Broome Port Authority - Parliament of Western Australia
Broome Port Authority - Parliament of Western Australia
Broome Port Authority - Parliament of Western Australia
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22. Financial instruments<br />
(i) Financial risk management objectives and policies<br />
The <strong>Authority</strong>’s principal financial instruments comprise cash and cash equivalents,<br />
receivables, payables, interest bearing borrowings and finance leases. The <strong>Authority</strong> has<br />
limited exposure to financial risks. The <strong>Authority</strong>’s overall risk management program focuses<br />
on managing the risks identified below.<br />
The fair values and carrying amounts <strong>of</strong> various financial instruments recognised at reporting<br />
date are as follows:<br />
Notes 2011 2011 2010 2010<br />
$’000 $’000 $’000 $’000<br />
Carrying<br />
Amounts<br />
Fair<br />
Values<br />
Carrying<br />
Amounts<br />
Fair<br />
Values<br />
Cash and cash equivalents<br />
Trade and other receivables<br />
Trade and other payables<br />
Loans and borrowings<br />
12 4,660 4,660 3,744 3,744<br />
13 1,781 1,781 1,013 1,013<br />
17 (746) (746) (836) (836)<br />
18 (12,232) (11,224) (10,678) (11,225)<br />
(6,537) (5,529) (6,757) (7,304)<br />
Note:<br />
The carrying amounts <strong>of</strong> cash and equivalents, receivables and trade and other payables are a<br />
reasonable approximation <strong>of</strong> their fair values on account <strong>of</strong> their short maturity cycle.<br />
The fair value <strong>of</strong> loans and borrowings are estimated by discounting<br />
the future expected cash flows<br />
applying the current Government yield curve at reporting date plus an adjustment for the BrPA's<br />
credit spread (i.e. 0.31% to 2.20%). BrPA does not expect prepayments <strong>of</strong> those loans and<br />
borrowings.<br />
Market risk<br />
Market risk is the changes in market prices such as foreign exchange rates and interest rates that<br />
will affect the <strong>Authority</strong>’s income or the value <strong>of</strong> its holdings <strong>of</strong> financial instruments. The <strong>Authority</strong><br />
does not trade in foreign currency and is not materially exposed to other price risks.<br />
The <strong>Authority</strong>’s exposure to market risk as a result <strong>of</strong> changes in interest rates, relates primarily to<br />
its long term debt obligations. The <strong>Authority</strong>’s borrowings are all obtained through the <strong>Western</strong><br />
<strong>Australia</strong>n Treasury Corporation (WATC) and are at fixed rates with varying maturities. The risk is<br />
managed by WATC through portfolio diversification and variation in maturity dates. Other than as<br />
detailed in the interest rate sensitivity analysis in the table below, the <strong>Authority</strong> has limited exposure<br />
to interest rate risk because it has no borrowings other than WATC borrowings and finance leases<br />
(fixed interest rate).<br />
Page 69 <strong>of</strong> 79
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