NEW ZEALAND GAZETTE

No. 118

Notes to the Consolidated Financial Statements for the Year Ended 31 March 2003

1. Statement of Accounting Policies

Reporting Entity

The Community Trust of Mid & South Canterbury Inc. is a charitable trust incorporated under the Trustee Banks Restructuring Act 1988. The financial statements have been prepared in accordance with the Financial Reporting Act 1993 and generally accepted accounting policies.

General Accounting Policies

The general accounting policies adopted in the preparation of these financial statements are:

• The measurement base adopted is that of historical cost, except for the revaluation of investments. Reliance is placed on the fact that the trust is a going concern.
• The matching of revenues earned and expenses incurred using accrual accounting.

Particular Accounting Policies

The following are the particular accounting policies which have a material effect on the measurement of results and financial position:

(a) Dividend Income

Dividend income is included in the consolidated statement of financial performance when it is received.

(b) Donations

Donations, special projects, and community loans are accounted for when they are approved for payment.

(c) Investments

Investments held as managed funds are shown at market value. Net income including unrealised gains or losses from holding such investments are recorded in the consolidated statement of financial performance.

(d) Trust Capital

Trust capital is made up of:

(i) Capital fund – which records initial capital fund (being the realised value of trust bank shares).

(ii) Inflation reserve – it is intended to increase the inflation reserve each year by applying the consumer price index to the sum of the initial capital fund and opening inflation reserve. The amount is to be allocated from trust profit on an annual basis.

(iii) Uncommitted surplus represents the balance of any profit remaining.

(e) Basis of Consolidation

The Community Trust of Mid & South Canterbury Inc. and its subsidiary the Trust Bank South Canterbury Community Trust Charities Limited have been consolidated using the purchase method of consolidation.

Changes in Accounting Policies

(a) While the trust has not changed its policy with respect to the capital and reserves of the trust, unfortunately the current financial result has depleted the capital and reserves:

(i) Capital fund – The initial capital fund (being the realised value of trust bank shares) was $32,087,148. The fund has been depleted with the current year's financial result to $31,136,967. It is the intention of the trustees to restore the initial capital fund to $32,087,148.

(ii) Inflation reserve – The inflation reserve has been extinguished with the current year's financial result. It is intended to increase the inflation reserve each year by applying the consumer price index to the sum of the initial capital fund and opening inflation reserve. The nominal inflation reserve required under this policy at 31 March 2003 is $4,328,167 and it is the trustees' intention to restore the inflation reserve accordingly.

(b) The trustees have not distinguished between realised and unrealised losses or between fund managers as was the case in previous years. Rather, the trustees have considered that it is more informative to analyse the gain/loss which results from the following four categories:

• Offshore debt
• Offshore equity
• New Zealand debt
• New Zealand equity

(c) The trustees have not identified accrued interest on managed funds as a separate line item this year but rather it is included in the managed fund investment balance. The trustees consider that this more accurately reflects the total balance invested in managed funds.

(d) There have been no other changes in accounting policy.

2. Managed Funds