Financial statements
Statement of Accounting Policies
for the year ended 30 June 2006
Reporting Entity
The Department of Building and Housing manages the Residential Tenancies Trust Account pursuant to the Public Finance Act 1989 and the Residential Tenancies Act 1986. The Department took over direct management of the Residential Tenancies Trust Account on 18 August 1992.
All interest arising from any investment in the Residential Tenancies Trust Account belongs to the Crown and is treated as other revenue to the Department of Building and Housing.
Investments are held in approved securities under the Public Finance Act 1989.
The Department of Building and Housing pays costs associated with the management of the Residential Tenancies Trust Account as departmental expenses.
Measurement system
These financial statements have been prepared on the basis of modified historical cost except for certain items with specific accounting policies outlined below.
Accounting policies
The following particular accounting policies that materially affect the measurement of financial results and financial position have been applied.
Accounts receivable
Accounts receivable are stated at estimated realisable value.
Taxation
The Residential Tenancies Trust Account is exempt from income tax in terms of the Income Tax Act 2004. Accordingly, no charge for income tax has been provided for.
Investments
Investments are not generally traded but held to maturity. Investments in government stock and bonds are valued at cost with premiums and discounts on investments accounted for on a yield-to-maturity basis. Investments in bank deposits are valued at cost.
Cash
Cash is defined as coins, notes and demand deposits in the Trust bank account and other deposits held on call.
Revenue
The Trust derives revenue from interest on investments. Interest on investments is accrued on a monthly basis.
Financial instruments
The Residential Tenancies Trust Account is party to financial instruments as part of its normal operations. These financial instruments include accounts payable and receivable, cash, deposits and investments. Revenue and expenditure in relation to all financial instruments is recognised in the Statement of Financial Performance.
Except for those items covered by a separate accounting policy, all financial instruments are shown at estimated fair value.
Changes in accounting policies
There have been no changes in accounting policies. All policies have been applied on a basis consistent with other years.
Statement of Financial Performance
for the year ended 30 June 2006
| |
2006
Actual
$000
|
2005
Actual
$000
|
| Revenue |
|
|
| Interest earned from government stock |
263 |
387 |
| Interest earned from bank deposits |
13,691 |
10,805 |
| Total revenue |
13,954 |
11,192 |
| |
|
|
| Expenditure |
|
|
| Interest to Department of Building and Housing |
13,954 |
11,192 |
| Operating surplus |
- |
- |
Reconciliation of Movements in Bondholders' Funds
for the year ended 30 June 2006
| |
2006
Actual
$000
|
2005
Actual
$000
|
| Bondholders' funds at 1 July |
187,065 |
167,720 |
| Total recognised revenues and expenses for the year |
|
|
| Bonds lodged |
117,837 |
109,707 |
| Bonds refunded |
(97,383) |
(90,362) |
| Bondholders' funds at 30 June |
207,519 |
187,065 |
Statement of Financial Position
as at 30 June 2006
| |
Note |
2006
Actual
$000
|
2005
Actual
$000
|
| Current assets |
|
|
|
| Bank |
|
5,624 |
8,118 |
| Investments |
1 |
148,786 |
138,999 |
| Accounts receivable |
|
6,098 |
4,009 |
| Total current assets |
|
160,508 |
151,126 |
| |
|
|
|
| Non-current assets |
|
|
|
| Investments |
1 |
60,305 |
43,760 |
| Total non-current assets |
|
60,305 |
43,760 |
| Total assets |
|
220,813 |
194,886 |
| |
|
|
|
| Current liabilities |
|
|
|
| Payable to Department of Building and Housing |
|
13,261 |
7,787 |
| Other |
|
33 |
34 |
| Total current liabilities |
|
13,294 |
7,821 |
| Net assets |
|
207,519 |
187,065 |
| |
|
|
|
| Bondholders' funds |
|
|
|
| Opening balance |
|
187,065 |
167,720 |
| Net increase |
|
20,454 |
19,345 |
| Closing balance of bondholders' funds |
|
