✨ Financial Statements Notes
ASB COMMUNITY TRUST
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2014
The effect on the Group’s Statement of Comprehensive Income and Statement of Financial Position as at 31 March 2013, due to a possible change in market risk (including interest rate risk, currency risk and pricing risk) is represented in the following table:
| | Sensitivity Range
| (-1 to +1 standard | (from the expected annual return)
| deviation from the |
| expected annual return) | Sensitivity Impact
| | $\000
|--------------------------|-----------------------------
| Growth Assets | 5.6% to +26.4% | -27,222 to +128,334
| Diversified Assets | 0.9% to +17.3% | -1,861 to +35,770
| Inflation Proofing Assets| -3.8% to +20.4% | -3,970 to +21,314
| Deflation Proofing Assets| -0.4% to +10.8% | +1,210 to +32,664
| Total Portfolio | -1.0% to +18.0% | -10,998 to +197,964
There is a 68% probability that the return in any one year will be within the range of -1.0% to +18.0%.
These sensitivity analyses are based on the volatility of each asset class and the portfolio as a whole, as measured by plus or minus one standard deviation. The overall effect of the Group’s diversified portfolio of uncorrelated financial assets is to reduce volatility and stabilise investment returns over time.
Forward Exchange Contracts
Hedging of the Trust’s pooled accounts and one segregated account is undertaken by J P Morgan Chase Bank NA. In addition another segregated account also holds forward exchange contracts with Westpac NZ Limited and Commonwealth Bank of Australia Limited. In addition the Trust has forward exchange contracts in place with ASB Bank Limited. At 31 March 2014 J P Morgan Chase Bank NA. had a long term S&P credit rating of A+ (2013: A+), Westpac NZ Limited, Commonwealth Bank of Australia Limited and ASB Bank Limited had long term S&P credit ratings of AA- (2013: AA-).
Refer to Currency Risk note for hedged and unhedged currency exposure.
Interest Rate Swaps
Interest Rate Swaps are held in a segregated account. Interest rate swaps are used to manage interest rate risk. These swaps do not qualify for hedge accounting and are accounted for as trading instruments. The exposure to movement in the fair value of the Group’s interest rate swaps in the segregated accounts is discussed in the note on Pricing Risk.
Interest Rate Swap Contractual Maturities
At 31 March 2014 the Trust’s Interest Rate Swaps were in an asset position with a carrying value of $706,000.
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NZ Gazette 2014, No 105
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ASB Community Trust Financial Statements
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