Urbanise.com Annual Report 2019

23. Financial risk management (continued) Based on the financial instruments held at 30 June 2019 the Group’s post tax profit and equity would have been $82,495 higher/lower (2018: $125,706 higher/lower) with a 10% increase/decrease (a reasonable possible change) in the Australian dollar against other foreign currencies. 10% is the sensitivity rate used when reporting foreign currency risk internally and represents management’s assessment of the possible change in foreign exchange rates in the short-term. Credit risk management Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss. The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions, foreign exchange transactions and other financial instruments. The Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The Group’s exposure and the credit ratings of its counterparties are continuously monitored. The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date of recognised financial assets is the carrying amount of those assets, net of any provisions for impairment of those assets, as disclosed in consolidated statement of financial position and notes to the consolidated financial statements. The Group does not have any material credit risk exposure to any single debtor or group of debtors under financial instruments entered into by the Group. Cash deposits and trade receivables Credit risk from balances with banks and financial institutions is managed by the Group’s finance department in accordance with the Group’s policy. Credit risk for cash deposits is managed by holding all cash deposits with major banks. Credit risk for trade receivables is managed by setting credit limits and completing credit checks for new customers. Outstanding receivables are regularly monitored for payment in accordance with credit terms. The ageing analysis of trade and other receivables is provided in Note 9. As the Group undertakes transactions with a large number of customers and regularly monitors payment in accordance with credit terms, the financial assets that are neither past due nor impaired, are expected to be received in accordance with the credit terms. The Group does not have any material credit risk exposure for other receivables or other financial instruments. Liquidity risk management Ultimate responsibility for liquidity risk management rests with the Board for the Group’s short, medium and long-term funding and liquidity management requirements. The Group manages liquidity risk by maintaining adequate reserves and continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. The table below represents the undiscounted contractual settlement terms for financial instruments and management’s expectation for settlement of undiscounted maturities. 2019 < 1 Year $ 1 - 5 years $ Total contractual cash flows $ Carrying amount $ Payables (1,154,395) – (1,154,395) (1,154,395) (1,154,395) – (1,154,395) (1,154,395) 2018 < 1 Year $ 1 - 5 years $ Total contractual cash flows $ Carrying amount $ Payables (1,407,539) – (1,407,539) (1,407,539) (1,407,539) – (1,407,539) (1,407,539) Fair value compared with carrying amounts The Directors consider that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values. Notes to the Consolidated Financial Statements for the year ended 30 June 2019 (continued) 73