Notes to the financial statements (continued) Section 4: Debt and equity (continued) 17. Financial risk management (continued) C. Credit risk Credit risk is the risk of financial loss to Western Power if a customer or counterparty to a financial instrument fails to discharge its contractual obligation. The maximum exposure to credit risk for Western Power is best represented by the carrying amounts of financial assets recognised in the statement of financial position as at the reporting dates (refer to note 17(b)(iii)). Western Power generally provides credit on 14 or 30 day payment terms, unless contractually agreed otherwise. Credit risk is actively managed through the adherence of Western Power’s Credit Risk and Treasury Management Standards, the use of credit ratings and monthly reporting to the Board. Western Power manages the quality of financial assets and its concentrations of credit risk by reference to external credit ratings, where available, or to historic information on counterparty default rates. Bank guarantees, insurance bonds or cash deposits are also obtained as security where necessary. i. Critical accounting estimates and judgements: impaired trade receivables Western Power applies the simplified approach to measure expected credit losses on trade receivables. This approach recognises a lifetime expected loss allowance for all trade receivables, being: • a loss allowance from day one • an estimate for forward-looking losses to reflect current conditions and forecasts of future conditions.
To measure the expected credit losses, trade receivables are grouped into like customer categories based on shared credit risk characteristics. The expected credit loss rate for each of these categories is based on the customers’ payment profiles over a number of periods before the reporting dates presented, and their corresponding historical credit losses experienced within this period. The historical credit loss rates are adjusted to reflect current and forward-looking information on macroeconomic factors affecting the ability of customers to settle the trade receivables. Western Power has identified the Western Australian Gross State Product to be the most relevant macroeconomic factor, and accordingly adjusts the historical credit loss rates based on the expected changes in this factor. For the reporting year ended 30 June 2025, changes in this factor reflected estimates for the ongoing impact of, and subsequent recovery from the COVID-19 pandemic on current and future economic conditions. This did not result in a material change to Western Power’s allowance for impairment of trade receivables (30 June 2024: no material change). The loss allowance for the impairment of trade receivables for the reporting years presented, is shown in table 38 below. This allowance is recognised in ‘Other expenses’ in profit or loss (refer to note 5(c)(i)).
Table 38: Loss allowance for the impairment of trade receivables for the reporting years presented 2024/25 2023/24
Impairment of trade receivables $M
Impairment of trade receivables $M
Trade receivables $M
Expected loss rate %
Trade receivables $M
Expected loss rate %
1 - - - 4 5
1 - - - 5 6
1.4% - - - 28.6%
71 1 1 1 14
1.4% - - - 35.7%
73 3 2 1 14 93
Current 30 days late 60 days late 90 days late More than 90 days late
Total
88
6.4%
5.7%
116
Western Power Annual Report 2025
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