Westgold Resources Limited Annual Report 2021

67 Westgold Resources Limited Annual Report 2021 4. F INANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Interest rate risk exposure (continued) (b) Credit risk Credit risk arises from the financial assets of the Group, which comprises cash and cash equivalents, trade and other receivables and other financial assets held as security and loans. Cash and cash equivalents are held with National Australia Bank, which is an Australian Bank with an AA- credit rating (Standard & Poor’s). The Group’s exposure to credit risk arises from potential default of the counter party, with the maximum exposure equal to the carrying amount of the financial assets (as outlined in each applicable note). The Group does not hold any credit derivatives to offset its credit exposure. The Group trades only with recognised, creditworthy third parties and as such collateral is not requested nor is it the Group’s policy to securitise its trade and other receivables. Receivable balances are monitored on an ongoing basis with the result that the Group does not have a significant exposure to bad debts. Significant concentrations of credit risk are in relation to cash and cash equivalents with Australian banks. (c) Price risk Equity Security Price Risk The Group’s operations were exposed to equity security price fluctuations arising from investments in equity securities. Refer to Note 15 for details of equity investments at fair value through profit or loss held at 30 June 2021. The Group has equity investments, which have shown volatility in price movements over the year. If security prices varied by 20%, with all other variables held constant, the impact on post tax profits and equity at 30 June, is reflected below: Post tax profit higher (lower) Other Comprehensive Income higher (lower) 30 June 2021 30 June 2020 30 June 2021 30 June 2020 Judgements of reasonably possible movements: Price + 20% 899,233 – – – Price - 20% (899,233) – – – (d) Commodity price risk The Group’s operations are exposed to commodity price fluctuations. The Group has a commodity risk management hedging policy that authorises management to enter into price protection contracts to ensure revenue streams up to 60% of gold sales for up to three years of forecast production. At the end of the financial year, the Group had unrecognised sales contracts for 156,000 ounces at an average price of $2,133 per ounce ending in March 2023, which the Group will deliver physical gold to settle. There was therefore no exposure on recognised financial instruments at the balance sheet date. (e) Liquidity risk Liquidity risk arises from the financial liabilities of the Group and the subsequent ability to meet the obligations to repay the financial liabilities as and when they fall due. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of hire purchase arrangements. The table below reflects all contractually fixed payables for settlement, repayment and interest resulting from recognised financial liabilities as of 30 June 2021. Cash flows for financial liabilities without fixed amount or timing are based on the conditions existing as 30 June.