Telstra 2013 Annual Report Download - page 137

NOTES TO THE
FINANCIAL STATEMENTS
(CONTINUED)
FINANCIAL STATEMENTS
Telstra Corporation Limited and controlled entities Telstra Annual Report 2013 135
(a) Risk and mitigation (continued)
Credit risk (continued)
Liquidity risk
Liquidity risk includes the risk that, as a result of our operational
liquidity requirements:
• we will not have sufficient funds to settle a transaction on the due
date;
• we will be forced to sell financial assets at a value that is less
than what they are worth; or
• we may be unable to settle a financial liability or recover a
financial asset at all.
To help reduce these risks we:
• have a liquidity policy which targets a minimum and average
level of cash and cash equivalents to be maintained;
• have readily accessible standby facilities and other funding
arrangements in place;
• generally use instruments that are tradeable in highly liquid
markets; and
• have a liquidity portfolio structure that requires surplus funds to
be invested within various bands of liquid instruments ranging
from ultra liquid to highly liquid and liquid instruments.
We monitor rolling forecasts of liquidity reserves on the basis of
expected cash flow. Our objective is to maintain a balance between
continuity of funding and flexibility through the use of liquid
instruments, borrowings and committed available credit lines.
At 30 June 2013, based on contractual face values, 4 per cent
(2012: 18 per cent) of our debt (after hedging) comprising offshore
borrowings, Telstra bonds and domestic loans and excluding
promissory notes, will mature in less than one year.
The contractual maturity of our fixed and floating rate financial
liabilities and derivatives and the corresponding carrying values are
shown in Table E. The contractual maturity amounts (nominal cash
flows) represent the future undiscounted principal and interest cash
flows and therefore do not equate to the carrying values. These
amounts are reported in Australian dollars based on the applicable
exchange rate as at 30 June. We have also included derivative
financial assets in the following table on the basis that these assets
have a direct relationship with an underlying financial liability and
both the asset and the liability are managed together.
For floating rate instruments, the amount disclosed is determined by
reference to the current market pricing for interest rates over the
period to maturity.
Also affecting liquidity are cash and cash equivalents, available for
sale financial assets and other interest and non-interest bearing
financial assets. Liquidity risk associated with these financial
instruments is represented by the face values as shown in note 17,
Table C.
18. FINANCIAL RISK MANAGEMENT (CONTINUED)
Table D Telstra Group
Credit risk concentrations (VaR based)
As at 30 June
2013 2012
%$m % $m
Australia . . . . . 23.4 2,521 25.8 3,188
United States . . . 22.8 2,454 21.1 2,616
Japan. . . . . . . 0.5 54 0.5 63
Europe . . . . . . 21.6 2,329 20.5 2,530
United Kingdom . 13.2 1,417 15.3 1,889
Canada . . . . . . - - 0.1 11
Switzerland . . . . 0.6 67 0.6 70
China/Hong Kong 17.3 1,864 15.3 1,892
Singapore . . . . 0.6 68 0.6 71
New Zealand . . . - - 0.2 27
Other . . . . . . . - 4 -2
100.0 10,778 100.0 12,359