Parks Victoria - Annual Report 2009-10

FINANCIAL REPORTNOTES TO THE FINANCIAL STATEMENTSFor The Financial Year Ended 30 June 201033 Financial Instruments (Continued)(f) Market riskThe Park Victoria’s exposures to market risk are primarily through interest rate risk with only insignificantexposure to foreign currency and other price risks. A sensitivity analysis has been prepared for interestrate risks on the return to Parks Victoria. Objectives, policies and processes used to manage each of theserisks are disclosed in the paragraphs below.Table 33.4: Interest rate market risk exposure$’000Interest rate risk–25 basis pointNet Result+100 basis pointsNet ResultFinancial assets: 2010Cash, Deposits & Investments – Based on actual 2009–10 closing balance (241) 965Carrying amount $96.6M @ 30 June 2010–100 basis points +100 basis pointsFinancial assets: 2009Cash, Deposits & Investments – Based on budgeted 2009–10 closing balance (1,017) 1017Carrying amount $68.6M @ 30 June 2009Cash, Deposits & investments include Cash and Deposits of $36.6 M and Investments of $60 M, howeverdue to a similar Interest rate on both amounts, the interest rate risk analysis has been applied on thecombined total of $96.6 M, on the estimate that the minimum interest rate decrease will be 0.25 % andthe maximum increase will be 1% for the 2010/11 financial year.Foreign currency riskThe Park Victoria is exposed to very minor foreign currency risk through its payables relating topurchases of supplies and consumables from overseas. This is because of a limited amount of purchasesdenominated in foreign currencies and a short timeframe between commitment and settlement.Interest rate riskExposure to interest rate risk is not significant. The weighted average cash interest rate earned for2009–10 was 4.04% (2008–09 4.97%).(g) Fair valueDue to the short-term nature of the current receivables, their carrying value is assumed to approximatetheir fair value and based on credit history it is expected that the receivables are neither past due norimpaired will be received when due.The fair values and net fair values of financial assets and financial liabilities are determined as follows:❚ the fair value of financial assets and financial liabilities with standard terms and conditions and tradedin active liquid markets are determined with reference to quoted market prices; and❚ the fair value of other financial assets and financial liabilities are determined in accordance withgenerally accepted pricing models based on discounted cash flow analysis.94 Parks Victoria - Annual Report 2009-10