3450 NEW ZEALAND GAZETTE, No. 141 25 AUGUST 2005

The financial statements have been prepared to comply with the Financial Reporting Act 1993 and comprise consolidated
statements of the following: Financial performance, movement in trust funds, financial position, cashflows, as well as notes
to these financial statements.

The financial statements are prepared on the basis of historical cost, except for the revaluation of managed funds.

Specific Accounting Policies

Income

Income from managed funds includes both realised and unrealised income and is recorded gross of fund management
expenses.

Interest is recognised on an accrual basis.

Foreign Currencies

All amounts denominated in foreign currencies are converted to New Zealand dollars at balance date. All realised and
unrealised gains and losses are recognised in the statement of financial performance.

Taxation

With effect from 1 April 2004, community trusts, including The Community Trust of Otago, became exempt from income tax
pursuant to section CB4 (1) (m) of the Income Tax Act 1994.

Fillmor House Limited is the only subsidiary liable for income tax. Income tax is recognised on the surplus available for
distribution before taxation, adjusting for differences between taxable and accounting income. Future tax benefits are not
recognised unless realisation of the asset is virtually certain.

Fixed Assets

Fixed assets are recorded at cost less accumulated depreciation.

Depreciation

Depreciation has been charged to the financial statement using rates which will write off the cost of assets less their estimated
residual value over their estimated economic lives. The depreciation rates used are:

Buildings 4%
Office furniture and equipment 12-48%

Donations Payable

Donations payable represents donations approved by the trustees but unpaid as at balance date.

Receivables

Receivables are stated at estimated realisable value after providing against debts where collection is doubtful. Bad debts are
written off during the period in which they are identified.

G.S.T.

Subsidiaries of The Community Trust of Otago, Fillmor House Limited and The Community Trust District Improvement
Company Limited are registered for G.S.T. Accordingly, their financial performance and financial position have been
consolidated within the accounts on a G.S.T. exclusive basis. Subject to the above, the trust is not registered for G.S.T.
purposes and the financial statements have been prepared on a G.S.T. inclusive basis.

Basis of Consolidation

The Community Trust of Otago, Fillmor House Limited, The Community Trust District Improvement Company Limited and
The Community Trust Amateur Sports Company Limited have been consolidated using the purchase method of consolidation.

Investments

Investments are valued at period end market value. All realised and unrealised gains and losses are recognised in the statement
of financial performance.

Hedging Instruments

The trust, through its fund managers, enters into hedging instruments such as forward exchange contracts. These are converted
to the New Zealand dollar rate at balance date with all realised and unrealised gains and losses being recognised in the
statement of financial performance as income from managed funds.

Statement of Cashflows

Cash comprises cash at bank and call deposits but does not include cash or deposits held by the fund managers.

Financial Instruments

All assets and liabilities of the trust with the exception of fixed assets are financial instruments and are recognised in the
statement of financial position. All financial instruments are recorded at market value or fair value or are not materially
different from market value or fair value.

Fund managers utilise financial instruments with off balance sheet risk to reduce exposure to fluctuations in foreign currency
exchange rates. Forward exchange contracts are entered into to hedge foreign currency transactions. These are converted to
the New Zealand dollar rate at balance date with all realised and unrealised gains and losses being recognised in the statement
of financial performance.

The quantitative disclosures required by FRS 31 Disclosure of Information About Financial Instruments have been included
throughout the financial statements where material.

Changes in Accounting Policies

Except for the change to the taxation policy arising from the trust becoming income tax exempt, there have been no other
changes in accounting policies during the year.