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Annual Financial Statements for year ended 30 June 2012
58
32. Presentation and Disclosure of Financial Instruments - continued
(d) Credit Risk
Credit risk represents the loss that would be recognised if counterparties fail to perform as contracted. Rate
receivables can be recovered by compulsory sale of property as determined in the Local Government Act
1999, whilst the credit risk of individual sundry debtors is assessed prior to the provision of goods or
services. Council’s investments are held by the Local Government Finance Authority, which is guaranteed by
the SA Government, and the Bendigo & Adelaide Bank Ltd and Westpac Banking Corporation, both of whom
the likelihood of credit failure is considered remote.
The Council does not have any significant credit risk exposure to any single counterparty or any group of
counterparties having similar characteristics. The carrying amount of financial assets recorded in the financial
statements, net of any provisions for losses, represents the Council’s maximum exposure to risk.
(e) Interest Rate Sensitivity
The following sensitivity analysis has been determined by applying a variation of +/- 50 basis points to the
average interest rate as at 1 July 2012 and determining the revenue effect on the balance of a specific
financial instrument at that date assuming that the balance remains constant.
Revenue Based Upon
30 June 2011
Balance
1/7/11
Average %
1/7/11
Average %
1/7/11
- 50 Basis
Points
+ 50 Basis
Points
Financial Assets:
Loans & Receivables
- Cash & Equivalents
30,346,108
5.32
1,614,413
1,462,682 1,766,143
- Receivables
2,085,637
2.75
57,355
46,927
67,783
Available for Sale
- Cash & Equivalents
1,742,301
4.32
75,267
66,556
83,979
Total
34,174,046
1,747,035
1,576,165 1,917,905
Variation in Revenue
-170,870
170,870
Revenue Based Upon
30 June 2011
Balance
1/7/11
Average %
1/7/11
Average %
1/7/11
- 50 Basis
Points
+ 50 Basis
Points
Financial Liabilities:
- Borrowings
23,343,503
6.75
1,575,686
1,458,970 1,692,404
Variation in Expense
-116,718
116,718
Revenue Based Upon
30 June 2012
Balance
1/7/12
Average %
1/7/12
Average %
1/7/12
- 50 Basis
Points
+ 50 Basis
Points
Financial Assets:
Loans & Receivables
- Cash & Equivalents
34,933,965
3.93
1,374,236
1,199,566 1,548,905
- Receivables
2,508,213
2.77
69,478
56,936
82,019
Available for Sale
- Cash & Equivalents
4,286,641
3.37
144,322
122,888 165,755
Total
41,728,819
1,588,035
1,379,391 1,796,679
Variation in Revenue
-208,644
208,644
Expense Based Upon
30 June 2012
Balance
1/7/12
Average %
1/7/12
Average %
1/7/12
- 50 Basis
Points
+ 50 Basis
Points
Financial Liabilities:
- Borrowings
20,565,976
6.74
1,386,262
1,283,432
1,489,092
Variation in Expense
-102,830
102,830
Notes to the Financial Statements