Annual Report 2013 - Mainfreight

3 Financial Risk Management Objectives and Policies (continued)
Foreign Currency Risk (continued)
The following sensitivity is based on the foreign currency risk exposures in existence at the balance sheet date:
At 31 March 2013, had the New Zealand Dollar moved as illustrated in the table below with all other variables held constant, post tax profit
and equity would have been affected as follows:
Judgements of reasonably possible movements:
Post Tax Profit
Higher/(Lower)
2013
$000
2012
$000
Equity
Higher/(Lower)
Group
NZD/USD +10% (861) (690) (5,405) (5,198)
NZD/USD -10% 1052 844 6,607 6,353
NZD/AUD +10% (1,687) (1,499) (9,870) (9,306)
NZD/AUD -10% 2,062 1,833 12,062 11,374
NZD/EURO +10% 172 (2,032) (8,106) (7,959)
NZD/EURO -10% (210) 2,484 9,909 9,728
Parent
NZD/USD +10% (69) (48) (69) (48)
NZD/USD -10% 84 58 84 58
NZD/AUD +10% (594) (391) (594) (391)
NZD/AUD -10% 726 478 726 478
NZD/EURO +10% 9,450 10,255 9,450 10,255
NZD/EURO -10% (11,550) (12,534) (11,550) (12,534)
The movement in equity is a combination of movement in post tax profit and the movement in the Foreign Currency Translation Reserve as
values of overseas investments in subsidiaries change.
Management believes the balance date risk exposures are representative of the risk exposure inherent in the financial instruments.
Credit Risk
In the normal course of business the Group is exposed to credit risk from financial instruments including cash, trade receivables, loans to team
members and derivative financial instruments.
Receivable balances are monitored on an ongoing basis with the result that, in management’s view, the Group’s exposure to bad debts is not
significant. The Group does not have concentrations of credit risk by industry but does have concentrations by geographical sectors (refer to
Segment Reporting in note 5).
With respect to credit risk arising from the other financial assets of the Group, which comprise cash and cash equivalents, loans to team
members and certain derivative instruments, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum
exposure equal to the carrying amount of these instruments. The Group has a policy only to deal with registered banks or financial institutions
with high quality credit ratings.
It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an
assessment of their independent credit rating, financial position, past experience and industry reputation. Risk limits are set for each individual
customer in accordance with parameters set by the Board. These risk limits are regularly monitored.
2013
$000
2012
$000
Financial Statements
85