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APN
annual report
2011
notes to the financial statements
APN News & Media Limited and Controlled Entities
32. STANDBY ARRANGEMENTS AND CREDIT FACILITIES
Entities in the consolidated entity have access to:
2011
$’000
2010
$’000
Overdraft facilities
Unsecured bank overdraft facility totalling
11,659
11,978
Amount of credit utilised
(714)
(839)
Amount of available credit
10,945
11,139
Loan facilities
Unsecured bank loan facility totalling
920,234
966,018
New Zealand Bond
76,104
75,415
Amount of facility utilised
(621,550)
(680,616)
Amount of available facility
374,788
360,817
33. FINANCIAL RISK MANAGEMENT
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, interest rate risk and price risk),
credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of financial markets and seeks
to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative financial instruments such as
foreign exchange contracts to hedge certain risk exposures. The Group uses different methods to measure different types of risk to which it
is exposed. These methods include sensitivity analysis in the case of interest rate and foreign exchange risk and ageing analysis for credit risk.
Risk management is carried out by a central treasury function under policies approved by the Board of Directors. The policies provide
principles for overall risk management, as well as covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of
derivative financial instruments and non-derivative financial instruments, and investment of excess liquidity.
(a) Market risk
(i) Cash flow and fair value interest rate risk
The Group’s main interest rate risk arises from long-term borrowings. Borrowings issued at variable rates expose the Group to cash flow
interest rate risk. Borrowings issued at fixed interest rates expose the Group to fair value interest rate risk. Group policy is to maintain a mix
of fixed and variable rate borrowings using interest rate swap arrangements where necessary. Refer to note 14 for further detail of the Group’s
interest rate swap arrangements.
Based on the outstanding net floating debt at 31 December 2011, a change in interest rates of +/–1% per annum with all other variables being
constant would impact post-tax profit by $2.5 million lower/higher (2010: $2.6 million lower/higher). The parent entity has no significant
exposure to a change in interest rates.
(ii) Foreign exchange risk
Foreign exchange risk arises from future commercial transactions and recognised assets and liabilities that are denominated in a currency
that is not the entity’s functional currency. Individual transactions are assessed and forward exchange contracts are used to hedge the risk
where deemed appropriate.
A US dollar denominated bank account is held for the purpose of paper contract purchases, which is kept at a minimum balance. As such,
any foreign exchange exposure is considered immaterial.
Whilst the Group as a whole has assets and liabilities in multiple currencies, individual entities in the Group do not have a significant foreign
exchange exposure to receivables or payables in currencies that are not their functional currency.
(iii) Price risk
The Group is not exposed to significant price risk.