Trust Bank Eastern and Central Community Trust Inc. Trustee Banks Restructuring Act 1988 Consolidated Statement of Financial Performance for the Year Ended 31 March 1999 Note 1999$ 1998$ Income Income from investments2 13,485,302 27,091,478 Less expenditure Advertising and promotion 205,695 192,340 Audit fees Trust auditors 6,300 7,983 Other auditors 2,262 Depreciation 19,870 17,408 Rent and occupancy 56,257 43,026 Professional fees 40,281 67,231 Trustee expenses 44,924 35,396 Trustee fees 118,795 92,717 Wages and salaries 132,285 108,781 Other expenses 65,220 61,963 Total expenditure 689,627 629,107 Net income before community payments 12,795,675 26,462,371 Less community payments Standard donations 1,833,710 1,739,700 Special donations 2,982,240 3,002,079 Bursaries 438,000 262,000 5,253,950 5,003,779 Less donations written back 147,259 Total community payments 5,106,691 5,003,779 Net surplus for the period $7,688,984 $21,458,592 (The notes to the financial statements form part of and are to be read in conjunction with the above accounts.) Consolidated Statement of Movements in Equity for the Year Ended 31 March 1999 1999$ 1998$ Equity at start of period130,706,794 109,248,202 Net surplus for the period7,688,984 21,458,592 Total recognised revenues and expenses for the year7,688,984 21,458,592 Equity at the end of period$138,395,778 $130,706,794 (The notes to the financial statements form part of and are to be read in conjunction with the above accounts.) Consolidated Statement of Financial Position as at 31 March 1999 Note 1999$ 1998$ Assets Investments3 132,201,239 123,833,394 Fixed assets4 37,519 49,429 Accrued income 81,304 29,008 Cash and bank deposits5 7,841,500 8,549,403 Total assets $140,161,562 $132,461,234 Liabilities Sundry payables 91,351 208,201 Employee entitlements 17,896 10,039 Donations payable6 1,656,536 1,536,200 Total liabilities 1,765,783 1,754,440 Net assets 138,395,779 130,706,794 Equity Trustee funds 138,395,779 130,706,794 Total trust funds $138,395,779 $130,706,794 GRAEME GLASS, Chairperson. BRIAN MARTIN, Trustee. Dated this 21st day of May 1999. Consolidated Statement of Cash Flows for the Year Ended 31 March 1999 Note 1999$ 1998$ Cash flows from operating activities Cash was provided from: Interest and dividends on investments 6,271,965 7,440,607 6,271,965 7,440,607 Cash was applied to: Community payments (4,986,355) (3,754,800) Trustees and employees (288,146) (230,450) Suppliers of other goods and services (437,628) (328,808) Net operating cash flows7 559,836 3,126,549 Cash flows from investing activities Cash was provided from: Sale of Government securities 856,806 232,000 Withdrawals from managed funds 6,000,000 10,000,000 6,856,806 10,232,000 Cash was applied to: Investment in Government securities Investment in managed funds (8,116,586) (15,961,791) Investment in shares Purchase of fixed assets (7,959) (21,112) Net investing cash flows (1,267,739) (5,750,903) Net increase (decrease) in cash held (707,903) (2,624,354) Add cash at 1 April 8,549,403 11,173,757 Cash at 31 March5 $7,841,500 $8,549,403 (The notes to the financial statements form part of and are to be read in conjunction with the above accounts.) Notes to the Consolidated Financial Statements for the Year Ended 31 March 1999 1. Statement of Accounting Policies 1.1 Reporting Entity Trust Bank Eastern and Central Community Trust is a charitable trust incorporated in accordance with the provisions of the Trustee Banks Restructuring Act 1988. The trust has a wholly owned company Eastern and Central Community Trust Charities Limited which is registered under the Companies Act 1993. The consolidated financial statements have been prepared in accordance with generally accepted accounting practice. 1.2 Measurement Base The measurement base applied is that of historical cost adjusted for the market valuation of investments. 1.3 Specific Accounting Policies The following are the particular accounting policies which have a material effect on the measurement of results and financial position. 1.3.1 Basis of Consolidation Purchase Method The consolidated financial statements include the trust and its wholly owned company accounted for using the purchase method. All significant inter-entity transactions are eliminated on consolidation. Both entities have a common balance date of 31 March. 1.3.2 Investment Income is accounted for on an accruals basis recognising both realised and unrealised gains or losses in value. 1.3.3 Foreign Currency balances are converted to NZD at the year end rate of exchange. Transactions completed during the year are converted at the rate applying at the date of the transaction. Foreign exchange gains and losses are included within the statement of financial performance. 1.3.4 Investments are recorded at market value at year end. 1.3.5 Cash comprises cash at bank, call deposits and short term deposits but does not include cash held by fund managers. 1.3.6 Donations are included in the statement of financial performance when approved by the trustees. 1.3.7 Fixed Assets Fixed assets are recorded at cost less accumulated depreciation. 1.3.8 Depreciation is provided 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. The depreciation periods are: Computer equipment 3 years Fixtures and fittings 9 years Furniture10 years Office equipment 5 years 1.3.9 Income Tax is not provided as the trust has charitable status for tax purposes. 