RNLI/Mike

RNLI notes to the accounts (continued)FOR THE YEAR ENDED 31 DECEMBER 2012Designated reserves are set aside at the discretion of theTrustees and comprise:Fixed Assets, which finances the fixed assets of the RNLI, fundedother than by restricted donations.Planned Capital Expenditure, which sets aside funds to assuresuppliers that the RNLI can meet its planned capital expenditure.This is expenditure to which the RNLI is committed over the next3 years in order to maintain the operation of the lifeboat andlifeguard service, principally new lifeboats and lifeboat stations.The total amount set aside excludes projects to be funded byrestricted reserves.All the above reserves are Committed reserves.Free reserves are retained to enable the Trustees to provideassurance to those at sea, the public and the governments of theUK and RoI, that the RNLI will be able to sustain its commitmentto provide the lifeboat and lifeguard service. The reserves areset at a level to withstand any short-term setback, whetheroperational, in the investment markets or in key sources ofincome, such as legacies. If free reserves fall outside the rangeof 6–18 months’ charitable expenditure cover, the Trustees willreview the Strategic Plan and make changes, as they considerappropriate. For the purposes of this calculation, free reserves arecalculated excluding FRS17 pension reserves.Transfers between reserves represent the application ofrestricted and designated funds to capital projects and transfersto maintain the committed value of restricted funds.h) Operating leasesRentals applicable to operating leases are charged to the SoFAover the period in which the cost is incurred.i) InvestmentsInvestments for which there is a quoted market are valued at thebid-price ruling at the Balance Sheet date. Other investments arevalued at their realisable market value.j) StocksStocks are valued at cost or written-down value. Stocks arereviewed on a line-item basis at least annually and provisionis made against cost to reduce carrying value to estimatedrealisable value.k) Exchange rate gains and lossesTransactions in foreign currencies are recorded using the rate ofexchange ruling at the date of the transaction. Monetary assetsare translated at the rate of exchange ruling at the balance sheetdate. Gains and losses on exchange are included in the SoFAunder investment income.Accrued legacy reserves represent the legacy value accrued on anestimated basis once probate has been granted and notificationhas been received, where the amount can be quantified withreasonable accuracy. The amount excludes restricted legacies.FRS17 pension reserves represent the FRS17 accounting deficitfor the defined benefit pension scheme and dependants’pensions as at the year end. The FRS17 basis is a prescribedaccounting basis that requires the discount rate to be the returnon AA-rated (or equivalent) corporate bonds. Each year, theScheme Actuary assesses the financial position of the scheme,allowing for the returns expected to be generated by the assetsplanned to be held by the scheme in the future. These assetswould not typically consist of 100% in corporate bonds. Furtherdetails are shown in note 15.26