Note 13: Financial Instruments

 

	2011 $'000	2010 $'000
Note 13A: Categories of Financial Instruments
Financial Assets
Loans and receivables:
Cash	58,160	48,555
Receivables for goods and services (gross)	30,727	14,669
Other receivables	28,879	15,390
Carrying amount of financial assets	117,766	78,614
Financial Liabilities
At amortised cost:
Trade creditors	80,184	83,120
Carrying amount of financial liabilities	80,184	83,120
Note 13B: Net Income and Expense from Financial Assets
Loans and receivables
Exchange gains/(loss)	(1,293)	60
Impairment gain/(loss)	253	99
Net gain/(loss) from loans and receivables	(1,040)	159
Note 13C: Net Income and Expense from Financial Liabilities
Financial liabilities - at amortised cost
Interest expense	-	4
Net gain/(loss) from financial liabilities - at amortised cost	-	4

The interest expense from financial liabilities not at fair value from profit and loss is $nil (2010: $465,000).

 

Note 13D: Fair Value of Financial Instruments

As the Department only holds basic financial instruments (cash, receivables and payable), the carrying amounts are reasonable approximation of fair value.

 

Note 13E: Credit Risk

The Department is exposed to minimal credit risk as loans and receivables comprise trade and other receivables. The maximum exposure to credit risk is the risk that arises from potential default of a debtor. This is equal to the total amount of these outstanding receivables of $59,606,000 (2010: $30,060,000).
The Department has assessed the risk of default on payment and has allocated $309,000 (2010: $ 389,000) to an allowance for doubtful debts account.
The Department manages its credit risk by undertaking background and credit checks prior to allowing a debtor relationship . In addition, the Department has policies and procedures that guide employees' debt recovery. 
The Department has no collateral to mitigate against credit risk.

 

Ageing of financial assets that were past due but not impaired for 2011
	Not past due  nor impaired $'000	0 to 30  days $'000	31 to 60 days $'000	61 to 90 days $'000	90+ days $'000	Total $'000
Not impaired
Cash	58,160	-	-	-	-	58,160
Receivables for goods and services	26,391	2,926	88	232	1,090	30,727
Other receivables	21,340	238	7	2	7,292	28,879
Impaired
Receivables for goods and services	-	-	-	-	(309)	(309)
Total	105,891	3,164	95	234	8,073	117,457
Ageing of financial assets that were past due but not impaired for 2010
	Not past due  nor impaired $'000	0 to 30  days $'000	31 to 60 days $'000	61 to 90 days $'000	90+ days $'000	Total $'000
Not impaired
Cash	48,555	-	-	-	-	48,555
Receivables for goods and services	9,004	1,980	101	1,136	2,448	14,669
Other receivables	15,066	82	1	194	48	15,391
Impaired
Receivables for goods and services	-	-	-	-	(389)	(389)
Total	72,625	2,062	102	1,330	2,107	78,226

 

Note 13F: Liquidity Risk

The Department's financial liabilities are trade creditors. It is highly unlikely that the Department will encounter difficulty in meeting its obligations associated with these liabilities given that it is a Commonwealth entity and has funding mechanisms available to ensure default does not occur. In addition, the Department has internal policies and procedures in place to ensure there are sufficient resources to make payments and has no history of default. The following table illustrates the maturities  for financial liabilities:

Maturities for non-derivative financial liabilities 2011

	On demand $'000	within 1 year $'000	1 to 2 years $'000	2 to 5 years $'000	> 5 years $'000	Total $'000
Trade Creditors	-	80,184	-	-	-	80,184
Total	-	80,184	-	-	-	80,184
Maturities for non-derivative financial liabilities 2010
	On demand $'000	within 1 year $'000	1 to 2 years $'000	2 to 5 years $'000	> 5 years $'000	Total $'000
Trade Creditors	-	83,120	-	-	-	83,120
Total	-	83,120	-	-	-	83,120

The entity has no derivative financial liabilities in either the current or prior year.

 

Note 13G: Market Risk

Currency risk
Foreign currency risk refers to the risk that the fair value of future cash flows of a financial instruments will fluctuate due to changes in foreign currency exchange rates. The Department is exposed to foreign currency exchange risk primarily through undertaking certain transactions denominated in a wide range of foreign currency through its operations overseas.
The following table illustrates the effect on the Department's operating result ( profit or loss) and equity as at 30 June 2011 form a 15% (2010: 14%) increase or decrease against the AUD in the currencies in which financial instruments were held by the Department , with all other variables held constant. 

 

Sensitivity analysis of the risk that the entity is exposed to for 2011
			+ Favourable Effect on		- Unfavourable Effect on
	Risk variable	Change in  risk  variable %	Profit and loss $'000	Equity $'000	Profit and loss $'000	Equity $'000
Cash	19,736	15%	(2,574)	(2,574)	3,483	3,483
Receivables for goods and services (net)	2,234	15%	(291)	(291)	394	394
Other receivables	36,966	15%	(4,822)	(4,822)	6,523	6,523
Trade creditors	(2,338)	15%	305	305	(413)	(413)
Total	56,598		(7,382)	(7,382)	9,987	9,987
Sensitivity analysis of the risk that the entity is exposed to for 2010
			+ Favourable Effect on		- Unfavourable Effect on
	Risk variable	Change in  risk  variable %	Profit and loss $'000	Equity $'000	Profit and loss $'000	Equity $'000
Cash	20,034	14%	(2,460)	(2,460)	3,261	3,261
Receivables for goods and services (net)	905	14%	(111)	(111)	147	147
Other receivables	43,530	14%	(5,346)	(5,346)	7,086	7,086
Trade creditors	5,174	14%	(635)	(635)	842	842
Total	69,643		( 8,552)	( 8,552)	11,336	11,336

Interest rate and Other price risk.
The Department holds basic financial instruments that do not expose it to 'Interest rate risk' or 'Other price risk'.