Consolidated Statement of Financial Performance for the Year Ended 31 March 2004
Note 2004 2003
$ $
Income:
Income from investments 2 15,410,286 (11,376,065)
Less expenditure:
Advertising and promotion 117,331 165,660
Auditor fees - Trust audit 11,238 8,000
- Other services 2,016 1,698
Depreciation 20,877 22,186
Rent and occupancy 42,581 50,665
Professional fees 70,844 80,271
Trustee meeting expenses 53,897 42,048
Trustee fees 151,457 135,417
Wages and salaries 263,308 234,183
Other expenses 70,470 66,616
Total expenditure 804,018 806,743
Less provision for tax 3 - -
Net surplus/(deficit) 14,606,268 (12,182,808)
The net surplus/(deficit) has been allocated as follows:
Trust capital maintenance 1,200,000 -
Donation reserve transfer 13,406,268 (12,182,808)
14,606,268 (12,182,808)
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2004
Note 2004 2003
$ $
Equity at start of period 105,432,428 121,840,792
Net surplus/(deficit) 14,606,268 (12,182,808)
Total recognised revenues and expenses 14,606,268 (12,182,808)
Net community donations 9 (4,879,396) (4,225,556)
Equity at the end of period 115,159,300 105,432,428
Consolidated Statement of Financial Position as at 31 March 2004
Note 2004 2003
$ $
Equity:
Trust capital 4 105,534,667 104,334,667
Donation reserve 5 9,624,633 1,097,761
Total trust funds 115,159,300 105,432,428
Assets:
Investments in managed funds 6 108,540,586 99,369,106
Fixed assets 7 44,383 49,623
Accrued income 110,368 72,814
Cash and bank deposits 8 8,975,886 9,449,192
Total assets 117,671,223 108,940,735
Liabilities:
Sundry payables 122,580 128,331
Employee entitlements 16,526 11,503
Donations payable 9 2,372,817 3,174,703
Provision for tax 3 - 193,770
Total liabilities 2,511,923 3,508,307
Net assets 115,159,300 105,432,428
These financial statements have been authorised for issue by the trustees on 24 June 2004.





JOHN CULLING BRIAN BOURKE
Chairperson Trustee
Consolidated Statement of Cash Flows for the Year Ended 31 March 2004
Note 2004 2003
$ $
Cash flows from operating activities-
Cash was provided from:
Investments income 7,508,421 1,220,563
7,508,421 1,220,563
Cash was applied to:
Trustees and employees (409,742) (370,867)
Suppliers of other goods and services (447,362) (620,219)
Payment of Tax (193,770) -
Net operating cash flows 10 6,457,547 229,477
Cash flows from investing activities-
Cash was provided from:
Withdrawals from managed funds - 46,568,577
Sale of fixed assets - -
- 46,568,577
Cash was applied to:
Investment in managed funds (1,233,934) (44,574,755)
Purchase of fixed assets (15,637) (43,654)
(1,249,571) (44,618,409)
Net cash flows from investing activities (1,249,571) 1,950,168
Cash flows from financing activities-
Cash was applied to:
Community donation payments (5,681,282) (5,744,870)
Net cash flows from financing activities (5,681,282) (5,744,870)
Net increase (decrease) in cash held (473,306) (3,565,225)
Add cash at 1 April 9,449,192 13,014,417
Cash at 31 March 8 8,975,886 9,449,192
Notes to the Consolidated Financial Statements for the Year Ended 31 March 2004
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. Cash flows from operations include withdrawals of income from managed funds.
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
2004 2003
$ $
Income from managed funds 14,992,493 (11,811,179)
Less fund managers' expenses 73,115 166,940
14,919,378 (11,978,119)
Plus interest 490,909 602,054
15,410,286 (11,376,065)
3. Taxation
2004 2003
$ $
Net surplus/(deficit) before taxation 14,606,268 (12,182,808)
Add back non-deductible expenditure 402,840 404,653
Less non-assessable income (11,824,491) 14,352,454
Gross assessable income 3,184,617 2,574,301
Beneficiary distributions of assessable income 3,184,617 2,574,301
Taxable income - -
Taxation @ 33% - -
Taxation (as agent) relation to prior years - -
Taxation expense - -
During the year, the trustees paid $193,770 to the Inland Revenue Department on behalf of the beneficiaries. The trustees had made provision for the likely tax payable in 2002. 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 over time 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 to increase the capital by $1,200,000. Previous transfers have exceeded inflation and population increases.
2004 2003
$ $
Balance at the beginning of the year 104,334,667 104,334,667
Allocation of surplus to capital maintenance 1,200,000 -
Balance at the end of the year 105,534,667 104,334,667
5. Donation Reserve
The trustees retain all undistributed income in the donation reserve.
