Trustee Banks Restructuring Act 1988 In accordance with section 24 of the Trustee Banks Restructuring Act 1988, the trust publishes throughout the Bay of Plenty region, the financial accounts of the trust in relation to the year ended 31 March 1997, viz: Chairman's Report for the Year Ended 31 March 1997 Objectives of the Trust: To receive income and allocate such income for charitable, cultural, philanthropic, recreational and other purposes, being purposes beneficial to the community principally in the Bay of Plenty area. Policies and Structure of the Trust A charitable trust designed to administer capital and distribute income for charitable purposes in the Bay of Plenty area. Activities of the Trust: The sale of Trust Bank New Zealand Limited shares in May 1996 at just under $90 million brought a busy year for the trust. The key objectives of trustees were to establish sound investment strategies and appoint fund managers to look after the trust's investments. This task was completed during April 1997 and in the interim period trust funds were invested short term. In tandem with this development Mr Bruce Cronin was appointed trust manager in January 1997. The additional funds available for investment generated by the sale of Trust Bank New Zealand Limited shares has increased substantially the interest earnings of the trust. A consequence is that gross income of the trust has risen from $3,417,551 in 1996 to $9,546,132 in 1997. The additional net proceeds available have enabled the trust to distribute by way of donations and special projects, a record figure of $2,389,198. Review of Results and Financial Position of the Trust The net surplus for the year of $9,078,769 reflects the increased interest earnings and is by far the highest net result achieved by the trust to date. Taxation strategies put in place during the year have resulted in the trust's charitable subsidiary company, Bay of Plenty Community Trust Charities Limited, being utilised for the first time. A beneficiaries income distribution of $7,043,371 to the company has been made for purposes of future donations to charitable organisations. The trustees are very aware that the capital of the trust must not only be protected but must be increased to keep pace with inflation and regional growth. In the immediate years ahead this will mean that reserve appropriations will need to increase but in harmony with reasonable total annual donations to the community. Thanks and Appreciation My sincere thanks are extended to my fellow trustees for the many hours worked on trust business during a very demanding year. Special thanks go to our retiring secretary, Athol Short, for the valued contribution he has made to the trust since taking up his position in 1993 we all wish him the very best in his retirement. ROB TAIT, Chairman. 18 June 1997. Consolidated Statement of Financial Performance for the Year Ended 31 March 1997 Note 1997$ 1996$ Income Dividends2 2,140,178 3,210,000 Interest 7,405,008 207,551 Other 946 - 9,546,132 3,417,551 Less expenditure Advertising 11,148 16,408 Audit fees 4,319 2,931 Office administration 107,291 35,120 Office rental 13,078 3,375 Office administration costs 218,475 60,764 Trustees' fees 66,355 39,957 Trustees expenses 32,747 28,124 453,413 186,679 Depreciation 13,950 1,154 Total operating costs $467,363 $187,833 Net surplus before donations 9,078,769 3,229,718 Donations Donations round 1,044,470 Business grow 33,750 Task Force Green 99,916 Dillon Scholarship 10,500 1,188,636 Net surplus after donations $9,078,769 $2,041,082 (The accompanying notes form part of these financial statements.) Consolidated Statement of Movements in Equity for the Year Ended 31 March 1997 1997$ 1996$ Equity at 1 April 199679,715,961 59,378,674 Less donations paid from capital: Special donations(61,250[teh]) Donations round(2,133,101[teh]) Business grow(85,750[teh]) Task Force Green(99,847[teh]) Dillon Scholarship(9,250[teh]) 77,326,763 59,378,674 Net surplus for the year9,078,769 2,041,082 Increase in revaluation reserve23,098 18,296,205 Capital profit on sale of TBNZ shares11,065,790 Return of non taxable share capital90 Total recognised revenue and expenses for the year20,167,747 20,337,287 Equity at 31 March 1997$97,494,510 $79,715,961 (The accompanying notes form part of these financial statements.) Consolidated Statement of Financial Position as at 31 March 1997 Note 1997$ 1996$ Equity General fund3 97,471,412 21,340,280 Investment revaluation reserve3 23,098 58,375,681 Total equity $97,494,510 $79,715,961 Represented by: Current assets Trust Bank Bay of Plenty Current account 34,849 54,843 Call account 75,000 101,504 Accounts receivable 551,339 48,965 661,188 205,312 Non current assets Term deposits 95,430,689 1,784,077 New Zealand Government stock4 1,443,843 1,654,733 Shares TBNZ Limited4 76,122,858 96,874,532 79,561,668 Fixed assets5 30,578 21,949 Total assets $97,566,298 $79,788,929 Current liabilities Accounts payable 71,788 72,968 Total liabilities 71,788 72,968 Total net assets $97,494,510 $79,715,961 Signed on behalf of the board of trustees: R. B. TAIT, Chairman. M. B. TOWNSHEND, Trustee. Dated this 18th day of June 1997. (The accompanying notes form part of these financial statements.) Consolidated Statement of Cash Flows for the Year Ended 31 March 1997 1997 1996 $ $ Cash flows from operating activities Cash was provided from: Dividends from Trust Bank New Zealand Limited2,140,178 3,210,000 Interest on investments6,856,472 198,585 Other296 8,996,946 3,408,585 Cash was dispersed to: Suppliers