New Zealand Gazette – 2012 – No. 82

Page 2238

✨ Financial Statements



2238 NEW ZEALAND GAZETTE, No. 81 6 JULY 2012

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 counter-party 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 2012 Global 2012 NZ 2011 Global 2011 NZ
AAA 73,447 1,487 62,131 11,806
AA 4,943 17,844 10,251 5,539
A 18,153 3,234 12,247 1,155
BBB 10,273 1,009 12,242 1,007
Other 2,849 66 955 1,835
Totals 104,665 23,640 97,826 21,342
Sector Rating 2012 Global 2012 NZ 2011 Global 2011 NZ
Government 53,701 10,897 36,747 13,428
Corporates 22,044 298 31,702 7,914
Mortgages 16,059 8,045 19,369 -
Swaps (132) 4,196 (5,227) -
Other 12,993 204 15,235 -
Totals 104,665 23,640 97,826 21,342


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Gazette.govt.nz — PDF NZ Gazette 2012, No 82




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