McConnell Dowell 2019 Annual Review

83 Annual Review 2019 The following sensitivity analysis is based on the interest rate risk exposure in existence at the balance date, with all other variables remaining constant: At balance date, had interest rates moved, as illustrated in the table below, post tax profit and equity would have been affected as follows: Credit risk Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and trade and other receivables. The Group’s exposure to credit risk arises from potential default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. No collateral is held as security. There are no significant concentrations of credit risk. Loans receivable from associate companies and joint arrangements comprise a number of entities. The group also holds letters of credit with certain financial institutions. Exposure at balance date is addressed in each specific note. The Group trades only with recognised, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures including an assessment of their independent credit rating and industry reputation. Risk limits are set and monitored for each individual customer in accordance with parameters set up by the board. Credit value represents the credit quality of the amounts. The Group has facilities under which various lenders/financiers provide guarantees and bonding facilities. The Group only obtains facilities from credit worthy third parties and does not consider there to be a concentration of credit risk among these parties. Receivable balances are monitored on an ongoing basis with the results being that the Group’s exposure to bad debts is not significant. The Group contracts with a number of third parties and does not consider that there is a concentration of credit risk with individual third parties. All figures are in A$ 000’s 2019 2018 2019 2018 Consolidated 100 basis point increase in interest rates with all other variables held constant 720 992 720 893 100 basis point fall in interest rates with all other variables held constant (720) (992) (720) (893) Equity Higher / (lower) Post tax profit Higher / (lower)