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 (continued) Ageing analysis of contractual receivables Carrying amount Not past due and not impaired Past due but not impaired Less than 1 month 1–3 months 3 months – 1 year 2011 Debtors 507,045 270,407 144,238 92,400 – Other receivables 107,713 107,713 – – – 614,758 378,120 144,238 92,400 – 2010 Debtors 9,813,601 8,909,951 892,970 10,680 – Other receivables 82,957 82,957 – – – 9,896,557 8,992,908 892,970 10,680 – Credit quality of contractual financial assets that are neither past due or impaired Finance Institutions Government Departments Other Government Entities Regional Tourism Bodies Other Total 2011 Cash and deposits 11,778,728 – 15,500,000 – 248,909 27,527,636 Receivables 22,515 221,000 4,100 92,132 275,011 614,758 Investments – – – – 1 1 Total contractual financial assets 11,801,243 221,000 15,504,100 92,132 523,921 28,142,395 2010 Cash and deposits 9,138,012 – 4,350,000 – 302,860 13,790,872 Receivables 15,251 8,814,860 134,076 780,714 151,658 9,896,557 Investments – – – – 1 1 Total contractual financial assets 9,153,263 8,814,860 4,484,076 780,714 454,519 23,687,430 There are no material financial assets which are individually determined to be impaired. 48 TOURISM VICTORIA ANNUAL REPORT 2010–11
Note 14. Financial instruments (continued) (c) Liquidity risk Liquidity risk arises when Tourism Victoria is unable to meet its financial obligations as they fall due. Tourism Victoria operates under the Government fair payments policy of settling financial obligations within 30 days and in the event of a dispute, make payments within 30 days from the date of resolution. It also continuously manages risk through monitoring future cash flows and maturities planning to ensure adequate holdings of high quality liquid assets and dealing in highly liquid markets. Tourism Victoria’s exposure to liquidity risk is deemed insignificant based on prior period’s data and current assessment of risk. Maximum exposure to liquidity risk is the carrying amounts of financial liabilities as disclosed in the face of the Balance Sheet. (d) Market risk Tourism Victoria’s exposure to market risk is primarily through interest rate risk and foreign currency risk. Objectives, policies and processes used to manage each of these risks are disclosed below: Foreign currency risk Tourism Victoria’s foreign currency risk is managed using forward exchange contracts, which are over-the-counter contracts that fix the future delivery of foreign currencies at a specified exchange rate. The forward foreign currency contract amount results in foreign currency account balances being sufficient to fund the budgeted foreign currency activities for 2011–2012. Tourism Victoria’s exposure to direct foreign currency risk has no impact on the net result from transactions. Consistent with Treasury recommendation (FRD 114a), Tourism Victoria has not adopted hedge accounting. Interest rate risk Tourism Victoria’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods is set out below. Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates. Tourism Victoria does not hold any interest bearing financial instruments that are measured at fair value, therefore has nil exposure to fair value interest rate risk. Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Tourism Victoria has minimal exposure to cash flow interest rate risks through its cash and deposits and term deposits that are at floating rates. Tourism Victoria manages this risk by investing in short term fixed rate financial instruments with an investment maturity sufficient to fund weekly expenditure. Cash at bank balances are kept at minimal operational levels. Management reviews its cash flow position on a weekly basis. Management has concluded that cash at bank is a financial asset that can be left at a floating rate without necessarily exposing Tourism Victoria to significant bad risk as it adopts a conservative approach in budgeting for interest revenue. Management monitors movement in interest rates on a weekly basis. 49
- Page 1 and 2: Annual Report 2010-11
- Page 3 and 4: COMPREHENSIVE OPERATING STATEMENT F
- Page 5 and 6: STATEMENT OF CHANGES IN EQUITY FOR
- Page 7 and 8: Note 1. Summary of significant acco
- Page 9 and 10: Note 1. Summary of significant acco
- Page 11 and 12: Note 1. Summary of significant acco
