Note 3. Financial Risk Management  (continued) Interest Rate Sensitivity Analysis (b) Credit Risk 52 Karoon Gas Australia Ltd  Annual Report 2011 The Group has policies in place to ensure that sales of products and services are made to customers with an appropriate credit history. To minimise credit risk, the Group has adopted a policy of only dealing with recognised and creditworthy third parties. The Group  does not have any material credit risk exposure to any single debtor or group of debtors entered into by the Group. Receivable  balances are monitored on an ongoing basis with the result being the Group’s exposure to bad debts is minimised. The Group  does not hold collateral, nor does it securitise its receivables. Credit risk is managed on a Group basis at the corporate level. Management monitors credit risk on an ongoing basis within the  Group. Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.  Credit risk arises from cash and cash equivalents and security deposits held with banks, financial institutions and joint venture  operators, as well as credit exposures to customers, including outstanding receivables. The sensitivity analysis is not fully representative of the inherent interest rate risk, as the financial year end exposure does not  necessarily reflect the exposure during the course of a financial year. These sensitivities should not be used to forecast the future  effect of movements in interest rates on future cash flows. The following table details the Group’s sensitivity to a 1.0% p.a. increase or decrease in interest rates, with all other variables held  constant. The sensitivity analysis is based on the balance of floating interest rate amounts held at the end of the financial year. NOTES TO THE FINANCIAL STATEMENTS CONTINUED FOR THE FINANCIAL YEAR ENDED 30 JUNE 2011 Consolidated Weighted  Floating  Fixed  Average  Interest  Interest Non-interest  Carrying Interest Rate  Rate  Rate  Bearing  Fair Value Amount 2010  % P.A.  $  $  $  $ $ Financial assets Cash and cash equivalents  4.0  24,894,805  61,171,587  1,056,444  87,122,836 87,122,836 Receivables  -  -  -  4,873,578  4,873,578 4,873,578 Security deposits  8.2  4,100  16,635,462  -  16,639,562 16,639,562 Total financial assets  24,898,905  77,807,049  5,930,022 108,635,976 108,635,976 Financial liabilities Trade and other payables  -  -  -  13,672,624  13,672,624 13,672,624 Total financial liabilities  -  -  13,672,624  13,672,624 13,672,624 Consolidated 2011 2010 $  $ Change in profit (loss) - Increase of interest rate by 1.0% p.a.  1,255,446 248,989 - Decrease of interest rate by 1.0% p.a.  (536,744) (55,377) Change in financial assets - Increase of interest rate by 1.0% p.a.  1,255,446 248,989 - Decrease of interest rate by 1.0% p.a.  (536,744) (55,377)