✨ Financial Liabilities and Risks
Financial liabilities
| 2012 | Distribution | 2011 | |
|---|---|---|---|
| Financial liabilities at amortised cost | |||
| Creditors and other payables | $ 311,561 | $ 369,610 | |
| Borrowings: | |||
| - secured loans | $ (3,130,079) | $ (1,290,443) | |
| - Net advance from related parties |
Financial instruments which potentially subject the Company to credit risk principally consist of bank balances and accounts receivable. Generally the Company does not require collateral. Maximum exposure to credit risk is the amount stated in the financial statements and is net of any recognised provision for losses on these financial instruments.
The Company is not exposed to any concentrations of risk or currency risk.
The Company has no bank overdraft facility.
The methods and assumptions used are that the carrying amount in the financial statements reflects the estimated fair value of the financial instruments including receivables, bank and investments and accounts payable.
The Company has long term borrowings which are used to fund ongoing activities.
Interest Rate Risk
Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. This could particularly impact on the cost of borrowing or the return on investments.
The Directors do not consider there is any significant exposure to interest rate risk on the Company’s investments.
The interest rates on the Company’s borrowings are disclosed in note 7. Interest rates are reviewed regularly.
There are no interest rate options or interest rate swap agreements in place as at 30 June 2012 (2011 : Nil).
Currency Risk
No currency risk.
Liquidity Risk
Management of liquidity risk
Liquidity risk is the risk that the Company will encounter difficulty raising liquid funds to meet commitments as they fall due. Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Company aims to maintain flexibility in funding by keeping committed credit lines available.
The Company manages its borrowings in accordance with its funding and financial policies, which include a Liquidity Management policy.
Contractual maturity analysis of financial liabilities
The table below analyses the financial liabilities into relevant maturity groupings based on the remaining period at balance date to the contractual maturity date.
The amounts disclosed are the contractual undiscounted cash flows.
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NZ Gazette 2012, No 143
✨ LLM interpretation of page content
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Financial Instruments
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🏭 Trade, Customs & IndustryFinancial liabilities, Creditors, Borrowings, Credit risk, Interest rate risk, Currency risk, Liquidity risk