- Page 13 and 14: Note 1. Summary of significant acco
- Page 15 and 16: Note 3. Expenses from transactions
- Page 17 and 18: Note 6. Property, plant and equipme
- Page 19 and 20: Note 7. Payables Current Contractua
- Page 21 and 22: Note 10. Superannuation Employees o
- Page 23 and 24: Note 12. Commitments for expenditur
- Page 25: Note 14. Financial instruments (con
- Page 29 and 30: Note 14. Financial instruments (con
- Page 31 and 32: Note 15. Cash flow information 2011
- Page 33 and 34: Note 17. Responsible persons In acc
- Page 35 and 36: Note 18. Remuneration of executives
- Page 37 and 38: Note 21. Glossary (continued) Forwa
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- Page 41 and 42: DISCLOSURE INDEX The Annual Report
Note 14. <strong>Financial</strong> instruments (continued)<br />
(c) Liquidity risk<br />
Liquidity risk arises when <strong>Tourism</strong> <strong>Victoria</strong> is unable to meet its financial obligations as they fall due. <strong>Tourism</strong> <strong>Victoria</strong> operates under the<br />
Government fair payments policy of settling financial obligations within 30 days and in the event of a dispute, make payments within 30<br />
days from the date of resolution. It also continuously manages risk through monitoring future cash flows and maturities planning to ensure<br />
adequate holdings of high quality liquid assets and dealing in highly liquid markets.<br />
<strong>Tourism</strong> <strong>Victoria</strong>’s exposure to liquidity risk is deemed insignificant based on prior period’s data and current assessment of risk.<br />
Maximum exposure to liquidity risk is the carrying amounts of financial liabilities as disclosed in the face of the Balance Sheet.<br />
(d) Market risk<br />
<strong>Tourism</strong> <strong>Victoria</strong>’s exposure to market risk is primarily through interest rate risk and foreign currency risk. Objectives, policies and processes<br />
used to manage each of these risks are disclosed below:<br />
Foreign currency risk<br />
<strong>Tourism</strong> <strong>Victoria</strong>’s foreign currency risk is managed using forward exchange contracts, which are over-the-counter contracts that fix the future<br />
delivery of foreign currencies at a specified exchange rate.<br />
The forward foreign currency contract amount results in foreign currency account balances being sufficient to fund the budgeted foreign<br />
currency activities for 2011–2012. <strong>Tourism</strong> <strong>Victoria</strong>’s exposure to direct foreign currency risk has no impact on the net result from transactions.<br />
Consistent with Treasury recommendation (FRD 114a), <strong>Tourism</strong> <strong>Victoria</strong> has not adopted hedge accounting.<br />
Interest rate risk<br />
<strong>Tourism</strong> <strong>Victoria</strong>’s exposure to interest rate risk and the effective weighted average interest rate by maturity periods is set out below.<br />
Fair value interest rate risk is the risk that the fair value of a financial instrument will fluctuate because of changes in market interest rates.<br />
<strong>Tourism</strong> <strong>Victoria</strong> does not hold any interest bearing financial instruments that are measured at fair value, therefore has nil exposure to fair<br />
value interest rate risk.<br />
Cash flow interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest<br />
rates. <strong>Tourism</strong> <strong>Victoria</strong> has minimal exposure to cash flow interest rate risks through its cash and deposits and term deposits that are at<br />
floating rates.<br />
<strong>Tourism</strong> <strong>Victoria</strong> manages this risk by investing in short term fixed rate financial instruments with an investment maturity sufficient to fund<br />
weekly expenditure. Cash at bank balances are kept at minimal operational levels. Management reviews its cash flow position on a weekly<br />
basis. Management has concluded that cash at bank is a financial asset that can be left at a floating rate without necessarily exposing <strong>Tourism</strong><br />
<strong>Victoria</strong> to significant bad risk as it adopts a conservative approach in budgeting for interest revenue. Management monitors movement in<br />
interest rates on a weekly basis.<br />
49
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