✨ Financial Statements Notes
THE COMMUNITY TRUST OF WELLINGTON
Notes to the Financial Statements
For the Twelve Months Ended 31 March 2010
10. 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:
| 2010 | 2009 | |
|---|---|---|
| Cash | 259,851 | 141,956 |
| Short Term Deposits | 2,432,945 | 1,500,000 |
| Fixed Interest - Domestic | - | 2,753,495 |
| Fixed Interest - Offshore | 13,125,805 | 11,585,322 |
The significant counterparties of the Trust are its investment managers: ING NZ Ltd, Tower Asset Management Ltd, and Mint Asset Management Ltd 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.
The credit risk on cash and short term deposits is limited because the counterparties are banks; BNZ and ASB, with high credit ratings assigned by international credit rating agencies.
During the September quarter, the ING (NZ) Limited Fixed Interest portfolio was closed, $2,871 million was paid out into the 025 BNZ Oncall account, and of this amount $1.8 million was invested into the ING (NZ) Limited International Equities portfolio.
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NZ Gazette 2010, No 81
✨ LLM interpretation of page content
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Notes to the Financial Statements of the Community Trust of Wellington
(continued from previous page)
💰 Finance & Revenue7 June 2010
Financial Statements, Notes, Financial Instruments, Liquidity Risk, Credit Risk