Income and Expenditure Account for the Period Ended 31 March 1994 Notes 1994$ 1993$ Income Dividends2 1,254,279 815,103 Interest Government stock 69,858 23,758 Other investments 23,467 42,612 Total income 1,347,604 881,473 Less expenditure ACC levy 418 408 Advertising 11,683 15,178 Administration expenses 41,445 2,238 Audit 2,519 1,193 Depreciation 2,042 Fees 5,605 338 Trustees' expenses 34,315 30,501 Total expenditure 98,027 49,856 Net income before community payments 1,249,577 831,617 Less community payments Donations General 261,055 278,490 Special 233,000 208,500 Bursaries 43,400 33,750 Total community payments3 537,455 520,740 Surplus transferred to the trust fund $712,122 $310,877 (The notes to the financial statements form part of and are to be read in conjunction with the above accounts.) Balance Sheet as at 31 March 1994 Notes 1994$ 1993$ Trust funds Balance as at 1 April 12,926,299 12,615,422 Net surplus for year 712,122 310,877 Accumulated funds 13,638,421 12,926,299 Revaluation reserve4 61,270,000 Total funds $74,908,421 $12,926,299 Represented by: Current assets Cash at bank5 544,422 367,199 Accruals 3,101 21,988 Total current assets 547,523 389,187 Less current liabilities Sundry creditors 8,125 4,640 Total current liabilities 8,125 4,640 Net current assets 539,398 384,547 Add fixed assets Fixed assets at cost 6,188 Less accumulated depreciation 2,042 Net fixed assets 4,146 Add long-term investments Shares in Trust Bank New Zealand Limited6 73,080,000 11,810,000 Government stock7 1,275,039 721,624 National Disaster Relief Fund 9,838 10,128 Total investments 74,364,877 12,541,752 Net assets $74,908,421 $12,926,299 (The notes to the financial statements form part of and are to be read in conjunction with the above accounts.) Signed on behalf of the board of trustees: T. K. STEWART, Chairperson. B. J. MARTIN, Trustee. Dated this 30th day of May 1994. Statement of Cash Flows for the Period Ended 31 March 1994 Notes 1994$ 1993$ Cash flows from operating activities Cash was provided from: Dividends 1,254,279 815,103 Interest on investments 112,692 93,960 1,366,971 909,063 Cash was applied to: Community payments 536,585 520,740 Trustees and employees 57,663 21,885 Suppliers of other goods and services 34,837 22,901 Net operating cash flows9 737,886 343,536 Cash flows from investing activities Cash was provided from: Sale of investments 100,000 Cash was applied to: Investment in Government stock (554,475) (749,092) Purchase of fixed assets (6,188) Net investing cash flows (560,663) (649,092) Net increase (decrease) in cash held 177,223 (305,556) Add cash at 1 April 367,199 672,755 Cash at 31 March5 $544,422 $367,199 (The notes to the financial statements form part of and are to be read in conjunction with the above accounts.) Notes to the Financial Statements for the Period Ended 31 March 1994 1. Statement of Accounting Policies General Accounting Policies The general accounting policies adopted in the preparation of these financial statements are: The measurement base adopted is the historical cost basis modified by the revaluation of certain assets. Reliance has been placed on the fact that the entity is a going concern. The matching of revenues earned and expenses incurred using accrual accounting except as disclosed separate below. Particular Accounting Policies The following are the particular accounting policies which have a material effect on the measurement of results and financial position: Dividend income from Trust Bank New Zealand Limited is included in the income and expenditure account when it is received. Donations made are included in the income and expenditure account when paid. Depreciation is charged to write off the cost of fixed assets over their expected economic lives using the straightline method: Computer equipment 3 years. Shares held in Trust Bank New Zealand Limited are stated at initial public offer value. Government Securities are purchased primarily with the intention of holding them until maturity. They are valued on a yield to maturity basis. Income tax is not provided as the trust has charitable status for tax purposes therefore its income is not subject to taxation. G.S.T. inclusive accounting has been adopted as the trust is not registered for G.S.T. purposes. Changes in Accounting Policies The shares in Trust Bank New Zealand Limited, previously shown at their cost of $11,810,000, have been revalued to their initial public offer value of $2.10 per share. The resultant increase in value has been shown separately under trust funds as a revaluation reserve of $61,270,000 giving a total value of $73,080,000. The valuation of Government securities has been changed to reflect the true yield to maturity. The effect of this change on the current year is not material. All other policies have been consistently applied. 