The Community Trust of Wellington Trustee Banks Restructuring Act 1988 Trust Bank Wellington Community Trust and its Subsidiary Company (trading as The Community Trust of Wellington) Consolidated Statement of Financial Performance for the Year Ended 31 March 1998 Notes 1998$ 1997$ Income Investment income (net) 8,025,585 8,699,737 Interest trust bank money market 15,551 104,528 Donations returned 10,000 1,500 Profit on sale of Trust Bank New Zealand shares5 24,602,905 Other 785 Total income 8,051,136 33,379,455 Less expenses Auditors' fees 5,237 1,975 Depreciation 2,079 1,175 Donations expenses 27,279 20,637 Occupancy costs 16,031 17,428 Operating costs 91,144 62,718 Staff expenses 61,027 42,106 Trustee expenses 9,298 5,019 Trustee fees 39,980 22,257 Total expenses 252,075 173,315 Net surplus before donations 7,799,061 33,206,140 Less donations 3,602,166 2,059,405 Net surplus transferred to trust funds $4,196,895 $31,146,735 Consolidated Statement of Movements in Trust Funds for the Year Ended 31 March 1998 1998$ 1997$ Trust funds at 1 April 199744,568,855 37,478,962 Plus Net surplus4,196,895 31,146,735 48,765,750 68,625,697 Less Movements in revaluation reserve 24,056,842 Total trust funds at 31 March 1998$48,765,750 $44,568,855 Consolidated Statement of Financial Position as at 31 March 1998 Notes 1998$ 1997$ Current assets Trust Bank Wellington 10,503 6,332 Accounts receivable 182,065 143,936 Prepayments 1,519 1,519 Deposits Trust Bank Wellington 363,335 Resident withholding tax 110 Total current assets 194,197 515,122 Less current liabilities Accounts payable 474,539 67,658 Total current liabilities 474,539 67,658 Net current liabilities 280,342 (447,464) Non current assets Fixed assets3 5,332 2,610 Investments4 49,040,760 44,118,781 Total non current assets 49,046,092 44,121,391 Net assets $48,765,750 $44,568,855 Represented by: Trust funds Accumulated funds 48,765,750 44,568,855 Total trust funds $48,765,750 $44,568,855 For and on behalf of the board of trustees: W. A. BRIEN, Chairperson. B. M. ALLEWAY, Trustee. Consolidated Statement of Cash Flows for the Year Ended 31 March 1998 1998$ 1997$ Cash flows from operating activities Cash was provided from: Investment income8,144,075 8,724,011 Profit on sale of Trust Bank New Zealand shares 24,602,905 Interest on investments15,551 110,610 Donations returned and other income10,000 2,285 8,169,626 33,439,811 Cash was applied to: Payments to suppliers(191,521) (274,913) Payments to trustees(50,046) (25,317) Donations to community(3,602,166) (2,059,405) Tax paid(110) (3,843,843) (2,359,635) Net inflow (outflow) from operating activities4,325,783 31,080,176 Cash flows from investing activities Cash was applied to: Purchase of fixed assets(4,801) (1,166) Purchase of investments(4,680,146) (7,444,942) Realisation of revaluation reserve (24,056,842) Net inflow (outflow) from investing activities(4,684,947) (31,502,950) Net increase (decrease) in cash held(359,164) (422,774) Opening cash brought forward369,667 792,441 Closing cash carried forward$10,503 $369,667 Shown in statement of financial position as: Deposits Trust Bank Wellington 363,335 Cash at bank Trust Bank Wellington10,503 6,332 Closing cash carried forward$10,503 $369,667 Consolidated Notes to the Financial Statements for the Year Ended 31 March 1998 1. Statement of Accounting Policies Reporting Entity The financial statements presented here are for the reporting entity Trust Bank Wellington Community Trust and its wholly owned company Wellington Community Trust Charities LImited, the company commenced trading on the 1st day of April 1997. The Trust Bank Wellington Community Trust is an incorporated charitable trust under the Charitable Trusts Act 1957. 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. Accounts Receivable Accounts receivable are stated at expected realised value. Donations Donations made are included in the statement of financial performance when paid. Fixed Assets Fixed assets 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: Computer equipment 24.048.0 percent CP Filing cabinets 13.214.4 percent DV 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. 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, 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. 2. Nature of Business The Trust Bank Wellington 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 community, principally in the trust region. The wholly owned Wellington Trust Charities Limited nature of business is restricted by its constitution to providing charitable benefits to the community, principally in the region of the Wellington Community Trust. The Trust Bank Wellington Community Trust and the Wellington Community Trust Charities Limited both operate under the trading name of ``The Community Trust of Wellington''. 3. Fixed Assets Cost$ AccumulatedDepreciation$ BookValue$ 1998 Computer equipment6,793 4,418 2,375 Filing cabinets3,340 383 2,957 $10,133 $4,801 $5,332 1997 Computer equipment4,167 2,708 1,151 Office furniture1,165 14 1,459 $5,332 $2,722 $2,610 4. Investments Investments held by Tower Corporation Holdings Limited comprise: 1998$ 1997$ Money market deposits496,092 18,908,393 Property418,549 Fixed interest bonds15,777,682 22,035,912 Equities11,554,155 3,174,475 Total investments at 31 March 1998$28,246,478 $44,118,781 Investments held by BT Funds Management (NZ) Limited comprise: 1998$ 1997$ Money market deposits(22,638) Property1,325,201 Fixed interest bonds7,538,469 Equities8,469,754 Short term investment3,483,497 Total investments at 31 March 1998$20,794,283 It is the intention of the trustees to hold the investments long term and accordingly they have been classified as non current assets. 