KU Annual Report 2008 | Page 36

KU Financial Report Notes to the Financial Statements Continued... (c) Financial Risk Management Objectives The Board and Management manage the financial risks relating to operations of the company. These include credit risk, liquidity risk, interest rate risk and market risk. The company does not enter into or trade financial instruments for speculative purposes. The company does not use derivative financial instruments. The company’s investments expose it primarily to the financial risks of changes in interest rate and market fair value adjustments. (d) Significant Accounting Policies Details of the significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which revenues and expenses are recognised, in respect of each class of financial asset, financial liability and equity instruments are disclosed in note 2 to the financial statements. (e) 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: Revenue Average Interest rate % Variable Interest rate $ $ $ 6.88% 16,148,516 - Receivables and other current assets - - - Investment in Managed Funds - 2008 Fixed Interest Rate Maturity Less than 1 1 to 5 Years More than 5 Year Years Non-interest Bearing Total $ $ $ - - - 16,148,516 - - 2,066,458 2,066,458 6,512,103 6,512,103 Financial Assets Cash Financial Liabilities Payables 36 KU Children’s Services 16,148,516 - - - 8,578,561 24,727,077 - - - - - 17,636,277 17,636,277 - - - - - 17,636,277 17,636,277