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 of directors 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 of directors 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
2018 $M
2017 $M
NOTE
Net profit/(loss) for the period
149.8
168.9
Items classified as investing activities Net loss/(gain) on disposal of PPE and software intangibles
2.4
4.3
Net loss/(gain) on sale of investments
(1.1)
–
1.3
4.3
Non-cash items Depreciation and amortisation
225.9
199.6
Non-cash portion of interest costs (net) Fair value change on financial instruments Associates (share of net (profit)/loss)
1.7
(3.8) (1.6) (1.6) (9.1) (1.3)
(3.1)
8
1.5 8.6
12.2
Increase/(decrease) in deferred tax Increase/(decrease) in provisions
21.4
Other non-cash items
0.4
–
256.4
182.2
Cash items not impacting net profit/(loss) Dividend received from associate
–
12.2
2.0
Changes in assets and liabilities Trade and other payables
35.0
8.2
Inventories
(1.2)
(2.0)
Trade and other receivables
(18.2) (33.2) (17.6)
(11.2) (16.7) (21.7)
Income tax
Net cash flows from/(used in) operating activities
389.9
335.7
102
Vector://AR 18
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