11 AUGUST

THE NEW ZEALAND GAZETTE

2629

FUNDS STATEMENT FOR YEAR ENDED 31 MARCH 1983

Source of funds—
From operations—
Tax paid profits
Add back items not
requiring funds—
Depreciation
Taxation
Other
Total funds from
operations
From other sources—
Depositors’ balances
increase
Repayment of investment principal on—
Mortgages and personal
loans
Local authority stock
Government stock
Sale proceeds of fixed
assets net of purchases
Term loan net increase
Decrease in cash
resources

Use of funds—
Investments—
Government stock
Local authority stock
Mortgages and personal
loans
Repayment of mortgage
principal
Payment of taxation
Fixed asset purchases net
of disposal proceeds
Increase in cash resources

$18,278,941 $30,154,424

NOTES TO THE ACCOUNTS

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 affect 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 years 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
Furniture and fittings
Computer equipment

3 percent to 5 percent
10 percent to 20 percent
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 earned and premiums paid on Government stock and depreciation.

2. Investments:

Government stocks are recorded at cost adjusted by the discount or premium amortised to date. Stocks are generally held until maturity date and 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
Nominal value
Market value
Local Authority Stock—
Cost and nominal value
Market value

3. Fixed assets:

1983
Cost $
Accumulated
Depreciation $
Book
Value $

1982
Cost $
Accumulated
Depreciation $
Book
Value $

Land
Buildings
Improvements to
leasehold premises
Furniture, fittings and
equipment

78,771
85,851
164,622
289,314

–
16,285
16,285
144,412

78,771
69,566
148,337
144,902

78,771
85,851
164,622
180,898

–
13,028
13,028
112,951

78,771
72,823
151,594
67,947

$1,141,043 $590,823 $550,220
$943,741 $470,421 $473,320

The current Government valuation of land and buildings is $165,000.

4. Current taxation payable:

1983 $
1982 $

Taxation on profit
Taxation on extraordinary item
(note 7)

539,389
–

566,549
8,719

539,389
575,268

Less:
Timing differences transferred to
deferred taxation
Provisional tax paid

57,376
482,013

222,545
352,723

$16,440
$352,723

5. Deferred taxation payable:

1983 $
1982 $

Deferred taxation last year
Add:
Timing differences transferred (note 4)
Deferred taxation this year

708,918
57,376
$766,294

486,373
222,545
$708,918

6. Term investment accounts:
   Repayable within—
   1 year
   1–2 years
   2–3 years
   3–5 years

1983 $
1982 $

51,439,558
3,043,000
5,211,300
47,000

39,349,839
3,999,847
1,451,613
–

$59,740,858 $44,801,299

Rates of interest payable range from 8.5 percent to 15.5 percent per annum.

7. Extraordinary item:
   Realised reserves upon sale
   of Willis Street property—

1983 $
1982 $

Capital
Revenue
Less: Taxation payable

–
59,774
8,719

127,511
–
51,055

Nil
$178,566

8. Financing commitments:

1983 $
1982 $

Mortgages approved but not uplifted
Capital commitments in respect of—
Data processing
Premises

1,705,100
1,043,200
689,000

858,700
665,500
–

AUDITORS’ REPORT

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 1983, and the results of its business and the changes in financial position for the year ended on that date.

HUTCHISON HULL & CO., Chartered Accountants.
28 April 1983, Wellington, New Zealand.