Page 26 University of Technology, Jamaica Notes to the Financial Statements 31 March 2020 (expressed in Jamaican dollars unless otherwise indicated) 3. Financial Risk Management (Continued) (c) Market risk The University takes on exposure to market risks, which is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risks mainly arise from changes in foreign currency exchange rates and interest rates. Market risk is monitored by the Finance Committee which monitors the investment portfolio against policies established by the University Council, and reports to the Council on a regular basis. Market risk exposures are measured using sensitivity analysis. There has been no change to the University’s exposure to market risks or the manner in which it manages and measures the risk. Currency risk Currency risk is the risk that the fair value of future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The University is exposed to foreign exchange risk with respect to the pound sterling STG, US dollar, Candian dollar and the Euro. Foreign exchange risk arises from future commercial transactions, recognised assets and liabilities. The University manages its foreign exchange risk by ensuring that the net exposure in foreign assets and liabilities is kept to an acceptable level by monitoring currency positions. The University further manages this risk by maximising foreign currency earnings from its investments and holding foreign currency balances. The tables below summarise the exposure to foreign currency exchange rate risk as at 31 March. 2020 Jamaican$ STG US$ CAN$ Euro Total J$’000 J$’000 J$’000 J$’000 J$’000 J$’000 Financial assets Long term investments 39,531 - 229,935 - - 269,466 Accounts receivable 1,282,506 - 203,622 - - 1,486,128 Reverse repurchase agreements 828,604 68,334 631,788 - 46,948 1,575,674 Cash in hand and at bank 363,667 175 20,271 844 7,043 392,000 Total financial assets 2,514,308 68,509 1,085,616 844 53,991 3,723,268 Financial liabilities Accounts payable 1,171,295 - - - - 1,171,295 Designated receipts 120,305 - - - - 120,305 Leases 77,467 - - - - 77,467 Bank overdraft 58,127 - 1,580 - - 59,707 Total financial liabilities 1,427,194 - 1,580 - - 1,428,774 Net financial position 1,087,114 68,509 1,084,036 844 53,991 2,294,494 University of Technology, Jamaica 142
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