Portland District Health Annual Report 2005 - South West Alliance of ...

Portland District HealthNotes to and Forming Part of the Financial Statements for the Year Ended 30 June 2005Note 6: Financial Instruments(a) Interest Rate Risk ExposureThe Hospital’s exposure to interest rate risk and effective weighted average interest rate by maturity periods is set out in the following timetable. Forinterest rates applicable to each class of asset or liability refer to individual notes to the financial statements. Exposure arises predominantly fromassets and liabilities bearing variable interest rates.WeightedInterest Rate Exposure as at 30/6/2005 Average Interest Floating 1 Year Greater thanRates Interest Rate or Less 1 Year 2004-05 2003-04% $’000 $’000 $’000 $’000 $’000Financial AssetsCash Assets 2.6% - - - - 286Receivables 2.3% 615 - 842 1,457 954Other Assets 2.3% 216 - - 216 471-Total Financial Assets 831 - 842 1,673 1,711Financial LiabilitiesPayables 3.5% 1,237 - - 1,237 1,254Borrowings:- Overdraft 3.8% 123 - - 123 -- Lease 8.7% 4 - - 4 216- Treasury Corporation Victoria - Current 5.7% 171 - - 171 240- Treasury Corporation Victoria - Non-Current 5.7% 1,793 1,793 1,715Total Financial Liabilities 3,328 - - 3,328 3,425Net Financial Assets and Liabilities (2,497) - 842 (1,655) (1,714)(b) Credit Risk ExposureCredit risk represents the loss that would be recognised if counterparties fail to meet their obligations under the respective contracts at maturity. Thecredit risk on financial assets of the entity have been recognised on the statement of financial position, as the carrying amount, net any provisionsfor doubtful debts.(c) Net Fair Value of Financial Assets and LiabilitiesThe carrying amount of financial assets and liabilities contained within these financial statements is representative of the net fair value of eachfinancial asset or liability.2004-05 2003-04Net Fair Value Book Net Book NetValue Fair Value FairValueValue$’000 $’000 $’000 $’000Financial AssetsCash at Bank - - 286 286Trade Debtors 1,457 1,457 954 954Other Assets 216 216 471 471Total Financial Assets 1,673 1,673 1,711 1,71Financial LiabilitiesPayables 1,237 1,237 1,254 1,254Borrowings* 298 298 2,171 2,171Total Financial Liabilities 1,535 1,535 3,425 3,425*Net fair values are capital amounts(Net fair values of financial instruments are determined on the following basis:1. Cash, deposit investments, cash equivalents and non-interest bearing financial assets and liabilities (trade debtors, other receivables, trade creditorsand advances) are valued at cost which approximates net fair value.2. Interest Bearing Liabilities amounts are based on the present value of expected future cash flows, discounted at current market interest rates,quoted for trade (Treasury Corporation of Victoria)62