2140 NEW ZEALAND GAZETTE, No. 96 1 JULY 2009

3. SIGNIFICANT ACCOUNTING POLICIES

The following are the particular accounting policies, which have a material affect 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. Any 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, being the fair value of the consideration paid. Subsequent to initial recognition they are measured to fair value through the income statement. 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 balance sheet day. 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.

A financial instrument is recognised when the Trust becomes a party to the contractual provisions of the instrument. 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.

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 income statement.

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) Revenue
Dividends are recognised as income on declaration date, and recorded net of any imputation tax credits. Interest income is recognised on an accruals basis.

e) Cash and Cash Equivalents
Cash and cash equivalents comprise cash on hand and cash in banks. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value.

f) 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.

g) 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.