Consolidated Statement of Financial Performance for the Year Ended 31 March 2002
Notes 2002 2001
$ $
Income:
Investment income (net) 12 (157,080) (2,595,068)
Capital gain on sale of investment property 27,848 -
Interest received 45,879 20,584
Donations returned 12,000 1,000
Rental income 161,998 161,077
Total income 90,645 (2,412,407)
Less expenses:
Auditors' fees 8,450 10,266
Depreciation 7,580 7,384
Donation expenses 16,857 12,380
Interest 10,249 55,284
Operating costs 401,943 285,870
Trustee expenses 27,554 14,589
Trustee fees 50,690 51,318
Total expenses 523,323 437,091
Net surplus/(deficit) before donations and taxation (432,678) (2,849,498)
Less:
Donations 1,939,695 3,399,543
Net surplus/(deficit) before taxation (2,372,373) (6,249,041)
Less:
Provision for taxation 7 - (20,694)
Net surplus/(deficit) (2,372,373) (6,228,347)
Consolidated Statement of Movements in Trust Funds for the Year Ended 31 March 2002
Trust funds at 1 April 2001 45,404,069 51,814,611
Less:
Allocated to donation reserve from prior years' trust funds 257,250 182,195
Net deficit 2,372,373 6,228,347
Total trust funds at 31 March 2002 42,774,446 45,404,069
Donation reserve account:
Opening balance as at 1 April 2001 - -
Allocation from prior years' trust funds 257,250 182,195
Less:
Donations paid from prior years' trust funds 257,250 182,195
Closing balance as at 31 March 2002 - -
Consolidated Statement of Financial Position as at 31 March 2002
Current assets:
Bank accounts 15,755 58,341
Investment property 6 - 1,300,000
Accounts receivable - trading 22,687 21,583
Accounts receivable - investment 74,396 29,724
Prepayments 7,770 1,566
Taxation refund 628 2,446
Investments 4 50,000 -
Goods and services tax 1,088 -
Total current assets 172,324 1,413,660
Less current liabilities:
Accounts payable - trading 81,067 201,520
Accounts payable - investment 413,068 17,071
Bank of New Zealand loan - current portion 10 - 664,519
Goods and services tax - 3,544
Total current liabilities 494,135 886,654
Net current liabilities 321,811 (527,006)
Non current assets:
Fixed assets 3 30,651 36,116
Investments 5 43,065,606 44,840,947
Total non current assets 43,096,257 44,840,947
Net assets 42,774,446 45,404,069
Represented by:
Trust funds 42,774,446 45,404,069
Total trust funds 42,774,446 45,404,069
For and on behalf of the board of trustees:
PETER RICHARDSON, Chairperson.
PETER WILLIS, Trustee.
Date: 6 June 2002.
Consolidated Statement of Cash Flows for the Year Ended 31 March 2002
Cash flows from operating activities-
Cash was provided from:
Interest on investments 37,385 20,585
Rental income 26,138 138,375
OPEX recovered 16,223 21,772
G.S.T. received - 38
Tax refunded 1,818 -
Donations returned 2,000 1,000
Capital gain on sale of investment property 27,848 -
111,412 181,770
Cash was applied to:
Payments to suppliers (308,916) (309,317)
Payments to fund managers (166,596) (152,413)
Payments to trustees (74,526) (64,109)
Donations to community (2,301,945) (3,476,738)
Tax paid - (26)
G.S.T. paid (2,785) -
(2,854,768) (4,002,603)
Net cash flows from operating activities (2,734,356) (3,820,833)
Cash flows from investing activities-
Cash was provided from:
Net realisation from investments 2,079,200 1,881,000
Sale of investment property 1,300,200 -
3,379,200 1,881,000
Cash was applied to:
Purchase of fixed assets (2,115) (34,720)
(2,115) (34,720)
Net cash flows from investing activities 3,377,085 1,846,280
Cash flows from financing activities-
Cash was provided to:
BNZ loan principal repayments (664,519) (42,806)
Interest expense (11,796) (55,109)
(676,315) (97,915)
Net cash flows from investing activities (676,315) (97,915)
Net increase (decrease) in cash held (42,586) (2,072,468)
Cash at the beginning of the year 58,341 2,130,809
Cash at the end of the year 15,755 58,341
Shown in statement of financial position as:
Cash at bank 15,755 58,341
Cash at the end of the year 15,755 58,341

Consolidated Notes to the Financial Statements for the Year Ended 31 March 2002
1. Statement of Accounting Policies
Reporting Entity
The financial statements presented here are for the reporting entity The Community Trust of Wellington and its wholly owned companies, Wellington Community Trust Charities Limited and Jarden Mile Investments Limited. The Community Trust of Wellington is an incorporated charitable trust under the Charitable Trusts Act 1957.
