Notes to the Financial Statements
For the year ended 30 June 2009
3. FINANCIAL RISK MANAGEMENT (continued)
Foreign currency risk
The Consolidated Entity’s exposure to movements in foreign currencies is immaterial.
The Consolidated Entity does not have commodity and equity securities price risk.
Credit risk is the risk that a customer or counterparty to a financial instrument will default on their contractual obligations resulting in a financial loss to the Consolidated Entity.
Contracts for Land, Integrated Housing and Apartments usually require payment in full prior to passing of title to customers. In the event that title is to pass without full payment being received, appropriate credit verification procedures are performed prior to executing the contract.
Contract Building customers are usually billed progressively for work completed. Evidence of the availability of finance is obtained prior to construction commencing. In addition,
receivable balances are monitored on an ongoing basis with the result that the Consolidated Entity’s exposure to impaired receivables is insignificant. The ageing analysis of Trade Receivables and the movement in provision for impairment is given in note 13(a).
Derivative counterparties and cash deposits are limited to financial institutions approved by the Board.
Liquidity risk Liquidity includes the risk that the Consolidated Entity:
may not have sufficient funds to settle a transaction on the due date;
may be forced to sell financial assets at values which are less than their carrying amounts;
may be unable to fully settle a financial liability or recover a financial asset; and
may be unable to refinance its current borrowings.
Prudent liquidity risk management is undertaken to ensure sufficient cash and the availability of funding through an adequate amount of committed credit facilities. Liquidity risk is managed by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. Group Treasury aims at maintaining flexibility in funding by keeping credit lines available.
The Consolidated Entity has received approval to extend its main banking facilities for a further 12 months, subject to an
annual review process as outlined in note 24(a). In addition,
the Consolidated Entity operates certain project funding facilities which are discussed in note 24(b).
At 30 June 2009, 99.6% (2008: 11.4%) of the Consolidated Entity’s interest bearing loans and borrowings will mature in less than one year. Based upon the approved extension of the Company’s main banking facilities to 30 September 2010, 28.4% of the Consolidated Entity’s debt at 30 June 2009 will mature in less than one year.
The Consolidated Entity has no significant concentrations of credit risk. The carrying amount of financial assets included in the consolidated Balance Sheet represents the maximum exposure to credit risk in relation to these assets.