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NEW ZEALAND GAZETTE, No. 95

10 AUGUST 2006

Statement of Cash Flows for the Year Ended 31 March 2006

Notes

Cash flow from operating activities—
Cash was provided from:
Investment income received
Cash was applied to:
Payments to suppliers and employees
Donations paid from income
Net cash flow from operating activities

Cash flow from investing activities—
Cash was provided from:
Net decrease in investments
Cash was applied to:
Net increase in investments
Purchase of property, plant and equipment
Net cash flow from investing activities

Cash flow from financing activities—
Cash was applied to:
Donations paid from capital
Net cash flow from financing activities

Net increase/(decrease) in cash held
Cash at beginning of the year
Ending cash carried forward

13

2006
$’000

2005
$’000

16,684
16,684

17,775
17,775

(2,116)
(6,682)
(8,798)
7,886

(1,896)
(5,812)
(7,708)
10,067

–
–

–
–

(6,119)
(98)
(6,217)
(6,217)

(9,729)
(184)
(9,913)
(9,913)

(1,089)
(1,089)

(874)
(874)

580
52
632

(721)
773
52

The Waikato Community Trust Incorporated Notes To and Forming Part Of the Consolidated Financial Statements for the Year Ended 31 March 2006

1. Statement of Accounting Policies

Basis of Reporting
The financial statements presented here are for the reporting entity The Waikato Community Trust Incorporated. The financial statements have been prepared in accordance with the requirements of the New Zealand Institute of Chartered Accountants for the measurement and reporting of profit on a historical cost basis with the exception of investments which are recorded at market value. The reporting currency is in New Zealand dollars.

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

(a) Reserves Policy
Set out below are the reserving policies. They were adopted by the trust in 1998 and have been amended following reviews in 2000, 2001, 2003, 2004 and 2005 to reflect investment performance.

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. Transfers were not made in the 2003, 2004 and 2005 years due to insufficient returns on investments. Following a sufficient increase in investment performance, an appropriate amount has been added to base capital in 2006 for the 2003 to 2006 years.

● Investment Fluctuation Reserve
The trustees have adopted an investment strategy with a targeted long term annual rate of return of 6.8% (2005 – 6.8%) 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.