Trustee Banks Restructuring Act 1988 Revenue Statement for the Year Ended 31 March 1996 Note 1996$ 1995$ Revenue Dividends2 5,988,000 3,532,143 Interest 422,284 149,589 Other income 1,629 23,000 Total revenue 6,411,913 3,704,732 Less expenditure Administration fees 33,141 10,000 Advertising 6,856 0 Auditor's fees 2,644 1,838 Depreciation 3,298 0 Legal 1,627 0 Levies and subs 33,763 0 Other expenses 5,295 27,416 Travelling 18,809 7,676 Trustees 36,133 28,960 Total expenditure 141,566 75,890 Net surplus before grants 6,270,347 3,628,842 Less grants 3,013,885 1,383,012 Net surplus for the year $3,256,462 $2,245,830 Distributed to: Investment reserve 5,200,000 2,245,830 Undistributed surplus ($1,943,538) $2,245,830 (The notes to the financial statements form part of and are to be read in conjunction with these financial statements.) Balance Sheet as at 31 March 1996 Notes 1966$ 1995$ Trust funds Funds introduced 21,281,000 21,281,000 Investment reserve6 8,200,000 3,000,000 Undistributed surplus7 99,133 2,042,671 $29,580,133 $26,323,671 Represented by: Current assets Trust Bank Southland Limited current account 207,255 27,094 Trust Bank Southland Limited money market account 6,600,000 300,000 Accounts receivable 28,633 22,172 Total current assets 6,835,888 349,266 Less current liabilities Accounts payable 11,064 25,845 Grants yet to be disbursed8 1,540,780 780,750 Total current liabilities 1,551,844 806,595 Net current assets 5,284,044 457,329 Investments Shares in Trust Bank New Zealand Limited5 24,281,000 24,281,000 Trust Bank Southland Limited money market 0 2,500,000 Total investments 24,281,000 26,781,000 Fixed assets10 15,089 0 Net assets $29,580,133 $26,323,671 Signed on behalf of the board of trustees: C. S. BALLANTYNE, Chairperson. W. A. CAMBRIDGE, Trustee. (The notes to the financial statements form part of and are to be read in conjunction with these financial statments.) Statement of Cash Flows for the Year Ended 31 March 1996 1996$ 1995$ Cash flow from operating activities Cash was derived from: Other1,629 23,000 Cash was disbursed to: Administration expenses32,913 10,000 Audit fees2,194 1,688 Grants to the community2,267,355 1,259,262 Other expenses42,803 37,956 Travelling expenses21,221 4,843 Trustees remuneration42,528 28,067 2,409,014 1,341,816 Net cash flow from operating activities2,407,385 1,318,816 Cash flow from investing activities Cash was derived from: Dividend from TBNZ Limited5,988,000 3,532,143 Interest on investment415,863 127,417 Matured investment2,500,000 0 8,903,863 3,659,560 Cash was disbursed to: Investment in Trust Bank Southland Limited0 2,500,000 Investment in Trust Bank Wellington Limited disaster fund0 15,722 Investment in Trust Bank New Zealand Limited shares0 0 Investment in fixed assets16,317 0 16,317 2,484,278 Net cash flow from investing activities8,887,546 1,175,282 Net movement in cash6,480,161 143,534 Opening cash balance327,094 470,628 Closing cash balance$6,807,255 $327,094 Notes to the Financial Statements for the Year Ended 31 March 1996 1. Statement of Accounting Policies The reporting entity is that entity known as the Trust Bank Southland Community Trust registered under the Incorporated Societies Act 1908. The financial statements have been prepared on the basis of historical cost with the exception of certain items for which specific accounting policies are identified. The following are the particular accounting policies which have a material effect on the measurement of results and financial position: Accounts receivable are valued at expected realisable value. Dividend income from Trust Bank New Zealand Limited is included in the revenue statement when it is received. Grants made are included in the revenue statement when committed. Shares in Trust Bank New Zealand Limited are stated at cost. 2. Dividend 1996$ 1995$ Dividends received from Trust Bank New Zealand Limited. Final dividend (declared in respect of the financial year ended 31 March 1995 and received 11 August 1995)3,706,857 1,251,000 Interim dividend in respect of the financial year ended 31 March 1996, received on 20 December 19952,281,143 2,281,143 $5,988,000 $3,532,143 3. Taxation For taxation purposes the trust is deemed to be a charitable organisation. It's income is not subject to taxation. 4. Goods and Service Tax The trust is not registered for goods and services tax purposes. Accordingly the financial statements are stated on a G.S.T. inclusive basis. 5. Shares in Trust Bank New Zealand Limited The trust holds 57 028 571 shares in Trust Bank New Zealand Limited, which had a market price of $2.56 per share as at 31 March 1996. 