14 AUGUST 2008 NEW ZEALAND GAZETTE, No. 127 3327

3. Significant Accounting Policies

The following are the particular accounting policies, which have a material effect on the measurement of results and financial position. They have been applied consistently to all periods presented in these financial statements.

(a) Foreign Currency Transactions

Foreign currency balances are converted to NZD at the year end rate of exchange unless covered by a forward exchange contract. Where such contracts are in place, the contracted rate is adopted. Transactions completed during the year are converted at the rate applying at the date of the transaction. Foreign exchange gain or loss on monetary items is included within the income statement.

(b) Financial Instruments

Financial instruments comprise investments in equity and debt securities, cash and cash equivalents, and trade and other payables. Investments in equity and debt securities are initially recognised at fair value. Subsequent to initial recognition, they are measured to fair value through the income statement. Cash and cash equivalents comprise cash balances, call deposits and short term deposits but do not include cash held by fund managers. Cash flow from operations includes withdrawal of income from managed funds. Trade and other payables are stated at cost.

A financial instrument is recognised when the trust becomes a party to the contractual provisions of the instruments. Financial assets are derecognised if the trust’s contractual right to the cash flows from the financial assets expire or if the trust transfers the financial assets to another party without retaining control or substantially all risks and rewards of the asset.

(c) Donations

Donations are recognised as a liability of the trust when they are approved by trustees and notified to applicants notwithstanding that the applicants may still have to fulfil some conditions.

(d) Property, Plant and Equipment

Items of property, plant and equipment are recorded at cost less accumulated depreciation and impairment losses. The trust has one class of asset being office furniture and fittings.

(e) Depreciation

Depreciation is recognised in the income statement on a straight line basis on all tangible fixed assets at rates calculated to allocate the assets’ cost less estimated residual value, over their estimated useful lives. Depreciation methods, useful lives and residual values are reassessed at the reporting date. The estimated life of assets is between 3 and 10 years.

(f) Impairment

The trust’s assets are reviewed at each balance date to determine whether there is any objective evidence 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.

(g) Employee Benefits

Unused annual leave and long service leave entitlements are the only benefits outstanding to employees. These obligations are recognised as a staff remuneration expense.

(h) GST

GST inclusive accounting has been adopted, as the trust is not registered for GST.

(i) Income Tax

The trust is exempt from income tax by legislation in the Income Tax Act 2004.

(j) Intangible Assets

Software, when acquired by the trust, will be measured at cost less accumulated depreciation and impairment losses.

(k) Leases

The trust has no leased assets that are required to be classed as finance leases. Operating leases are not recognised on the balance sheet. Operating lease payments are recognised in the income statement on a straight line basis.

4. Net Income From Investments

| Unrealised income | | |
| Foreign exchange (losses) | (7,570,307) | (11,144,071) |
| Change in fair value of financial assets held for trading | (5,440,345) | 11,862,170 |
| | (13,010,652) | 718,099 |

| Total income from investments | (3,162,919) | 8,848,294 |
| Less fund managers’ fees | 180,445 | 171,720 |
| Total net income from investments | (3,343,364) | 8,676,574 |