1682

NEW ZEALAND GAZETTE

No. 72

CASH FLOW FROM INVESTING ACTIVITIES

Cash was applied to:

Net Increase in Investments

(2,876)

(172)

Purchase of Fixed Assets

(454)

(945)

Net Cash Flow from Investing Activities

(3,330)

(1,117)

CASH FLOW FROM FINANCING ACTIVITIES

Cash was applied to:

Donations paid from Donation Reserve

(1,532)

(1,264)

Net Cash Flow from Financing Activities

(1,532)

(1,264)

NET INCREASE (DECREASE) IN CASH HELD

69

14

Cash at beginning of the year

30

16

ENDING CASH CARRIED FORWARD

99

30

The Waikato Community Trust Incorporated Notes to and Forming Part of the Consolidated Financial Statements for the Year Ended 31 March 2000

1. STATEMENT OF ACCOUNTING POLICIES

Basis of Reporting

The financial statements presented here are for the reporting entity The Waikato Community Trust Incorporated and its wholly-owned subsidiary Trust Waikato Charities Limited (formerly Waikato Community Trust Charities Limited).

The financial statements have been prepared in accordance with the requirements of the Institute of Chartered Accountants of New Zealand for the measurement and reporting of profit on an historical cost basis with the exception of investments which are recorded at market value.

Specific Accounting Policies

The following specific accounting policies which materially affect the measurement of financial performance and the financial position have been applied:

(a) Trust Funds

In order to prudently manage the financial affairs of the Trust the Trustees have adopted the following policies for accounting for the Trust’s Capital and Retained Earnings.

• Capital

  Following the sale of the Trust’s shares in Trust Bank New Zealand Limited in April 1996 the Trustees agreed that the value of the Trust at that time should be maintained for the benefit of current and future generations living in the Waikato region. For this purpose the Trustees agreed that $169,800,000 would be considered as the ‘initial capital’ of the Trust. The ‘initial capital value’ is increased each year to show the ‘base capital value’ which reflects growth due to inflation and regional growth. An amount was transferred from retained earnings in 1997 to increase the capital of the Trust from its original amount of $21,316,622 to the ‘initial capital value’ and to provide for growth during the 1997 year. Each year an appropriate amount is transferred from income to allow for growth due to inflation and regional population growth.

• Investment Fluctuation Reserve

  The Trustees have adopted an investment strategy with a targeted long term annual rate of return of 7.5% of the Trust’s ‘base capital value’. Recognising that actual returns are likely to fluctuate from year to year, the Trust holds the variation from the target in an Investment Fluctuation Reserve. In years when investment returns are less than the target an appropriate amount will be transferred to income. At the Trust’s current risk profile the Investment Fluctuation Reserve should have a lower limit of 8.1% and an upper limit of 20.3% of the ‘base capital value’. If the reserve falls below the lower limit then the level of annual donations will be reduced. If the reserve exceeds the upper limit then any further excess returns will be transferred to the Donation Reserve.

• Donation Reserve

  The Trust’s present donation policy is to distribute annually as donations 3.5% of the ‘base capital value’. The Trustees recognise that for a number of reasons this might not always be achievable and that there will inevitably be fluctuations between the donations distributed and the actual target. The surplus after transfers to capital and the Investment Fluctuation Reserve is held in the Donation Reserve and represents the Trust’s retained earnings. It is the Trust’s intention to apply this fund to future donations.

(b) Fixed Assets

All fixed assets have been recorded at cost price less accumulated depreciation.

(c) Depreciation

Depreciation of fixed assets is calculated using taxation rates so as to allocate the cost of the assets over their useful lives. The following rates are used:

Office Equipment and Furniture

12-48%

Motor Vehicles

31.2%

Buildings

4-31.2%