Consolidated Statement of Financial Performance for the Year Ended 31 March 2002
Note 2002 2001
$ $
Income:
Income from investments 2 (1,779,412) (4,804,814)
Less expenditure:
Advertising and promotion 179,139 236,099
Auditor fees - Trust audit 11,500 7,931
- Other services 1,864 3,699
Depreciation 15,745 15,269
Rent and occupancy 49,689 46,914
Professional fees 129,867 69,370
Trustee expenses 39,907 43,537
Trustee fees 112,742 120,163
Wages and salaries 234,241 181,451
Other expenses 75,498 69,954
Total expenditure 850,192 794,388
Less provision for tax 3 193,770 0
Net surplus/(deficit) (2,823,374) (5,599,202)
The net surplus/(deficit) has been allocated as follows:
Trust capital maintenance 3,038,874 2,950,362
Donation reserve transfer (5,862,248) (8,549,564)
(2,823,374) (5,599,202)
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2002
Note 2002 2001
$ $
Equity at start of period 131,688,108 148,950,226
Net surplus/(deficit) (2,823,374) (5,599,202)
Total recognised revenues and expenses (2,823,374) (5,599,202)
Net community donations 9 (7,023,942) (11,662,916)
Equity at the end of period 121,840,792 131,688,108
Consolidated Statement of Financial Position as at 31 March 2002
Note 2002 2001
$ $
Equity:
Trust capital 4 104,334,667 101,295,793
Donation reserve 5 17,506,125 30,392,315
Total trust funds 121,840,792 131,688,108
Assets:
Investments in managed funds 6 113,790,288 120,269,549
Fixed assets 7 28,155 36,830
Accrued income 75,141 66,379
Cash and bank deposits 8 13,014,417 16,933,082
Total assets 126,908,002 137,305,841
Liabilities:
Sundry payables 166,653 158,120
Employee entitlements 12,770 7,222
Donations payable 9 4,694,017 5,452,391
Provision for tax 3 193,770 -
Total liabilities 5,067,210 5,617,732
Net assets 121,840,792 131,688,108
These financial statements have been authorised for issue by the trustees on 12th June 2002.




JOHN CULLING BRIAN BOURKE
Chairperson Trustee
12th June 2002 12th June 2002
Consolidated Statement of Cash Flows for the Year Ended 31 March 2002
Note 2002 2001
$ $
Cash flows from operating activities-
Cash was provided from:
Interest and dividends on investments 995,377 1,588,944
995,377 1,588,944
Cash was applied to:
Trustees and employees (381,342) (349,857)
Suppliers of other goods and services (715,315) (705,394)
Net operating cash flows 10 (101,280) 533,693
Cash flows from investing activities-
Cash was provided from:
Sale of government securities - 3,103,858
Withdrawals from managed funds 6,828,000 13,014,501
Sale of fixed assets 350 -
6,828,350 16,118,359
Cash was applied to:
Purchase of fixed assets (7,419) (11,150)
Investment in managed funds (2,856,000) -
(2,863,419) (11,150)
Net investing cash flows 3,964,931 16,107,209
Cash flows from financing activities-
Cash was applied to:
Community donation payments (7,782,316) (8,938,301)
Net financing cash flows (7,782,316) (8,938,301)
Net increase (decrease) in cash held (3,918,665) 7,702,601
Add cash at 1 April 16,933,082 9,230,481
Cash at 31 March 8 13,014,417 16,933,082
Notes to the Consolidated Financial Statements for the Year Ended 31 March 2002
1. Statement of Accounting Policies
1.1 Reporting Entity
Eastern and Central Community Trust Inc. is a charitable trust incorporated in accordance with the provisions of the Community Trusts Act 1999.
The trust has a wholly owned company - Eastern & Central Community Trust Charities Limited - which is registered under the Companies Act 1993.
The consolidated financial statements have been prepared in accordance with the Financial Reporting Act 1993.
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
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 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 approximate 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 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.
