Consolidated Statement of Financial Performance for the Year Ended 31 March 2005
Notes 2005 2004
$ $
Revenue:
Investment income (net) 7 2,567,026 2,291,209
Interest received 215,931 872,884
Donations returned – 1,297
Rental income 105,460 103,472
Other income 25,264 35,742
G.S.T. prior period adjustment 17,236 –
Total revenue 2,930,917 3,304,604
Less expenses:
Auditors’ fees 7,500 7,989
Depreciation 4 6,143 8,391
Donation expenses 6,420 9,260
Interest expenses 659 652
Operating costs 369,404 333,333
Trustee expenses 7,669 3,993
Trustee fees 50,770 44,965
Total expenses 448,565 408,583
Net surplus before donations and taxation 2,482,352 2,896,021
Less:
Donations 655,470 383,980
Taxation 3 – –
Net surplus after taxation 1,826,882 2,512,041
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2005
Surplus and revaluations
Trustees’ net surplus/(deficit) for the year 1,826,882 2,512,041
Total surplus/(deficit) and revaluations for the year 1,826,882 2,512,041
Other movements
Allocated to donation reserve fund (171,085) (44,136)
Total other movements (171,085) (44,136)
Total movements in equity for the year 1,655,797 2,467,905

Equity at 1 April 2004 36,305,465 33,837,560
Equity at 31 March 2005 37,961,262 36,305,465
Donation reserve account
Opening balance as at 1 April 2004 – –
Allocation from prior years’ trust funds 171,085 44,136
Less:
Donations paid from prior years’ trust funds 171,085 44,136
Closing balance as at 31 March 2005 – –
Consolidated Statement of Financial Position as at 31 March 2005
Current assets:
Bank accounts 115,942 123,061
Term investments 5 1,595,223 1,591,469
Accounts receivable – trade 83,513 10,370
Accounts receivable – investment 7,034 –
Prepayments 8,082 9,092
The Embassy Theatre Trust 5 – 80,000
Karori Wildlife Sanctuary Trust 5 175,000 –
G.S.T. refund due 35,857 1,378
Taxation refund 3 157 15,664
Total current assets 2,020,808 1,831,034
Current liabilities:
Accounts payable – trading 104,331 58,968
Accounts payable – investment 31,109 31,734
Marac Finance – current portion 1,935 1,766
Total current liabilities 137,375 92,468
Working capital 1,883,433 1,738,566

Non current assets:
Property, plant and equipment 4 26,574 27,987
Investments 6 36,061,079 34,544,041
Total non-current assets 36,087,653 34,572,028
Non current liabilities
Marac Finance – long term portion 9,824 5,129
Total non-current liabilities 9,824 5,129
Net assets 37,961,262 36,305,465
Represented by:
Equity
Trust capital brought forward 36,305,465 33,837,560
Trustees’ surplus for the year 1,826,882 2,512,041
Other movements (171,085) (44,136)
Total equity 37,961,262 36,305,465
For and on behalf of the board of trustees:
MATHEW BLACKBURN, Chairperson.
LINDA RIEPER, Trustee.
Date: 4 August 2005.
