25 SEPTEMBER 2008 NEW ZEALAND GAZETTE, No. 143 3913

Judgements are made by management in the application of NZ IFRS that have a significant effect on the financial statements and estimates with a significant risk of material adjustment in the next year are discussed in Note 9: Financial Assets and Liabilities.

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.

Revenue – 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 on an accrual basis.

Grants

Grants are accounted for as they are committed to be distributed to eligible organisations approved by the trustees. Committed grants are payable on the satisfaction of any conditions placed on the recipients. Grants no longer required or not fully utilised by grant recipients are shown separately in the statement of financial performance.

Fixed and Intangible Assets

Fixed assets

Fixed assets are valued at cost, less accumulated depreciation and accumulated impairment losses.

Intangible assets

Intangible assets are valued at the lower of cost or fair value, less accumulated depreciation and accumulated impairment losses.

Fixed assets and intangible assets are reviewed annually to determine any impairment losses. Impairment losses are recognised in the statement of financial performance.

Depreciation, Amortisation and Impairment Losses

Depreciation is provided over the useful life of the assets. Buildings are depreciated on a straight line basis. Other fixed assets are depreciated on a diminishing value basis. The rates used are those approved by trustees as follows:

• Land: Nil
• Buildings: 2.5% – 3.0%
• Office equipment and furniture: 9.5% – 6.0%

Foreign Currency Transactions and Balances

Foreign currency transactions are recorded in New Zealand dollars at the spot exchange rate applying at the date of the transaction.

All amounts denominated in foreign currencies at balance date are translated to New Zealand dollars at the balance date closing exchange rate.

All realised and unrealised gains and losses on foreign currency transactions are recognised in the statement of financial performance.

Financial Assets

All assets that are financial instruments are recognised in the statement of financial position.

All investments are initially recognised at fair value, being the fair value of consideration paid. After initial recognition, financial assets designated at fair value through profit or loss are revalued to fair value at each reporting date.

For investments that are actively traded in organised financial markets, fair value is determined by reference to exchange quoted market bid prices at the close of business on the statement of financial position date.

All realised and unrealised gains or losses on investments are recognised in the statement of financial performance.

Investments in pooled funds are valued at the unit exit price determined by the fund manager at the close of business on the statement of financial position date.

Investment transactions are recorded by fund managers on a transaction date basis.

Financial assets are managed and have their performance evaluated on a fair value basis in accordance with risk management and investment strategies of the trust, as disclosed in Note 9.

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

The trust derecognises a financial asset when and only when the contractual rights to cash flows from the financial asset expire.

Reserves

Transfers to the capital maintenance reserve are based on the annual movement in the consumer price index as described in Note 6.

Transfers to all other reserves from the retained 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.