Stockland Direct Retail Trust No.1

More documents

Recommendations

Info

Stockland Direct Retail Trust No. 1 and its controlled entities Notes to the Consolidated Financial Statements For the Year Ended 30 June 2009 20 Financial instruments (a) Financial risk and capital management The consolidated entity’s activities expose it to a variety of financial risks: credit risk, liquidity risk, and interest rate risk. The consolidated entity’s overall financial risk management focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the consolidated entity’s financial performance. The consolidated entity uses derivative financial instruments to hedge exposure to fluctuations in interest rates. Financial risk and capital management is carried out by a central treasury department under policies approved by the Directors of the Responsible Entity. The Board provides written principles of overall risk management, as well as written policies covering specific areas such as managing capital, mitigating interest rate and credit risks, use of derivative financial instruments and investing excess liquidity. Capital management The Responsible Entity’s objective when managing capital is to safeguard the ability to continue as a going concern, whilst providing returns for Unitholders and benefits for other stakeholders and to maintain a capital structure to minimise the cost of capital. The Responsible Entity can alter the capital structure of the consolidated entity by adjusting the amount of distributions paid to Unitholders and adjusting the timing of development and capital expenditure. In this context, the consolidated entity considers capital to include interest-bearing loans and borrowings and Unitholders’ funds. Management monitor the capital structure of the consolidated entity through the loan-to-value ratio. The ratio is calculated as the amount of the loan facility drawn divided by the latest valuation of the consolidated entity’s properties. The loan-to-value ratio as at 30 June 2009 is 72% (2008: 61%) which is not in compliance with the LVR covenant requirement of 70%. On 29 June 2009, the Directors received written confirmation from NAB that they will waive their rights to take any action against the Trust in relation to the Trust not being in compliance with the LVR covenant. Refer to Note 1(b), 14, and 26 for further detail on the Trust not being in compliance with the LVR covenant under the loan facility agreement. Credit risk Credit risk is the risk that a customer or counterparty to a financial instrument will default on their contractual obligations resulting in a financial loss to the consolidated entity. The consolidated entity has no significant concentrations of credit risk and has policies to review the aggregate exposure of tenancies across its portfolio. The consolidated entity also has policies to ensure that leases are made to customers with an appropriate credit history. Derivative counterparties are limited to entities with high credit ratings set down by Standard and Poors. As at 30 June 2009, for the consolidated entity, the aging analysis of total trade receivables is as follows: 2009 Trade receivables Impairment Net receivables $’000 $’000 $’000 Not past due 40 – 40 0-30 days past due 17 (7) 10 31-60 days past due 25 (7) 18 61-90 days past due 18 – 18 +91 days past due – – – 100 (14) 86 As at 30 June 2009 and 30 June 2008, there were no significant financial assets that were past due and impaired. As at 30 June 2009 and 30 June 2008, there were no significant financial assets that would otherwise be past due whose terms have been renegotiated. 20 Stockland Direct Retail Trust No. 1 June 2009
Stockland Direct Retail Trust No. 1 and its controlled entities Notes to the Consolidated Financial Statements For the Year Ended 30 June 2009 20 Financial instruments (continued) (a) Financial risk and capital management (continued) Credit risk (continued) The movement in the allowance for impairment loss is as follows: Consolidated Trust 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Balance as at 1 July – – – – Charge for the year 14 – – – Amounts written off – – – – Closing balance at 30 June 14 – – – The carrying amount of financial assets included in the Balance Sheet represents the consolidated entity’s and the Trust’s maximum exposure to credit risk in relation to these assets. Refer to Notes 5 and 6 for a breakdown of these financial assets. Liquidity risk Liquidity risk is the risk that the consolidated entity or the Trust will not be able to meet its financial obligations as they fall due. Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The consolidated entity and the Trust aims at maintaining flexibility in funding by keeping sufficient committed credit lines available. Management prepares and monitors rolling forecasts of liquidity requirements on the basis of expected cash flow. The consolidated entity manages liquidity risk through monitoring the maturity of its debt portfolio. As at 30 June 2009, the current weighted average debt maturity is 0.5 years (2008: 1.5 years). Refer to Note 14 for further detail of the loan facility. The table below reflects all contractual maturities of financial liabilities including principal and estimated interest cash flows calculated based on conditions existing at balance date. The amounts presented represent the future undiscounted cash flows and may not equate to carrying amounts of financial liabilities in the Balance Sheet. Contractual maturity of financial liabilities including derivatives and estimated interest 2009 2008 Contractual Contractual cash flows 1 year or less 1-3 years 3-5 years 5+ years cash flows 1 year or less 1-3 years 3-5 years 5+ years $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 Consolidated Trade payables and accruals (1,624) (1,624) – – – (2,464) (2,464) – – – Distribution payable (622) (622) – – – (778) (778) – – – Loan facility 1 (58,102) (58,102) – – – (62,952) (4,611) (58,341) – – Interest rate swap (688) (1,301) (157) 770 – 3,787 1,029 1,504 1,047 207 (61,036) (61,649) (157) 770 – (62,407) (6,824) (56,837) 1,047 207 Trust Trade payables and accruals (600) (600) – – – (358) (358) – – – Distribution payable (622) (622) – – – (778) (778) – – – Loan facility 1 (58,102) (58,102) – – – (62,952) (4,611) (58,341) – – Interest rate swap (688) (1,301) (157) 770 – 3,787 1,029 1,504 1,047 207 (60,012) (60,625) (157) 770 – (60,301) (4,718) (56,837) 1,047 207 1 The loan facility is due to mature on 22 December 2009. Refer to Note 14 for further detail. Stockland Direct Retail Trust No. 1 June 2009 21
Page 1 and 2: 2009 Stockland Direct Retail Trust
Page 3 and 4: Stockland Direct Retail Trust No. 1
Page 21: Stockland Direct Retail Trust No. 1
Page 31: Stockland Corporation Ltd ACN 000 1

Stockland Direct Retail Trust No.1

You also want an ePaper? Increase the reach of your titles

Delete template?

Save as template?