Vector AR’19 ― notes to the financial statements (continued)
20. Financial risk management CONTINUED 20.4 Foreign exchange risk Policies
Vector is exposed to foreign exchange risk through its borrowing activities, foreign currency denominated expenditure, and through our Australian subsidiaries. Foreign exchange exposure is primarily managed through entering into derivative contracts. The Board requires that all significant foreign currency borrowings and expenditure are hedged into NZD at the time of commitment to drawdown or when the exposure is highly probable. Hence, at balance date there is no significant exposure to foreign currency risk.
20.5 Funding risk Policies
Funding risk is the risk that Vector will have difficulty refinancing or raising new debt on comparable terms to existing facilities. The objective is to spread the concentration of risk so that if an event occurs the overall cost of funding is not unnecessarily increased. Details of borrowings are shown in Note 18. The Board has set the maximum amount of debt that may mature in any one financial year.
21. Cash flows 21.1 Reconciliation of net profit/ (loss) to net cash flows from/ (used in) operating activities
Reconciliation of net profit/(loss) to net cash flows from/ (used in) operating activities
2019 $M
2018 $M
84.0
Net profit/(loss) for the period
149.8
Items classified as investing activities Non-cash items classified as investing activities Other items classified as investing activities
(3.4)
12.8
1.6
(0.1) (1.1)
–
Net loss/(gain) on sale of investments
(1.8)
11.6
Items classified as financing activities Items associated with lease liabilities
1.5
–
Non-cash items Depreciation and amortisation
246.8
225.9
(5.5)
Non-cash portion of interest costs (net) Fair value change on financial instruments
1.7
2.5
(3.1)
(0.6)
Associates (share of net (profit)/loss)
1.5
46.6 11.6
Impairment
–
Increase/(decrease) in deferred tax Increase/(decrease) in provisions
8.6
(4.2) (1.6)
21.4
Other non-cash items
(2.4)
295.6
253.6
Changes in assets and liabilities Trade and other payables
(12.4)
0.9
(5.2)
Contract liabilities Contract assets
11.2
0.3 3.2 2.8
(3.6) (0.3) (0.1)
Inventories
Trade and other receivables
(19.9) (31.2)
Income tax
(33.2) (25.1)
Net cash flows from/(used in) operating activities
348.1
389.9
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