Aoraki Trade Exports Ltd: What do you do with this request?

// DRILLS / ISSUE 02 / AORAKI TRADE

IN HIGHBANK ISSUE 02 · 2026-07-07 · 6 MIN READTHE SENIOR READ — MICHAEL

Aoraki Trade Exports

THE MULTI-CURRENCY REQUEST

TRADE · CROSS-BORDER · DIFFICULTY 3/5

// FACILITY REQUEST

ExistingNZ$4.0m revolver (NZD)

RequestedNZ$6.0m equiv, multi-currency

CurrenciesUSD + "to be confirmed"

TenorAnnual review, rolling

Decision byIn principle, this week

You have ten minutes. What do you do?

Read the file

// ONE FILE, THREE CHAIRS

// THE LENDING CHAIR · ISSUE 02

Aoraki Trade Exports

You are here

// THE EXPORTER'S CHAIR

The Currency You Won't Name

Read from this chair →

// THE FINANCE MANAGER'S CHAIR

Four Months of Cover

Read from this chair →

// THE SETUP

Aoraki Trade Exports is a 12-year-old NZ exporter of premium nutritional and specialty food products, selling through distributors in Singapore, Taipei, and — for the past two years — two fast-growing relationships in Greater China. Founder-MD, first generation. Annual revenue NZ$36m equivalent, around 75% of it invoiced in USD. The cost base — raw materials, processing, wages — is almost entirely NZD.

The MD called on Tuesday. He wants to replace the existing NZ$4.0m revolver with a NZ$6.0m-equivalent multi-currency facility — "drawable in USD, maybe one or two others." Asked which others, and against which flows, he says he'll confirm the mix at documentation; what he needs this week is approval in principle, before peak shipping season. He mentions, without being asked, that another bank has a term sheet on his desk.

Eight years with the bank. Conduct clean, covenants clean, reviews on time. The relationship manager is supportive — "exporters need currency flexibility, everyone offers this." You're sitting on the credit committee when the file lands on your desk.

You have the financials. You have ten minutes. What do you do?

// FY25 SNAPSHOT

SOURCE: COMPANY-PREPARED · UNAUDITED · COMPOSITE CASE — FICTIONAL

REVENUE

NZ$36m

▲ +28% (2yr)

USD SHARE OF SALES

75%

▲ from 55%

EXPORT DSO

74 days

▲ +21 days

HEDGE COVER

4 months

▼ from 9 months

OCF

NZ$1.1m

▼ −45% YoY

Read it against its own file first: the board's treasury policy, last provided at the FY23 review, calls for cover six to twelve months ahead. Cover now runs four.

// THE FILE

THREE YEARS OF ACCOUNTS · NZ$000 · FY23–FY25

FY25 is the last full year of accounts. Sales invoiced in US dollars are shown at their NZ$ equivalent. Debtor days in the ratios are on all sales; the US-dollar ledger alone runs at 74. Figures in NZ$000. Operating cash flow is after interest and tax paid; debtor days are on revenue, stock and creditor days on cost of sales. A composite borrower: the accounts belong to no real company.

THE FACILITIES

Revolver (NZD)Drawn close to the limit at the October shipping peak. Currencies requested: USD, and 'to be confirmed'.: NOWNZ$4.0m limit · NZ$1.3m drawn at year-end; REQUESTEDNZ$6.0m equivalent, multi-currency
HedgingNine months two years ago. Run by the finance manager on a rolling book of forwards.: NOWFour months of forecast USD receipts covered; REQUESTED—
Security and covenantsEight years with the bank, reviews on time.: NOWGeneral security agreement; covenants clean; REQUESTEDTo be set with the structure

PROFIT AND LOSS

Profit and loss, NZ$000, by year.
Line	FY23	FY24	FY25
Revenue	28,100	32,000	36,000
Cost of sales	(21,638)	(24,640)	(27,720)
Gross profit	6,462	7,360	8,280
Overheads	(3,371)	(3,840)	(4,356)
EBITDA	3,091	3,520	3,924
Depreciation	(450)	(480)	(520)
EBIT	2,641	3,040	3,404
Interest	(150)	(180)	(250)
Profit before tax	2,491	2,860	3,154
Tax	(697)	(801)	(883)
Net profit after tax	1,794	2,059	2,271