Reporting Basis
The trustees have chosen to prepare general purpose financial reports which comply with generally accepted accounting practice.
Measurement Base
The measurement base adopted is historical cost with the exception of certain items for which specified accounting policies are identified.
Investment Income (Net)
Investment income (net) includes gross investment income less management fees payable to the fund managers.
Investment Property
The investment property held is valued at net current value. Depreciation is not charged on the investment property. The net change in the value of the investment property is recorded in the consolidated statement of financial performance.
Basis of Consolidation
The consolidated financial statements have been prepared using the purchase method of consolidation and include the financial statements of the parent and subsidiary companies.
All significant inter-entity profits and transactions have been eliminated in preparing the consolidated financial statements.
Accounts Receivable
Accounts receivable are stated at expected realisable value.
Donations
Donations made from current year's income are recorded in the statement of financial performance when paid. Donations from prior years' income are recorded in the statement of movements in trust funds when paid.
Fixed Assets
Fixed assets are stated at cost less accumulated depreciation.
Depreciation
Depreciation is charged at the maximum rates allowable by the Inland Revenue Department. The tax rates are as follows:
Computer equipment 24.0 - 48.0 %CP
Office furniture 9.0 - 60.0 %DV
Goods and Services Tax
The financial statements for The Community Trust of Wellington are prepared on a G.S.T. inclusive basis with the following exceptions:
? The Wellington Community Trust Charities Limited is registered for G.S.T. on the basis that taxable supplies are derived from rent received and the reimbursement of operating expenses from the sub-leasing of their premises. Income and expenditure relating to this are stated on a G.S.T. exclusive basis.
? Transactions relating to Jarden Mile Investments Limited are prepared on a G.S.T. exclusive basis as it is registered for G.S.T.
Shares and Investments
Shares and other investments are stated at the market value. Changes in the market value of investments are taken to the statement of financial performance.
Financial Instruments
All financial instruments held by the trust are recorded in the statement of financial position. The financial instruments comprise equity securities, discounted securities, secured investments, borrowings, deposits and cash. Concentrations of credit risk arise as a result of holding equity securities as investments. These are subject to the normal market risk associated with investments of this nature. There are no significant differences between the fair value and book value of financial instruments.
Where possible, financial assets and liabilities are supported by collateral or other security. These arrangements are described in the individual policy statements associated with each item.
Changes in Accounting Policies
There have been no changes in accounting policies. All policies have been applied on bases consistent with those used in previous years.
2. Nature of Business
The Community Trust of Wellington was incorporated as a charitable trust in accordance with the provisions of the Trustee Banks Restructuring Act 1988 and now superseded by the Community Trust Act 1999. The purpose of the community trust is to provide charitable, cultural, philanthropic and recreational benefits to the community, principally in the trust region.
The nature of business of the wholly owned companies, Wellington Community Trust Charities Limited and Jarden Mile Investments Limited, is restricted by their constitution to providing charitable benefits to the community, principally in the region of The Community Trust of Wellington.
The Community Trust of Wellington and its subsidiary companies operate under the trading name of "The Community Trust of Wellington".
3. Fixed Assets
2002
Cost Accumulated
Depreciation Book
Value
$ $ $
Computer equipment 14,094 12,303 1,791
Office furniture 40,537 11,677 28,860
54,631 23,980 30,651
2001
Cost Accumulated
Depreciation Book
Value
$ $ $
Computer equipment 14,094 10,686 3,408
Office furniture 38,422 5,714 32,708
52,516 16,400 36,116
4. Investments (Current)
2002 2001
$ $
Secured investments (current):
The Embassy Theatre Trust 50,000 -
Total 50,000 -
On 30 June 1998, The Embassy Theatre Trust entered in a 5th mortgage agreement with Wellington Community Trust Charities Limited. The mortgage is repayable over 10 years and is secured over the property owned by The Embassy Theatre Trust. The first repayment will be on 1 July 2002.
