T he ma ximum e xposur e t o cr edit risk is r epr esen t ed b y the carrying amoun t o f e ach fnancial as se t including deriv a tiv e fnancial ins trumen ts in the balanc e shee t C oun t erpar ties t o tr ans ac tions in v olving deriv a tiv e fnancial ins trumen ts ar e lar ge Aus tr alian and in t erna tional banks with whom the Gr oup has a signed ne tting agr eemen t M anagemen t does no t e xpec t an y c oun t erpar t y t o f ail t o mee t its obliga tions Gr oup polic y is t o pr o vide fnancial guar an t ees only t o whol ly o wned subsidiaries De t ails o f the Deed o f Cr os s Guar an t ee ar e pr o vided in no t e 5c Liquidit y risk T he liquidit y position o f the Gr oup is c on tinuously managed using cash fo w f or ecas ts t o ensur e suf fcien t liquid funds ar e a v ailable t o mee t its fnancial c ommitmen ts in a timely and c os t e f f ec tiv e manner T he Gr oup is par t y t o a number o f bila t er al deb t f acilit y and long t erm no t e agr eemen ts which pr o vide funding f or ac quisitions and w orking capit al r e f er t o no t e 3c No t e 4c de t ails the r epa ymen t obliga tions in r espec t o f the amoun t o f the f acilities and deriv a tiv es utilised M ark e t risk In t er es t r a t e risk In t er es t r a t e risk is the risk tha t the Gr oup s fnancial posi tion and per f ormanc e wil l be adv ersely a f f ec t ed b y mo v e men ts in in t er es t r a t es In t er es t r a t e risk on cash and shor t t erm deposits is no t c onsider ed t o be a ma t erial risk due t o the shor t t erm na tur e o f these fnancial ins trumen ts T he Gr oup s in t er es t r a t e risk arises fr om long t erm deb t F loa ting r a t e deb t e xposes the Gr oup t o cash fo w in t er es t r a t e risk and fx ed r a t e deb t e xposes the Gr oup t o f air v alue in t er es t r a t e risk In t er es t r a t e risk is managed b y main t ain ing an appr opria t e mix o f fx ed and foa ting r a t e deb t T he Gr oup en t ers in t o in t er es t r a t e sw aps t o manage the r a tio o f fx ed r a t e deb t t o foa ting r a t e deb t Hedging is under t ak en agains t specifc r a t e e xposur es only as disclosed in no t e 4c F or eign e x change risk T he Gr oup oper a t es in t erna tional ly and is e xposed t o f or eign e x change risk arising fr om v arious curr enc y e xposur es F or eign e x change risk arises fr om futur e pur chase and s ales c ommitmen ts and as se ts and liabilities tha t ar e denomi na t ed in a curr enc y tha t is no t the func tional curr enc y o f the r espec tiv e Gr oup en tities Me asuring the e xposur e t o f or eign e x change risk is achie v ed b y r egularly monit oring and per f orming sensitivit y analysis on the Gr oup s fnancial position T he Gr oup ma y en t er in t o f orw ar d f or eign e x change c on tr ac ts FE Cs t o hedge c er t ain f or ecas t pur chase c om mitmen ts denomina t ed in f or eign curr encies principal ly US dol lars T he t erms o f these c ommitmen ts ar e gener al ly les s than thr ee mon ths T he amoun t o f f or ecas t pur chases is es tima t ed based on curr en t c onditions in f or eign mark e ts cus t omer or ders c ommitmen ts t o suppliers and e xperienc e T he Gr oup borr o ws funds in f or eign curr encies t o hedge its ne t in v es tmen ts in f or eign oper a tions T he Gr oup s C anadian dol lar denomina t ed borr o wings ar e designa t ed as hedges o f the Gr oup s ne t in v es tmen ts in subsidiaries with this func tional curr enc y T he Gr oup has also en t er ed in t o cr os s curr enc y in t er es t r a t e sw aps which ha v e been designa t ed as hedges o f ne t in v es tmen ts in f or eign oper a tions whose func tional curr encies ar e C anadian dol lars Cz ech k oruna and Eur os C apit al managemen t C apit al c omprises equit y a ttribut able t o equit y holders loans and borr o wings and cash and cash equiv alen ts C apit al managemen t in v olv es the use o f c orpor a t e f or ecas t ing models which f acilit a t es analysis o f the Gr oup s fnancial position including cash fo w f or ecas ts t o de t ermine the futur e capit al managemen t r equir emen ts C apit al manage men t is under t ak en t o ensur e a secur e c os t e f f ec tiv e and fe xible supply o f funds is a v ailable t o mee t the Gr oup s oper a ting and capit al e xpenditur e r equir emen ts T he Gr oup monit ors ge aring and tr e asury polic y br e aches and e x c ep tions T he ge aring r a tio ne t deb t t o ne t deb t plus equit y as a t balanc e da t e is 363 per c en t 2018 311 per c en t T he Gr oup main t ains a s t able capit al base fr om which it can pursue its gr o w th aspir a tions whils t main t aining a fe xible capit al s truc tur e tha t al lo ws ac c es s t o a r ange o f deb t and equit y mark e ts t o bo th dr a w upon and r epa y capit al 4B C APIT AL RESERVES R ec oncilia tion o f mo v emen t in capit al In mil lions o f A UD C onsolida t ed 2019 2018 Is sued and paid up shar e capit al 485514376 or dinary shar es ful ly paid 2018 488764376 13259 13481 M o v emen ts in or dinary shar e capit al B alanc e a t beginning o f y e ar 13481 14534 3250000 shar es buyback 2018 15456767 246 1068 279610 Ne t T r e asury shar es v es t ed and is sued t o emplo y ees 2018 183384 24 15 B alanc e a t end o f y e ar 13259 13481 A s a t the end o f y e ar the t o t al number o f tr e asury shar es held b y the ALS Limit ed L TI P lan T rus t w as 32815 2018 312425 T hese tr e asury shar es ar e held b y the T rus t t o mee t the C ompan y s futur e an ticipa t ed equit y se ttled per f ormanc e righ ts obliga tions in r espec t o f the L TI P lan T erms and C onditions Holders o f or dinary shar es ar e en titled t o r ec eiv e dividends as declar ed fr om time t o time and ar e en titled t o one v o t e per shar e a t shar eholders mee tings In the e v en t o f wind ing up o f the C ompan y or dinary shar eholders r ank a f t er cr edit ors and ar e en titled t o the ne t pr oc eeds o f liquida tion 63 ALS LIMITED AND IT S SUBSIDIARIES A NNU AL F INANCIAL R EPOR T F OR THE Y EAR E NDED 31 M AR CH 2019 F INANCIAL REPOR T F INANCIAL S T A TEMENT S N O TES T O THE FINANCIAL S T A TEMENT S Risk capit al managemen t