Consolidated Statement of Cash Flows for the Year Ended 31 March 2005
Cash flows from operating activities—
Cash was provided from:
Interest on investments 145,840 910,946
Rental income 105,460 103,472
Donations returned – 1,297
Miscellaneous income 12,764 35,741
Realised revenue 2,279,365 438,596
Dividends received 658,902 412,323
Income taxes refunded 15,507 –
G.S.T. received – 186
3,217,838 1,902,561
Cash was applied to:
Payments to suppliers 407,523 308,898
Payments to trustees 56,523 64,189
Payments to fund managers 205,492 92,864
Donations to community 779,475 417,376
G.S.T. paid 17,243 –
Income taxes paid – 15,031
1,466,256 898,358
Net cash inflow (outflow) from operating activities 1,751,582 1,004,203
Cash flows from investing activities
Cash was provided from:
Realisation from investments 10,069,832 30,153,823
The Embassy Theatre Trust 400,000 80,000
10,469,832 30,233,823
Cash was applied to:
Purchase of property, plant and equipment 6,558 8,266
Investment funds 12,221,976 31,133,848
12,228,534 31,142,114
Net cash inflow (outflow) from investing activities (1,758,702) (908,291)

Net increase (decrease) in cash held (7,119) 95,912
Add opening cash brought forward 123,061 27,149
Ending cash carried forward 115,942 123,061
Cash balances in balance sheet:
Cash at bank 115,942 123,061
115,942 123,061
Reconciliation With Reported Operating Surplus
2005 2004
$ $
Net opening surplus/(deficit) 1,826,882 2,512,041
Add non-cash items:
Depreciation 6,143 8,391
Loss on sale of fixed assets 215 –
Small balance assets written off 1,613 –
Unrealised gains/losses 134,818 (1,528,339)
142,789 (1,519,948)
1,969,671 992,093
Add/(less) movements in other working capital items:
(Increase)/decrease in accounts receivable (73,143) 2,325
(Increase)/decrease in prepayments 1,010 (370)
Increase/(decrease) in accounts payable 46,271 26,642
Increase/(decrease) in taxation liability 15,507 (15,031)
Increase/(decrease) in G.S.T. liability (34,479) (175)
Increase/(decrease) in interest accrual (7,034) 35,960
Increase/(decrease) in finance leases 4,864 6,895
(47,004) 56,246
Add/(deduct) movements in trust funds:
Donations paid from prior year’s trust fund (171,085) (44,136)
Net cash inflow from operating activities 1,751,582 1,004,203
Consolidated Notes to the Financial Statements for the Year Ended 31 March 2005
1. Statement of Accounting Policies
Reporting Entity
The financial statements presented here are for the entity The Community Trust of Wellington (“the trust”) and its subsidiary, Wellington Community Trust Charities Limited. The trust is an incorporated charitable trust under the Charitable Trusts Act 1957. The trust prepares its financial statements in accordance with the Act and the financial reporting standards issued by the Institute of Chartered Accountants of New Zealand.
Measurement Base
The measurement base adopted is historical cost with the exception of certain items for which specified accounting policies are identified.
Accounts Receivable
Accounts receivable are stated at expected realisable value.
Property, Plant and Equipment
Property, plant and equipment are stated at cost less accumulated depreciation. Depreciation is calculated on a diminishing value basis to allocate the cost over its useful life:
Furniture and office equipment 9.0%DV – 48.0%DV
Investment Income (Net)
Investment income (net) includes gross investment income less management fees payable to the fund managers.
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 donations reserve account when paid.
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.
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.
Goods and Services Tax
The financial statements have been prepared using a G.S.T. exclusive figures to the extent that G.S.T. is claimable.
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.
Cash and Cash Equivalents
For the purposes of the statement of cash flows, cash comprises cash balances (net of bank overdrafts) and demand deposits. Cash excludes treasury bills that are not used as part of the group’s day-to-day cash management.
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 their constitution to providing charitable benefits to the community, principally in the region of The Community Trust of Wellington. The company was placed into voluntary liquidation on 31 March 2005. From 1 April 2005, all operating activities will be undertaken by the trust. The Community Trust of Wellington and its subsidiary company operate under the trading name “The Community Trust of Wellington”.
3. Taxation
The Community Trust of Wellington is exempt from income tax under section CB4 (1) (m) of the Income Tax Act 1994.
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.
4. Property, Plant & Equipment
2005 2004
$ $
Furniture and office equipment
At cost 43,312 69,547
Less Accumulated depreciation 16,738 41,560
Net book value 26,574 27,987
Depreciation charge for the year 6,143 8,391
5. Investments (Current)
2005 2004
$ $
Secured Investments:
The Embassy Theatre Trust – 80,000
Total – 80,000
On 30 June 1998, The Embassy Theatre Trust entered in a 5th mortgage agreement with Wellington Community Trust Charities Limited. The mortgage was repayable over 10 years and is secured over the property owned by The Embassy Theatre Trust. The mortgage was repaid in full during the year.