5. Revaluation Reserve 1998$ 1997$ Opening balance at 1 April 1997 24,056,842 Movements in the year (24,056,842) Closing balance at 31 March 1998 Fundamental Error During the year ended 31 March 1997, the Trust Bank Wellington Community disposed of its ownership in TBNZ shares. From the sale of the TBNZ shares, the Trust Bank Wellington Community Trust recorded a profit of $22,708,563 in the year ended 1997 financial statements. The full profit on sale was actually $24,602,905, therefore in the year ended 31 March 1997, profit was understated by $1,894,342. Due to the significance of the amount, the trustees believe that in the 1998 financial statements, the 1997 comparatives should be amended to reflect the correct profit on sale. The effect on the statement of financial position is to increase retained earnings by $1,894,342. 6. Taxation The charitable status of the Trust Bank Wellington Community Trust is currently being reviewed by the Inland Revenue. The trustees are of the view that no income tax liability will arise. For taxation purposes the Wellington Community Trust Charities Limited is deemed to be a charitable organisation and on this basis the income is not subject to taxation. The compamy's charitable status was confirmed on the 27th day of August 1997 by the Inland Revenue Department. 7. 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. 8. Commitments (a) Donations Wellington Community Trust Charities Limited has committed funding to: $ Wellington Regional Stadium Trust3,000,000 St James Theatre Trust1,200,000 Sport Wellington Region Trust2,000,000 Museum of Wellington Trust2,400,000 Donations approved bur not uplifted as at 31 March 1998 were: Children's Grief Centre Trust50,000 Newtown Union Health Centre80,000 Trust Bank Wellington Community Trust has the following donations not uplihted as at 31 March 1998: House of Hope, Otaki10,000 Junior Cricket Upper Hutt (approved 97)100,000 (b) Lease Commitments Commitments existed for non-cancellable operating leases as follows: 1998$ 1997$ Not later than 1 year11,000 Later than 1 year $11,00 (c) Capital Commitments The group has no capital commitments as at 31 March 1998. (1997 $Nil.) 9. Contingent Liabilities The group has no contingent liabilities as at 31 March 1998. (1997 $Nil.) 10. Financial Instruments Investments are stated at estimated market value at balance date. Accrued interest, accounts payable, and accounts receivable are stated at the amount expected to be received or paid. Accordingly, the trustees consider that the fair value of each class of financial asset and financial liabilities is the same as the carrying value in the statement of financial position. Concentration of Credit Risk The concentrations of credit risk incurred by the trust are managed by Tower Corporation Holdings Limited and BT Funds Management (NZ) Limited within a range of financial institutions. Trustees consider the risk of non-recovery of these investments to be within satisfactory guidelines. Currency Risk The Community Trust of Wellington incurs currency risk as a result of investment transactions managed by Tower Corporation Holdings Limited and BT Funds Management (NZ) Limited. Interest Rate Risk The investments of the Community Trust of Wellington which are sensitive to changes in interest rates are managed by Tower Corporation Holdings Limited and BT Funds Management (NZ) Limited. 11. Reconciliation of Net Surplus with Net Cash Flow from Operating Activities 1998$ 1997$ Net surplus4,196,895 31,146,735 Add/(deduct) non cash items: Depreciation2,079 1,175 4,198,974 31,147,910 Add/(deduct) movements in other working capital items: (Increase)/decrease in accounts receivable(38,129) (141,864) (Increase)/decrease in prepayments (1,519) (Increase)/decrease in accounts payable406,881 54,147 (Increase)/decrease in taxation paid(110) 6,082 368,642 (83,154) Less items classified as an investing activity: Income Tower Corporation Holdings Limited241,833 (15,420) Net cash flow from operating activities$4,325,783 $31,080,176 Audit Report To the readers of the financial report of Trust Bank Wellington Community Trust and its subsidiary company (trading as the Community Trust of Wellington). We have audited the financial report. The financial report provides information about the past financial performance of the Trust Bank Wellington Community Trust and subsidiary as at 31 March 1998. This information is stated in accordance with the accounting policies set out in the notes to the financial statements. Board of Trustees' Responsibilities The board of trustees is responsible for the preparation of a financial report which gives a true and fair view of the financial position of the group as at 31 March 1998 and of the results of operations and cash flows for the year ended 31 March 1998. Auditor's Responsibilities It is our responsibility to express an independent opinion on 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 judgments made by the board of trustees in the preparation of the financial report, and whether the accounting policies are appropriate to the group'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. Other than in our capacity as auditors we have no relationship with or interests in the Trust Bank Wellington Community Trust or its subsidiary. Unqualified Opinion We have obtained all the information and explanations we have required. In our opinion: Proper records have been kept by the trust and subsidiary 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 and subsidiary as at 31 March 1998 and the results of its operations and cash flows for the year ended on that date. Our audit was completed on 15 June 1998 and our unqualified opinion is expressed as at that date. SPICER & OPPENHEIM, Chartered Accountants. Wellington. The complete annual report which includes a schedule of successful recipients for the 1997 year is available on request at the office of the Community Trust of Wellington, Level Four, Guardian Assurance House, 111115 Customhouse Quay, Wellington or by Telephone: (04) 499 7966.