✨ Financial Statements
30 AUGUST 2010 NEW ZEALAND GAZETTE, No. 109 2947
THE COMMUNITY TRUST OF SOUTHLAND
NOTES TO & FORMING PART OF THE FINANCIAL STATEMENTS
For the Year Ended 31 March, 2010
24. FINANCIAL INSTRUMENTS (Cont.)
Currency Risk
Currency risk is the risk that the value of a foreign currency denominated financial instrument will fluctuate due to changes in foreign exchange rates.
Foreign exchange risk arises from transactions and recognised assets that are denominated in a currency that is not the Trust’s functional currency.
Equity Price Risk
The Trust is exposed to equity price risk. This arises from Managed Funds held by the Trust and classified as financial assets at fair value through profit and loss.
Credit Risk Management
Credit risk is the risk that a third party will default on its obligation to the Trust, causing the Trust to incur a loss.
The Group from time to time has significant funds in trading bank deposits. The Group limits risk by spreading the deposits over several trading banks. The Group has not required collateral or other security to support its financial instruments. The Group further limits risk through its policy of placing Managed Funds with eight separate fund managers, with each fund manager having an investment mandate which requires that they diversify their instruments on the Group’s behalf. The Group has sought and obtained the advice of professional financial advisers prior to making its investment allocations and placement decisions.
Liquidity Risk Management
Liquidity risk is the risk that the Trust will encounter difficulty raising liquid funds to meet commitments as they fall due. Prudent liquidity risk management implies maintaining sufficient cash, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. The Trust aims to maintain flexibility in funding by keeping committed credit lines available.
In meeting its liquidity requirements, the Trust maintains a target level of investments that collectively provide liquidity equivalent to an average level of two years’ grant distributions allowing for expected interest income.
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NZ Gazette 2010, No 109
✨ LLM interpretation of page content
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Financial Report of the Community Trust of Southland
(continued from previous page)
💰 Finance & RevenueFinancial Instruments, Currency Risk, Equity Price Risk, Credit Risk Management, Liquidity Risk Management