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 three years
Fixtures and fittings nine years
Furniture ten years
Office equipment five years
1.3.9 Income tax expense recognises the obligation payable to the Inland Revenue Department.
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
Taxation has been provided for the first time this year. The provision of $193,770 has increased the net deficit for the year and increased current liabilities. There have been no other changes in accounting policies. All policies have been consistently applied.
1.5 Changes in Presentation
The reporting of donations has been reclassified as a distribution from equity and disclosed in the statement of movements in equity. Previously the donations were recorded in the statement of financial performance. Comparative figures have also been reclassified to enable proper comparison.
2. Income From Investments
2002 2001
$ $
Interest 2,554,845 2,910,875
Dividends 1,457,895 1,797,178
Gains on disposals of investments 3,046,702 1,658,103
Foreign exchange gain (1,305,221) 5,260,222
Changes in investment value (7,257,343) (16,123,798)
(1,503,122) (4,497,419)
Less fund managers' expenses 276,290 307,395
(1,779,412) (4,804,814)
3. Taxation
2002
$
Net surplus/(deficit) before taxation (2,629,604)
Add non-deductible expenditure 424,526
Less non-assessable income 6,220,434
beneficiary distributions of assessable income 4,015,356
Taxable income 0
Taxation @ 33% 0
Taxation (as agent) relation to prior years 193,770
Taxation expense 193,770
The trust's charitable status is currently under review by the Inland Revenue Department. The trustees have made provision for the likely tax payable in settlement with the Inland Revenue Department.
4. Trust Capital
The initial trust capital was set at $90,000,000 in 1997. The trust capital is maintained by a transfer of 3% of the opening capital base each year, as a surrogate for inflation and population growth within the region administered by the trust. The trustees periodically review the capital maintenance transfer.
2002 2001
$ $
Balance at the beginning of the year 101,295,793 98,345,430
Transfer from income 3,038,874 2,950,363
Balance at the end of the year 104,334,667 101,295,793
5. Donation Reserve
The trustees retain all undistributed income in the donation reserve.
2002 2001
$ $
Balance at the beginning of the year 30,392,315 50,604,796
Transfer from income (5,862,248) (8,549,564)
24,530,067 42,055,232
Less donations 7,023,942 11,662,916
Balance at the end of the year 17,506,125 30,392,315
6. Investments in Managed Funds
2002 2001
$ $
Opening balance 120,269,549 139,408,426
Gross income (2,242,297) (5,324,420)
Withdrawals to fund donations (net) (4,236,963) (13,814,457)
Closing balance 113,790,289 120,269,549
Investments comprise:
Bonds 37,340,851 45,066,697
Equities 76,449,437 75,202,852
Total managed funds 113,790,289 120,269,549
Held in:
New Zealand Bonds 22,352,702 25,889,620
Equities 11,097,001 10,752,300
33,449,704 36,641,920

Off shore Bonds 14,988,149 19,177,077
Equities 65,352,436 64,450,552
80,340,585 83,627,629
113,790,289 120,269,549
7. Fixed Assets
2002 2001
$ $
Fixtures, fittings and equipment at cost 108,427 128,307
Less accumulated depreciation 80,272 91,476
28,155 36,830
8. Cash and Bank Deposits
2002 2001
$ $
Current accounts 7,315 4,162
Call accounts 1,206,889 2,665,884
Petty cash 213 36
Short term deposits 11,800,000 14,263,000
13,014,417 16,933,082
9. Donations
2002 2001
$ $
Standard donations 1,130,834 1,651,113
Special donations 3,607,150 5,453,302
Bursaries 405,000 442,500
Shooting Star 1,989,505 4,258,217
Total community donations 7,132,489 11,805,132
Less donations written back 108,547 142,216
Net community donations 7,023,942 11,662,916
Included in donations payable is $3,136,914 ($3,516,918 - 2001) of donations, which are subject to the applicants fulfilling certain conditions.
10. Reconciliation of Net Surplus With Operating Cash Flows
2002 2001
$ $
Net surplus/(deficit) for the period (2,823,374) (5,599,202)
Adjust for non-cash items:
Income on investments 2,507,261 6,016,270
Depreciation 15,745 15,269
Movements in net current assets:
Accrued income (8,762) 71,989
Donations and sundry payables 14,080 29,367
Provision for taxation 193,770 0
Net operating cash flows (101,280) 533,693
11. Contingent Liabilities and Commitments
Commitments
The trust is committed to $982,279 ($2,971,784 - 2001) for the "Shooting Star Community Project" and future funding of $500,000 ($1,000,000 - 2001) for the four regional sports trusts in the region.
Lease Commitments
2002 2001
$ $
Within 1 year 39,375 39,375
1-2 years 24,704 39,375
2-5 years 0 21,791
64,079 100,541
A six-year renewal option exists.
Contingencies
There are no contingent liabilities at balance date.
12. Segmental Reporting
The trust operates as a charitable trust distributing funds to the community in the central North Island region.
13. Financial Instruments
Financial instruments include short-term deposits, New Zealand bonds, international bonds, derivatives and investments in managed funds both within New Zealand and overseas.
13.1 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.
13.2 Fair Values
The trust has recorded its financial assets and liabilities at current market values, which represent estimated fair values and credit risk exposure.
13.3 Currency Risk
The trust has exposure to currency risk through its investments in offshore equities and bonds. The current investment policy requires full hedging of currency risk for overseas bonds and 50% hedging of currency risk for overseas equities. This is managed by fund managers with a range of tolerance.
Offshore investments are denominated into the following foreign currency groupings:
$
USA/Canada 26,498,943
UK/Europe 30,100,383
Japan 15,628,384
Australia 8,112,875
80,340,585
13.4 Credit Facilities
The trust has no credit facilities.
13.5 Interest Rate Risk
The trust investments in fixed rate securities are subject to interest rate risk.
14. 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 Eastern & Central Community Trust Inc.
We have audited the attached consolidated financial report. The consolidated financial report provides information about the past financial performance and financial position of Eastern & Central Community Trust Inc. group (the trust) as at 31 March 2002. This information is stated in accordance with the accounting policies set out in note 1.
Trustees' Responsibilities
The trustees are responsible for the preparation, in accordance with New Zealand law and generally accepted accounting practice, of a financial report which gives a true and fair view of the financial position of the trust as at 31 March 2002 and of the results of its operations and cash flows for the year ended 31 March 2002.
Auditors' Responsibilities
It is our responsibility to express an independent opinion on the 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 financial report. It also includes assessing:
? the significant estimates and judgements made by the trustees in the preparation of the 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 consider 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.
Our firm has provided taxation and accounting advice to the trust during the year. Other than this and our responsibilities as auditors, 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:
? proper accounting records have been kept by the trust as far as appears from our examination of those records; and
? the attached consolidated financial report
- complies with generally accepted accounting practice in New Zealand;
- gives a true and fair view of the financial position of the trust as at 31 March 2002 and the results of its operations and cash flows for the year ended on that date.
Our audit was completed on 12 June 2002 and our unqualified opinion is expressed as at that date.




DENT ROBERTSON & PARTNERS
Chartered Accountants
Hastings, New Zealand
Schedule of Community Payments for the Year Ended 31 March 2002
Donations by Region
2002 2001
$ $
Poverty Bay 1,479,870 1,174,173
Hawke's Bay 1,844,148 5,154,037
Tararua 190,710 918,610
Wairarapa 668,266 1,053,594
Manawatu 1,571,062 2,791,562
Horowhenua 1,114,133 388,106
Regional 264,300 325,050
Total donations 7,132,489 11,805,132
---------------
An itemised list of all donations is available at www.ecct.org.nz or free of charge from the Trust Manager, Eastern & Central Community Trust Inc., P.O. Box 1058, Hastings.