Axiom 2014 Annual Report - page 108

Notes to the Financial Statements
for the year ended 30 September 2014
Axiom Mining Limited
20. Financial risk management and fair values
Exposure to credit, liquidity, interest rates and currency risks arises in the normal course of the Company’s business.
The Company’s exposure to these risks and the financial risk management policies and practices used by the Company
are described below and are limited by the Company’s financial management policies and practices described below.
a. Credit risk
Exposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of
contract obligations that could lead to a financial loss to the Group.
Credit risk is managed through the maintenance of procedures (such procedures include the utilisation of systems for
the approval, granting and renewal of credit limits, regular monitoring of exposures against such limits and monitoring
of the financial stability of significant customers and counterparties), ensuring to the extent possible, that customers
and counterparties to transactions are of sound credit worthiness. Such monitoring is used in assessing receivables for
impairment. Credit terms are generally 14 to 30 days from the invoice date.
Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating, or
in entities that the Board has otherwise cleared as being financially sound. Where the Group is unable to ascertain a
satisfactory credit risk profile in relation to a customer or counterparty, the risk may be further managed through title
retention clauses over goods or obtaining security by way of personal or commercial guarantees over assets of sufficient
value which can be claimed against in the event of any default.
Credit risk exposures
The maximum exposure to credit risk by class of recognised financial assets at the end of the reporting period, excluding
the value of any collateral or other security held, is equivalent to the carrying value and classification of those financial
assets (net of any provisions) as presented in the statement of financial position. Credit risk also arises through the
provision of financial guarantees, as approved at board level.
Trade and other receivables that are neither past due nor impaired are considered to be of high credit quality.
The Company manages its credit risk associated with funds on deposit and cash at bank by only dealing with reputable
financial institutions. At year end the Company has one material exposure of $2,084,000 (2013: $369,000) to the Australia
and New Zealand Banking Group Limited relating to funds on deposit and cash at bank.
b. Liquidity risk
Liquidity risk arises from the possibility that the Company might encounter difficulty in settling its debts or otherwise
meeting its obligations related to financial liabilities.
The Company manages this risk through the following mechanisms:
preparing forward-looking cash flow analysis in relation to its operational, investing and financing activities;
maintaining a reputable credit profile;
managing credit risk related to financial assets; and
only investing surplus cash with major financial institutions.
The Company’s policy is to regularly monitor its liquidity requirements and its compliance with lending covenants, to
ensure that it maintains sufficient reserves of cash and readily realisable marketable securities and adequate committed
lines of funding from major financial institutions to meet its liquidity requirements in the short and longer term.
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