RFG Annual Report 2007 - Retail Food Group

32. Financial instruments (continued)
The following table details the Group’s exposure to interest rate risk as at 30 June 2006:
2006
Weighted
average
effective
interest
rate
%
Variable
interest
rate
$’000
Less
than 1
year
$’000
1–2
years
$’000
Maturity Dates
2–3
years
$’000
3–4
years
$’000
4–5
years
$’000
5+
years
$’000
Non
interest
bearing
Financial assets
Cash and cash equivalents 3.0 1,631 – – – – – – – 1,631
Receivables – – – – – – – – 3,866 3,866
Related party Receivables 8.0 – 1,067 – – – – – 18 1,085
1,631 1,067 – – – – – 3,884 6,582
Financial liabilities
Trade payables – – – – – – – – 1,525 1,525
Other payables – – – – – – – – 233 233
Income tax payable – – – – – – – – 629 629
Bank loans 8.18 17,575 – – – – – – – 17,575
Employee benefi ts – – – – – – – – 260 260
17,575 – – – – – – 2,647 20,222
$’000
Total
$’000
61
Retail Food Group Annual Report
(d) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in fi nancial loss to the Group. The Group has
adopted a policy of only dealing with creditworthy counterparties and obtaining suffi cient collateral where appropriate, as a means of mitigating
the risk of fi nancial loss from defaults. The Group exposure and the credit ratings of its counterparties are continuously monitored and the
aggregate value of transactions concluded are spread amongst approved counterparties. Credit exposure is controlled by counterparty limits that
are reviewed and approved by the audit committee annually. The Group measures credit risk on a fair value basis.
The Group does not have any signifi cant credit risk exposure to any single counterparty or any group of counterparties having similar
characteristics.
(e) Fair value of financial instruments
The Directors consider that the carrying amount of fi nancial assets and fi nancial liabilities recorded in the fi nancial statements approximates their
fair values.
The fair values of fi nancial assets and fi nancial liabilities are determined as follows:
• the fair value of fi nancial assets and fi nancial liabilities with standard terms and conditions and traded on active liquid markets are determined
with reference to quoted market prices;
• the fair value of other fi nancial assets and fi nancial liabilities are determined in accordance with generally accepted pricing models based on
discounted cash fl ow analysis; and,
• the fair value of derivative instruments, included in hedging assets and liabilities, are calculated using quoted prices. Where such prices are
not available use is made of discounted cash fl ow analysis using the applicable yield curve for the duration of the instruments.
(f) Liquidity risk management
The Group manages liquidity risk by maintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoring
forecast and actual cash fl ows and matching the maturity profi les of fi nancial assets and liabilities.