28 SEPTEMBER 2006

NEW ZEALAND GAZETTE, No. 112

3327

Notes to the Financial Statements for the Year Ended 31 March 2006

1. Statement of Accounting Policies

The ASB Bank Community Trust (“the trust”) is the reporting entity. The trust was formed on 30 May 1988 through the creation of a trust deed in compliance with the Trustee Banks Restructuring Act 1988. Under the terms of the trust deed, the trust was settled with 60 million $1 fully paid ordinary shares in ASB Bank Limited representing 100% of the issued capital. As at 31 March 1988, the net tangible asset backing of those 60 million shares was $147,655,000. In 1989, 45 million shares were sold to the Commonwealth Bank of Australia for $252,000,000 which was then donated to the ASB Charitable Trust. In October 2000, the remaining 15 million shares were sold to the Commonwealth Bank of Australia for $545,000,000.

On 27 February 2006, the trustees of the ASB Charitable Trust resolved to distribute, on or before 31 March 2006, the capital of that trust (including all accumulations of income and capital to that date less accrued liabilities) in specie to the ASB Bank Community Trust. Subsequent to this distribution, the trustees intend to formally wind up the ASB Charitable Trust.

The measurement basis adopted is that of historical cost adjusted for the revaluation of certain assets. Reliance is placed on the fact that the trust is a going concern. The financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 1993.

Consolidated Financial Statements

Consolidated financial statements have not been prepared as the subsidiary companies have not traded since incorporation.

Statement of Cash Flows

Cash comprises cash at bank and call deposits but does not include cash or deposits held by the fund managers. Therefore, the statement of cash flows does not reflect the cash flows within the fund managers’ portfolios.

Dividends, pooled funds and interest

Dividends are recognised as income on declaration date, and are recorded net of any imputation tax credits. Income from pooled funds is recognised on declaration date. Interest is recognised as income on an accrual basis.

Grants

Grants are accounted for as they are committed to be distributed to eligible organisations as approved by the trustees.

Expenses

Some expenses are shared jointly with the ASB Charitable Trust. Whilst each trust bears its own specific costs, the joint expenses are allocated between each trust on the basis of the number of applications processed by each.

Joint expense allocations were:

Fixed Assets

Fixed assets are valued at cost, less accumulated depreciation.

Depreciation

Depreciation is provided over the useful life of the assets. Buildings are depreciated on a straight line basis. Vehicle, office equipment and furniture are depreciated on a diminishing value basis. The rates used are those recommended by the Inland Revenue Department.

• Land and buildings: 2.5% – 3.0%
• Office equipment and furniture: 9.5% – 48.0%

Foreign Currencies

All amounts denominated in foreign currencies are converted to New Zealand dollars at balance date and all realised and unrealised gains and losses are recognised in income and expenditure for the period.

Investments

Investment in managed funds and other investments are stated at market value. Any gains or losses are recognised in income and expenditure for the period. Investment transactions are recorded by the fund managers on a trade date basis.

Financial Instruments

All assets and liabilities of the trust are financial instruments and are recognised in the statement of financial position. All financial instruments are recorded at market value which equates to fair value.

The trust uses financial instruments to reduce exposure to fluctuations in foreign currency exchange rates. Forward exchange contracts are entered into to hedge foreign currency transactions. These are converted to the New Zealand dollar rate at balance date with all realised and unrealised gains and losses being recognised in the income and expenditure statement.

The quantitative disclosures required by FRS 31 Disclosure of Information about Financial Instruments have been included throughout the financial statements where material.

Reserves

Transfers to the capital maintenance reserve are based on the annual movement in the consumer price index. Transfers to all other reserves from the unallocated surplus are made at the discretion of the trustees.

Taxation

The Income Tax Act 1994 provides exemption from income tax for Community Trusts established under the Trustee Banks Restructuring Act 1988. The amendment applied from the 2005 income year, and consequently no taxation has been provided for in these financial statements.

Changes in Accounting Policies

There have been no material changes in accounting policies during the period.