FINANCIAL REPORT (cont.) Notes to the Financial Statements (cont.)
19. FINANCIAL INSTRUMENTS The Group has three significant categories of financial instruments which are described below together with the policies and risk management processes which the Group utilises: (a) Cash and cash equivalents The Group deposits its cash and cash equivalents with Australian banks. Funds can be deposited in cheque accounts, cash management accounts and term deposits. The policy is to utilise at least two Australian banks for cash management accounts and term deposits. (b) Debtors and credit risk management The Group has a credit risk policy to protect against the risk of debtor default. The majority of the Group’s debtors are long-term customers and are multinational oil and gas companies, government authorities and large Australian corporations where the credit risk is considered to be low.
New customers are assessed for credit risk using credit references and reports from credit agencies as necessary. (c) Bank guarantees and insurance bonds The Group has a preference to provide bank guarantees or bonding to customers in lieu of the cash retention required under contracts. This preference is pursued subject to specific contract requirements and the Group’s finance facility requirements. Capital risk management The Group’s capital structure currently consists of equity and retained earnings. The only external long-term debt or short-term debt relates to lease liabilities. The operating cash flows of the Group are used to finance short-term capital expenditure. The Group’s capital risk management is continuously reviewed and adjusted based on surplus cash available for investment.
Categories of financial instruments
2023 $’000
2022 $’000
Financial assets Cash and cash equivalents Accounts receivables Total financial assets Financial liabilities Trade and other payables
12,833 23,099 35,932
36,746 28,946 65,692
17,487
18,998
Lease Liabilities
4,485
3,519
Total financial liabilities
21,972
22,517
Liquidity risk management Ultimate responsibility for liquidity risk management rests with the board of directors, who have built an appropriate liquidity risk management framework for the management of the Group’s short, medium and long-term liquidity management requirements. The Group manages liquidity risk by continually monitoring and maintaining adequate banking facilities. Cash flows are monitored and matched to the maturity profiles of financial assets and liabilities. Liquidity and interest risk tables The following table details the Group’s remaining contractual maturity for its non-derivative financial assets and liabilities. The tables have been drawn up based on the undiscounted cash flows of financial assets and liabilities based on the earliest date on which the Group can be required to receive or pay. The table includes both interest and principal cash flows.
Obligations under finance leases Leasing arrangements
The Group leases certain of its construction equipment under finance leases. The average lease term is 4.3 years. The Group’s obligations under finance leases are secured by the lessor’s title to the leased assets. Financial risk management objectives The Group’s exposure to market risk mainly arising from interest rate risk (including currency risk, fair value interest rate risk and price risk) and cash flow interest rate risk, is disclosed in the interest rate sensitivity analysis below. Credit risk is monitored monthly through continuous management of the ongoing projects.
Annual Report 2023 84
Made with FlippingBook - Online Brochure Maker