87 / 116
(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 2016 are listed below and include $19.4m
(2015: $2.9m) 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 $31.8m (2015: $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
2016
$’000
2015
$’000
Neither past due nor impaired
31,849
32,940
Past due but not impaired
30 - 60 days
18,660
2,788
61 - 90 days
11
95
> 90 days
700
60
Total
51,220
35,883
As at 30 June 2016 there was an allowance of impairment in trade and other receivables of the
Group of $0.031m (2015: $0.024m). The individually impaired items relate to rental on property
where the lessees have fallen significantly behind on lease payments. Other receivables past
due but not considered impaired are nil (2015: nil).
NOTE 12 (CONTINUED)
FINANCIAL RISK MANAGEMENT
85