5. Investments (Non Current)
2002 2001
$ $
Investments held by Tower Asset Management comprise:
Money market deposits 2,668,489 1,678,767
Fixed interest bonds 2,664,851 3,640,654
Equities 18,017,843 19,963,356
Other investments 435,177 (667,105)
Total 23,786,360 24,615,672
Investments held by BT Funds Management (NZ) Limited comprise:
Currency 175,746 (82,883)
Property - 18,325
Fixed interest bonds 1,399,001 2,831,778
Equities 13,873,607 14,494,443
Short term investment 1,840,791 933,612
Investment trusts 10,101 -
Total 17,299,246 18,195,275
Secured investments (non current):
The Embassy Theatre Trust 480,000 530,000
Karori Wildlife Sanctuary Trust 1,500,000 1,500,000
Total 1,980,000 2,030,000
On 19 February 1999, the Karori Wildlife Sanctuary Trust entered into a loan agreement with Wellington Community Trust Charities Limited. The loan is guaranteed by the Wellington City Council. The loan is to be repaid over 15 years with repayments commencing from 1 July 2004.
Total investments 43,065,606 44,840,947
It is the intention of the trustees to hold the investments long term and, accordingly, they have been classified as non current assets.
6. Investment Property
2002 2001
$ $
Investment property at valuation - 1,300,000
Total investment property - 1,300,000
The investment property at 19 Jarden Mile, Ngauranga, was sold in June 2001.
7. Taxation
The Community Trust of Wellington is not exempt from income tax as a charitable trust. No taxation liability arises for the year ended 31 March 2002.
A reversal of provision for taxation of $20,694 was recorded in the financial statements for the 2001 year. During 2001, the charitable status of the trust was being reviewed by the Inland Revenue Department. The review resulted in a reversal of the 2000 tax provision in 2001.
For taxation purposes, Wellington Community Trust Charities Limited is deemed to be a charitable organisation and on this basis the income is not subject to taxation. The company's charitable status was confirmed on 27 August 1997 by the Inland Revenue Department.
For taxation purposes, Jarden Mile Investments Limited is deemed to be a charitable organisation and on this basis the income is not subject to taxation. The company's charitable status was confirmed on 29 September 1998 by the Inland Revenue Department.
8. Commitments
(a) Donations
As at 31 March 2002, The Community Trust of Wellington has conditionally committed funding to:
2002 2001
$ $
The Wellington Regional Sports Education Trust (Sport Wellington Region) 1,000,000 1,500,000
Te Runanganui O Taranaki Whanui Ki Te Upoko O Te Ika A Maui Incorporated (Tu Tangata) - 60,000
New Zealand Symphony Orchestra Limited - 150,000
WellTrust 1,800,000 2,400,000
New Zealand International Festival of the Arts Trust 450,000 600,000
Fresh Start Incorporated 15,000 -
Total commitments 3,265,000 4,710,000
Less than one year 1,257,500 1,460,000
Between one and two years 1,257,500 1,250,000
Between two and five years 750,000 2,000,000
3,265,000 4,710,000
(b) Lease Commitments
Commitments existed for non-cancellable operating leases as follows:
Less than one year 132,036 132,036
Between one and two years 132,036 132,036
Between two and five years 289,107 389,699
Greater than five years - 31,443
553,179 685,214
(c) Capital Commitments
The group has no capital commitments as at 31 March 2002 (2001 $Nil).
9. Contingent Liabilities
The trust has no contingent liabilities as at 31 March 2002 (2001 $Nil).
10. Term Loan
2002 2001
$ $
Bank of New Zealand:
Current - 664,519
Non current - -
Total liability - 664,519
The term loan was fully repaid with the proceeds from the sale of the investment property situated at 19 Jarden Mile, Ngauranga, in June 2001.
11. Financial Instruments
Investments are stated at estimated market value at balance date. Accounts payable, secured investments and accounts receivable are stated at the amount expected to be received or paid.
Accordingly, the trustees consider that the fair value of each class of financial asset and financial liabilities is the same as the carrying value in the statement of financial position.