BALANCE SHEET AT YEAR-END

Balance sheet at each year-end, NZ$000.
Line	FY23	FY24	FY25
Cash	900	1,100	1,200
Receivables	3,630	4,874	6,460
of which invoiced in US dollars	2,244	3,647	5,474
Inventory	3,150	3,300	3,500
Current assets	7,680	9,274	11,160
Plant and equipment	3,550	3,670	3,650
Total assets	11,230	12,944	14,810
Trade payables	2,336	3,191	3,286
Revolver (drawn)	1,300	1,300	1,300
Term loan	0	0	0
Total liabilities	3,636	4,491	4,586
Shareholders' equity	7,594	8,453	10,224

CASH FLOW

Cash flow, NZ$000, by year.
Line	FY23	FY24	FY25
EBITDA	3,091	3,520	3,924
Increase in working capital	56	(539)	(1,691)
Interest paid	(150)	(180)	(250)
Tax paid	(697)	(801)	(883)
Operating cash flow	2,300	2,000	1,100
Capital expenditure	(500)	(600)	(500)
Dividends	(1,500)	(1,200)	(500)
Term loan drawn / (repaid)	0	0	0
Revolver drawn / (repaid)	(200)	0	0
Net change in cash	100	200	100

RATIOS FROM THE STATEMENTS ABOVE

Ratios computed from the three statements, by year.
Ratio	FY23	FY24	FY25
Revenue growth	—	13.9%	12.5%
EBITDA margin	11.0%	11.0%	10.9%
Operating cash flow ÷ EBITDA	74.4%	56.8%	28.0%
Debtor days (on revenue)	47	56	65
Stock days (on cost of sales)	53	49	46
Creditor days (on cost of sales)	39	47	43
Cash conversion cycle, days	61	57	68
Total debt ÷ EBITDA	0.4×	0.4×	0.3×

THE REST OF THE FILE · SECURITY · COVENANTS · CONDUCT · DEBTORS · BUDGET

As the file stood when the request arrived: FY25 the last full year of accounts, the FY26 budget approved by the board. What a bank has on file beyond the accounts — enough to write a full credit paper on. A composite borrower: none of it belongs to a real company.

OWNERSHIP, PEOPLE, PREMISES

100% The founder-MD's family trust — Has held all the shares since the company was formed twelve years ago; the MD and a professional trustee are the trustees

Managing director.: The founder, first generation. Runs the four distributor relationships himself. Forward contracts are placed by the finance manager on his approval.
Finance manager.: Runs the finance function and the forward book; joined six years ago. Monthly management accounts and a monthly treasury report go to the MD; neither comes to the bank.
Operations manager.: Runs the plant: processing, packing, quality and the export documents.

Leased, not owned: a processing and packing plant at Washdyke, near Timaru, let by an unrelated property owner, with nine years left on the lease, one right of renewal, and a right of first refusal if the landlord sells. Head office and a dry store are on the same site. About eighty permanent staff, with seasonal packers through the shipping peak. The rent sits in overheads.

FACILITIES AND PRICING

Working capital revolver (NZD): Limit NZ$4.0m; NZ$1.3m drawn at the FY25 year-endFloating; 8.25% all-in on drawings through FY25; line fee 0.50% a year on the limitAnnual review, rolling. NZ dollars only
Foreign exchange line: Forward contracts to twelve months, up to NZ$12.0m equivalent outstandingDealing margin on each contractUS dollars sold for NZ dollars, against the company's own receipts; NZ$7.09m equivalent outstanding at the FY25 year-end
Trade services: Export documentary collections; a US-dollar account that receives the distributors' remittancesFees per item
The request: A NZ$6.0m-equivalent multi-currency facility, to replace the revolverNot yet discussed“Drawable in USD, maybe one or two others”; the mix to be confirmed at documentation. Approval in principle asked for this week, before peak shipping

SECURITY

General security agreement: Over all present and after-acquired property of Aoraki Trade Exports Ltd, first-ranking, registered when the relationship began eight years ago.
The landlord's waiver: The Washdyke landlord has agreed in writing that the bank may enter the plant to take and remove plant and stock.
Trade credit insurance: The bank is named as loss payee on the single-buyer policy over the Singapore distributor. No other buyer is insured.
Guarantees: None.

