14 AUGUST 2008 NEW ZEALAND GAZETTE, No. 127 3349

Accounting policies set out below have been applied in preparing the financial statements for the year ended 31 March 2008, the comparative information presented in these financial statements for the year ended 31 March 2007 and in the preparation of the opening NZ IFRS balance sheet at 1 April 2006, the Trust’s date of transition.

Specific Accounting Policies

The following specific accounting policies which materially affect the measurement of financial performance and the financial position have been applied:

(a) Revenue

Rental revenue in relation to operating leases is recognised in the income statement on a straight-line basis over the lease term.

Dividend revenue from investments is recognised when the Trust’s rights to receive payment have been established. Interest income is recognised as interest accrues using the effective interest method.

(b) Income Tax

The Trust is exempt from income tax under section CB4(1)(m) of the Income Tax Act 2004.

(c) Property, Plant & Equipment

Property, plant and equipment is stated at cost less accumulated depreciation and impairment.

(d) Depreciation

Depreciation has been calculated as follows.

Furniture and equipment 9.0% – 60.0%

(e) Investments Including Investments in Managed Funds

Shares in listed companies and quoted fixed interest investments are designated as “financial assets at fair value through the profit and loss” as the portfolios are managed on a fair value basis in accordance with a documented investment strategy. They are initially recorded at cost and subsequently revalued to market bid price each balance date. Gains and losses are recorded in the income statement as part of the investment income.

(f) Financial Instruments

Financial instruments are recognised if the Trust becomes a party to the contractual provisions of the instruments. Financial assets are initially measured at fair value plus transaction costs except for those classified as fair value through profit or loss. Financial assets are derecognised if the Trust’s rights to the cash flows from the financial assets expire or if the Trust transfers a financial asset to another party without retaining control or substantially all risks and rewards of the asset. Regular purchases and sales of financial assets are accounted for at trade date. Financial liabilities are derecognised if the Trust’s obligations, specified in the contract, expire, are discharged or cancelled.

Held-to-Maturity Investments

If the Trust has the intent and ability to hold debt securities to maturity, then they are classified as held-to-maturity. Subsequent to initial recognition, held-to-maturity investments are measured at amortised cost using the effective interest method, less any impairment losses.

Investments at Fair Value Through Profit and Loss

An instrument is classified at fair value through the profit and loss if it is held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through the profit and loss if the Trust manages such investments and makes purchase and sale decisions based on their fair value. Upon initial recognition, attributable transaction costs are recognised in the income statement when incurred. Subsequent to initial recognition, financial instruments at fair value through profit and loss are measured at fair value and changes therein are recognised in the income statement.

Loans and Receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as loans and receivables. Loans and receivables are measured at amortised cost using the effective interest method less any impairment.

Cash and cash equivalents comprise cash balances and call deposits.

(g) Impairment

The carrying amount of the Trust’s assets are reviewed each balance date to determine whether there is any indication of impairment. If any such indication exists, the asset’s recoverable amount is estimated.

If the estimated recoverable amount of an asset is less then its carrying amount, the asset is written down to its estimated recoverable amount and an impairment loss is recognised in the income statement.

The estimated recoverable amount of investments carried at amortised cost is calculated as the present value of estimated future cash flows, discounted at their original effective interest rate. Receivables with a short duration are not discounted.

The estimated recoverable amount of other assets is the greater of their fair value, less costs to sell, and value in use. Value in use is determined by estimating future cash flows from the use and ultimate disposal of the asset and discounting these to their present value using a pre-tax discount rate that reflects current market rates and the risks specific to the asset. For an asset that does not generate largely independent cash flows, the recoverable amount is determined for the cash-generating unit to which the asset belongs.

Impairment losses are reversed when there is a change in the estimates used to determine the recoverable amount.

An impairment loss on an investment in shares classified as available-for-sale or on property carried at fair value is reversed through the relevant reserve. All other impairment losses are reversed through the income statement.

(h) Operating Leases

Operating lease payments, where the lessor effectively retains substantially all the risks and rewards of ownership of the leased items, are included in the determination of the net surplus in equal instalments over the lease term.