✨ Financial Statements Notes
Bay of Plenty Community Trust Incorporated
Notes to the financial statements (continued)
in New Zealand Dollars ($000's)
14 Financial instruments (continued)
Liquidity risk
Liquidity risk represents the Trust’s ability to meet its contractual obligations. The Trust evaluates its liquidity measurements on an ongoing basis. In general, the Trust generates sufficient cash flows from its activities to meet its obligations arising from its financial liabilities.
Market risk
Market risk is the risk that changes in market prices, such as interest rates or equity prices, will affect the Trust’s profit or valuation of net assets. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
The risk is mitigated by the policies and procedures outlined in the Trust’s SIPO. These include diversification of the investment portfolio and prudent investment strategies.
Foreign currency risk
The Trust is exposed to foreign currency risk as a result of investment transactions entered into by fund managers in a currency other than the Trust’s functional currency, New Zealand dollars. It is Trust policy to have at least 90% of its overseas investments hedged to NZ dollars, which is achieved by investing in hedged funds.
Interest rate risk
The Trust has bank call deposit accounts, short term deposits, government and local authority securities and other investments held by the Trust’s fund managers that are exposed to interest rate risk.
Other market price risk
The entity is not exposed to substantial other market price risk arising from financial instruments.
Quantitative disclosure
Credit and interest rate risk
The carrying amount of financial assets represents the Trust’s maximum credit exposure.
| Carrying amount | 2013 | 2012 |
|---|---|---|
| Cash and cash equivalents | 275 | 255 |
| Short term deposits | 279 | 456 |
| Loans | 912 | 1,344 |
| 1,466 | 2,055 | |
| Investment in Te Kate Putea Limited Partnership | 90 | - |
| Investments | ||
| NZ fixed interest debt securities | 9,124 | 9,527 |
| Australasian equities | 9,365 | 7,409 |
| Global bonds | 76,758 | 69,610 |
| Global equities | 64,360 | 58,561 |
| Global property | - | - |
| Total investments designated at fair value through profit or loss | 159,607 | 145,107 |
| Total financial assets | 161,163 | 147,162 |
Management of the interest rate risk is performed by the fund managers by use of interest rate swaps.
Next Page →
NZ Gazette 2013, No 110
✨ LLM interpretation of page content
💰
Bay of Plenty Community Trust Incorporated Financial Statements
(continued from previous page)
💰 Finance & RevenueFinancial Statements, Community Trusts, Bay of Plenty, Cash Equivalents, Short Term Deposits, Loans, Investments, Financial Instruments, Liquidity Risk, Market Risk, Foreign Currency Risk, Interest Rate Risk