COVENANTS, TESTED ON THE AUDITED ACCOUNTS

Each covenant, its level, and the result in each of the three years.
Covenant	FY23	FY24	FY25
Interest cover (EBIT to interest) At least 3.0×	17.6×	16.9×	13.6×
Equity ratio (shareholders' funds to total assets) At least 40%	68%	65%	69%

Audited annual accounts within 120 days of year-end, with a certificate of the two covenants. FY25's arrived on day 96.
An aged debtors ledger each half-year. Nothing on hedging is required; the treasury policy was last provided at the FY23 review.
Eight annual reviews, each on time. Every covenant met and no excess on the revolver since the relationship began.
With the request: the FY25 aged ledger, the four distributor agreements, and the year's remittances by distributor.

THE REVOLVER, MONTH-END BY MONTH-END · LIMIT NZ$4.00m

M1NZ$1.72m
M2NZ$2.24m
M3NZ$2.78m
M4NZ$3.26m
M5NZ$3.62m
M6NZ$3.85m
M7NZ$3.93m
M8NZ$3.71m
M9NZ$3.18m
M10NZ$2.52m
M11NZ$1.86m
M12NZ$1.30m

No excess over the limit and no dishonoured payment in the year. Drawn to within NZ$0.07m of the limit at the shipping peak, and back to NZ$1.3m at the year-end, as at each of the two year-ends before.

DEBTORS AT THE FY25 YEAR-END

The debtors ledger by age, with each band's share of the total.
US dollars — up to 30 days from invoice	NZ$2.05m	32%
US dollars — 31–60 days	NZ$1.72m	27%
US dollars — 61–90 daysMostly the Greater China pair, whose 60 days run from arrival	NZ$1.27m	20%
US dollars — over 90 daysThree shipments to the Greater China pair held a month at a transhipment port. Their terms run from arrival, so none was yet due; all paid in the first two months of FY26	NZ$0.44m	7%
NZ dollars — within terms	NZ$0.93m	14%
NZ dollars — past termsThree wholesale accounts, each under 30 days late	NZ$0.06m	1%
Total, as in the balance sheet	NZ$6.46m

CUSTOMERS

Singapore distributorA customer for ten years. US dollars; open account, 45 days from invoice; covered by a single-buyer trade credit policy at 90% indemnity: 25%; 23%
Taipei distributorSeven years. US dollars; documentary collection through the bank, documents against payment at sight: 19%; 18%
Greater China distributor, the largerTwo years. US dollars; open account, 60 days from arrival; a one-year agreement, renewed each year: 18%; 19%
Greater China distributor, the secondTwo years. US dollars; open account, 60 days from arrival; a one-year agreement: 13%; 18%
New Zealand wholesale and food serviceAbout thirty accounts. NZ dollars; the 20th of the month following: 13%; 12%
Contract packing for a New Zealand food companyNZ dollars; 30 days. Reduced since FY24 to free plant time for export orders: 12%; 10%

SALES BY MARKET, THREE YEARS

SingaporeUS dollars: FY23NZ$8.9m; FY24NZ$9.0m; FY25NZ$9.0m
TaipeiUS dollars: FY23NZ$6.6m; FY24NZ$6.7m; FY25NZ$6.8m
Greater China, two distributorsUS dollars: FY23—; FY24NZ$5.1m; FY25NZ$11.2m
New ZealandNZ dollars: FY23NZ$12.6m; FY24NZ$11.2m; FY25NZ$9.0m
Share invoiced in US dollars: FY2355%; FY2465%; FY2575%
Revenue: FY23NZ$28.1m; FY24NZ$32.0m; FY25NZ$36.0m

US-dollar sales at their NZ$ equivalent, as in the accounts. The Greater China pair's first orders came in FY24.

THE FORWARD BOOK AT EACH YEAR-END

Months of forecast USD receipts covered: FY239; FY247; FY254
Forward sales of US dollars outstandingNZ$ equivalent at the contracted rates: FY23NZ$9.80m; FY24NZ$9.56m; FY25NZ$7.09m
Share of the next twelve months' forecast receipts: FY2350%; FY2437%; FY2523%

The treasury policy on file, approved by the board and provided at the FY23 review, calls for cover six to twelve months ahead, a higher share in the nearer months. No later version has been provided. Cover was still four months when the request arrived.

