Consolidated Statement of Financial Performance for the Year Ended 31 March 2003
Note 2003 2002
$ $
Income:
Income from investments 2 (11,376,065) (1,779,412)
Less expenditure:
Advertising and promotion 165,660 179,139
Auditor fees - Trust audit 8,000 11,500
- Other services 1,698 1,864
Depreciation 22,186 15,745
Rent and occupancy 50,665 49,689
Professional fees 80,271 129,867
Trustee expenses 42,048 39,907
Trustee fees 135,417 112,742
Wages and salaries 234,183 234,241
Other expenses 66,616 75,498
Total expenditure 806,743 850,192
Less provision for tax 3 - 193,770
Net surplus/(deficit) (12,182,808) (2,823,374)
The net surplus/(deficit) has been allocated as follows:
Trust capital maintenance - 3,038,874
Donation reserve transfer (12,182,808) (5,862,248)
(12,182,808) (2,823,374)
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2003
Note 2003 2002
$ $
Equity at start of period 121,840,792 131,688,108
Net surplus/(deficit) (12,182,808) (2,823,374)
Total recognised revenues and expenses (12,182,808) (2,823,374)
Net community donations 9 (4,225,556) (7,023,942)
Equity at the end of period 105,432,428 121,840,792
Consolidated Statement of Financial Position as at 31 March 2003
Note 2003 2002
$ $
Equity:
Trust capital 4 104,334,667 104,334,667
Donation reserve 5 1,097,761 17,506,125
Total trust funds 105,432,428 121,840,792
Assets:
Investments in managed funds 6 99,369,106 113,790,288
Fixed assets 7 49,623 28,155
Accrued income 72,814 75,142
Cash and bank deposits 8 9,449,192 13,014,417
Total assets 108,940,735 126,908,002
Liabilities:
Sundry payables 128,331 166,653
Employee entitlements 11,503 12,770
Donations payable 9 3,174,703 4,694,017
Provision for tax 3 193,770 193,770
Total liabilities 3,508,307 5,067,210
Net assets 105,432,428 121,840,792
These financial statements have been authorised for issue by the trustees on 16 July 2003.





JOHN CULLING BRIAN BOURKE
Chairperson Trustee
Consolidated Statement of Cash Flows for the Year Ended 31 March 2003
Note 2003 2002
$ $
Cash flows from operating activities-
Cash was provided from:
Interest and dividends on investments 1,220,563 995,377
1,220,563 995,377
Cash was applied to:
Trustees and employees (370,867) (381,342)
Suppliers of other goods and services (620,219) (715,315)
Net operating cash flows 10 229,477 (101,280)
Cash flows from investing activities-
Cash was provided from:
Withdrawals from managed funds 46,568,577 6,828,000
Sale of fixed assets - 350
46,568,577 6,828,350
Cash was applied to:
Investment in managed funds (44,574,755) (2,856,000)
Purchase of fixed assets (43,654) (7,419)
(44,618,409) (2,863,419)
Net cash flows from investing activities 1,950,168 3,964,931
Cash flows from financing activities-
Cash was applied to:
Community donation payments (5,744,870) (7,782,316)
Net increase (decrease) in cash held (3,565,225) (3,918,665)
Add cash at 1 April 13,014,417 16,933,082
Cash at 31 March 8 9,449,192 13,014,417
Notes to the Consolidated Financial Statements for the Year Ended 31 March 2003
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. The 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
There have been no changes in accounting policies. All policies have been consistently applied.
2. Income From Investments
2003 2002
$ $
Income from managed funds (11,811,179) (2,242,298)
Less fund managers' expenses 166,940 276,290
(11,978,119) (2,518,588)
Plus interest 602,054 739,176
(11,376,065) (1,779,412)
3. Taxation
2003 2002
$ $
Net surplus/(deficit) before taxation (12,182,808) (2,629,604)
Less non-deductible expenditure 404,653 424,526
non-assessable income 14,352,454 6,220,434
Gross assessable income 2,574,301 4,015,356
Beneficiary distributions of assessable income 2,574,301 4,015,356
Taxable income - -
Taxation @ 33% - -
Taxation (as agent) relation to prior years - 193,770
Taxation expense - 193,770
In the previous year, the trustees made provision of $193,770 for the likely tax payable on behalf of the beneficiaries in settlement with the Inland Revenue Department. No tax is payable this year as all applicants have presented an Inland Revenue letter of exemption from income tax.
