NEW ZEALAND GAZETTE, No. 127

14 AUGUST 2008

transactions costs are recognised in profit or loss when incurred. Subsequent to initial recognition, financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.

Trade and other receivables

Trade and other receivables are stated at their cost less impairment losses.

Trade and other payables

Trade and other payables are stated at cost.

(ii) Derivative financial instruments

The trust uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from investment activities. In accordance with its policy, the trust does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.

Derivative financial instruments are recognised initially at fair value and transaction costs are expensed immediately. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss.

(c) Property, Plant and Equipment

(i) Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.

Cost includes expenditures that are directly attributable to the acquisition of the asset. When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.

(ii) Subsequent costs

The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the trust and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.

(iii) Depreciation

Depreciation is recognised in profit or loss on a diminishing value basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated.

The depreciation rates for the current and comparative periods are from 11.4% to 60%

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

(d) Impairment

The carrying amounts of the trust’s assets are reviewed at each balance date to determine whether there is any indication of impairment.

An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses directly reduce the carrying amount of assets and are recognised in the income statement.

(i) Impairment of debt instruments and receivables

The recoverable amount of the trust’s receivables carried at amortised cost is calculated as the present value of estimated future cashflows, discounted the original effective interest rate (ie. the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted.

(ii) Non-financial assets

The carrying amounts of the trust’s non-financial assets are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.

(e) Employee Benefits

There are no employee benefits at 31 March 2008.

(f) Revenue

Investment income

Dividend income is recognised on the date that the trust’s right to receive payment is established. Interest income is recognised as it accrues.

(g) Grants Payable

Grants payable are recognised as a distribution from equity when the payment of the grant has been approved by the trustees and the recipient of the grant does not have any further obligations to meet in order to receive the grant.

(h) New Standards and Interpretations Not Yet Adopted

A number of new interpretations are not yet effective for the year ended 31 March 2008, and have not been applied in preparing these financial statements:

• NZ IFRS 8 Operating Segments. NZ IFRS 8, which becomes mandatory for the trust’s 2010 financial statements, is not expected to have any impact on the financial statements.
• NZ IFRS 1 Presentation of Financial Statements (revised). NZ IFRS 1 will become mandatory for the trust’s 2010 financial statements. The trust has not yet determined the potential effect of the interpretation.
• NZ IFRS 4 I. Insurance Contracts – Amendments. NZ IFRS 4, which becomes mandatory for the trust’s 2010 financial statements, is not expected to have any impact on the financial statements.
• NZ IAS 23 Borrowing Costs. NZ IAS 23 will become mandatory for the trust’s 2010 financial statements, and is not expected to have any impact on the financial statements.