REMITTANCES BY DISTRIBUTOR, FY25

Singapore distributor: INVOICES46; PAID BY DUE DATE46 of 46; DAYS TO CASH47
Taipei distributor: INVOICES38; PAID BY DUE DATE38 of 38; DAYS TO CASH36
Greater China distributor, the larger: INVOICES31; PAID BY DUE DATE31 of 31; DAYS TO CASH83
Greater China distributor, the second: INVOICES24; PAID BY DUE DATE24 of 24; DAYS TO CASH86

Days to cash is the average from invoice to money in the company's US-dollar account with this bank.

MANAGEMENT'S BUDGET FOR THE YEAR AHEAD

Revenue: ACTUALNZ$36.0m; BUDGETNZ$40.0m
Share invoiced in US dollars: ACTUAL75%; BUDGET78%
Gross margin: ACTUAL23.0%; BUDGET23.0%
EBITDA: ACTUALNZ$3.92m; BUDGETNZ$4.36m
Working capital added: ACTUALNZ$1.69m; BUDGETNZ$0.75m — the FY25 cycle on the extra sales
Operating cash flow: ACTUALNZ$1.10m; BUDGETNZ$2.34m
Capital spending: ACTUALNZ$0.50m; BUDGETNZ$0.60m
Dividends: ACTUALNZ$0.50m; BUDGETNZ$0.80m
Revolver at year-end: ACTUALNZ$1.30m; BUDGETNZ$0.36m, peaking near NZ$5.1m at the shipping peak

LAST YEAR'S BUDGET, AGAINST WHAT ARRIVED

Last year's budget against the actual result, line by line.
Line	BUDGET	ACTUAL
Revenue	NZ$35.0m	NZ$36.0m
Share invoiced in US dollars	71%	75%
EBITDA	NZ$3.85m	NZ$3.92m
Operating cash flow	NZ$2.30m	NZ$1.10m
Export debtor days	60	74

WHAT IS STILL NOT IN THE FILE

A real file would also hold these. A paper that says which of them it needs before approving, and why, is reading the file properly.

Stock at the year-end by product and by age — the accounts give only the total.
Credit reports on the two Greater China distributors, and their own accounts.
A month-by-month forecast of drawings through the coming shipping season, rather than a year-end budget and a peak.
The trade credit policy's wording, the insurer's limit on the Singapore buyer, and any claims made under it.
The other bank's term sheet — mentioned by the MD, not seen.

DOWNLOAD THE FILE · XLSX

With the rest of the file above, this one is complete enough for a full credit paper. Write one, and the first three sent in are read free, the way the senior reads here are written — how the pilot works.

// YOUR JUDGMENT

What do you do with this request?

[A]Approve as requested — multi-currency flexibility is standard for exporters; settle the mix at documentation[B]Approve an NZD core plus a USD sub-limit sized to eligible USD receivables — any further currency only against a disclosed currency schedule[C]Hold the approval — no currency schedule, no facility; the reluctance is the data point[D]Decline and exit — the opacity plus the term-sheet pressure is disqualifying

This drill needs JavaScript: the options above cannot be selected without it, and the senior banker's reading stays hidden. Turn JavaScript on and reload the page to take the drill.

// THE READING

Read the request before the numbers, and read it as a structure, not a number. A working capital facility has a currency the same way it has a tenor — it follows the cash conversion cycle it funds. Aoraki invoices three-quarters of its sales in USD and pays almost all of its costs in NZD. For that business, a USD drawing line against USD receivables is not financial engineering — it's the textbook natural hedge, and arguably something the company should have had years ago: borrow the currency your customers owe you, repay from their remittances, and the exchange rate mostly cancels out of the loan. So the request contains a legitimate core. The work is figuring out what the rest of it is.

Open the file and this is not Issue 01. Revenue is up 28% over two years and the margin held — the growth is real and it's priced properly. Conduct is clean. What moves together is quieter: the USD share of sales went from 55% to 75%; export DSO stretched 21 days as the two new Greater China distributors came on at open-account terms; and hedge cover shortened from nine months to four. Read as one sentence: more of the company's cash is in USD, it arrives later, and less of it is insured. Operating cash flow is still positive but down 45% — not because the business weakened, but because the cycle lengthened. A borrower in this position asking to draw USD is being rational. A borrower in this position who has quietly stopped hedging while asking for "currency flexibility" may have started running treasury as a profit centre — which is the polite name for taking a view.

