4 JULY
THE NEW ZEALAND GAZETTE
2947

Current Liabilities:
Interest accrued to depositors 15,880 13,295
Provision for current taxation 691 691
Provision for donations 650 650
Sundry creditors 1,512 1,088
18,042 15,724

Term Liabilities:
Provision for deferred taxation 5,888 3,687
Housing Corporation of New Zealand 5,295 4,088
11,183 7,775
Reserve Fund 62,592 53,946
$1,241,190 $1,106,689

Current Assets:
Cash Resources 112,066 101,170
Interest due and accrued on investments 20,273 11,100
Sundry debtors 1,459 858
Taxation refund due 397 397
134,195 113,128

Investments:
New Zealand Government securities 450,274 405,620
Local authorities securities 4,263 6,669
Mortgages 539,695 482,862
Term loans 50,092 40,354
Personal loans 13,853 18,177
Overdrafts 5,006 2,377
Trusteebank Visa 9,682 6,336
Interest in partnerships 7,355 8,716
1,080,220 969,111
Fixed assets: 26,775 24,450
$1,241,190 $1,106,689

To be read in conjunction with the notes to the financial statements.

PROFIT AND LOSS ACCOUNT FOR YEAR ENDED 31 MARCH 1985

Income: 1985 1984
$000 $000
Interest:
New Zealand Government securities 45,987 39,183
Local authorities securities 631 904
Mortgages 68,005 59,762
Other investments 27,838 18,449
142,461 118,298
Rent, commissions, etc. 6,428 5,204
Profit on Sale—Local authorities securities 59 16
Total Income 148,948 123,518

Less Expenditure:
Interest credited and accrued to depositors 94,062 76,437
Charges and administration expenses etc. 34,960 30,905
Loss on sale—New Zealand Government securities 876 1,368
Trustees fees and allowances 46 46
Depreciation 2,675 2,306
132,619 111,062
Net profit before taxation 16,329 12,456
Less: Provision for taxation 7,033 5,103
Net profit for year 9,296 7,353
Balance of reserve fund 31 March 1984 53,946 47,243
63,242 54,596
Less: Provision for donations 650 650
Balance of reserve fund 31 March 1985 $62,592 $53,946

To be read in conjunction with the notes to the financial statements.

L. J. CHRYSTALL, President.
L. E. EDMONDS, General Manager.

Auckland, 10 May 1985.

STATEMENT OF CHANGES IN FINANCIAL POSITION FOR THE YEAR ENDED 31 MARCH 1985

Funds were received from: $000 $000
Operations:
Net profit after tax 9,296
Less: Net provision for donations 650
8,646

Adjustments for items not involving movement of funds:
Deferred taxation 2,201
Depreciation 2,675
Loss on sale of assets/investments 839
Total funds from operations 14,361

Other sources:
Repayment of investments 290,978
Increase in depositors’ balances 120,129
Increase in Housing Corporation of New Zealand 1,207
$426,675

These funds were applied to:
Net capital expenditure:
Land and buildings 148
Other fixed assets 4,873
5,021
New investments 402,905
Net increase in working capital 18,749
$426,675

NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 1985

1. General Accounting Policies
   (a) The measurement base adopted is that of historical cost. Reliance is placed on the fact that the Bank is a going concern.
   (b) Accrual accounting is used to match expenses and revenues.

2. Particular Accounting Policies
   Particular accounting policies used which significantly affect the measurement of the Bank’s profit and its financial position, are set out below:

(a) Recognition of Income
Interest on investments is recognised as income for the period in which it is earned, rather than the period in which it is received. Interest charged on personal loans is apportioned over the term of the loan, using the “Rule of 78” method.

(b) Depreciation
Fixed assets are being depreciated on a straight line basis at rates which will write off the cost over their estimated useful lives to estimated residual values. The principal write off periods are:
Buildings 40–100 years
Computer and Office 5–10 years
Calculating Equipment 10–15 years
Furniture and Fittings 3–15 years

(c) Taxation
Taxation charged against net profit is the estimated expense relating to the result of the year. It includes an amount for taxation, the payment of which is deferred to future periods, because taxation practice differs from accounting policies in the treatment of:
(i) Interest accrued on investments
(ii) Depreciation charges
(iii) Interest included in the purchase price of New Zealand Government securities.

(d) Current Assets and Investments
All current assets and investments are shown at cost. The cost is calculated after adjusting for interest accrued in the purchase price. Government and Local Authorities Securities are regarded as long term investments and are redeemable at maturity at their face value.

The realisable value of fixed interest securities fluctuates with movement in market yields and it is customary for such fluctuations to be disregarded in the recording of the results of the long term institutional investor.

3. Changes in Accounting Policies
   There have been no material changes in accounting policies.

4. Government and Local Authorities Securities
   Government Local
   $000 Authorities
   $000
   Face value at 31 March 1985 457,244 5,049
   Less unamortised discounts 6,970 786
   Book value $450,274 $4,263

Original cost $450,274,000. Estimated market value of Government Securities as at 31 March 1985 was $370,587,000.

The Government Guarantee of Depositors’ Funds including accrued interest in terms of section 44 of The Trustee Banks Act 1983 and subsequent amendments was in force at balance date and continues to remain in force. However the requirement to hold New Zealand Government Securities was removed on 11th February 1985.

The loss on New Zealand Government Securities recorded this year resulted from the sale of low yielding securities, the proceeds from which were re-invested in higher yielding securities.