New Zealand Gazette – 2011 – No. 101

Page 2919

✨ Financial Statements Notes



Otago Community Trust

Notes to the financial statements

in New Zealand Dollars ($000's)

18 Financial instruments (continued)

Trustees regard risk as the likelihood that the Trust fails to achieve these objectives and have adopted a series of strategies to mitigate all risks. The principle strategies include:

  • ensuring the Fund is well diversified;
  • maintaining an appropriate level of liquidity;
  • avoiding purely speculative investments;
  • retaining an investment consultant for investment advice;
  • using only fund managers which are researched and recommended by the investment consultant;
  • maintaining adequate reserves;
  • regularly reviewing investment performance.

1. Credit Risk

Credit risk represents the risk that a counter-party to a financial asset fails to discharge an obligation which will cause the Trust to incur a financial loss. The current exposure at balance date is the fair value of these assets as disclosed in the Statement of Financial Position. Concentrations of risk arise when a number of financial instruments or contracts are entered into with the same counterparty or where a number of counterparties are engaged in similar business activities, geographic regions or similar economic features that would influence their ability to meet their contractual obligations by reason of changes in economic, political or other considerations.

The Trust manages credit concentration risks through:

  • a diversified and non-correlated basket of investments across traditional and alternative asset classes
  • ensuring compliance with the mandate requirements of each fund manager

The credit quality of the Trust’s New Zealand and global fixed interest portfolios is managed using the Standard and Poors rating categories. In addition, exposure to global bonds is fully hedged against foreign currency movements. The following is an analysis of the Trust’s fixed interest portfolios, based on information supplied by the Fixed Interest managers.

Analysis of Fixed Interest Portfolios

Credit Rating 2011 Global 2011 NZ 2010 Global 2010 NZ
AAA 62,131 11,806 66,580 11,123
AA 10,261 5,539 4,856 5,005
A 12,247 1,155 10,393 1,411
BBB 12,242 1,007 5,242 940
Other 955 1,835 5,866 1,523
Totals 97,826 21,342 92,927 20,002
Sector Rating 2011 Global 2011 NZ 2010 Global 2010 NZ
Government 36,747 13,428 39,856 12,209
Corporates 31,702 7,914 18,018 7,877
Mortgages 19,369 - 14,671 -
Swaps (5,227) - 9,281 -
Other 15,235 - 11,101 (84)
Totals 97,826 21,342 92,927 20,002


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Online Sources for this page:

Gazette.govt.nz — PDF NZ Gazette 2011, No 101




✨ LLM interpretation of page content

💰 Otago Community Trust Financial Statements for 2011 (continued from previous page)

💰 Finance & Revenue
Financial Instruments, Credit Risk, Investment Management, Financial Assets, Financial Liabilities