Annual Report 2010–2011, Part 2: Financial (1.8 ... - Tourism Victoria
Annual Report 2010–2011, Part 2: Financial (1.8 ... - Tourism Victoria Annual Report 2010–2011, Part 2: Financial (1.8 ... - Tourism Victoria
NOTES TO THE FINANCIAL STATEMENTS CONTINUED 30 JUNE 2011 Note 14. Financial instruments (a) Financial risk management objectives Tourism Victoria’s principal financial instruments comprise of: • cash assets; • term deposits; • forward foreign currency exchange contract; • receivables (excluding statutory receivables); • payables (excluding statutory payables); • borrowings; and • finance lease payables. Tourism Victoria’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates, and interest rates. The policies for managing these risks are discussed in more detail below. Details of significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in Note 1 of the financial statements. The main purpose in holding financial instruments is to prudently manage Tourism Victoria’s financial risks within the Government policy parameters. Tourism Victoria’s main financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market risk. Tourism Victoria manages these financial risks in accordance with its financial risk management policy. Tourism Victoria uses different methods to measure and manage the different risks to which it is exposed. Primary responsibility for the identification and management of financial risks rests with the Financial Risk Management Committee of Tourism Victoria. The carrying amounts of Tourism Victoria’s financial assets and financial liabilities by category are in the following table: Financial assets 2011 2010 Notes $ $ Cash and deposits (i) 27,527,636 13,790,872 Loans and receivables (i) 614,758 9,896,557 Investments (ii) 1 1 Forward Foreign Currency Exchange Contract (ii) 1,313,299 3,725,724 Total financial assets (a) 29,455,694 27,413,154 Financial liabilities Payables (iii) 7,188,810 6,963,676 Forward Foreign Currency Exchange Contract (ii) 1,313,299 3,725,724 Total financial liabilities (b) 8,502,109 10,689,399 Categorisation of financial instruments (i) These are loans and receivables (ii) Contractual financial assets/liabilities designated at fair value through profit and loss (iii) These are contractual financial liabilities at amortised costs (a) The total amount of financial assets disclosed here excludes statutory receivables (i.e. Amounts owing from Victorian Government and GST input tax credit recoverable). (b) The total amount of financial liabilities disclosed here excludes statutory payable (i.e. Taxes payable). 46 TOURISM VICTORIA ANNUAL REPORT 2010–11
Note 14. Financial instruments (continued) Net holding gain/(loss) on financial instruments by category Financial assets 2011 2010 $ $ Cash and deposits 1,105,877 904,071 Total financial assets 1,105,877 904,071 Financial liabilities Finance lease 9,280 (25,925) Total financial liabilities 9,280 (25,925) The net holding gains or losses disclosed above are determined as follows: • For cash and deposits, loans or receivables, the net gain or loss is calculated by taking the interest revenue, plus or minus foreign exchange gains or losses arising from revaluation of the financial assets, and minus any impairment recognised in the net result; • For financial liabilities measured at amortised cost, the net gain or loss is calculated by taking the interest expense, plus or minus foreign exchange gains or losses arising from the revaluation of financial liabilities measured at amortised cost; • For financial asset and liabilities that are held-for-trading or designated at fair value through profit or loss, the net gain or losses calculated by taking the movement in the fair value of the financial asset or liability. (b) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to Tourism Victoria. Tourism Victoria has adopted a policy of only dealing with creditworthy counterparties and obtaining sufficient collateral where appropriate, as a means of mitigating the risk of financial loss from defaults. Tourism Victoria measures credit risk on a fair value basis. Tourism Victoria does not have any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with creditratings assigned by international credit rating agencies. The carrying amount of financial assets recorded in the financial statements, net of any allowances for losses, represents Tourism Victoria’s maximum exposure to credit risk without taking account for the value of any collateral obtained. Provision of impairment for contractual financial assets is recognised when there is objective evidence that Tourism Victoria will not be able to collect a receivable. Objective evidence includes financial difficulties of the debtor, default payments, debts which are more than 60 days overdue, and changes in debtor credit ratings. 47
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NOTES TO THE FINANCIAL STATEMENTS CONTINUED<br />
30 JUNE 2011<br />
Note 14. <strong>Financial</strong> instruments<br />
(a) <strong>Financial</strong> risk management objectives<br />
<strong>Tourism</strong> <strong>Victoria</strong>’s principal financial instruments comprise of:<br />
• cash assets;<br />
• term deposits;<br />
• forward foreign currency exchange contract;<br />
• receivables (excluding statutory receivables);<br />
• payables (excluding statutory payables);<br />
• borrowings; and<br />
• finance lease payables.<br />
<strong>Tourism</strong> <strong>Victoria</strong>’s activities expose it primarily to the financial risks of changes in foreign currency exchange rates, and interest rates.<br />
The policies for managing these risks are discussed in more detail below.<br />
Details of significant accounting policies and methods adopted, including the criteria for recognition, the basis of measurement and the basis<br />
on which income and expenses are recognised, in respect of each class of financial asset, financial liability and equity instrument are disclosed in<br />
Note 1 of the financial statements.<br />
The main purpose in holding financial instruments is to prudently manage <strong>Tourism</strong> <strong>Victoria</strong>’s financial risks within the Government policy<br />
parameters.<br />
<strong>Tourism</strong> <strong>Victoria</strong>’s main financial risks include credit risk, liquidity risk, interest rate risk, foreign currency risk and market risk. <strong>Tourism</strong> <strong>Victoria</strong><br />
manages these financial risks in accordance with its financial risk management policy.<br />
<strong>Tourism</strong> <strong>Victoria</strong> uses different methods to measure and manage the different risks to which it is exposed. Primary responsibility for the<br />
identification and management of financial risks rests with the <strong>Financial</strong> Risk Management Committee of <strong>Tourism</strong> <strong>Victoria</strong>.<br />
The carrying amounts of <strong>Tourism</strong> <strong>Victoria</strong>’s financial assets and financial liabilities by category are in the following table:<br />
<strong>Financial</strong> assets<br />
2011 2010<br />
Notes $ $<br />
Cash and deposits (i) 27,527,636 13,790,872<br />
Loans and receivables (i) 614,758 9,896,557<br />
Investments (ii) 1 1<br />
Forward Foreign Currency Exchange Contract (ii) 1,313,299 3,725,724<br />
Total financial assets (a) 29,455,694 27,413,154<br />
<strong>Financial</strong> liabilities<br />
Payables (iii) 7,188,810 6,963,676<br />
Forward Foreign Currency Exchange Contract (ii) 1,313,299 3,725,724<br />
Total financial liabilities (b) 8,502,109 10,689,399<br />
Categorisation of financial instruments<br />
(i) These are loans and receivables<br />
(ii) Contractual financial assets/liabilities designated at fair value through profit and loss<br />
(iii) These are contractual financial liabilities at amortised costs<br />
(a) The total amount of financial assets disclosed here excludes statutory receivables (i.e. Amounts owing from <strong>Victoria</strong>n Government and GST input tax credit recoverable).<br />
(b) The total amount of financial liabilities disclosed here excludes statutory payable (i.e. Taxes payable).<br />
46 TOURISM VICTORIA ANNUAL REPORT 2010–11
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