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S E C T I O N 1 2 : Our Financial Review

ALLIANCE ANNUAL REP ORT 2018

D. F I N A N C I A L I N ST RU M E N T S U S E D T O M A N AG E R I S K IN THIS SECTION This section explains the financial risks that the Alliance Group faces and how these risks are managed. This includes reviewing the hedging instruments used to manage risk. D1

MANAGEMENT OF FINANCIAL RISK Alliance is subject to a variety of financial risks relating to its operations that are managed by the Group’s Treasury Policy. This policy provides guidance to management on minimising the exposure to these risks and the use of derivative financial instruments. Alliance is exposed to foreign currency, interest rate, credit and liquidity risks which arise during the normal course of business. The group manages commodity risk through negotiated supply contracts. MANAGEMENT OF ALLIANCE’S KEY FINANCIAL RISKS Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counter-party fails to meet its financial obligations. Exposure to credit risk primarily arises in relation to trade debtors. Refer to Note C5 for the status of trade receivables. This risk is managed through a credit approval process and on-going monitoring being undertaken. Offshore debtor credit risk is also partially managed by the use of confirmed letters of credit from reputable banks. There are no significant concentrations of credit risk. The carrying amount of financial assets represents the group’s maximum credit exposure. Liquidity risk

Liquidity risk represents the group’s ability to meet its contractual obligations as they fall due. In general, the group generates sufficient cash flows from its operating activities to meet its obligations arising from its financial liabilities and maintains adequate banking facilities to cover potential shortfalls. The Group is required to disclose the expected timings of cash outflows for each of its financial liabilities. The amounts in the table below are the contractual undiscounted cash flows (including interest), so will not always reconcile to the amount disclosed on the statement of financial position. Balance Contractual sheet cash flow

< 3 months

3-12 mths

1-5 yrs

$000

$000

$000

$000

$000

Loans and borrowings

72,100

72,354

254

12,100

60,000

2017 Loans and borrowings

19,000

19,008

8

9,000

10,000

2018

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Profile for alliance12

Annual Report 2018  

Annual Report 2018