KU Annual Report 2010 - Page 37

The following table details the company’s exposure to interest rate risk as at 31 December 2009: Fixed Interest Rate Maturity 2009 Revenue Average Interest rate Variable Interest rate Less than 1 Year 1 to 5 Years More than 5 Years Non-interest Bearing Total % $ $ $ $ $ $ Financial Assets Cash 2.90% 27,608,816 - - - - 27,608,816 Receivables and other current assets - - - - - 2,398,335 2,398,335 Investment in Managed Funds - - - - - 7,561,554 7,561,554 27,608,816 - - - 9,959,889 37,568,705 - - - - - 30,724,789 30,724,789 - - - - - 30,724,789 30,724,789 Financial Liabilities Payables (f) 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. (g) 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 respective net fair values, determined in accordance with the accounting policies disclosed in note 2 to the financial statements. (h) 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. (i) Market Risk The Company’s exposure to market risk is in relation to the effect of changes in interest rates which would affect interest received, and in relation to its available for sale financial assets which are units in an unit trust. The exposure arising from the units in the equity trust is to movements in the equity markets in which the trust holds investments and in relation to the market for trading in the units themselves the exposure is to movements in the fair value of the investment and in relation to distributions arising from the investment. 115th Annual Report 2010 37