Financial Statements of Waikato River Authority
for the period ended 30 June 2012
b) Market Risk
i) Foreign Currency Risk
Foreign currency risk is the risk that the value of the Authority’s assets
and liabilities will fluctuate due to changes in foreign exchange rates. The
Authority has no current exposure to foreign currency risk.
ii) Interest Rate Risk
Interest rate risk is the risk that the value of the Authority’s assets and
liabilities will fluctuate due to changes in market interest rates. The Authority
is exposed to interest rate risk primarily through its cash balances.
c) Interest rate risk
Balance Maturity
Effective
date
interest rate
Term Deposit
764,883 21/08/12
4.50%
764,883
d) Sensitivity analysis
In managing interest rate the trust aims to reduce the impact of short-term
fluctuations on the trust’s earnings by investing in short term deposits. Over the
longer-term, however, permanent changes in interest rates will have an impact on
profit. A decrease in interest rates of one percent would reduce interest income
by $7,649.
e) Credit quality of financial assets
The credit quality of financial assets that are neither past due nor impaired can
be assessed by reference to Standard and Poor’s credit ratings (if available) or to
historical information about counterparty default rates.
2012
2011
COUNTERPARTIES WITH CREDIT RATINGS
AA-
793,633
963,122
793,633
963,122
f) Classification and fair values
Other
Total
Loans and amortised
carrying
Fair
receivables
cost
amount
value
Note
2012
2012
2012
2012
Financial assets
Trade and other receivables 9
12,384
-
12,384
12,384
Cash and cash equivalents 8
28,750
-
28,750
28,750
Other financial asset
10
764,883
-
764,883 764,883
Total current financial assets
806,017
-
806,017 806,017
Total financial assets
806,017
-
806,017 806,017
Financial liabilities
Trade and other payables 12
-
27,844
27,844
27,844
Total current
financial liabilities
-
27,844
27,844
27,844
Total financial liabilities
-
27,844
27,844
27,844
22