4. Trust Capital
The initial trust capital was set at $90,000,000 in 1997. The trust capital has been increased 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 and this year the trustees have determined not to increase the capital as previous transfers have exceeded inflation and population increases.
2003 2002
$ $
Balance at the beginning of the year 104,334,667 101,295,793
Transfer from income - 3,038,874
Balance at the end of the year 104,334,667 104,334,667
5. Donation Reserve
The trustees retain all undistributed income in the donation reserve.
2003 2002
$ $
Balance at the beginning of the year 17,506,125 30,392,315
Transfer from income (12,182,808) (5,862,248)
5,323,317 24,530,067
Less donations 4,225,556 7,023,942
Balance at the end of the year 1,097,761 17,506,125
6. Investments in Managed Funds
2003 2002
$ $
Opening balance 113,790,289 120,269,549
Gross income (11,811,179) (2,242,297)
Withdrawals to fund donations (net) (2,610,004) (4,236,963)
Closing balance 99,369,106 113,790,289
Investments comprise:
Bonds 70,074,201 37,340,851
Equities 29,294,905 76,449,437
Total managed funds 99,369,106 113,790,289
Held in:
New Zealand Bonds 70,074,201 22,352,702
Equities 8,117,851 11,097,001
78,192,052 33,449,704
Off shore Bonds - 14,988,149
Equities 21,177,054 65,352,436
21,177,054 80,340,585
99,369,106 113,790,289
7. Fixed Assets
2003 2002
$ $
Fixtures, fittings and equipment at cost 131,924 108,427
Less accumulated depreciation 82,301 80,272
49,923 28,155
8. Cash and Bank Deposits
2003 2002
$ $
Current accounts 7,598 7,315
Call accounts 1,041,391 1,206,889
Petty cash 202 213
Short term deposits 8,400,000 11,800,000
9,449,192 13,014,417
9. Donations
2003 2002
$ $
Standard donations 1,082,945 1,130,834
Special donations 2,884,100 3,607,150
Bursaries - 405,000
Shooting Star 483,746 1,989,505
Total community donations 4,450,791 7,132,489
Less donations written back 225,235 108,547
Net community donations 4,225,556 7,023,942
Included in donations payable is $2,944,902 ($3,136,914 - 2002) of donations, which are subject to the applicants fulfilling certain conditions.
10. Reconciliation of Net Surplus With Operating Cash Flows
2003 2002
$ $
Net surplus/(deficit) for the period (12,182,808) (2,823,374)
Adjust for non-cash items:
Income on investments 12,427,360 2,507,261
Depreciation 22,186 15,745
Movements in net current assets:
Accrued income 2,328 (8,762)
Sundry payables (39,589) 14,080
Provision for taxation - 193,770
Net operating cash flows 229,477 (101,280)
11. Contingent Liabilities and Commitments
Commitments
The trust is committed to $498,536 ($982,279 - 2002) for the "Shooting Star Community Projects".
Lease Commitments
2003 2002
$ $
Within 1 year 24,704 39,375
1-2 years - 24,704
2-5 years - -
24,704 64,079
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 when held and 50% hedging of currency risk for overseas equities. Since October 2002, the trust has held a tactical hedging position with 100% cover on overseas equities. Currency risk is managed by fund managers with a range of tolerance.
Offshore investments are denominated into the following foreign currency groupings:
2003 2002
$
USA/Canada 6,760,883 26,498,943
UK/Europe 6,439,769 30,100,383
Japan 3,285,778 15,628,384
Australia 4,690,624 8,112,875
21,177,054 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 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 2003. This information is stated in accordance with the accounting policies set out in the consolidated financial report.
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 2003 and of the results of its operations and cash flows for the year ended 31 March 2003.
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 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.
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 2003 and the results of its operations and cash flows for the year ended on that date.
Our audit was completed on 16 July 2003 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 2003
Donations by Region
2003 2002
$ $
Poverty Bay 502,950 1,479,870
Hawke's Bay 1,369,136 1,844,148
Tararua 117,450 190,710
Wairarapa 919,300 668,266
Manawatu 799,580 1,571,062
Horowhenua 340,875 1,114,133
Regional 401,500 264,300
Total donations 4,450,791 7,132,489
---------------
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.