of goods and services(355,444[teh]) (66,494[teh]) Trustees(82,646[teh]) (49,159[teh]) Donations to the community(2,356,309[teh]) (1,178,136[teh]) Dillon Memorial Scholarship(9,250[teh]) (10,500[teh]) (2,803,649[teh]) (1,304,289[teh]) Net cash flows from operating activities6,193,297 2,104,296 Cash flows from investing activities Cash was provided from: Sale of shares87,167,470 Cash was applied to: Purchase of fixed assets(22,579[teh]) (23,103[teh]) Purchase of investments(93,384,686[teh]) (2,053,382[teh]) Net cash outflows from investing activities(6,239,795[teh]) (2,076,485[teh]) Increase (decrease) in cash held(46,498[teh]) 27,811 Add cash at 1 April 1996156,347 128,536 Cash at 31 March 1997 $109,849 $156,347 Reconciliation of Net Surplus and Net Cash Flows From Operating Activities 1997 1996 $ $ Net surplus transferred to equity9,078,769 2,041,082 Less payments out of capital (net)(2,389,108[teh]) Fixed asset purchases in accounts payable(20,206[teh]) Add (less) non cash items: Depreciation of fixed assets13,950 1,154 Amortisation of Government stocks13,446 13,660 Movement in working capital: Increase in accounts receivable(502,374[teh]) (22,625[teh]) Increase (decrease) in accounts payable(1,180[teh]) 71,025 Net cash flows from operating activities $6,193,297 $2,104,296 (The accompanying notes form part of these financial statements.) Notes to the Financial Statements for the Year Ended 31 March 1997 1. Statement of Accounting Policies Reporting Entity The Trust Bank Bay of Plenty Community Trust Incorporated is a charitable trust registered under section 14 (i) of the Trustee Banks Restructuring Act 1988. The group consists of Trust Bank Bay of Plenty Community Trust Incorporated and its subsidiary Bay of Plenty Trust Charities Limited. The financial statements have been prepared as required by the Trustee Banks Restructuring Act 1988 and the trust deed dated 30 May 1988 and in accordance with generally accepted accounting practice. Measurement Base The accounting principles recognised as appropriate for the measurement and reporting of earnings and financial position on a historical cost basis are followed by the trust, with the exception of the revaluation of New Zealand Government Stocks. Specific Accounting Policies The following specific accounting policies which materially affect the measurement of financial performance and the financial position have been applied: (a) Donations: Donations made during the year are included in the statement of movements in equity and have been paid from trust capital. (b) Investments: New Zealand Government Stocks are stated at assessed market value. (c) Fixed Assets: Fixed assets are stated at cost less accumulated depreciation. (d) Depreciation: Depreciation is charged to write off the cost of fixed assets over their expected economic lives using the diminishing value method at rates from 12 percent to 40 percent per annum. (e) Accounts Receivable: Accounts receivable are recorded at their estimated realisable value. (f) Financial Instruments: The trust includes all financial instrument arrangements in the balance sheet using the concept of accrual accounting. Financial instruments are valued as per note 1, measurement base. These instruments arise as a result of everyday operations and include bank, accounts receivable, accounts payable and investments. Revenues and expenses in relation to all financial instruments are recognised in the statement of financial performance. Financial instruments are shown at their fair values. (g) The Trust Bank Bay of Plenty Community Trust and its subsidiary charitable company, Bay of Plenty Community Trust Charities Limited have been consolidated using the purchase method of consolidation. Changes in Accounting Policies The following changes have been made to accounting policies this year: Donations have been paid out of capital instead of revenue. Depreciation has been calculated using the diminishing value method instead of the straight-line method. The trust is no longer exempt from income tax. The tax status of the trust has been reviewed and as a consequence the trust is now liable for income tax on assessable income. All other policies have been applied on bases consistent with those used in previous years. 2. Dividends 1997 1996 $ $ Trust Bank New Zealand Limited2,140,000 3,210,000 Community Trusts Investment Limited178 $2,140,178 $3,210,000 3. Equity 1997 1996 $ $ General Fund Balance 1 April 199621,340,281 19,299,199 Net surplus for the year9,078,769 2,041,082 Realised revaluations transferred from investment revaluation reserve58,375,680 Capital profit on sale of TBNZ shares11,065,790 Return of non taxable share capital90 Less donations paid from capital(2,389,198[teh]) 97,471,412 21,340,281 Investment Revaluation Reserve Balance 1 April 199658,375,680 40,079,475 Revaluation for the year23,098 18,296,205 58,398,778 58,375,680 Realised revaluations from sale of TBNZ shares transferred to general fund58,375,680 Balance 31 March 199723,098 58,375,680 Total Equity$97,494,510 $79,715,961 4. Non Current Assets 1997 1996 $ $ Shares in Trust Bank New Zealand Limited: Direct 2 000 ordinary shares of 50 cents each fully paid at market value $2.49 each 4,980 Through Community Trusts Nominees Limited, 30 569 429 ordinary shares of 50 cents each 76,117,878 Total shares $76,122,858 New Zealand Government stocks are shown at assessed market value 1,443,843 1,654,733 New Zealand Government stocks at cost price adjusted by amortised discount/premium to date1,420,745 1,675,910 Sale of TBNZ Limited Shares Trust Bank Bay of Plenty Community Trust Incorporated accepted a Westpac offer for the purchase of TBNZ shares, such offer including a bonus issue of 3 shares for every 11 held plus a special interim dividend. The final gross amount received inclusive of early sales totalled $89,307,470. $ Sale value inclusive of special dividend87,838,137 Early sale proceeds1,469,333 89,307,470 Comprising: Original cost of shares17,726,000 Revaluation reserve realised58,375,680 Capital profit11,065,790 Dividends received2,140,000 $89,307,470 5. Fixed Assets 1997 1996 $ $ Office furniture and equipment: Cost45,682 23,103 Accumulated depreciation15,104 1,154 Book value$30,578 $21,949 6. Financial Instruments Credit Risks Financial instruments which potentially subject the trust to credit risk principally consist of bank balances, bank term deposits and accounts receivable. Maximum exposure to credit risk as at balance date is: 1997 1996 $ $ Bank balances109,849 156,347 Bank term deposits95,430,689 1,784,077 Accounts receivable551,339 58,042 Concentrations of Credit Risk The bank balances are held with Trust Bank New Zealand Limited. Term deposit investments are with various trading banks and under common funds management. There are no other material concentrations of credit risk. Market Risk The value of investments which are held in shares and New Zealand Government stocks are subject to market fluctuations. No provision has been made for potential gains or losses that could occur due to market fluctuations. Fair Value The carrying value is considered to be the fair value for financial instruments. 7. Taxation 1997 1996 $ $ Net surplus after donations9,078,769 Less non assessable distribution to Bay of Plenty Community Trust Charities Limited(7,043,371[teh]) Net surplus before taxation2,035,398 Add: non deductible expenditure31,434 Imputation credits received1,054,118 Assessable income for tax purposes3,120,950 Taxation @ 33 percent1,029,913 Less: imputation credits received1,054,118 Net imputation credits available to convert to loss carried forward$(24,205[teh]) [tn,3]Imputation credits of $24,205 converted to loss carried forward $96,820 (at extra emolument rate for 31 March 1997 year of 25 percent) 8. 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. 9. Related Party Transactions Bay of Plenty Community Trust Charities Limited (``the company'') is wholly owned by Trust Bank Bay of Plenty Community Trust Incorporated (``the trust''). During the year the trust made a beneficiaries income distribution to the company of $7,043,371. No related party debts have been written off or forgiven during the year. 10. Segment Information The trust's only activity is to receive income to allocate for charitable, cultural, philanthropic, recreational and other purposes beneficial to the community, principally in the Bay of Plenty area. Schedule of Distributions of Income by Way of Donations for the Year Ended 31 March 1997 Donations made by the trust may be summarised as follows: $ Special projects61,250 199697 donations round2,133,101 Employment initiatives Business grow85,750 Task Force Green99,847 Dillon Memorial Scholarship9,250 $2,389,198 (A full list covers a number of pages and is attached to the original of this document. A copy is available on request.) Audit Report to the Members of the Trust Bank Bay of Plenty Community Trust Incorporated We have audited the consolidated financial statements. The consolidated financial statements provide information about the past financial performance of Trust Bank Bay of Plenty Community Trust Incorporated and its financial position as at 31 March 1997. This information is stated in accordance with the accounting policies set out. Trustees' Responsibilities The trustees are responsible for the preparation of consolidated financial statements which present a true and fair view of the financial position of the Trust Bank Bay of Plenty Community Trust Incorporated as at 31 March 1997 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 consolidated financial statements presented by the trustees and statements our opinion to you. Basis of Opinion An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the consolidated financial statements. It also includes assessing: the significant estimates and judgments made by the trustees in the preparation of the consolidated financial statements, and whether the accounting policies are appropriate to Trust Bank Bay of Plenty Community Trust Incorporated'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 consolidated financial statements are 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 consolidated financial statements. Other than in our capacity as auditors, we have no relationship with, or interest in Trust Bank Bay of Plenty Community Trust Incorporated. Unqualified Opinion We have obtained all the information and explanations we have required. In our opinion: proper accounting records have been kept by Trust Bank Bay of Plenty Community Trust Incorporated as far as appears from our examination of those records; and the consolidated financial statements shown: comply with generally accepted accounting practice; and give a true and fair view of the financial position of Trust Bank Bay of Plenty Community Trust Incorporated as at 31 March 1997 and the results of its operations and cash flows for the year ended on that date. Our audit was completed on 18 June 1997 and our unqualified opinion is expressed as at that date. INGHAM MORA MALCOLM & RASSELL, Chartered Accountants. Tauranga.