1.3.10 G.S.T. inclusive accounting has been adopted as the trust is not registered for G.S.T. 1.4 Changes in Accounting Policies There have been no changes in accounting policies. All policies have been consistently applied. 2. Income from Investments 1999$ 1998$ Realised investment income6,691,014 7,582,972 Changes in investment values gain (loss)4,548,486 10,116,167 Foreign exchange movements gain (loss)2,559,579 9,665,295 13,799,079 27,364,434 Less fund managers' expenses313,777 272,956 $13,485,302 $27,091,478 3. Investments Type Manager Appointed 1999 1998 $ $ New Zealand shares Active Coronet Asset Management Jan 97 11,080,915 10,258,471 Passive TeNZ Dec 97 12,640,280 14,662,725 International shares Passive State Street Global Advisors May 97 58,338,294 56,646,384 New Zealand bonds Active Citibank Global Asset Mgt Mar 97 46,562,307 38,071,633 Passive Self 3,579,443 4,194,181 $132,201,239 $123,833,394 4. Fixed Assets Fixtures, fittings and equipment at cost98,964 91,005 Less accumulated depreciation61,445 41,576 $37,519 $49,429 5. Cash and Bank Deposits Current accounts4,663 30,460 Call accounts1,005,925 1,018,743 Petty cash22 200 Short term deposits6,830,890 7,500,000 $7,841,500 $8,549,403 6. Donations Payable Included in donations payable are $1,339,125 of donations which are subject to the applicants fulfilling certain conditions. 7. Reconciliation of Net Surplus With Operating Cash Flows 1999$ 1998$ Net surplus for the period7,688,984 21,458,592 Adjust for non cash items Unrealised income on investments(7,108,065) (19,815,024) Depreciation19,870 17,408 Movements in net current assets Accrued income(52,296) 67,315 Donations and sundry payables911,341 1,398,258 Net operating cash flows$559,836 $3,126,549 8. Contingent Liabilities and Commitments There are no contingent liabilities at 31 March 1999. Lease commitments (including G.S.T.). 1999$ 1998$ Within 1 year33,750 33,750 12 years33,750 33,750 25 years82,970 101,250 Beyond 5 years 18,280 $150,470 $187,030 A 6 year renewal option exists. 9. Segmental Reporting The trust operates as a charitable trust distributing funds to the community in the Central North Island region. 10. Financial Instruments Financial instruments include short-term deposits, New Zealand bonds and investments in managed funds both within New Zealand and overseas. 10.1 Credit Risk The trustees regularly review their investment strategy. The investment strategy ensures an appropriate diversification of investments so that the trust has no significant concentration of counterparty or credit risk. 10.2 Fair Values The trust has recorded its financial assets and liabilities at current market values, which represent estimated fair values and credit risk exposure. 10.3 Currency Risk The trust has exposure to currency risk through its investments in offshore equities and bonds. Offshore bonds are covered by forward exchange contracts. 10.4 Credit Facilities The trust has no credit facilities. 10.5 Interest Rate Risk The trust investments in fixed rate securities are subject to interest rate risk. 11. Net Current Assets Cash, bank deposits and accrued income are expected to be realised within 12 months. All liabilities are due within 12 months. Audit Report To the trustees of Trustbank Eastern and Central Community Trust Inc We have audited the consolidated financial report. The consolidated financial report provides information about the past financial performance of Trustbank Eastern and Central Community Trust Inc group (the trust) and its financial position as at 31 March 1999. This information is stated in accordance with the accounting policies set out. Trustees' Responsibilities The trustees are responsible for the preparation of a consolidated financial report which fairly reflects the financial position of the trust as at 31 March 1999 and of the results of operations and cash flows for the year ended 31 March 1999. Auditors' Responsibilities It is our responsibility to express an independent opinion on the consolidated financial report presented by the trustees 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 consolidated financial report. It also includes assessing: the significant estimates and judgments made by the trustees in the preparation of the consolidated financial report, and whether the accounting policies are appropriate to the trust's 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. We obtained sufficient evidence to give reasonable assurance that the consolidated 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 consolidated financial report. During the year we performed an internal audit of donations. Other than in our capacity as auditors and internal auditors of donations we have no relationship with or interests in the trust. Unqualified Opinion We have obtained all the information and explanations we have required. In our opinion the consolidated financial report fairly reflects the financial position of the trust as at 31 March 1999 and the results of its operations and cash flows for the year ended on that date. Our audit was completed on 30 June 1999 and our unqualified opinion is expressed as at that date. DENT ROBERTSON AND PARTNERS, Chartered Accountants. Hastings, New Zealand. Schedule of Community Payments for the Year Ended 31 March 1999 Donations by Region 1999$ Poverty Bay606,155 Hawke's Bay1,980,470 Tararua245,430 Wairarapa755,970 Manawatu983,880 Horowhenua458,295 Regional223,750 Total donations$5,253,950 An itemised list of all donations is available, free of charge, from the Trust Manager, P.O. Box 1058, Hastings.