1570

NEW ZEALAND GAZETTE

No. 66

Investment Fluctuation Reserve

The trustees have adopted an investment strategy, that is reviewed and revised from time to time, with a targeted long term annual rate of return of 8.4% (2000 – 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 is transferred to income. At the trust’s current risk profile the investment fluctuation reserve should have a lower limit of 10% (2000 – 8.1%) and an upper limit of 26% (2000 – 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 4.9% (2000 – 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 other than land, art and artefacts, 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 12.0-48.0% Diminishing Value
Motor Vehicles 31.2% Diminishing Value
Buildings 4.0-31.2% Diminishing Value

(d) Donations and Distributions

Donations and distributions made are included in the statement of financial performance or statement of movements in equity when approved by the trustees.

(e) 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.

(f) Investments

Investments are stated at market value. Adjustments to market value of investments are included in the statement of financial performance.

(g) Taxation

Income tax expense recognises the current obligations payable to the Inland Revenue Department. The partial method of recognising deferred tax is employed. No deferred tax liability is expected to crystallise in the foreseeable future.

(h) Currency Translation

Monetary assets denominated in foreign currency are converted to New Zealand dollars at the exchange rates reported at balance date and any unrealised profit or loss resulting from the conversion is reflected in the statement of financial performance.

(i) Consolidation Method

The purchase method is used to consolidate the trust and its subsidiaries. All inter-entity transactions, balances and unrealised profits and losses on transactions between group members have been eliminated.

(j) Changes in Accounting Policies

There have been no changes in accounting policies since the previous annual financial statements. All policies have been applied on bases consistent with those used in the prior year.

2. Incorporation

The Trust Bank Waikato Community Trust was incorporated on 5 August 1988 with trust capital of $21,316,622. The name of the trust was changed to The Waikato Community Trust Incorporated in December 1997.

2001 2000
$’000 $’000
3. Revenue
Comprises:
Managed funds 4,461 16,843
Other investments 117 81
4,578 16,924

2001 2000
$’000 $’000
4. Expenses
Comprises:
Audit fees 10 14
Accountancy/secretarial fees 42 38
Consultants – donations 5 34
Consultants – tax 34 50
Consultants – other 6 6