Concentration of Credit Risk
The concentrations of credit risk incurred by the trust are managed by Tower Asset Management and BT Funds Management (NZ) Limited. Credit risk also exists with the loan agreements entered into during the year.
Trustees consider the risk of non-recovery of these investments to be within satisfactory guidelines.
Maximum exposures to credit risk as at balance date are:
2002 2001
$ $
Bank accounts 15,755 58,341
Accounts receivable 97,083 51,307
Investments (current) 50,000 -
Investments (non current) 43,065,606 46,140,947
Currency Risk
The Community Trust of Wellington incurs currency risk as a result of investment transactions managed by Tower Asset Management and BT Funds Management (NZ) Limited.
Interest Rate Risk
The investments of the Community Trust of Wellington which are sensitive to changes in interest rates are managed by Tower Asset Management and BT Funds Management (NZ) Limited. The Community Trust of Wellington is also exposed to interest rate fluctuation on loans, as the debt is on a floating rate.
12. Investment Income (Net)
2002 2001
$ $
Portfolio income-realised and unrealised revenue 198,400 (2,352,943)
Less fund management fees and expenses (355,480) (242,125)
Total investment income (net) (157,080) (2,595,068)
13. Reconciliation of Net Surplus (Deficit) with Net Cash Flow From Operating Activities
2002 2001
$ $
Net surplus/(deficit) (2,372,373) (6,228,347)
Add/(deduct) financing items:
Interest expense 11,796 55,108
Add/(deduct) non cash items:
Depreciation 7,580 7,384
Portfolio investment income reinvested 42,138 2,280,863
49,718 (3,884,992)
Add/(deduct) movements in other working capital items:
(Increase)/decrease in accounts receivable (45,776) 156,669
(Increase)/decrease in prepayments (6,204) 1,392
Increase/(decrease) in accounts payable 275,545 119,437
(Increase)/decrease in G.S.T. (4,633) 452
Increase/(decrease) in taxation paid 1,818 (26)
Increase/(decrease) in tax provision - (20,694)
220,750 257,230
Add/(deduct) items classified as an investing activity:
Movement-BT Funds Management (NZ) Limited (404,959) (6,352)
Movement-Tower Asset Management 8,962 (4,524)
(395,997) (10,876)
Add/(deduct) movements in trust funds:
Donations paid from prior years' trust fund (257,250) (182,195)
Net cash flow from operating activities (2,743,356) (3,820,833)
14. Events After Balance Date
Since balance date, there has been a change in fund managers. The investments are now managed by BT Funds Management Limited and New Zealand Guardian Trust Funds Management Limited.
Audit Report
To the readers of the financial report of The Community Trust of Wellington and its subsidiary companies.
We have audited the financial report. The financial report provides information about the past financial performance and its financial position of The Community Trust of Wellington and its subsidiary companies as at 31 March 2002. This information is stated in accordance with the accounting policies.
Board of Trustees' Responsibilities
The board of trustees is responsible for the preparation of a financial report which gives a true and fair view of the financial position of The Community Trust of Wellington and its subsidiary companies as at 31 March 2002 and of the results of operations and cash flows for the year ended on that date.
Auditors' Responsibilities
It is our responsibility to express an independent opinion on the financial report presented by the board of 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 board of trustees in the preparation of the financial report; and
? whether the accounting policies are appropriate to The Community Trust of Wellington and its subsidiary companies' circumstances, consistently applied and adequately disclosed.
We conducted our audit in accordance with New Zealand auditing standards in. 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 obtain 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 carries out other assignments for The Community Trust of Wellington and its subsidiary companies in the area of special consultancy projects. Other than in our capacity as auditor, we have no other relationship with or interest in The Community Trust of Wellington and its subsidiary companies.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion:
? proper records have been kept by The Community Trust of Wellington and its subsidiary companies as far as appears from our examination of those records; and
? the financial report:
- complies with generally accepted accounting practice;
- gives a true and fair view of the financial position of The Community Trust of Wellington and its subsidiary companies 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 6 June 2002 and our unqualified opinion is expressed as at that date.
GRANT THORNTON, Wellington.
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A copy of the complete annual report, which includes a list of the successful recipients for the 2001/2002 financial year,
is available on request from the office of the trust at Level One, 28 Grey Street, Wellington, or by phoning (04) 499 7966.