Home' Nufarm Annual Report : Nufarm Annual Report 2015 Contents 31. Financial risk management and financial instruments (continued)
Credit risk (continued)
Impairment losses (continued)
Some of the past due receivables are secured by collateral from customers such as directors’ guarantees, bank guarantees
and charges on fixed assets. The past due receivables not impaired relate to customers that have a good credit history with
the group. Historically, the bad debt write-off from trade receivables has been very low. Over the past nine years, the bad
debt write-off amount has averaged 0.05 per cent of sales, with no greater than 0.12 per cent of sales written off in any
In the crop protection industry, it is normal practice to vary the terms of sales depending on the climatic conditions
experienced in each country.
The movement in the allowance for impairment in respect of trade receivables during the year was as follows:
Balance at 1 August
Provisions made during the year
Provisions used during the year
Provisions acquired through business combinations
Balance at 31 July
The allowance account for trade receivables is used to record the impairment losses unless the group is satisfied that no
recovery of the amount owing is possible. At that point the amount is considered irrecoverable and is written off against
the receivable directly.
Liquidity risk is the risk that the group will encounter difficulty in meeting the obligations associated with its financial liabilities
that are settled by delivering cash or another financial asset. The group’s approach to managing liquidity is to ensure, as far as
possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
without incurring unacceptable losses or risking damage to the group’s reputation.
On 23 August 2011, Nufarm executed a A$300 million group trade receivables securitisation facility. Subsequent to execution,
the facility limit was reduced to A$250 million. On 13 June 2013, the facility limit was increased to A$300 million. On 15 April
2015, a monthly facility limit was introduced to reflect the cyclical nature of the trade receivables being used to secure funding
under the program. The monthly facility limit is set at A$300 million for four months of the financial year, at A$375 million
for three months of the financial year, and at A$225 million for five months of the financial year (2014: facility limit was
A$300 million). The facility provides funding that aligns with the working capital cycle of the company.
On 8 October 2012, the group completed a US$325 million senior unsecured notes offering due in October 2019 (the ‘notes’).
On the 23 February 2015, the senior secured syndicated bank facility (SFA) was partially refinanced such that the total facility
amount has increased to A$540 million (2014: A$530 million), of which A$150 million is due in February 2018, A$30 million is
due in December 2017, A$350 million is due in December 2016, and A$10 million is due in December 2015 (2014: A$520 million
due in December 2016, A$10 million due in December 2014). The SFA is secured by assets in Australia, New Zealand and the
United States (2014: Australia, New Zealand and the United States). The SFA includes covenants of a type normally associated
with facilities of this kind, and the group was in compliance with these covenants throughout the financial year. The amount
drawn down under the facility at 31 July 2015 is $10 million (2014: $51 million).
The majority of debt facilities that reside outside the notes, SFA and the group trade receivables securitisation facility
are regional working capital facilities, primarily located in Brazil and Europe, which at 31 July totalled $526 million
(2014: $572 million).
At 31 July 2015, the group had access to debt of $1,807 million (2014: $1,743 million) under the notes, SFA, group trade
receivables securitisation facility and with other lenders.
A parent guarantee is provided to support working capital facilities in Europe, South America and the notes.
NOTES TO THE FINANCIAL STATEMENTS continued
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