30 JULY
THE NEW ZEALAND GAZETTE
2155

Current assets—
Cash on hand and at bank .. .. 696,528 819,022
Deposits .. .. 6,942,845 4,550,000
Sundry debtors .. .. 260,317 166,315
Trusteebank visa advances .. .. 301,904
Accrued income .. .. 1,052,235 752,580
9,253,829 6,287,917

Investments—
New Zealand Government stock (note 2) .. .. 25,474,542 21,451,813
Local authority stock (note 2) .. .. 977,058 780,091
Mortgages .. .. 35,125,216 28,533,080
Personal loans .. .. 690,559 730,725
62,267,375 51,495,710

Fixed assets—
Cost less depreciation (note 3) .. .. 634,312 658,965
$72,155,516 $58,442,592

AUDITORS’ REPORT TO THE TRUSTEES OF WELLINGTON SAVINGS BANK

We have obtained all the information and explanations that we have required. In our opinion proper accounting records have been kept by the bank so far as appears from our examination of those records.

In our opinion, the accompanying balance sheet, profit statement and funds statement give, using the historical cost method, a true and fair view of the financial position of the Bank at 31 March 1981, and the results of its business and the changes in financial position for the year ended on that date.

HUTCHISON HULL & CO., Chartered Accountants.
Wellington, 4 May 1981.

PROFIT STATEMENT FOR YEAR ENDED 31 MARCH 1981

Income—
Interest on Government stock .. .. 2,454,941 2,122,305
Interest on local authority stock .. .. 107,671 78,398
Interest on mortgage and personal loan lending .. .. 4,020,395 3,200,034
Interest on other investments .. .. 976,932 361,357
Other income .. .. 126,060 139,579
Total income .. .. 7,685,999 5,901,673

Less: Expenses—
Interest to depositors .. .. 4,224,021 3,181,532
Audit .. .. 18,500 16,750
Equipment leasing .. .. 146,183 125,628
Mortgage interest .. .. 15,906 16,599
Trustees’ honoraria .. .. 11,490 8,915
Administration .. .. 2,645,242 2,199,564
Depreciation .. .. 97,926 89,001
7,159,268 5,637,989

Profit before taxation .. .. 526,731 263,684
Less: Taxation on profit .. .. 237,029 118,769
Tax paid profit for year .. .. 289,702 144,915
Retained profit brought forward .. .. 410,494 266,079
Add: Provision for donations reversed .. .. .. 500
700,196 411,494
Less: Provision for deferred taxation .. .. .. 1,000
Retained profit .. .. $700,196 $410,494

FUNDS STATEMENT FOR YEAR ENDED 31 MARCH 1981

Source of funds—
From operations—
Tax paid profits .. .. 289,702
Add back items not requiring funds—
Depreciation .. .. 97,926
Taxation .. .. 237,029
Other .. .. 4,324
Total funds from operations .. .. 628,981

From other sources—
Depositors’ balances increase .. .. 12,606,012
Repayment of investment principal on—
Mortgages and personal loans .. .. 5,470,898
Local authority stock .. .. 3,033
Term loan net increase .. .. 165,447
$18,874,371

Use of funds—
Investments—
Government stock .. .. 4,000,519
Local authority stock .. .. 200,000
Mortgage and personal loans .. .. 12,000,369
16,200,888
Repayment of mortgage principal .. .. 16,000
Fixed asset purchases net of disposal proceeds .. .. 81,305
Increase in cash resources .. .. 2,576,178
$18,874,371

NOTES TO THE ACCOUNTS

Note 1. Statement of accounting policies—The general accounting principles recommended by the New Zealand Society of Accountants for the measurement and reporting of profit and financial position on an historical cost method have been adopted in the preparation of these financial statements.

The following particular accounting policies which materially effect the measurement of profit and the financial position have been consistently applied.

(a) Government Stock—Discounts and premiums on certain Government stocks are amortised from the date of purchase so that stocks will attain their redemption values by maturity date. The current year’s discount and premium amortisation is reflected in the profit statement.

(b) Personal Loans—The Bank’s policy is to add interest to the advance at the commencement of the loan. The ‘rule of 78’ method of accounting for income is used to apportion the income between accounting periods. The effect of this method is that income earned over the term of the loan represents a level rate of return on the declining loan balance outstanding. The personal loan investment is net of unearned interest.

(c) Depreciation—Fixed assets are depreciated on the straight-line method at rates which will write off the cost over their estimated useful lives. The principal rates are:
Buildings .. .. .. 3 percent to 5 percent
Furniture and fittings .. .. 10 percent to 20 percent
Computer equipment .. .. 20 percent to 25 percent

(d) Taxation—The charge for income tax is the amount of the tax liability in respect of the accounting profit for the year and includes both current and deferred tax.

The liability for deferred taxation arises from items of income and expenditure being included in taxation calculations in periods different from those in which they are dealt with in the financial accounts. The significant timing differences relate to accrued interest income, discounts and premiums paid on Government stock and depreciation.

Note 2. Investments—Government stocks are recorded at cost adjusted by the discount or premium amortised to date. Stocks are generally held until maturity date, therefore differences in the following bases of valuation have little financial effect on the bank. Statutory ratio requirements are based on the nominal value of stocks. Local authority stocks are recorded at cost.

New Zealand Government stock—
Cost price plus amortisation .. .. 25,474,542 21,451,813
Nominal value .. .. 25,619,890 21,619,890
Market value .. .. 22,388,467 17,639,400