Directory as at 31 March 1996 Trustees E. H. Barnes, D. Bay, D. J. Braithwaite (Chairman), M. M. Brooker, I. R. Gear, J. A. Grace, L. E. Holder, M. M. Lamb, M. M. Leggat, R. T. Mahuta, F. J. H. Parker, R. N. Stanich, A. G. Steel and L. M. Storey. Executive Manager K. M. Gordon, P.O. Box 391, Hamilton. Telephone: (07) 838 2660. Secretary and Accountants Beattie Rickman, P.O. Box 191, Hamilton. Telephone: (07) 838 3838. G. F. Balme. Auditors Deloitte Touche Tohmatsu, P.O. Box 17, Hamilton. Telephone: (07) 839 2527. B. Taylor. Bankers Trust Bank Waikato Limited, P.O. Box 230, Hamilton. Telephone: (07) 834 9777. Trust Particulars The Trust Bank Waikato Community Trust was incorporated as a charitable trust in accordance with the provisions of the Trustee Banks Restructuring Act 1988. The purpose of the community trust is to provide charitable, cultural, philanthropic and recreational benefits to the people in the area served by Trust Bank Waikato Limited. Trustees Report for the Year Ended 31 March 1996 Income Dividends of $5,104,970 (1995 $3,231,800) were received by the Trust Bank Waikato Community Trust from Trust Bank New Zealand Limited during the 1996 year. Other income amounted to $1,178,409 (1995 $1,306,047) being income from other investments held by the trust. Donations Donations for the 1996 year totalled $1,706,125 (1995 $1,181,025). This represents a 44 percent increase over the previous year. These donations were made to 1,502 recipients. Trust Funds The net surplus of $5,484,054 (1995 $2,181,915) was transferred to trust funds, along with an adjustment to recognise the market value of the shares held in Trust Bank New Zealand Limited. This gave an accumulated balance of $149,202,739 (1995 $115,519,085) at the end of the year. General The trust remains in a sound position to continue to provide charitable, cultural, philanthropic and recreational benefits within its area of operation. Signed on behalf of the trustees: D. J. BRAITHWAITE, Chairperson. J. A. GRACE, Trustee. Audit Report to the Readers of the Financial Report of Trust Bank Waikato Community Trust We have audited the financial report. The financial report provides information about the past financial performance of the trust and its financial position as at 31 March 1996. This information is stated in accordance with the accounting policies set out. Board of Trustees' Responsibilities The board of trustees are responsible for the preparation of a financial report which gives a true and fair view of the financial position of the trust as at 31 March 1996 and of the results of the operations and cash flows for the year ended 31 March 1996. Auditors' Responsibilities It is our responsibility to express an independent opinion of the financial report presented by the board of 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 board of 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 in our capacity as auditors we have no relationship with or interests in the trust. Unqualified Opinion We have obtained all the information and explanations that 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 financial report: complies with generally accepted accounting practice; gives a true and fair view of the financial position of the trust as at 31 March 1996 and the results of its operations and cash flows for the year ended on that date. Our audit was completed on 31 May 1996 and our unqualified opinion is expressed as at that date. DELOITTE TOUCHE TOHMATSU. Hamilton. Statement of Financial Performance for the Year Ended 31 March 1996 1996$ 1995$ Income Dividends received from Trust Bank New Zealand Limited 5,104,970 3,231,800 Other investment income1,178,409 1,306,047 6,283,379 4,537,847 Expenses Accountancy/secretarial fees31,893 48,272 Audit3,938 2,250 Bank charges8 Community Trusts Investments Limited share of costs28,785 18,894 Conference1,360 756 Consultants fees 225 General3,987 614 Donation stationery and advertising15,222 4,272 Investment advisory services266,930 89,897 Legal 747 Memberships338 56 Office3,186 Postage and stationery9,261 Publications1,311 4,075 Rent2,608 Recruitment9,735 Telephone and tolls1,518 Travel7,965 3,576 Trustees fees36,646 37,050 Wages30,050 454,966 210,459 Depreciation4,890 Total expenses459,856 210,459 Net income before donations5,823,523 4,327,388 Less donations1,706,125 1,181,025 Net income after donations4,117,398 3,146,363 Increase (decrease) in market value of investments1,366,656 (964,448) Net surplus$5,484,054 $2,181,915 Statement of Movements in Equity for the Year Ended 31 March 1996 1996$ 1995$ Equity at start of the year115,519,085 133,271,370 Net surplus (deficit) for the year5,484,054 2,181,915 Increase (decrease) in revaluation reserve 28,199,600 (19,934,200) Equity at end of the year$149,202,739 $115,519,085 These financial statements must be read in conjuction with the notes shown. Statement of Financial Position as at 31 March 1996 Note 1996$ 1995$ Trust capital Capital fund 21,316,622 21,316,622 Retained income 25,913,846 20,429,792 Shares in TBNZ Limited revaluation reserve3 101,972,271 73,772,671 149,202,739 115,519,085 Current liabilities Payables4 277,372 83,442 $149,480,111 $115,602,527 Represented by: Current assets Trust Bank Waikato cheque account 30,418 517 Trust Bank Waikato call account 1,314,272 173,441 Trust Bank Waikato term deposits 1,846,265 3,190,955 173,959 Investment in Waikato Community Trust Charities Limited5 1,880 1,304 Investments6 146,252,808 115,427,264 Fixed assets 34,468 $149,480,111 $115,602,527 Signed on behalf of the trustees: D. J. BRAITHWAITE, Chairperson. J. A. GRACE, Trustee. Dated this 20th day of June 1996. Statement of Cash Flows for the Year Ended 31 March 1996 Note 1996$ 1995$ Cash flow from operating activities Cash was provided from: Dividends 5,104,970 3,231,800 Other investment income 1,178,409 1,306,047 6,283,379 4,537,847 Cash was disbursed to: Donations 1,570,575 1,131,575 Payments to suppliers and trustees 396,586 207,451 1,967,161 1,339,026 Net cash flow from operating activities8 4,316,218 3,198,821 Cash flow from investing activities Cash was applied to: Net increase in investments 4,246,960 3,206,823 Purchase of fixed assets 39,358 Net cash flow from investing activities 4,286,318 3,206,823 Net increase (decrease) in cash held 29,900 (8,002) Cash at beginning of the year 518 8,520 Cash at end of the year $30,418 $518 Notes to the Financial Statements for the Year Ended 31 March 1996 1. Statement of Accounting Policies Basis of Reporting The financial statements presented here are for Trust Bank Waikato Community Trust and have been prepared in accordance with the requirements of the New Zealand Society of Accountants for the measurement and reporting of profit on an historical cost basis with the exception of certain items for which the specific accounting policies are identified. Fixed assets All fixed assets have been recorded at cost price less depreciation. Donations Donations made are included in the statement of financial performance when approved by the trustees. Taxation For taxation purposes, the trust is deemed to be a charitable organisation. Its income is not subject to taxation. Goods and Services Tax The trust is not registered for goods and services tax purposes. Accordingly, these financial statements are stated on a G.S.T. inclusive basis. Investments Investments are stated at market value. Adjustments to market value of investments are included in the statement of financial performance, with the exception of Trust Bank New Zealand shares, which are included in the share revaluation reserve. Dividend income is included in the statement of financial performance when it is received. 2. Incorporation The Trust Bank Waikato Community Trust was incorporated on 5 August 1988. The value of the Trust Bank New Zealand Limited shares transferred to the Trust Bank Waikato Community Trust is shown in the capital fund in the trust funds section of the statement of financial position. 3. Shares in Trust Bank Waikato New Zealand Limited Revaluation Reserve 1996$ 1995$ Balance at 1 April73,772,671 93,706,871 Increase (decrease) in market value28,199,600 (19,934,200) Balance at 31 March$101,972,271 $73,772,671 4. Payables 1996$ 1995$ Accounts payable72,372 13,992 Donations payable205,000 69,450 $277,372 $83,442 5. Waikato Community Trust Charities Limited This is a wholly-owned charitable company established by the trust and may be used to carry out some of the trust's future activities. The company has not traded and accordingly no consolidation is required. 6. Investments 1996$ 1995$ TBNZ shares120,091,400 91,891,800 Forward exchange contracts43,708 Cash1,383,257 11,314,219 Fixed interest4,275,983 4,180,486 Shares17,412,226 8,040,759 New Zealand Government stock517,243 Convertible notes2,528,991 $146,252,808 $115,427,264 7. Financial Instruments The trust uses the services of an investment advisor to pursue an investment policy considered appropriate for the trust. The current policy is to achieve a long term asset allocation of: Cash15 percent Bonds15 percent Equities70 percent The trust's financial instruments are denominated in the following currencies: 1996$ 1995$ New Zealand dollars132,883,523 109,864,229 Australian dollar equivalents2,313,626 1,534,785 United States dollar equivalents8,033,871 2,095,855 Great Britain pound equivalents5,649,298 2,105,836 Singapore dollar equivalents266,096 Swiss franc equivalents266,931 $149,413,345 $115,600,705 All financial instruments are disclosed at fair value. No undisclosed credit risk exists. At 31 March 1996 the trust had entered in forward exchange contracts to purchase the equivalent of $NZ2,397,000 (1995 $2,027,000) in foreign exchange currency during 1996. 8. Cash flow Reconciliation 1996$ 1995$ Net surplus5,484,054 3,146,363 Adjust for non cash items Depreciation4,890 Increase in market value of investment(1,366,656) Movements in working capital Increase in accounts payable58,380 3,008 Increase in donations payable135,550 49,450 193,930 52,458 Net cash flow from operating activities$4,316,218 $3,198,821 9. Trust Bank New Zealand Limited The trust's investment in Trust Bank New Zealand Limited is valued at market value $2.47 at 31 March 1996 (1995 $1.89). This value is subject to normal market fluctuations of the share price. 10. Subsequent Events On 8 May 1996 the trust agreed to sell its shares in Trust Bank New Zealand Limited to Westpac Bank for an effective price of $2.92 per share. 11. Changes in Accounting Policies There have been no changes in accounting policies since the previous annual financial statements. All policies have been applied on a basis consistent with those used in the previous years annual financial statements. These financial statements must be read in conjuction with the notes shown. A full list of the donations made by the Trust Bank Waikato Community Trust during the year is available on request, by writing to the Executive Manager, Trust Bank Waikato Community Trust (Inc), P.O. Box 391, Hamilton.