2019-11-12 S&O Agenda - Item 11 - Attachment 1 - Draft Noosa Council 2018-19 Annual Report

                                                                                                           Financial Statements 2019



Noosa Shire Council

Notes to the Financial Statements
for the year ended 30 June 2019

Note 30. Financial Instruments (continued)

                                                                                                   2019               2018
Sensitivity
Sensitivity to interest rate movements is shown for variable financial assets and liabilities based on the carrying
amount at reporting date.

The Council does not account for any fixed-rate financial assets or financial liabilities at Fair Value through Profit
or Loss, therefore a change in interest rates at the reporting date would not affect profit or loss.

The following interest rate sensitivity analysis depicts what effect a reasonably possible change in interest rates
(assumed to be 1%) would have on the profit and equity, based on the carrying values at the end of the reporting
period. The calculation assumes that the change in interest rates would be held constant over the period.

                                        Net Carrying                 Net Result                       Equity
                                           Amount          1% increase     1% decrease     1% increase       1% decrease
                                            $'000              $'000           $'000           $'000             $'000


2019
QTC Cash Fund                                37,630                 376            (376)            376               (376)
Other Investments                             2,142                  21             (21)             21                (21)
Loans - QTC                                 (24,233)               (242)            242            (242)               242
Net Total                                   15,539                 155            (155)            155               (155)

2018
QTC Cash Fund                                52,934                 529            (529)            529               (529)
Other Investments                             4,897                  49             (49)             49                (49)
Loans - QTC                                 (36,140)               (361)            361            (361)               361
Net Total                                   21,691                 217            (217)            217               (217)

In relation to the QTC loans held by the Council, the following has been applied:

QTC Generic Debt Pool - the generic debt pool products approximate a fixed rate loan. There is a negligible impact
on interest sensitivity from changes in interest rates for generic debt pool borrowings.

Fair Value

The fair value of trade and other receivables and payables is assumed to approximate the value of the original
transaction, less any allowance for impairment.

The fair value of borrowings with QTC is based on the market value of debt outstanding. The market value of a debt
obligation is the discounted value of future cash flows based on prevailing market rates and represents the amount
required to be repaid if this was to occur at balance date. The market value of debt is provided by QTC and
disclosed in Note 16.

QTC applies a book rate approach in the management of debt and interest rate risk, to limit the impact of market
value movements to clients' cost of funding. The book value represents the carrying value based on amortised cost
using the effective interest method.




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