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NEW ZEALAND GAZETTE, No. 175

13 OCTOBER 2005

D. Trust Capital

Following the sale of the group’s shares in Trust Bank New Zealand Limited in April 1996 for $158,460,000, the trustees agreed that the value of the trust at that time should be maintained for the benefit of current and future generations living in the region. For this purpose, the trustees agreed that $158,460,000 would be considered as the “trust capital” value of the group and that this value would be maintained. Trustees further agreed that over the long term, the net assets of the group would not be allowed to reduce to a level below the inflation-adjusted real value of this trust capital.

E. Capital Maintenance Reserve

The capital maintenance reserve represents the additional amount necessary to preserve the real value of the trust capital allowing for inflation as measured by the Consumers Price Index (all groups) and payments of grants out of capital.

F. Grants Maintenance Reserve

While the trustees have adopted a long-term investment strategy, they accept that annual returns from investments are likely to fluctuate from year to year. In recognition of this, a grants maintenance reserve is maintained. In years when net income from investments is higher than the grant levels, surplus income will be transferred to this reserve. In years when there is insufficient income to sustain the level of grants, an appropriate amount will be transferred from the grants maintenance reserve to income.

G. Basis of Recognising Components of the Financial Statements

The following general accounting policies are adopted:

Assets

A transaction results in an asset being recognised in the statement of financial position when it will probably give rise to ongoing benefits for the group and those benefits can be measured with reliability.

Liabilities

A transaction results in a liability being recognised in the statement of financial position when it will probably give rise to the need for the group to sacrifice assets in the future and those sacrifices can be measured with reliability.

Revenue

Revenue is recognised in the statement of financial performance when a transaction gives rise to an increase in the value of the group’s net assets, and that increase can be measured with reliability.

Expenses

An expense is recognised in the statement of financial performance when a transaction results in a decrease in the value of the group’s net assets, and that decrease can be measured with reliability.

Classification of Assets and Liabilities Between Current and Non-current

An amount is classified as current when it is expected to be settled or extinguished within one year of the date of the financial statements. All other amounts are classified as non-current.

H. Fixed Assets

Fixed assets are initially stated at cost and then depreciated on a straight line basis. Land and buildings are stated at valuation as determined by an independent registered valuer. The basis of valuation of the land and buildings is highest and best use. The estimated useful lives of fixed assets are as follows:

Land Indefinite

Buildings 30-40 years

Furniture and fittings 3-15 years

Office equipment 3-8 years

Motor vehicles 5-8 years

I. Investments

Investments are stated at market value and report realised and unrealised gains or losses on holding these investments in the statement of financial performance. These gains or losses are shown in the statement of financial performance as income from revaluation of investments.

J. Accounts Receivable

Accounts receivable are stated at expected realisable value.

K. Grants

Grants are recognised when they are approved by the trustees. Unpaid grants are recorded as a liability.

L. Goods and Services Tax

The group is not registered for goods and services tax. The financial statements are prepared using G.S.T. inclusive accounting.

M. Income Taxation

The group provides for income tax on its net income after adjusting for tax accounting differences and any beneficiaries’ income determinations made pursuant to section OB1 (226) of the Income Tax Act 1994.

N. Statement of Cash Flows

Operating cash flows includes interest and dividends paid or credited to investment funds under management and any upward or downward revaluation of funds during the period. Cash movements in funds invested are recognised in investing activities.

O. Changes in Accounting Policies

Uniform accounting policies have been applied throughout the trust and group and on a consistent basis with those of the previous period.