6. Investment Reserve 1996$ 1995$ Balance 1 April 19953,000,000 3,000,000 Transfer from undistributed surplus5,200,000 Balance 31 March 1995$8,200,000 $3,000,000 7. Undistributed Surplus 1996$ 1995$ Balance 1 April 19952,042,671 203,159 Net surplus for the year3,256,462 2,245,830 Transfer to investment reserve(5,200,000) 0 Balance 31 March 1996$99,133 $2,042,671 8. Grants Not Paid 1996$ 1995$ Committed grants not yet disbursed: Crops for Southland41,780 0 ICC Swimming Pool750,000 750,000 Queenstown Events Centre150,000 0 SCHE505,000 0 Southland Polytechnic Bursaries9,000 3,750 Southland Competitions Society0 1,000 Southland District Council10,000 10,000 Southland Promotions0 5,000 St Johns Central Southland0 10,000 TBS Art Foundation25,000 0 Tourism Spirit of a Nation25,000 0 Waihopai Rowing Club25,000 0 Wakatipu Environmental Society0 1,000 Total$1,540,780 $780,750 9. Reconciliation of Net Surplus to Operating Activities 1996$ 1995$ Net surplus for the year3,256,462 2,245,830 Increase (decrease) in other liabilities748,547 116,836 (Increase) decrease in other assets2,475,152 2,506,200 Net movement in investing activities8,887,546 1,175,282 Net cash flow from (used in) operating activities($2,407,385) ($1,318,816) 10. Fixed Assets Fixed assets are recorded at cost less accumulated depreciation: Cost$ AccumulatedDepreciation$ BookValue 1996$ Equipment18,387 3,298 15,089 11. Depreciation Depreciation has been charged in the financial statements using rates which will write off the cost of the assets less their estimated residual value over their estimated economic lives. The depreciation rates used are: Equipment 1030 percent c.p. 12. Financial Investments Credit Risk Financial investments which potentially subject the trust to credit risk consist of bank balances, shares and accounts receivable. Concentration of credit risk due to client balances are high due to the trust having all its cash investments and shares with Trust Bank New Zealand Limited. Maximum exposures to credit risk as at balance date are: 1996$ 1995$ TRust Bank Southland current account207,255 27,094 Trust Bank Southland money market account6,600,000 2,800,000 Shares in Trust Bank New Zealand Limited24,281,000 24,281,000 Fair Value The following methods and assumptions were used to estimate the fair value of each class of financial inhstrument. Cash receivables, short-term deposits, payables. The fair value amount of the financial instruments which have been disclosed is considered to be the same as determined in accordance with the accounting policies as disclosed in the financial instruments. 13. Subsequent to balance date the trust has agreed to sell its share in Trust Bank New Zealand to Westpac for $2.92 per share realising approximately $166 million to the trust. Audit Report to the Members of Trust Bank Southland Community Trust Incorporated We have audited the financial report. The financial report provides information about the past financial performance of the trust and its financial position as at 31 March 1996. This information is stated in accordance with the accounting policies as outlined. Trust Responsibilities The Trust Bank Southland Community Trust is responsible for the preparation of a financial report which gives a true and fair view of the financial position of the trust as at 31 March 1996 and of the results of operations and cash flows for the year ended 31 March 1996. Auditor's Responsibilities It is our responsibility to express an independent opinion on the financial report presented by the trust and report our opinion to you. Basis of Opinion An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial report. It also includes assessing: the significant estimates and judgments made by the trust in the preparation of the financial report, and whether the accounting policies are appropriate to the trust circumstances, consistently applied and adequately disclosed. We conducted our audit in accordance with generally accepted auditing standards in New Zealand. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to give reasonable assurance that the financial report is free from material misstatements, whether caused by fraud or error. In forming our opinion we also evaluated the overall adequacy of the presentation of information in the financial report. Other than in our capacity as auditors we have no relationship with or interests in the Trust Bank Southland Community Trust. Unqualified Opinion We have obtained all the information and explanations we have required. In our opinion the financial report provides a true and fair view of the financial position of the trust as at 31 March 1996 and the results of its operations and cash flows for the year ended on that date. Our audit was completed on 26 April 1996 and our unqualified opinion is expressed as at that date. DELOITTE TOUCHE TOHMATSU, Chartered Accountants. Invercargill. A copy of the full list of grants is available on request from Trust Bank Southland Community Trust Inc., 25 Don Street, Invercargill.