AWB Limited - 2003 Annual Report

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 SEPTEMBER 2003
32. FINANCIAL INSTRUMENTS (continued)
(d) Credit risk exposure
Credit risk reports the loss that would be recognised if counterparties failed to perform as contracted.
Recognised financial instruments
The credit risk on financial assets, excluding investments, of the consolidated entity which have been recognised on the statement of
financial position, is the carrying amount net of any provision for doubtful debts or counterparty risk.
The consolidated entity minimises concentration of credit risk by undertaking transactions with a large number of customers and obtaining
credit insurance for certain customers.
Under the terms of the grower loan contracts, any distributions from the AWB National Pools are applied as repayments of the
outstanding loan balance. The loans are advanced on a non-recourse basis; any shortfall on repayment is underwritten by AWB
Finance Limited.
Unrecognised financial instruments
Credit risk on derivative contracts which have not been recognised on the statement of financial position is minimised as counterparties
are recognised financial intermediaries with acceptable credit ratings.
(e) Net fair values
Recognised financial instruments
The carrying amounts and net fair values of financial assets and financial liabilities, at balance date are as follows:
Carrying amount
Net fair value
2003 2002 2003 2002
$'000 $'000 $'000 $'000
Financial assets
Cash assets 54,785 69,921 54,785 69,921
Receivables 1,006,482 2,137,041 1,006,482 2,137,041
Short term deposits 36,005 10,718 36,005 10,718
Financial assets – other 23,446 51,880 23,446 51,880
Shares 138,066 14,419 138,066 14,419
Total financial assets 1,258,784 2,283,979 1,258,784 2,283,979
Financial liabilities
Payables 336,066 122,681 336,066 122,681
Borrowings 1,062,884 1,637,518 1,062,884 1,637,518
Financial liabilities 8,907 – 8,907 –
Unearned income 9,458 120 9,458 120
Net deferred gains and losses 3,684 19,956 3,684 19,956
Total financial liabilities 1,420,999 1,780,275 1,420,999 1,780,275
Unrecognised financial instruments
The net fair values of financial instruments not recognised in the statement of financial position held as at the reporting date are:
Consolidated
2003 2002
$'000 $'000
Forward rate agreements – (32)
Interest rate swaps (905) (1,295)
Interest rate options 151 (62)
Interest rate futures – –
(754) (1,389)
Interest rate futures and exchange traded options: The net fair value for interest rate futures and exchange traded options is calculated
as the value of the variation margin on the last business day of the period.
Interest rate swaps, over the counter options and forward rate agreements: The net fair value of these instruments represents the value
that would be obtained in a liquid market if these positions were liquidated.
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