✨ Financial Risk Analysis
4 JULY 2011
NEW ZEALAND GAZETTE, No. 91
2581
EASTERN AND CENTRAL COMMUNITY TRUST INC
The Australian Listed Property Index Trust and the Off Shore Bond Securities Index Fund are reported in AUD. The remaining offshore equity investments are:
- Managed by State Street Global Advisors (Boston, USA).
- Invested in 24 individual country common trust funds.
- Reported in the fund’s base currency of USD.
Exposure to currency risk:
| Asset | Australian Dollar at 31 March 2011 $ | US Dollar at 31 March 2011 $ | Australian Dollar at 31 March 2010 $ | US Dollar at 31 March 2010 $ |
|---|---|---|---|---|
| Equities & Bonds | 13,724,811 | 65,324,066 | 11,585,597 | 62,456,008 |
The following NZD exchange rates applied during the year:
| Currency | Average monthly Mid-Rate for 2010 - 2011 | Average monthly Mid-Rate for 2009 - 2010 |
|---|---|---|
| Australian Dollar | 0.7772 | 0.7971 |
| US Dollar | 0.7332 | 0.6785 |
Sensitivity Analysis for Currency:
A 10 per cent movement of the NZD against the following currencies at 31 March would have increased (decreased) profit or loss by the amounts shown below. This analysis assumes that all other variables, in particular interest rates, remain constant. This analysis is performed on the same basis for 2010.
Effect in NZD:
| Effect of Movements in NZD | Profit or (Loss) 31 March 2011 $ | Profit or (Loss) 31 March 2010 $ |
|---|---|---|
| 10% fall in NZD/AUD | 1,524,979 | 1,287,289 |
| 10% rise in NZD/AUD | (1,247,710) | (1,053,236) |
| 10% fall in NZD/USD | 7,258,230 | 6,939,556 |
| 10% rise in NZD/USD | (5,938,551) | (5,677,819) |
b) Interest Rate Risk
The Trust's investments in fixed rate securities are subject to interest rate risk. The Trust's SIPO requires a fixed rate security to have a minimum of a BBB- rating or equivalent grade. The maximum exposure to each fixed security is controlled by the credit rating so that the higher the credit rating, the higher the allowable exposure. The fixed rate securities mandate ensures that a percentage of the securities are rated A, or higher. Short term deposits are invested for periods up to 365 days taking into account current interest rates.
The Trust’s cheque and call accounts are interest bearing. Any movement in interest rates on these accounts is minimal and not considered to be material.
At the reporting date the interest rate profile of the Trust’s interest bearing financial instruments was:
| Carrying Amount 2011 $ | Carrying Amount 2010 $ | |
|---|---|---|
| Fixed Rate Instruments | 62,054,451 | 62,453,931 |
| Variable Rate Instruments | 9,758,151 | 6,203,976 |
| Total | 71,812,602 | 68,657,907 |
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NZ Gazette 2011, No 91
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Eastern and Central Community Trust Financial Statements
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