Annual Report 2019-20

Noosa Shire Council

Notes to the Financial Statements
for the year ended 30 June 2020

Note 30. Financial Instruments and Financial Risk Management                                     (continued)

                                                                                                          Council
                                                                                                  $'000                    $'000


Market risk
Market risk is the risk that changes in market indices, such as interest rates, will affect the Council's income or the
value of its holdings of financial instruments.

Interest rate risk
Noosa Shire Council is exposed to interest rate risk through investments and borrowings with Queensland Treasury
and/or other financial institutions.

It also has access to a mix of variable and fixed rate funding options through QTC so that interest rate
risk exposure can be minimised.

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        % increase       1% decrease      1% increase        1% decrease
                                           $'000           $'000           $'000             $'000             $'000


2020
QTC cash fund                               54,627              546              (546)             546                     (546)
Other investments                            2,139               21               (21)              21                      (21)
Loans - QTC                                (21,517)            (215)              215             (215)                     215
Net                                        35,249              352               (352)            352                  (352)

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                                        15,539              155               (155)            155                  (155)

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.




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