✨ Financial Statements Notes
Bay of Plenty Community Trust Incorporated
Notes to the financial statements (continued)
in New Zealand Dollars ($000's)
12 Cash and cash equivalents & short term deposits
| 2013 | 2012 | |
|---|---|---|
| Bank balances | 180 | 199 |
| Call deposits | 95 | 56 |
| Cash and cash equivalents | 275 | 255 |
| Short term deposits | 279 | 456 |
| Short term deposits | 279 | 456 |
13 Grants maintenance reserve
The grants maintenance reserve relates to a capital maintenance reserve established and maintained at the Trustees' discretion.
Inflation & population growth reserve
As an "enduring" (everlasting) Trust, BayTrust has a responsibility to ensure it treats all classes of beneficiaries equitably and this includes future potential beneficiaries. For this reason the Trust maintains its "real" (inflation-adjusted) capital by reserving annually sufficient funds to cover inflation as measured by the Consumers' Price Index. These measurements have traditionally been taken for the 12 months to June of the preceding year and in this case the CPI increase to June 2012 was 1.0%, requiring an addition of $1.4m to the Reserve.
The Trust also has a policy of reserving, when conditions permit, for some population growth in its territory. This policy was discarded in February 2013.
14 Financial instruments
Exposure to credit, interest rate, foreign currency, equity price and liquidity risks arises in the normal course of the Trust's business. The Trust's risk management policies and procedures for financial instruments are formally documented and approved by the Trustees in the Trust's Statement of Investment Policies and Objectives ("SIPO").
Credit risk
The Trust's SIPO stipulates value ranges that may be held in New Zealand equities, overseas equities, overseas fixed interest, New Zealand cash, hedge funds, global property and collateralised commodity futures. Within each of these investment sub-trusts there are maximum limits that can be invested within one investment group and with one investment manager. This diversified investment strategy reduces the credit risk exposure of the Trust.
The Trust makes loans only to entities that are well established and have demonstrated a robust ability to make regular repayments.
The SIPO states minimum credit ratings of investment bonds.
The Trust manages credit concentration risks through:
- a diversified and non-correlated basket of investments across traditional and alternative classes
- through the use of a multi-fund manager approach to investments in its portfolio
- and by ensuring compliance with the individual mandate requirements of each investment
The Trust reviews the portfolio for compliance against each investment mandate on a regular basis.
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NZ Gazette 2013, No 110
✨ LLM interpretation of page content
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Bay of Plenty Community Trust Incorporated Financial Statements
(continued from previous page)
💰 Finance & RevenueFinancial Statements, Community Trusts, Bay of Plenty, Cash Equivalents, Short Term Deposits, Grants Maintenance Reserve, Inflation Reserve, Population Growth Reserve, Financial Instruments, Credit Risk, Investment Policies