Then the tell. "Multi-currency, mix to be confirmed" is not a working capital specification — it is an option, and banks do not grant options silently inside working capital lines; they name them and they price them. In this corridor, an unnamed third currency usually resolves to one of three things: an offshore related party that needs funding — the "distributor" that is really the family's Shanghai entity; a customer who has moved settlement from USD to RMB on longer terms, which the MD would rather not headline; or a funding arbitrage — drawing a cheaper currency against no matching flow, a carry trade wearing a working capital jacket. None of these is automatically fatal. Every one of them is a different conversation, a different structure, and a different price. That is why the currency schedule is not paperwork. The currency schedule is the credit decision.

The senior banker's read is B. C — refusing to move until the full map arrives — treats the whole request as contaminated by the missing schedule, but the file already verifies the USD leg: the aged ledger, the distributor contracts, the remittance history are all on the table. Approve what the evidence supports. Restructure the line as an NZD core sized to local costs, plus a USD sub-limit capped at 80% of eligible USD receivables, drawings matched to invoice tenor, with a minimum hedge-cover covenant so the insurance can't quietly lapse again. Any third currency is available on one condition: a currency-mapped cash flow and named counterparties. Run the arithmetic and the irony surfaces — sized off the disclosed flows, the structure supports very nearly the NZ$6m equivalent he asked for. The size was never the problem. The silence was.

Note what B is not. It is not a decline wearing conditions, and it is not calling the MD's bluff about the other bank — if a competitor wants to write an unpriced currency option inside a working capital line, it can have the trade. B answers the legitimate need in full, takes the disclosed part of the request out of the auction, and makes the undisclosed part impossible to fund in silence. The MD's reaction on Friday is the last diagnostic: a borrower who wanted the hedge takes the structure; a borrower who wanted the option keeps negotiating for vagueness. Either way the bank has learned the thing the file couldn't say. When a borrower won't name the currency, the silence is the disclosure — the structure just makes it legible.

THE NUMBERS THE READING USED

RevenueP&L · FY23 → FY25: NZ$28.1m → NZ$36.0m; Up 28% in two years, with the margin held — the growth is real.
Sales invoiced in US dollarsTHE SETUP · RECEIVABLES: 55% → 75%; Costs are almost entirely NZ dollars. The mismatch grew with the growth.
US-dollar receivablesBALANCE SHEET · of which invoiced in US dollars: NZ$2.24m → NZ$5.47m; 74 days of US-dollar sales, from 53 — the Greater China pair on open account. This is what a USD sub-limit can lend against.
Operating cash flowCASH FLOW · FY24 → FY25: NZ$2.0m → NZ$1.1m; Down 45% while revenue rose: the cash is in the US-dollar ledger.
The structure, sized off the flows80% × ELIGIBLE USD RECEIVABLES + NZD CORE: NZ$5.88m; A USD sub-limit of 80% of the NZ$5.04m inside 90 days, plus an NZD core of NZ$1.85m — about three weeks of the local cost base. Very nearly the NZ$6m he asked for, with a shape that knows where each dollar comes from.

Every figure above is in the file appendix before the question — open THE FILE and redo it.

The invoice sets the currency. The request only names it.

// THE SAME FILE, FROM TWO OTHER CHAIRS

The same file, read by the two people with the most riding on it. Each has one decision to make, and neither has the bank's lever.

// THE EXPORTER'S CHAIR

The Currency You Won't Name

Nearly your number, in two legs — and a third currency the bank will not fund until you name it. Another bank will. What do you sign?

Read from this chair →

// THE FINANCE MANAGER'S CHAIR

Four Months of Cover

Cover fell from nine months to four while nobody was looking. The bank noticed. The MD has a view. You hold the book.

Read from this chair →

// HOW READERS ANSWER

The senior banker's read is [B].

Early days. The distribution appears here once enough readers have answered.

The tempting answer is C. The senior banker chose B. The reading explains why.

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Kauri Dairy Holdings

The patriarch is retiring. The bank hears about the succession plan from the accountant first.

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Aoraki Trade Exports

// YOUR JUDGMENT

What do you do with this request?

The Lab