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