ANNUAL REPORT - Northern Health

Note 20: Financial Instruments (continued)
Notes To and Forming Part of the Financial Statements
Northern Health Annual Report 2009/2010
(e) Market Risk
Northern Health's exposures to market risk are primarily through interest rate risk with only insignificant exposure to foreign currency and other price risks. Objectives, policies and processes used to
manage each of these risks are disclosed in the paragraph below.
Currency Risk
Northern Health is exposed to insignificant foreign currency risk through its payables relating to purchases of supplies and consumables from overseas. This is because of a limited amount of
purchases denominated in foreign currencies and a short timeframe between commitment and settlement.
Interest Rate Risk
Exposure to interest rate risk might arise primarily through Northern Health's interest bearing liabilities. Minimisation of risk is achieved by mainly undertaking fixed rate or non-interest bearing
financial instruments. For financial liabilities, Northern Health mainly undertake financial liabilities with relatively even maturity profiles.
Other Price Risk
Northern Health's exposure to 'Other Price Risk' arises from its current investment portfolio. The investment portfolio has experienced a reduction in value due to the volatility of the global financial
markets and there is an increasing expectation that due to the nature of these investments that the original face value may not be realised on maturity.
As a consequence of these events, Northern Health has taken all possible steps to strengthen its financial policies and internal controls relating to the investment of surplus funds.
Interest Rate Exposure of Financial Assets and Liabilities as at 30 June
Weighted Carrying
Average Amount Fixed Variable Non-
Effective Interest Interest Interest
Interest Rate Rate Bearing
2010 Rate (%) $'000 $'000 $'000
Financial Assets
Cash and Cash Equivalents 3.23 1,382 - 1,349 33
Recievables (i)
- Trade debtors 0.00 2,104 - - 2,104
- Other receivables 0.00 3,216 - - 3,216
Other financial assets
- Available for sale 4.33 - - - -
6,702 - 1,349 5,353
Financial Liabilities
Payables (i) 0.00 19,347 - - 19,347
Interest Bearing Liabilities 3.80 855 - 855 -
Other financial liabilities 0.00 5 - - 5
20,207 - 855 19,352
2009
Financial Assets
Cash and Cash Equivalents 4.59 4,361 - 4,328 33
Recievables (i)
- Trade debtors 0.00 3,434 - - 3,434
- Other receivables 0.00 2,492 - - 2,492
Other financial assets
- Available for sale 7.39 1,440 - 1,440 -
11,727 - 5,768 5,959
Financial Liabilities
Payables (i) 0.00 24,810 - - 24,810
Interest Bearing Liabilities 3.80 891 - 891 -
Other financial liabilities 0.00 8 - - 8
25,709 - 891 24,818
(i) The carrying amount excludes statutory financial assets and liabilities (i.e. GST input tax credit and GST payable)
Interest Rate Exposure
Northern Health Financial Report Appendix to the 2009 - 2010 Annual Report
Page 42 of 52