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Waikato River Authority
Annual Report
2015
www.
waikatoriver
.org.nz
47
Trade and other payables are non-interest bearing and are normally settled on 30-
day terms. Therefore, the carrying value of trade and other payables approximates
their fair value.
17 Provisions
2015
2014
Grant provisions
Opening balance
1,867,492
1,342,972
Additional provisions made
1,314,911
1,680,609
Amount used
(1,244,684)
(1,100,626)
Unused amounts reversed
(80,331)
(55,463)
Closing balance
1,857,388
1,867,492
Current
1,857,388
1,867,492
Non-current
-
-
Total provisions
1,857,388
1,867,492
Grant provisions
The board approved these payments during the period. The current portion are
grants that will be paid out in the next financial year and non current portion
represents payments expected to occur in 2017.
18 Financial instruments
Exposure to currency, interest rate and credit risk arises in the normal course of the
Trust’s business.
a) Credit Risk
Credit risk is the risk that the counterparty to a transaction with the trust will fail
to discharge its obligations, causing the trust to incur a financial loss. The trust is
exposed to credit risk through the normal trade credit cycle and advances to third
parties. No collateral is required in respect of financial assets.
Reputable financial institutions are used for investing and cash handling
purposes.
The maximum exposure to credit risk is represented by the carrying value of each
financial asset in the Statement of Financial Position.
b) Market Risk
i) Foreign Currency Risk
Foreign currency risk is the risk that the value of the trust’s assets and
liabilities will fluctuate due to changes in foreign exchange rates. The trust
has exposure to currency risk from non NZ dollar denominated assets. As a
result of these activities, exposure to currency risk arises. The Trust manages
these risks by a fund manager in accordance with the boards directions.
ii) Interest Rate Risk
Interest rate risk is the risk that the value of the trust’s assets and liabilities
will fluctuate due to changes in market interest rates. The trust is exposed to
interest rate risk primarily through its cash and term deposit balances.
iii) Price Risk
Price risk is the risk that the fair value or future cash flows of a financial
instrument will fluctuate as a result of changes in market prices. Equity
securities risk arises on listed share investments, which are classified as
financial assets held at fair value through other comprehensive revenue.
The price risk arises due to market movements in listed shares.