Annual Report 2011 Australian Grand Prix Corporation

Notes to and Forming Part of the Financial Statementsfor the Financial Year Ended 30 June 2011(e) Market riskThe Corporation’s exposures to market risk are primarily through foreign currency risk and interest raterisk. Objectives, policies and processes used to manage each of these risks are disclosed below.Foreign currency riskThe Corporation has entered into forward foreign exchange contracts and foreign exchange optionsto hedge certain commitments denominated in US dollars. These contracts extend to 2016. Currentderivatives relate to forward contracts that fall due within the next 12 months and non currentderivatives relate to forward contracts and foreign exchange options that fall due after this date.These forward foreign exchange contracts and foreign currency options have been entered into withfull compliance of guidelines from, and with the approval of, the Treasurer of Victoria in accordancewith the requirements of Section 24(2) of the Australian Grands Prix Act 1994.The Corporation has not disclosed the gross value payable and receivable under the foreign currencycontracts and is exempted from doing so under Section 49 of the Australian Grands Prix Act 1994.Disclosure of this information would constitute a breach of the international agreements as defined innote 25.Interest rate riskThe Corporation has an interest rate risk with respect of monies held on account and on term depositwith the bank (at floating interest rate) and Treasury Corporation of Victoria (at fixed and floatinginterest rates).The Corporation manages this risk by mainly undertaking fixed rate financial instruments with relativelyeven maturity profiles, with only minimised amounts of financial instruments at floating rates. TheCorporation has concluded for cash at bank, these financial assets can be left at floating interest rateswithout exposing the Corporation to significant bad risk, and monitors movements in interest rates on aregular basis.The Corporation does not have any interest rate risk in respect of financial liabilities.The Corporation’s exposure to interest rate risk is set out below:2011Weightedaverageeffectiveinterest rate %Carryingamount$’000Fixedinterest rate$’000Variableinterest rate$’000Non-interestBearing$’000Financial assetsCash at bank 4.63 12,411 - 12,411 -Cash on deposit 4.89 8,000 8,000 - -Receivables 4,808 - - 4,808Derivatives - - - -Total financial assets 25,219 8,000 12,411 4,808Financial liabilitiesPayables 4,608 - - 4,608Derivatives 25,556 - - 25,556Total financialliabilities30,164 - - 30,164Australian Grand Prix Corporation Annual Report 2011 59