✨ Financial Sensitivity Analysis
21 JULY 2010
NEW ZEALAND GAZETTE, No. 87
2347
EASTERN AND CENTRAL COMMUNITY TRUST INC
Sensitivity Analysis for Variable Rate Instruments:
A change of 100 basis points (1%) in interest rates at the reporting date would have increased (decreased) profit or loss by the amounts shown below. The analysis is performed on the same basis for 2009.
| Variable Rate Instruments | Cash Flow Sensitivity 31 March 2010 $ | Cash Flow Sensitivity 31 March 2009 $ |
|---|---|---|
| 100 basis points increase | 135,598 | 129,621 |
| 100 basis points decrease | (135,598) | (129,621) |
c) Pricing Risk
Pricing risk is the risk that the value of the instrument will fluctuate as a result of changes in market price (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. As the majority of the funds' financial instruments are carried at fair value with fair value changes recognised in the statement of comprehensive income, all changes in market conditions will directly affect investment income.
Price risk is managed by the Trust by constructing a diversified portfolio of instruments traded on various markets. The SIPO sets down the guidelines for this diversification.
The Trust's financial assets are priced at fair value. The effect on the Trust's statement of comprehensive income and balance sheet as at 31st March 2010, due to a possible change in market factors is represented in the following table:
| Financial Asset | Sensitivity Range (-1 to +1 Standard Deviations) | Sensitivity Impact $,000 |
|---|---|---|
| NZ/Australian Equities | -10.6% to 27.6% | -2,820 to 7,325 |
| NZ Bonds | 2.7% to 12.8% | 1,353 to 6,445 |
| NZ Cash | 4.4% to 7.1% | 333 to 536 |
| Overseas Equities | -9.0% to 27.0% | -4,076 to 12,237 |
| Overseas Bonds | 3.1% to 12.9% | 335 to 1,382 |
| Property | -7.9% to 23.9% | -113 to 340 |
| Total Portfolio | -3.5% to 19.9% | -1,081 to 7,112 |
There is a 68% probability that the return in any one year will be within the range -3.5% to 19.9%.
The effect on the Trust's statement of comprehensive income and balance sheet as at 31st March 2009, due to a possible change in market factors is represented in the following table:
| Financial Asset | Sensitivity Range (-1 to +1 Standard Deviations) | Sensitivity Impact $,000 |
|---|---|---|
| NZ/Australian Equities | -10.6% to 27.6% | -1,704 to 4,432 |
| NZ Bonds | 2.7% to 12.8% | 1,573 to 7,424 |
| NZ Cash | 4.4% to 7.1% | 255 to 413 |
| Overseas Equities | -8.1% to 26.1% | -3,042 to 9,819 |
| Property | -6.4% to 22.4% | -80 to 280 |
| Total Portfolio | -2.5% to 18.8% | -306 to 7,081 |
There is a 68% probability that the return in any one year will be within the range -2.5% to 18.8%.
These sensitivity analyses are based on the volatility of each asset class and the investment portfolio as a whole, as measured by plus or minus one standard deviation.
The overall effect of the Trust's diversified portfolio of uncorrelated financial assets is to reduce volatility and stabilise investment returns over time.
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NZ Gazette 2010, No 87
✨ LLM interpretation of page content
💰
Notes to the Financial Statements of Eastern and Central Community Trust Incorporated
(continued from previous page)
💰 Finance & Revenue21 July 2010
Financial statements, Community Trusts Act 1999, Eastern and Central Community Trust, NZ GAAP, NZ IFRS, Operating leases, Contingencies, Related party transactions, Financial instruments, Market risk, Currency risk, Investment strategy