✨ Financial Statements Notes
14 SEPTEMBER 2010 NEW ZEALAND GAZETTE, No. 117 3167
ASB COMMUNITY TRUST
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2010
Liquidity Risk
Liquidity Risk is the risk that the Group will encounter difficulties in meeting the obligations associated with its financial liabilities. This risk is managed through the Group’s investment in a diversified portfolio of financial assets.
The Group’s investment portfolio during the year under review consisted of only listed securities which under normal market conditions are readily convertible to cash. In addition the Trust maintains sufficient cash and cash equivalents to meet normal operating requirements. The Trust has also an established credit line with ASB Bank Limited.
The Group’s financial liabilities comprise trade and other payables. At balance date, all trade and other payables were current, and are normally settled on the 20th of the month following invoice date.
Market Risk
Market Risk is the risk that the fair value of future cash flows from financial assets and liabilities will fluctuate due to changes in market variables such as interest rates, foreign exchange rates and market prices. Market risk is managed and monitored using sensitivity analysis and minimised by ensuring that all investment activities are undertaken in accordance with established mandate limits and the investment strategies set out in the Group’s SIPO.
Interest Rate Risk
Interest Rate Risk arises from the possibility that changes in interest rates will affect future cash flows or the fair value of financial assets. The Group’s investment in global bonds is held in a pooled fund. As such movements in interest rates will be reflected in each pooled fund’s fair value asset pricing. NZ Bonds are held in a segregated account. The exposure to movement in the fair value of the Group’s bond portfolios is discussed in the commentary on Price Risk.
The Group’s cheque and call accounts are interest bearing. Any movement in interest rates on these accounts is minimal and is not considered to be material.
Currency Risk
Currency Risk is the risk that the fair value of, or future cash flows from financial assets and amounts owing under financial liabilities will fluctuate due to changes in foreign currency exchange rates. All investments denominated in foreign currencies are fully hedged back to the New Zealand dollar on a monthly basis for 30 day periods. Liabilities denominated in foreign currencies are fully hedged back to New Zealand dollars at the time that the obligation is entered into. This effectively removes the exposure to currency risk.
Implementation of hedging contracts for the investment portfolio follows the month end valuation of the portfolio. Any movements in markets during this period may result in the portfolio being under or over hedged. These are not considered material, and will have minimal impact on the fair value of or future cash flows from the Group’s financial assets.
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NZ Gazette 2010, No 117
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ASB Community Trust Financial Statements
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💰 Finance & RevenueFinancial statements, Community Trusts, ASB Community Trust, Liquidity Risk, Market Risk, Interest Rate Risk, Currency Risk, Financial Liabilities, Investment Portfolio, Credit Risk