interest rate and foreign exchange risk and ageing analysis for credit risk.
Risk management is carried out centrally by the CFO and finance function under policies approved by the Board of Directors.
The Group has no significant concentrations of credit risk. The Group has policies in place to ensure that sales of products and
services are made to customers with an appropriate credit history.
Derivative counterparties and cash transactions are limited to high credit quality financial institutions.
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding
through an adequate amount of committed credit facilities and the ability to close out market positions. The Group aims at
maintaining flexibility in funding by keeping committed credit lines available.
Management monitors forecasts of the Group's liquidity on the basis of expected cash flow. See note 20(d) for details of
available facilities.
The tables below analyse the Group's financial liabilities and net settled derivative financial instruments into relevant maturity
groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the
tables are the contractual undiscounted cash flows. There is no liquidity risk at the Parent entity level.
Group - 2014
Non-derivatives
The maximum exposure to credit risk best represents the carrying value of the financial assets at balance date.
Less than 1 year
$'000
Between 1
and 3 years
$'000
Between 3
and 5 years
$'000
Between 5
and 8 years
$'000
Over 8 years
$'000
Less than 1 year
$'000
Between 1
and 3 years
$'000
Between 3
and 5 years
$'000
-
2,809
-
-
-
143,504
-
-
Derivatives
-
-
337,840
56,683
4,137
-
21,999
72,933
Non-derivatives
Group - 2013
Derivatives
The Group enters into forward exchange contracts to hedge foreign currency denominated receivables and also to manage
foreign currency denominated inventory and capital items.
Refer to note 10(f) for receivables denominated in foreign currencies.
The Group has no significant interest-bearing assets and the Group's income and operating cash flows are not materially
exposed to changes in market interest rates.
The Group's interest-rate-risk arises from long term borrowings. Borrowings issued at variable rates expose the Group to cash
flow interest-rate-risk. Borrowings issued at fixed rates expose the Group to fair value interest-rate-risk. Group policy is to fix the
rates for between 30% and 70% of its borrowings.
-
2,111
1,548
123,034
4,805
1,058
890
4,676
2,310
-
-
5,138
-
197,029
-
-
Between 5
and 8 years
$'000
Over 8 years
$'000
-
-
Page 48
Bradken Limited
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
(CONTINUED)
1...,75,76,77,78,79,80,81,82,83,84 86,87,88,89,90,91,92,93,94,95,...136