2004 2003
$ $
Balance at the beginning of the year 1,097,761 17,506,125
Transfer from income 13,406,268 (12,182,808)
14,504,029 5,323,317
Less donations 4,879,396 4,225,556
Balance at the end of the year 9,624,633 1,097,761
6. Investments in Managed Funds
2004 2003
$ $
Opening balance 99,369,106 113,790,289
Gross income 14,992,493 (11,811,179)
Withdrawals to fund donations (net) (5,821,013) (2,610,004)
Closing balance 108,540,586 99,369,106
Investments comprise:
Bonds 71,449,273 70,074,201
Equities 37,091,313 29,294,905
Total managed funds 108,540,586 99,369,106
Held in:
New Zealand Bonds 71,449,273 70,074,201
Equities 10,504,888 8,117,851
81,954,161 78,192,052
Off shore Bonds - -
Equities 26,586,425 21,177,054
26,586,425 21,177,054
108,540,586 99,369,106
7. Fixed Assets
2004 2003
$ $
Fixtures, fittings and equipment at cost 147,561 131,924
Less accumulated depreciation 103,178 82,301
44,383 49,923
8. Cash and Bank Deposits
2004 2003
$ $
Current accounts 8,061 7,598
Call accounts 1,267,682 1,041,391
Petty cash 143 202
Short term deposits 7,700,000 8,400,000
8,975,886 9,449,192
9. Donations
2004 2003
$ $
Standard donations 1,103,300 1,082,945
Special donations 3,089,100 2,884,100
Flood relief 300,000 -
Shooting Star 787,340 483,746
Total community donations 5,279,740 4,450,791
Less donations written back 400,344 225,235
Net community donations 4,879,396 4,225,556
Included in donations payable is $1,661,281 ($2,944,902 - 2003) of donations, which are subject to the applicants fulfilling certain conditions.
10. Reconciliation of Net Surplus With Operating Cash Flows
2004 2003
$ $
Net surplus/(deficit) for the period 14,606,268 (12,182,808)
Adjust for non-cash items:
Income on investments (7,937,426) 12,427,360
Depreciation 20,877 22,186
Movements in net current assets:
Accrued income (37,554) 2,328
Sundry payables (848) (39,589)
Provision for taxation (193,770) -
Net operating cash flows 6,457,547 229,477
11. Contingent Liabilities and Commitments
Commitments
The trust has no further commitments ($498,536 - 2003) for the "Shooting Star Community Project".
Lease Commitments
2004 2003
$ $
Within 1 year 41,741 24,704
1-2 years 48,155 -
2-5 years 144,465 -
234,361 24,704
The lease on the present temporary premises expires on 31 July 2004. The trustees have signed an agreement to enter into a
12-year lease for new premises commencing on 1 July 2004. The rent payable is dependent on the fit-out cost but will not exceed $48,155 per annum initially. At the conclusion of the second and fourth years, the rental will be adjusted, if necessary, in accordance to any increase in the consumer price index.
Contingencies
There are no contingent liabilities or contingent assets at balance date.
12. Related Part Transactions
The trust's new premises will be leased from a company in which K. Atkinson, trustee, has a financial interest (refer note 11).
13. Segmental Reporting
The trust operates as a tax-exempt philanthropic trust distributing funds to the community in the central North Island region.
14. 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.
14.1 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.
14.2 Fair Values
The trust has recorded its financial assets and liabilities at current market values, which represent estimated fair values and credit risk exposure.
14.3 Currency Risk
The trust has exposure to currency risk through its investments in offshore equities managed funds. 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. Since March 2003, the Australian equities have been unhedged. In March 2004, the hedging position on the remaining overseas equities was returned to the strategic 50% cover. Currency risk is managed by fund managers with a range of tolerance.
Offshore investments are denominated into the following foreign currency groupings:
2004 2003
$
USA/Canada 7,314,439 6,760,883
UK/Europe 7,819,186 6,439,769
Japan/Asia 5,613,856 3,285,778
Australia 5,838,944 4,690,624
26,586,425 21,177,054
14.4 Credit Facilities
The trust has no credit facilities.
14.5 Interest Rate Risk
The trust investments in fixed rate securities are subject to interest rate risk.
15. 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 2004. 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 2004 and of the results of its operations and cash flows for the year ended 31 March 2004.
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.
Other than our capacity as auditors, we have no relationship with or interest 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 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 2004 and the results of its operations and cash flows for the year ended on that date.
Our audit was completed on 24 June 2004 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 2004
Donations by Region
2004 2003
$ $
Poverty Bay 665,400 502,950
Hawke's Bay 1,735,050 1,369,136
Tararua 148,900 117,450
Wairarapa 413,936 919,300
Manawatu 1,269,800 799,580
Horowhenua 488,654 340,875
Regional 558,000 401,500
Total donations 5,279,740 4,450,791
---------------
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.