2. Dividends 1994$ 1993$ Dividends received from Trust Bank New Zealand Limited Final dividend for year ended 31 March 1993732,279 461,970 Interim dividend for year ended 31 March 1994522,000 353,133 $1,254,279 $815,103 3. Donation commitments 1994$ 1993$ Donations approved but not paid Unconditional90,000 181,000 Conditional3,500 18,000 $93,500 $199,000 4. Revaluation Reserve 1994$ 1993$ Revaluation of shares61,270,000 $61,270,000 5. Cash at Bank 1994$ 1993$ Trust bank current account7,353 14,592 Trust bank call account12,000 Petty cash69 Short term deposit525,000 352,607 $544,422 $367,199 6. Shares in Trust Bank New Zealand Limited No. ofShares Shareholding in Trust Bank New Zealand Limited Held at the beginning of the year (ordinary shares of $1 each, fully paid)8 700 000 One for one bonus issue 1 February 19948 700 000 17 400 000 Two for one share split 1 February 199417 400 000 Shares now held (ordinary shares of 50c each, fully paid)34 800 000 1994 1993 Market value $ $ The market value of shares at 31 March 1994 ($2.30)$80,040,000 N/A Restrictions on Disposal Regional community trusts have agreed to an embargo on any sale of their shares (other than as part of the offer or among the participating community trusts) for at least 12 months following flotation. Relationship with Trust Bank New Zealand Limited The 9 regional community trusts together hold approximately 78 percent of the capital of Trust Bank New Zealand Limited. This means that, as a group, they retain control of the Trust Bank Group. The Trust Bank Eastern and Central Community Trust holds 2000 shares outright and 34 798 000 are held by Community Trusts Nominees Limited which acts as a bare trustee and has legal ownership of these shares while the community trust retains beneficial ownership. This holding of 34 800 000 shares represents 10.3 percent of the total shareholding in Community Trusts Investments Limited and Community Trusts Nominees Limited. Community Trusts Nominees Limited is required to act for the participating community trusts, including the exercise of the voting rights attached to the shares, in the manner directed by Community Trusts Investments Limited. The directors of Community Trusts Investments Limited and Community Trusts Nominees Limited are the same. Community Trusts Investments Limited is owned by the participating community trusts in proportion to their present individual shareholdings in Trust Bank New Zealand. The articles of Community Trusts Investments Limited, together with a deed of trust entered into by the participating community trusts, are the mechanisms adopted to regulate the ongoing relationship of the participating community trusts and to manage their collective shareholding in Trust Bank New Zealand. 7. Government Stock Yield% 1994$ 1993$ New Zealand Government stock maturing 15/02/95 10 percent6.09 230,000 230,000 New Zealand Government stock maturing 15/11/95 8 percent6.31 233,000 233,000 New Zealand Government stock maturing 15/11/96 9 percent6.43 255,000 New Zealand Government stock maturing 15/07/97 10 percent6.47 218,000 218,000 New Zealand Government stock maturing 15/07/98 8 percent6.53 255,000 Nominal value 1,191,000 681,000 Unamortised premium 84,039 40,624 $1,275,039 $721,624 Market value of Government stock at 31 March 1993 $1,283,492 8. Financial Instruments The fair values of all financial instruments are disclosed within this report. No undisclosed credit risk exists. There are no undisclosed financial instruments. 9. Reconciliation of Net Surplus With Operating Cash Flows 1994$ 1993$ Net Surplus transferred to trust fund712,122 310,877 Adjust for non cash items Interest included in purchase price of investments6,985 23,585 Amortisation of premium on investments8,272 3,950 Compounded interest(580) (656) Disaster fund payments870 Depreciation2,042 Movements in net current assets Accruals4,690 712 Sundry creditors3,485 2,559 Sundry debtors 2,509 Net operating cash flows$737,886 $343,536 10. Subsidiary Company On 10 March 1994, a subsidiary company, Eastern and Central Community Trust Charities Limited, was incorporated. At 31 March 1994 no capital had been called or paid and no transactions undertaken. Auditors' Report to the Trustees of the Trust Bank Eastern and Central Community Trust Inc. We have audited the financial statements in accordance with accepted auditing standards, and have carried out such procedures as we considered necessary. In our opinion the financial statements give, using the modified historical cost method, a true and fair view of the financial position of the trust as at 31 March 1994 and the results of its activities and cash flows for the year ended on that date. DENT ROBERTSON & PARTNERS, Chartered Accountants. Hastings, New Zealand. Dated this 31st day of May 1994. Note: An itemised list of all donations is available, on request, from the Executive Secretary, P.O. Box 1058, Hastings.