✨ Financial Statements
Financial Statements
Notes to the financial statements (In New Zealand Dollars ($000’s)
18 Financial instruments (continued)
Interest rate risk at 31 March 2010 occurs in the following investments:
| Carrying amount $\'000 | Percentage covered by interest rate swaps | |
|---|---|---|
| New Zealand Cash | 96,475 | - |
| New Zealand Fixed Interest | 144,563 | - |
| Global Bonds | 39,311 | - |
| Emerging Market Debt | 24,175 | - |
| Alternative Assets | 3,872 | - |
| Total | 308,396 | - |
At 31 March 2011 the Group had no interest-rate swaps (2010: none).
Capital management
The Group’s capital includes Core Real Capital Base Reserve, Accumulated Income Reserve and Capital Base Reserve.
The Group’s policy is to maintain a strong capital base so as to maintain investor confidence and to sustain future development of the Canterbury Community Trust.
The Group is not subject to any externally imposed capital requirements.
The Group’s policies in respect of capital management and allocation are reviewed regularly by the Board of Trustees.
There have been no material changes in the Group’s management of capital during the period.
Sensitivity analysis
In managing interest rate and currency risks, the Group aims to reduce the impact of short-term fluctuations on the Group’s earnings. Over the longer-term, however, permanent changes in foreign exchange and interest rates will have an impact on profit.
At 31 March 2011, it is estimated that a general increase/(decrease) of one percentage point in interest rates would increase/decrease the Group’s profit and accumulated income by approximately $11,248,000 (2010: $11,420,000).
This calculation has been performed by determining which of the Group’s financial assets are impacted by market interest rates, as opposed to those with fixed interest rates or variable interest rates where the interest rate risk is managed by way of interest rate swap derivatives. The fair value of the investments are then recalculated under a scenario where interest rates are one percentage point higher.
It is estimated that a general increase/(decrease) of 15 percentage points in the value of the New Zealand dollar against other foreign currencies would have decreased/(increased) the Group’s profit and accumulated income by approximately $19,891,000 for the year ended 31 March 2011. For the year ending 31 March 2010 a 15 percentage point increase/(decrease) in the value of the New Zealand dollar would have decreased/(increased) the Group’s profit before tax by $16,398,000. The forward exchange contracts have been included in this calculation.
This calculation is performed by firstly determining which financial assets are denominated in an overseas currency and where the exchange rate risk is not managed by way of foreign exchange contracts. A calculation is then performed to simulate the impact of a change in the value of the New Zealand dollar.
Estimation of fair value
The methods used in determining the fair values of financial instruments are discussed in note 4.
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NZ Gazette 2011, No 116
✨ LLM interpretation of page content
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Canterbury Community Trust Financial Statements
(continued from previous page)
💰 Finance & RevenueFinancial Instruments, Interest Rate Risk, Capital Management, Sensitivity Analysis, Fair Value Estimation