14 AUGUST 2008 NEW ZEALAND GAZETTE, No. 127 3351

2008 2007
$ $

Held-to-maturity investments:
ASB Term Deposit – 072 – 513,116
ASB Term Deposit – 078 – 255,424
ASB Term Deposit – 079 731,998 –
Bank of New Zealand – 027 101,384 –
Total held-to-maturity investments 833,383 768,540

ASB Bank 079
Maturity Date: 9th April 2008
Interest Rate: 8.87%p.a.
Current Balance: $731,998.44

Bank of New Zealand 027
Maturity Date: 20th April 2008
Interest Rate: 8.54%p.a.
Current Balance: $101,384.11

2008 2007
$ $

Loans and receivables—
Karori Wildlife Sanctuary Trust Inc:
Current portion 100,000 100,000
Term portion 1,133,333 1,233,333
Total Karori Wildlife Sanctuary Trust Inc 1,233,333 1,333,333

The loan is guaranteed by the Wellington City Council. The loan has a repayment term of 15 years which commenced on 1 August 2005. The interest rate is calculated against an agreed formula. The rate for the year under review was 6.7%.

9. Financial Instruments
   Significant accounting policies
   Details of significant accounting policies and methods adopted, including the criteria for recognition and the basis of measurement applied in respect of each of the class of financial assets are disclosed in note 1 to the financial statements.

The trustees have approved a statement of investment policy and objectives (SIPO) which establishes investment portfolio objectives and target asset allocations. Performance against these targets is reviewed at least quarterly by the trustees and asset reallocations undertaken as required.

Fair Value
The carrying amount of financial assets and financial liabilities recorded in the financial statements represents their respective fair values, determined in accordance with the Trust’s accounting policies.

Liquidity Risk
All financial assets at fair value through profit and loss can be realised within 12 months. There are no significant financial liabilities. The Trust’s investments are managed to ensure that the Trust will have sufficient liquidity to meet expected cashflow requirements. Liquidity risk is managed through the Trust’s asset allocation strategy, which provides exposure to both growth and income assets, and the benchmark portfolio against which investment returns are monitored. The Trust’s benchmarks are maintained through rebalancing between investment managers to bring the weights to benchmark.

Credit Risk
Financial instruments which potentially expose the Trust to credit risk consist of cash and short term deposits, fixed interest securities and receivables and, indirectly, investments in unitised products which invest in cash and fixed interest investments. The maximum exposure to credit risk is the carrying value of these financial instruments:

2008 2007
$ $
Cash and short term deposits 833,382 768,450
Fixed interest – domestic 5,976,812 5,767,147
Fixed interest – offshore 9,506,152 8,702,013

The significant counterparties of the Trust are its investment managers: ING NZ Limited, Tower Asset Management Limited, Tyndall Investment Management NZ Limited, Walker Capital Management Limited and Mint Asset Management Limited, which the trustees consider to be financial institutions of high quality. The investments are held in trust by the investment managers for the benefit of the Trust. The managers operate within the portfolio mix approved by the trustees.

Currency Risk
The Trust is indirectly exposed to currency risk in that future currency movements will affect the valuation of investments in unitised products which invest in foreign currency denominated investments. The Trust has no directly held investments denominated in a foreign currency. Risk management activities are undertaken by the Trust’s investment managers to operate within the guidelines provided by the trustees.

Interest Rate Risk
The Trust is exposed to interest rate risk in that future interest rate movements will affect cash flows and net market values of fixed interest assets and, indirectly, the valuation of investments in unitised products which invest in cash and fixed interest investments.

Interest rate risk management activities are undertaken by the investment manager in accordance with the investment mandate set by the trustees.