Consolidated Statement of Financial Performance for the Year Ended 31 March 2004
Notes 2004 2003
$ $
Income:
Investment income (net) 9 2,291,209 (7,271,617)
Interest received 872,884 286,981
Donations returned 1,297 20,190
Rental income 103,472 106,567
Other income 35,742 80
Total income 3,304,604 (6,857,879)
Less expenses:
Auditors' fees 7,989 9,000
Depreciation 8,391 9,189
Donation expenses 9,260 14,384
Interest expenses 652 -
Operating costs 333,333 344,890
Trustee expenses 3993 18,640
Trustee fees 44,965 58,795
Total expenses 408,583 454,898
Net surplus/(deficit) before donations and taxation 2,896,021 (7,312,777)
Less:
Donations 383,980 1,447,290
Net surplus/(deficit) 2,512,041 (8,760,067)
Consolidated Statement of Movements in Trust Funds for the Year Ended 31 March 2004
Net surplus/(deficit) 2,512,041 (8,760,067)
Total recognised revenuesand expenses 2,512,041 (8,760,067)
Less:
Allocated to donation reserve from prior years' trust funds 44,136 176,818
Movement in equity for the year 2,467,905 (8,936,885)
Trust funds at 1 April 2003 33,837,560 42,774,445
Total trust funds at 31 March 2004 36,305,465 33,837,560
Donation reserve account
Opening balance as at 1 April 2003 - -
Allocation from prior years' trust funds 44,136 176,818
Less:
Donations paid from prior years' trust funds 44,136 176,818
Closing balance as at 31 March 2004 - -
Consolidated Statement of Financial Position as at 31 March 2004
Current assets:
Bank accounts 123,061 27,149
Term investments 4 1,591,469 27,037,912
Accounts receivable - trading 10,370 12,694
Accounts receivable - investment - 22,909
Prepayments 9,092 8,722
Taxation refund 15,664 633
The Embassy Theatre Trust 4 80,000 80,000
Goods and services tax 1,378 1,203
Total current assets 1,831,034 27,191,222
Less current liabilities:
Accounts payable - trading 58,968 64,061
Accounts payable - investment 31,734 -
Marac Finance - current portion 1,766 -
Total current liabilities 92,468 64,061
Net current assets 1,738,566 27,127,161
Non current assets:
Fixed assets 3 27,987 28,112
Investments 4 34,544,041 6,682,287
Total non current assets 34,572,028 6,710,399
Non current liabilities
Marac Finance - term portion 5,129 -
Total non current liabilities 5,129 -
Net assets 36,305,465 33,837,560
Represented by:
Trust funds 36,305,465 33,837,560
Total trust funds 36,305,465 33,837,560
For and on behalf of the board of trustees:
MATTIE BLACKBURN, Chairperson.
LINDA RIEPER, Trustee.
Date: 1 July 2004.
Consolidated Statement of Cash Flows for the Year Ended 31 March 2004
Cash flows from operating activities-
Cash was provided from:
Interest on investments 910,946 238,608
Rental income 103,472 106,567
Donations returned 1,297 30,190
Miscellaneous income 35,741 80
Realised revenue 438,596 -
Dividends received 412,323 -
G.S.T. received 186 -
1,902,561 375,445
Cash was applied to:
Payments to suppliers (308,898) (353,777)
Payments to fund managers (92,864) (179,172)
Payments to trustees (64,189) (88,165)
Donations to community (417,376) (1,638,492)
Tax paid (15,031) (6)
G.S.T. paid - (197)
(898,358) (2,259,809)
Net inflow (outflow) from operating activities (1,004,203) (1,884,364)
Cash flows from investing activities-
Cash was provided from:
Realisation from investments 30,153,823 28,842,211
The Embassy Theatre Trust 80,000 50,000
30,233,823 28,892,211
Cash was applied to:
Purchase of fixed assets (8,266) (6,650)
Term investments - (26,989,803)
Investment funds (31,133,848) -
(31,142,114) (26,996,453)
Net inflow (outflow) from investing activities (908,291) 1,895,758

Net increase (decrease) in cash held 95,912 11,394
Opening cash brought forward 27,149 15,755
Closing cash carried forward 123,061 27,149
Shown in statement of financial position as:
Cash at bank 123,061 27,149
Closing cash carried forward 123,061 27,149
Consolidated Notes to the Financial Statements for the Year Ended 31 March 2004
1. Statement of Accounting Policies
Reporting Entity
The entity qualifies for differential reporting under the Institute of Chartered Accountants of New Zealand's Differential Reporting Framework due to size. The entity has taken advantage of all available differential reporting exemptions, except that a statement of cash flows has been prepared in accordance with Financial Reporting Standard No. 10.
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.
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 company.
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.
Property, Plant and Equipment
Property, plant and equipment 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:
Furniture and office equipment 13.2 - 48.0 %DV
Goods and Services Tax
The Community Trust of Wellington financial statements are prepared on a G.S.T. inclusive basis.
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 company, Wellington Community Trust Charities Limited, is restricted by its 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 company operate under the trading name of "The Community Trust of Wellington".
3. Fixed Assets
2004
Cost AccumulatedDepreciation BookValue
$ $ $
Furniture and office equipment 69,547 41,560 27,987
69,547 41,560 27,987
2003
Cost AccumulatedDepreciation BookValue
$ $ $
Furniture and office equipment 61,281 33,169 28,112
61,281 33,169 28,112
4. Investments
2004 2003
$ $
Secured Investments (Current):
The Embassy Theatre Trust 80,000 80,000
Total 80,000 80,000
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 next repayment is due 1 July 2004.
