Page 58 - NZPM Annual Report 2017

NZPM GROUP ANNUAL REPORT 2017

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the year ended 31 March 2017

20. FINANCIAL RISK MANAGEMENT (CONTINUED)

Interest rate derivatives
The Group’s treasury policy requires a portion of the Group’s core debt to be fixed via interest rate derivates
to protect the Group from exposure to fluctuations in interest rates. Accordingly, the Group has entered into
interest rate swap contracts under which it is obliged to receive interest at variable rates and pay interest at
fixed rates.

Interest rate sensitivity
At year end all loans are at fixed rates for defined periods of up to two months, after which interest rates will be
reset. Additionally the Group has overnight deposits that are subject to fluctuations of interest rates. Excluding
the impact of the interet rate swaps, if the Group’s year end loan and deposit rates had remained the same
through the year and interest rates moved by 1% then the impact would be a $65,000 gain or loss on pre-tax
profits (2016: $85,000).

(iii) Price/commodity risk
The Group does not trade in commodity instruments and therefore is not exposed to commodity
price risk.

(b) Credit risk
In the normal course of business, the Group is exposed to counter party credit risks from trade debtors and
transactions with financial institutions. The maximum exposure at year end is equal to the carrying value for
cash and equivalents and trade and other receivables.

The objective of the Group is to minimize the risk through evaluation and monitoring of the credit quality of
customers and through control over credit in accordance with the credit policy. The potential risk is further
minimized by having a spread of customers with no significant concentration of credit risk.

Trade receivables
2017 2016
Age of trade receivables: $’000 $’000

0-30 days 18,421 17,290
31-60 days 1,747 3,658
61-90 days 482 696
90+ days 641 1,732
Total trade receivables 21,291 23,376
Less provision for credit notes (140) 0
Less allowance for doubtful debts (273) (400)
20,878 22,976

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