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Whitehaven Coal Limited : Annual Report 2011
72 noteS to the Financial StatementS 30 june 2011 4. siGNifiCANT ACCOuNTiNG JudGEmENTs, EsTimATE s ANd AssumPTiONs (CONTiNuEd) Australian Government’s proposed carbon pricing mechanism The Australian Government announced the ‘Securing a Clean Energy Future – the Australian Government’s Climate Change Plan’ on 10 July 2011 Whilst the announcement provides further details of the framework for a carbon pricing mechanism, uncertainties continue to exist on the impact of any carbon pricing mechanism on the Group as legislation has yet to be drafted, and must be voted on and passed by both houses of Parliament The introduction of a carbon pricing mechanism has the potential to significantly impact the assumptions used for the purpose of the value in use calculations in asset impairment testing The Group has assessed the potential impact in its impairment testing at 30 June 2011, and does not believe any impairment of assets would be required The carrying amount of the assets that could be affected by the implementation of the government’s proposed emissions trading scheme as at 30 June 2011 are disclosed in note 19 5. fiNANCiAL Risk mANAGEmENT OBJECTivEs ANd POLiCiEs Overview The consolidated entity has exposure to the following risks from their use of financial instruments: • market risk • credit risk • liquidity risk This note presents information about the consolidated entity’s exposure to each of the above risks, its objectives, policies and processes for measuring and managing risk, and the management of capital Further quantitative disclosures are included throughout this financial report The Board of Directors has overall responsibility for the establishment and oversight of the risk management framework The Board has established the Audit and Risk Management Committee, which is responsible for developing and monitoring risk management policies The Committee reports regularly to the Board on its activities Risk management policies are established to identify and analyse the risks faced by the consolidated entity, to set appropriate risk limits and controls, and to monitor risks and adherence to limits Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the consolidated entity’s activities The consolidated entity, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations The Audit and Risk Management Committee oversees how management monitors compliance with the consolidated entity’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the consolidated entity Capital management The Board’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business The consolidated entity defines capital as total shareholders’ equity The Board monitors the capital structure on a regular basis including the level of dividends paid to ordinary shareholders The Board seeks to maintain a balance between the higher returns that might be possible with higher levels of borrowings and the advantages and security afforded by a sound capital position There were no changes in the consolidated entity’s approach to capital management during the year Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements
Annual Report 2010
Annual Report 2012