✨ Financial Statements Notes
THE WAIKATO COMMUNITY TRUST INCORPORATED
NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS
For the year ended 31 March 2011
Price Risk
The Trust is exposed to price risk. This arises from investments held by the Trust and classified as financial assets at fair value through profit and loss.
The table below details the Trust’s sensitivity to a 30% increase and 10% decrease in the price risk. The sensitivity rates are the same as the previous year to reflect the continued volatility in the international currency and financial markets that have been experienced over the past year. The disclosures adopted provide a more accurate measurement for the movement in the future, due to current market volatility.
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.
Due to the timing of its cash inflows and outflows, the Trust invests surplus cash with registered banks. The Trust’s investment policy limits the amount of credit exposure to any one institution.
The Trust has processes in place to review the credit exposure and credit quality of funds prior to the funds being deposited with financial institutions.
The Trust’s maximum credit exposure for each class of financial instrument is represented by the total carrying amount of cash equivalents (note 8), other financial assets at fair value through profit or loss (note 10), trade and other receivables (note 9), the Sport Waikato loan (note 12), and the Database loan (note 22).
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 must mature within specified timeframes.
The following table summarises the sensitivity of the Trust’s financial assets and liabilities to interest rate risk, foreign exchange risk and other price risk.
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NZ Gazette 2011, No 119
✨ LLM interpretation of page content
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Notes to Financial Statements of the Waikato Community Trust
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💰 Finance & RevenueFinancial Statements, Price Risk, Credit Risk Management, Liquidity Risk Management, Sensitivity Analysis, Market Volatility, Credit Exposure, Investment Policy, Financial Instruments, Cash Flow