✨ Financial Statements
THE COMMUNITY TRUST OF MID & SOUTH CANTERBURY INC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 MARCH 2011 (Continued)
11. Reserves
(i) Capital Fund
The initial Capital Fund (being the realised value of Trust Bank shares) was $32,087,148.
(ii) Inflation Reserve
It is intended to increase the inflation reserve each year by applying the Consumer Price Index to the sum of the initial Capital Fund and opening Inflation Reserve. The nominal Inflation Reserve required under this policy at 31 March 2011 is $45,737,569.
(iii) General Reserve
The Trustees intend to compile a minimum General Reserve equivalent to 5% of the Initial Capital Fund and Inflation Reserve. The General Reserve is intended to enable the Trustees to continue with distributions should the Trust incur a deficit in a particular income year.
12. Financial Instruments
Fair Values
Investments are stated at estimated market value at balance date. Interest accrued, Sundry Debtors, Sundry Creditors, Term Loans and donations approved, not yet paid, are stated at the amounts expected to be received or paid.
Accordingly, the Trustees consider that the fair value of each class of financial assets and financial liabilities is the same as the carrying value in the Statement of Financial Position.
Credit Risk
58% of the assets of the Trust are represented by debt investments and Current Account balances with Westpac Bank and through Managed Funds. The Trustees consider the risk of non-recovery of these investments at balance date to be within satisfactory guidelines.
The maximum exposure to credit risk of other financial instruments are:
| 2011 | 2010 | |
|---|---|---|
| $ | $ | |
| Debtors | 61,731 | 52,786 |
| GST Refund Due | 6,443 | 3,799 |
| Managed Fund Equities | 18,001,316 | 17,587,504 |
| Total | 18,069,490 | 17,644,189 |
Currency Risk
The Trust is party, through its Managed Funds, to financial instruments with off Balance Sheet risk to reduce exposure to fluctuations in foreign currency exchange rates. Forward exchange contracts are entered into to hedge foreign currency transactions.
The Trust is also party through its Managed Funds, to financial instruments with off Balance Sheet risk to reduce exposure to fluctuations in foreign currency interest rates. Future contracts are entered into to hedge foreign currency fixed interest transactions.
Interest Rate Risk
The following investments of the Trust are sensitive to changes in interest rate: Bank Call Accounts and Term Deposits, and various Managed Fund investments.
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NZ Gazette 2011, No 132
✨ LLM interpretation of page content
💰
Notes to the Financial Statements of The Community Trust of Mid & South Canterbury Inc
(continued from previous page)
💰 Finance & Revenue3 August 2011
Financial Statements, Accounting Policies, Community Trusts, Mid & South Canterbury