2005 2004
$ $
Investments:
ASB Bank Limited 1,092,470 1,026,454
Bank of New Zealand 502,753 565,015
Sub total 1,595,223 1,591,469
Karori Wildlife Sanctuary Trust 175,000 –
1,770,223 1,591,469

Total current investments 1,770,223 1,671,469
6. Investments (Non Current)
2005 2004
$ $
Investments held by AMP Capital Investors comprise:
New Zealand fixed interest bonds – 4,638,030
Total – 4,638,030
Investments held by Tyndall Investment Management (formerly Guardian Trust Funds Management) comprise:
Equities 14,682,137 13,792,994
14,682,137 13,792,994
Investments held by Tower Asset management comprise:
International fixed interest bonds 7,693,140 7,106,580
7,693,140 7,106,580
Investments held by ING New Zealand Limited comprise:
Fixed interest fund 5,100,443 –
5,100,443 –
Investments held by Walker Capital Management Limited comprise:
Money market deposits 318,867 362,884
Equities 6,939,577 6,869,231
Other investments 1,915 (45,678)
7,260,359 7,186,437
Secured investments (non current):
The Embassy Theatre Trust – 320,000
Karori Wildlife Sanctuary Trust 1,325,000 1,500,000
1,325,000 1,820,000
Total non-current investments 36,061,079 34,544,041
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. As at 31 March 2005, the balance, terms and conditions associated with the loan were transferred from Wellington Community Trust Charities Limited to The Community Trust of Wellington. It is the intention of the trustees to hold the investments long term and accordingly they have been classified as non-current assets.
7. Investment Income (Net)
2005 2004
$ $
Portfolio income-realised and unrealised revenue 2,803,234 2,391,948
Less fund management fees and expenses (236,208) (100,739)
Total investment income (net) 2,567,026 2,291,209
8. Contingent Liabilities
There are no contingent liabilities as at 31 March 2005 (2004 – $Nil).
9. Commitments
(a) Donations
As at 31 March 2005, The Community Trust of Wellington has the following commitments:
2005 2004
$ $
Less than one year 200,000 296,785
Between one and two years 200,000 400,000
Between two and five years – –
400,000 696,785
(b) Lease Commitments
Commitments existed for non-cancellable operating leases as follows:
Less than one year 127,518 129,956
Between one and two years 42,000 127,518
Between two and five years – 42,000
169,518 299,474
Total rental expenses for the year ended 31 March 2005 is $125,775 (2004 – $126,000).
Commitments existed for non-cancellable finance leases as follows:
Less than one year 4,775 2,562
Between one and two years 3,172 2,562
Between two and four years 6,345 3,416
14,292 8,540
(c) Capital Commitments
The are no capital commitments as at 31 March 2005 (2004 – $Nil).
10. 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.
Fair Value
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 ING New Zealand Limited, Tower Asset Management, Tyndall Investment Management and Walker Capital Management Limited. Credit risk also exists with the loan agreements entered into during the year. The 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:
2005 2004
$ $
Bank accounts 115,942 123,061
Accounts receivable and prepayments 98,630 9,092
Investments (current) 1,770,223 1,671,469
Investments (non current) 36,061,079 34,544,041
Currency Risk
The Community Trust of Wellington incurs currency risk as a result of investment transactions managed by ING New Zealand Limited, Tower Asset Management, Tyndall Investment 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 ING New Zealand Limited, Tower Asset Management, Tyndall Investment 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.
11. Significant Event
Liquidation of Wellington Community Trust Charities Limited
On 31 March 2005, The Wellington Community Trust Charities Limited was placed into voluntary liquidation. Victor Wu and Rhys Barlow, of Wellington, were appointed liquidators of the company. All assets, liabilities, commitments and contingencies of the company were transferred to The Community Trust of Wellington by way of a $33,000,000 dividend. The Community Trust of Wellington will be responsible for any residual payments or receipts resulting from the liquidation.
Audit Report
To the readers of the financial report of The Community Trust of Wellington and its subsidiary company.
We have audited the attached financial report. The financial report provides information about the past financial performance and financial position of The Community Trust of Wellington and its subsidiary company as at 31 March 2005. This information is stated in accordance with the accounting policies as attached.
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 2005, 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 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 New Zealand Auditing Standards. 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. Other than our capacity as auditors, we have no relationship with or interest in The Community Trust of Wellington or its subsidiary company.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion:
? proper accounting 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 in New Zealand;
– gives a true and fair view of the financial position of The Community Trust of Wellington and its subsidiary company as at 31 March 2005 and the results of its operations and cash flows for the year ended on that date.
Our audit was completed on 4 August 2005 and our unqualified opinion is expressed as at that date.
HORWATH AUDIT (WELLINGTON), Chartered Accountants, Wellington.
–––––––––––––––
A copy of the complete annual report, which includes a list of the successful recipients for the 2004/2005 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.