KU Annual Report 2007 - Page 33

c) Interest Rate Risk Management The company is exposed to interest rate risk as it invests its surplus funds in variable rate instruments. The risk is managed by regular review of its variable interest rate investments. The following table details the company’s exposure to interest rate risk at the balance date: 2007 Revenue Average Interest Rate Variable Interest Rate % $ Fixed Interest Rate Maturity Less Than 1 Year 1 to 5 Years More Than 5 Years $ $ $ Non-Interest Bearing Total $ $ Financial Assets Cash 6.31% Receivables and other current assets - Investment in Managed Funds - 14,104,293 - 14,104,293 - - - - - - - 14,104,293 2,941,723 2,941,723 - - - 7,951,665 7,951,665 - - - 10,893,388 24,997,681 Financial Liabilities Payables - - - - - 14,362,048 14,362,048 - - - - - 14,362,048 14,362,048 The following table details the company’s exposure to interest rate risk as at 31 December 2006: 2006 Fixed Interest Rate Maturity Revenue Average Interest Rate Variable Interest Rate % $ Non-Interest Bearing Total $ $ Less Than 1 Year 1 to 5 Years More Than 5 Years $ $ $ - - - - - - 644,268 - - - 7,685,329 7,685,329 - - - 8,329,597 21,106,009 Financial Assets Cash 4.9% Receivables and other current assets - Investments in Managed Funds - 12,776,412 - 12,776,412 12,776,412 644,268 Financial Liabilities Payables d) - - - - - 11,019,167 11,019,167 - - - - - 11,019,167 11,019,167 Credit Risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the company. The company has adopted the policy of only dealing with creditworthy counterparties. The company does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The carrying amount of financial assets recorded in the financial statements, net of any provisions for losses, represents the company’s maximum exposure to credit risk. e) Fair Value of Financial Instruments The directors consider that the carrying amount of financial assets and financial liabilities recorded in the financial statements approximates their respect ive net fair values, determined in accordance with the accounting policies disclosed in note 2 to the financial statements. f) Liquidity Risk Management Ultimate responsibility for liquidity risk management rests with the board of directors. The company manages liquidity risk by maintaining adequate cash reserves and by continuously monitoring forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities. KU’s 112 Annual Report 2007 th 33