2011-2012 Annual Report - Full Version - PDF - Palmerston North ...

2012 2011$000 $000 $000 $000 $000 $000 $000 $000-100bp +100bp -100bp +100bpGROUP Profit Equity Profit Equity Profit Equity Profit EquityINTEREST RATE RISKFinancial assetsCash and cash equivalents (1) - 1 - (2) - 2 -Investment fund NZsecurities and bonds 479 - (462) - 387 - (376) -Derivatives - held for trading 643 - (613) - 998 - (869) -Financial liabilitiesSecured loans 419 - (419) - 412 - (412) -Derivatives - held for trading (4,631) - 4,335 - (4,380) - 3,682 -Total sensitivity tointerest rate risk (3,091) - 2,842 - (2,585) - 2,027 --10% +10% -10% +10%Profit Equity Profit Equity Profit Equity Profit EquityFOREIGN EXCHANGE RISKFinancial assetsOther financial assets- quoted share investments 644 - (528) - 711 - (583) -Total sensitivity toforeign exchange risk 644 - (528) - 711 - (583) -EQUITY PRICE RISKFinancial assetsOther financial assets- quoted share investments (580) - 580 - (641) - 641 -Unlisted shares (49) - 49 - (27) - 27 -Total sensitivity toequity price risk (629) - 629 - (668) - 668 -Explanation of interest rate risk sensitivityThe interest rate sensitivity is based on a reasonablepossible movement in interest rates, with all othervariables held constant, measured as a basis points(bps) movement. For example, a decrease of 100bpsis equivalent to a decrease in interest rates of 1.0%.The sensitivity for derivatives (interest rate swaps)has been calculated using a derivative valuationmodel based on a parallel shift in interest rates of-100bps/+100bps.Explanation of foreign exchange risksensitivityThe foreign exchange sensitivity is based on areasonable possible movement in foreign exchangerates, with all other variables held constant,measured as a percentage movement in the foreignexchange rate.Explanation of other price risk sensitivityThe sensitivity for listed shares has been calculatedbased on a -10%/+10% movement in the quoted bidshare price at year end for the listed shares.Financial Statements Note 34Palmerston North City Council Annual Report 2011/12187