NOTE 12
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 (A3 and above),
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 loss
As at 30 June 2014 there was an allowance of
impairment in trade and other receivables of the Group
of $64k (2013: $32k). The individually impaired items
relate to rental on property where the lessees have
fallen significantly behind on lease payments.
The ageing of trade receivables is as follows:
Consolidated
2014
$’000
2013
$’000
0-30 days
33,166
46,899
31-60 days
18,693
9,284
61-90 days
245
356
>90 days
528
1,502
52,632
58,041
Movements in the provision for impairment of trade receivables that are assessed for impairment individually
are as follows:
Consolidated
2014
$’000
2013
$’000
At 1 July
(32)
(26)
Provision for impairment charged to other expenses during the half year
(77)
(1,443)
Receivables written off during the year as uncollectable
45
1,431
Unused amounts reversed
-
6
At 30 June
(64)
(32)
The creation and release of the provision for impaired receivables has been included in ‘other expenses’ in the income
statement. Amounts charged to the allowance account are generally written off when there is no expectation of
recovering additional cash.
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