15 JUNE 2006

NEW ZEALAND GAZETTE, No. 57

1439

Lease Commitments

The lease on the present Westerman’s premises commenced on 1 July 2004 and expires on 30 June 2016. The rent payable is to be reviewed at the conclusion of the second and fourth years and the rental will be adjusted, if necessary, in accordance to any increase in the consumer price index.

Contingencies

There are no contingent liabilities or contingent assets at balance date (nil – 2005).

12. Related Part Transactions

The trust’s premises are leased from a company in which Mr K. Atkinson, trustee, has a financial interest (refer note 11). The rent paid for the period was $44,898 ($31,900 for part of the 2005 year).

13. Segmental Reporting

The trust operates as a tax-exempt philanthropic trust distributing funds to the community in the central North Island region.

14. Financial Instruments

Financial instruments include short-term deposits, New Zealand bonds, international bonds, derivatives and investments in managed funds both within New Zealand and overseas.

14.1 Credit Risk

The trustees regularly review their investment strategy. The investment strategy ensures an appropriate diversification of investments so that the trust has no significant concentration of counterparty or credit risk.

14.2 Fair Values

The trust has recorded its financial assets and liabilities at current market values, which represent estimated fair values and credit risk exposure.

14.3 Currency Risk

The trust has exposure to currency risk through its investments in offshore equities. The current investment policy requires full hedging of currency risk for overseas bonds when held and 50% hedging of currency risk for overseas equities. There was no currency hedging on overseas equities throughout the year after a resolution to this effect was passed by the board. Currency risk is managed by fund managers with a range of tolerance.

Offshore investments are denominated into the following foreign currency groupings:

14.4 Credit Facilities

The trust has no credit facilities.

14.5 Interest Rate Risk

The trust investments in fixed rate securities are subject to interest rate risk.

15. Net Current Assets

Cash, bank deposits and accrued income are expected to be realised within 12 months. All liabilities are due within 12 months.

16. International Financial Reporting Standards

The trust is undertaking a review of its accounting policies to determine the changes that will be required on adoption of International Financial Reporting Standards (IFRS). It is not anticipated that IFRS will materially affect the trust’s reported results.

Audit Report

To the Trustees of Eastern & Central Community Trust Incorporated

We have audited the financial statements. The financial statements provide information about the past financial performance of the Eastern & Central Community Trust (Inc) and its financial position as at 31 March 2006. This information is stated in accordance with the accounting policies set out in note 1 to the financial statements.

The Trustees' Responsibilities

The trustees are responsible for the preparation of financial statements that give a true and fair view of the financial position of the trust and the results of its operations and cash flows for the year ended 31 March 2006.

Auditors' Responsibilities

It is our responsibility to express an independent opinion on the financial statements presented by the trustees and report our opinion to you.