207,519 |
187,065 |
Statement of Cash Flows
for the year ended 30 June 2006
| |
Note |
2006
Actual
$000
|
2005
Actual
$000
|
| Cash flows from operating activities |
|
|
|
| Cash was provided from: |
|
|
|
| Interest received |
|
11,865 |
10,059 |
| Cash was disbursed to: |
|
|
|
| Interest payments to Department of Building and Housing |
|
(8,480) |
(7,372) |
| Net cash flows from operating activities |
4 |
3,385 |
2,687 |
| Cash flows from investing activities |
|
|
|
| Cash was provided from: |
|
|
|
| Proceeds from maturity of investments |
|
153,321 |
151,021 |
| Cash was disbursed to: |
|
|
|
| Purchase of investments |
|
(179,653) |
(169,378) |
| Disposal of goods |
|
(1) |
5 |
| Net cash flows from investing activities |
|
(26,333) |
(18,352) |
| Cash flows from financing activities |
|
|
|
| Cash was provided from: |
|
|
|
| Lodgement of bonds |
|
117,837 |
109,707 |
| Cash was disbursed to: |
|
|
|
| Refund of bonds |
|
(97,383) |
(90,362) |
| Net cash flows from financing activities |
|
20,454 |
19,345 |
| Net increase/(decrease) in cash held |
|
(2,494) |
3,680 |
| Opening cash |
|
8,118 |
4,438 |
| Closing cash |
|
5,624 |
8,118 |
NOTES TO THE FINANCIAL STATEMENTS
for the year ended 30 June 2006
Note 1: Investments by Counterparty
Investments are undertaken in line with the Department's investment strategy. Investments were held with the following counterparties at 30 June (investments valued at book value).
| |
2006
Actual
$000
|
2005
Actual
$000
|
| Current |
|
|
| Westpac |
34,200 |
17,269 |
| National Bank |
8,000 |
21,651 |
| ANZ |
39,925 |
18,173 |
| BNZ |
30,006 |
40,909 |
| ASB |
32,633 |
40,997 |
| Government stock |
4,022 |
- |
| Total current |
148,786 |
138,999 |
| Non-Current |
|
|
| Westpac |
10,000 |
- |
| ANZ |
7,500 |
10,000 |
| BNZ |
18,005 |
16,048 |
| ASB |
24,800 |
13,633 |
| Government stock |
- |
4,079 |
| Total non-current |
60,305 |
43,760 |
| Total investments by counterparty |
209,091 |
182,759 |
| Interest rates |
|
|
| Short-term deposits |
7.02% |
6.92% |
| Term deposits |
7.42% |
6.57% |
| Government stock |
6.48% |
6.48% |
| |
|
|
Note 2: Book Value of Investments
| |
2006
Actual
$000
|
2005
Actual
$000
|
| Bank deposits |
197,425 |
160,615 |
| Bank bonds |
7,644 |
18,065 |
| Government stock |
4,022 |
4,079 |
| Total book value of investments |
209,091 |
182,759 |
Note 3: Financial Instruments
Financial instruments that are potentially subject to credit risk principally consist of cash on hand, bank balances, accounts receivable, short-term deposits and investments.
Credit risk
The maximum exposures to credit risk at balance date are:
| |
2006
Actual
$000
|
2005
Actual
$000
|
| Cash held |
5,624 |
8,118 |
| Accounts receivable |
6,098 |
4,009 |
| Investments |
209,091 |
182,759 |
| Total |
220,813 |
194,886 |
| |
|
|
There are no major concentrations of credit risk for accounts receivable.
Currency risk
The Residential Tenancies Trust Account has no currency risk, given that any financial instruments it deals with are in New Zealand dollars.
Interest rate risk
The Residential Tenancies Trust Account has no interest rate risk, as all investments are held to maturity. Deposits are held with authorised New Zealand banks.
Fair value
The fair value of all financial instruments is equivalent to the carrying amount disclosed in the Statement of Financial Position, apart from the investment in government stock, the fair value of which is the market value of $4,045,200 (2005: $4,102,060); and bank bonds, the fair value of which is $4,025,600 (2005: $18,021,473).
Note 4: Reconciliation of Operating Surplus to Net Cash Flows from Operating Activities
| |
2006
Actual
$000
|
2005
Actual
$000
|
| Operating surplus |
- |
- |
| Add/(less) movements in working capital |
|
|
| (Increase)/decrease in interest payable |
5,474 |
(3,819) |
| Increase/(decrease) in interest receivable |
(2,089) |
1,132 |
| Net cash flows from operating activities |
3,385 |
(2,687) |
Note 5: Commitments and contingencies
The Residential Tenancies Trust Account has no commitments or contingent liabilities at balance date (2005: Nil).