2009 GMHBA Annual Report - GMHBA Health Insurance

GMHBA Limited ABN 98 004 417 092NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2009 (CONTINUED)15. Financial instrumentsInterest rate risk disclosuresThe Company’s exposure to interest rate risk is set out below:2009 NOTE Floating/FixedinterestrateInterest Maturing in:1 year or less Over 1 to 5yearsNon-interestbearingFinancial assets $’000 $’000 $’000 $’000 $’000Cash 3 7,472 - 7,472Receivables 4 - - 9,654 9,654Bank term deposits 5 122,594 4,011 126,605Debentures 5 3,021 3,021Bank bonds 5 502 502TotalGMHBA Limited ABN 98 004 417 092NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2009 (CONTINUED)16. Market RiskMarket risk is the risk that the fair value or future cash flows of a financial instrument will fluctuatebecause of changes in market factors. Market risk comprises three types of risk: currency risk (dueto fluctuations in foreign exchange rates), interest rate risk (due to fluctuations in market interestrates) and price risk (due to fluctuations in market prices). The following policies and proceduresare in place to mitigate the company’s exposure to market risk.• A risk management plan and investment plan setting out the assessment and determinationof what constitutes market risk for the company.• The Investment Committee is responsible for compliance with the investment plan which itmonitors for any exposures or breaches. It is also the role of the Investment Committee todetermine action plans in mitigation of market risk.Currency risk7,472 126,117 4,011 9,654 147,254Weighted average interest rate % 7.50 4.38Financial liabilitiesPayables 8 - 3,191 3,1913,191 3,191Net financial assets 7,472 126,117 4,011 6,463 144,0632008 Floating/FixedinterestrateInterest Maturing in:1 year or less Over 1 to 5yearsNon-interestbearingFinancial assets $’000 $’000 $’000 $’000 $’000Cash 3 3,569 - - - 3,569Receivables 4 - - - 8,646 8,646Bank term deposits 5 74,003 74,003Debentures 5 4,995 4,995Bank bonds 5 4,563 4,563Negotiable certified deposit 5 5,506 5,506Portfolio credit linked note 5 2,000 2,000Managed investments 5 - - 31,615 31,6153,569 91,067 - 40,261 134,897Weighted average interest rate % 7.38 (24.63)Financial liabilitiesPayables 8 - - - 4,287 4,287Total4,287 4,287Net financial assets 3,569 91,067 - 35,974 130,610Currency risk is the risk that the fair value of future cashflows of a financial instrument will fluctuatebecause of changes in foreign exchange rates.The company does not have any direct foreign investments and therefore no foreign exchange raterisk.Interest rate riskInterest rate risk is the risk that the value of future cash flows of a financial instrument will fluctuatebecause of changes in market interest rate. The company invests primarily in financial instrumentswith fixed interest rates which expose the company to fair value interest rate risk.The following table illustrates the sensitivity of the net result for the year ended 30 June 2009 to areasonably possible change in interest rates of + / -1% (2008: + / - 1%). These changes areconsidered to be reasonably possible based on observation of current market conditions. Thecalculations are based on the company’s financial instruments held at balance sheet date, with allother variables held constant.2009 2008$’000 $’000+1% -1% +1% -1%Money Market SecuritiesNet result (650) 661 (444) 451The company actively manages its investments in high quality liquid fixed interest securities andcash for the duration of the fixed interest period, which should be taken into consideration whenconsidering the impact of the above movement.46 4547 46