2004 2003
$ $
Term investments (current):
ANZ Banking Group - 7,075,573
ASB Bank Limited 1,026,454 6,013,828
Bank of New Zealand 565,015 2,864,560
National Bank - 11,083,951
Total 1,591,469 27,037,912
Investments (Non Current)
2004 2003
$ $
Investments held by AMP Capital Investors comprise:
New Zealand fixed interest bonds 4,638,030 -
Total 4,638,030 -
Investments held by BT Funds Management (NZ) Limited comprise:
Cash - 79,977
Currency - (5,489)
Fixed interest bonds - 4,697,833
Equities - 9,966
Total - 4,782,287
Investments held by Guardian Trust Funds Management comprise:
Equities 13,792,994 -
Total 13,792,994 -
Investments held by Tower Asset management comprise:
International fixed interest bonds 7,106,580 -
Total 7,106,580 -
Investments held by Walker Capital Limited comprise:
Money market deposits 362,884 -
Equities 6,869,231 -
Other investments (45,678) -
Total 7,186,437 -
Secured investments (non current):
The Embassy Theatre Trust 320,000 400,000
Karori Wildlife Sanctuary Trust 1,500,000 1,500,000
Total secured investments 1,820,000 1,900,000
Total non current investments 34,544,041 6,682,287
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. Repayments were to commence from 1 August 2004. This is now to be 1 August 2005.
It is the intention of the directors to hold the investments long term and accordingly they have been classified as non current assets.
5. 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 2004.
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.
6. Commitments
(a) Donations
As at 31 March 2004, The Community Trust of Wellington has the following commitments:
2004 2003
$ $
Less than one year 296,785 382,921
Between one and two years 400,000 177,500
Between two and five years - -
696,785 560,421
(b) Lease Commitments
Commitments existed for non-cancellable operating leases as follows:
Less than one year 129,956 126,000
Between one and two years 127,518 126,000
Between two and four years 42,000 168,000
Greater than five years - -
299,474 420,000
Total rental expense for 2004 is $126,000.00 (2003 - $126,000.00).
Commitments existed for non-cancellable finance leases as follows:
Less than one year 2,562 -
Between one and two years 2,562 -
Between two and four years 3,416 -
Greater than five years - -
8,540 -
(c) Capital Commitments
The group has no capital commitments as at 31 March 2004 (2003 - $Nil).
7. Contingent Liabilities
The trust has no contingent liabilities as at 31 March 2004 (2003 - $Nil).
8. 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 AMP Capital Investors, Tower Asset Management, Guardian Trust Funds Management and Walker Capital Management 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:
2004 2003
$ $
Bank accounts 123,061 28,649
Accounts receivable 10,370 35,603
Investments (current) 1,671,469 27,117,912
Investments (non current) 34,544,041 6,682,287
Currency Risk
The Community Trust of Wellington incurs currency risk as a result of investment transactions managed by AMP Capital Investors, Tower Asset Management, Guardian Trust Funds Management and Walker Capital Management Limited.
Interest Rate Risk
The investments of the Community Trust of Wellington, which are sensitive to changes in interest rates, are managed by AMP Capital Investors, Tower Asset Management, Guardian Trust Funds Management and Walker Capital Management Limited. The Community Trust of Wellington is also exposed to interest rate fluctuation on loans, as the debt is on a floating rate.
9. Investment Income (Net)
2004 2003
$ $
Portfolio income-realised and unrealised revenue 2,391,948 (7,027,465)
Less fund management fees and expenses (100,739) (244,152)
Total investment income (net) 2,291,209 (7,271,617)
10. Reconciliation of Net Surplus (Deficit) with Net Cash Flow From Operating Activities and Movements in Trust Funds
2004 2003
$ $
Net surplus/(deficit) 2,512,041 (8,760,067)
Add/(deduct) non cash items:
Depreciation 8,391 9,189
Movements in investment portfolio (1,528,339) 7,097,228
992,093 (1,653,650)
Add/(deduct) movements in other working capital items:
(Increase)/decrease in accounts receivable 2,324 12,715
(Increase)/decrease in prepayments (370) (951)
Increase/(decrease) in accounts payable 26,641 (17,429)
Increase/(decrease) in G.S.T. (175) (115)
Increase/(decrease) in taxation paid (15,031) (6)
Increase/(decrease) in interest accrual 35,960 (48,110)
Increase/(decrease) in finance leases 6,895 -
56,244 (53,896)
Add/(deduct) movements in trust funds:
Donations paid from prior year's trust fund (44,136) (176,818)
Net cash flow from operating activities 1,004,201 (1,884,364)
Audit Report
To the readers of the financial report of The Community Trust of Wellington and its subsidiary company.
Other than our capacity as auditors, our firm has no relationship with or interests in The Community Trust of Wellington and its subsidiary company.
Trustees' Responsibilities
The trustees are 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 company as at 31 March 2004, and of the results of operations 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 Community Trust of Wellington and its subsidiary company'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 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 company in the area of taxation advice and general accounting assistance. Other than in these areas, our firm has no interests in or relationship with The Community Trust of Wellington and its subsidiary company.
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 company as far as appears from our examination of those records; and
? the attached 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 company as at 31 March 2004 and the results of their operations for the year ended on that date.
Our audit was completed on 2 July 2004 and our unqualified opinion is expressed as at that date.
HORWATH WELLINGTON AUDIT, Chartered Accountants, Wellington.
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A copy of the complete annual report, which includes a list of the successful recipients for the 2003/2004 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.