✨ Financial Statements Notes
THE COMMUNITY TRUST OF SOUTHLAND
NOTES TO & FORMING PART OF THE FINANCIAL STATEMENTS
For the Year Ended 31 March, 2011
23. FINANCIAL INSTRUMENTS (Cont.)
Capital Maintenance Reserve
The Capital Maintenance Reserve represents the additional amount necessary to preserve the real value of the Trust Capital allowing for inflation as measured by the Consumers Price Index (all groups), and payments of grants out of capital.
Grants Maintenance Reserve
While the Trustees have adopted a long-term investment strategy, they accept that annual returns from investments are likely to fluctuate from year to year. In recognition of this a Grants Maintenance Reserve is maintained. In years when net income from investments is higher than the grant levels, surplus income will be transferred to this reserve. In years when there is insufficient income to sustain the level of grants, an appropriate amount will be transferred from the Grants Maintenance Reserve to income.
The following table details the Group’s sensitivity to certain risks as follows:
- Interest rate risk +/- movement in interest rates of 100 basis points
- Foreign exchange +/- movement in foreign exchange rates of 10%
- Equity price risk +/- in equity prices of 10%
| Interest Rate Risk | Foreign Exchange Risk | Equity Price Risk | ||||
|---|---|---|---|---|---|---|
| -1% | +1% | -10% | +10% | -10% | +10% | |
| 31 March 2011 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
| Net Surplus/(Deficit) | $(3,906) | $3,906 | $5,627 | $(4,604) | $(7,813) | $7,813 |
| Total Funds Employed | $3,906 | $(3,906) | $5,627 | $(4,604) | $(7,813) | $7,813 |
| Interest Rate Risk | Foreign Exchange Risk | Equity Price Risk | ||||
|---|---|---|---|---|---|---|
| -1% | +1% | -10% | +10% | -10% | +10% | |
| 31 March 2010 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 |
| Net Surplus/(Deficit) | $4,360 | $(4,360) | $4,756 | $(4,290) | $(7,301) | $7,301 |
| Total Funds Employed | $4,360 | $(4,360) | $4,756 | $(4,290) | $(7,301) | $7,301 |
The above sensitivity analysis has been prepared based on the following assumptions:
- The assets and liabilities as at year end remain the same throughout the ensuing year.
- Each of the sensitivities is performed in isolation.
- For the purposes of assessing foreign exchange risk, it has been assumed that the offshore equity investments held by the Trust are domiciled in the following currencies:
- US$ 50%
- Euros 30%
- Yen 20%
The Trust’s offshore fixed interest investments are fully hedged, and therefore no foreign exchange risk exists in respect of those investments.
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NZ Gazette 2011, No 146
✨ LLM interpretation of page content
💰
Financial Statements of the Community Trust of Southland
(continued from previous page)
💰 Finance & Revenue24 August 2011
Financial Statements, Community Trust, Southland, Capital Maintenance Reserve, Grants Maintenance Reserve, Interest Rate Risk, Foreign Exchange Risk, Equity Price Risk