3 APRIL 2008

NEW ZEALAND GAZETTE, No. 69

1925

further agreed that over the long term, the net assets of the parent would not be allowed to reduce to a level below the inflation-adjusted real value of this trust capital.

F. Capital Maintenance Reserve

The capital maintenance reserve represents the additional amount necessary to preserve the real value of the trust capital allowing for inflation as measured by the Consumers Price Index (all groups) and payments of grants out of capital.

G. Grants Maintenance Reserve

While the trustees have adopted a long-term investment strategy, they accept that annual returns from investments are likely to fluctuate from year to year. In recognition of this, a grants maintenance reserve is maintained. In years when net income from investments is higher than the grant levels, surplus income will be transferred to this reserve. In years when there is insufficient income to sustain the level of grants, an appropriate amount will be transferred from the grants maintenance reserve to income.

H. Basis of Recognising Components of the Financial Statements

The following general accounting policies are adopted:

Assets

A transaction results in an asset being recognised in the statement of financial position when it will probably give rise to ongoing benefits for the group and those benefits can be measured with reliability.

Liabilities

A transaction results in a liability being recognised in the statement of financial position when it will probably give rise to the need for the group to sacrifice assets in the future and those sacrifices can be measured with reliability.

Revenue

Revenue is recognised in the statement of financial performance when a transaction gives rise to an increase in the value of the group’s net assets, and that increase can be measured with reliability.

Expenses

An expense is recognised in the statement of financial performance when a transaction results in a decrease in the value of the group’s net assets, and that decrease can be measured with reliability.

Classification of Assets and Liabilities Between Current and Non-current

An amount is classified as current when it is expected to be settled or extinguished within one year of the date of the financial statements. All other amounts are classified as non-current.

I. Property, Plant and Equipment (Parent)

Property, plant and equipment are initially stated at cost and then depreciated on a straight line basis. Land and buildings are stated at valuation as determined by an independent registered valuer. The basis of valuation of the land and buildings is highest and best use. Revaluation surpluses are taken directly to the revaluation reserve. Decreases in value are debited directly to the revaluation reserve to the extent they reserve previous surpluses and are otherwise recognised as expenses (and income on subsequent reversal) in the statement of financial performance. The estimated useful lives of fixed assets are as follows:

| Land | Indefinite |
| Buildings | 30–40 years |
| Furniture and fittings | 3–15 years |
| Office equipment | 3–8 years |
| Motor vehicles | 5–8 years |

J. Property, Plant and Equipment (Group)

Property, plant and equipment are initially stated at cost and then depreciated using maximum rates approved for taxation purposes. The rates and method applied are as follows:

| Furniture and fittings | 11.4% – 18.0% diminishing value |
| Office equipment | 22.0% – 60.0% diminishing value |
| Motor vehicles | 7.5% diminishing value |
| Other assets | 48.0% diminishing value |

K. Investments with Fund Managers

Investments with fund managers are stated at market value. Realised and unrealised gains or losses on holding these investments are recognised in the statement of financial performance. These gains or losses are shown in the statement of financial performance as income from revaluation of investments.

L. Other Investments

Cash investments are stated at cost plus interest credited or accrued to balance date.

M. Accounts Receivable

Accounts receivable are stated at expected realisable value.

N. Rental Payments

Invest South Limited Group leases its premises in addition to certain items of plant and equipment. Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased items, are included in the determination of the operating surplus/(deficit) in equal instalments over the lease term.

O. Loan Funding Advances

Invest South Limited (a subsidiary) has advanced monies to non-related entities as part of its core business activity. Interest is charged on these advances and accrued where necessary. The investments are recorded at expected realisable value.

P. Impairment

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