10 AUGUST 2006

NEW ZEALAND GAZETTE, No. 95

2829

At the trust’s current risk profile, the investment fluctuation reserve should have a lower limit of 9% (2005 – 9%) and an upper limit of 25% (2005 – 25%) of the “base capital value”. When the reserve falls below the lower limit, the levels of expenditure and distributions are reviewed by the trust. If the reserve exceeds the upper limit, any further excess returns are transferred to the donation reserve.

● Donation Reserve

The trust’s present donation policy is to distribute annually as donations 3.5% (2005 – 3.5%), subject to the investment fluctuation reserve policy, 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 or deficit after transfers to the capital and the investment fluctuation reserve is held in the donation reserve and represents the trust’s retained earnings or accumulated losses. It is the trust’s intention to apply the surplus in this fund to future donations or recover deficits from future income.

(b) Property, Plant and Equipment

All property, plant and equipment has been recorded at cost price less accumulated depreciation.

(c) Depreciation

Depreciation of property, plant and equipment, 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

Donations 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 GST inclusive basis.

(f) Taxation

From 1 April 2004, section CB 4 (1) (m) of the Income Tax Act (1994) exempts the trust from income tax.

(g) 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. All hedge instruments are also revalued to market value at year end and unrealised profits and losses are reflected in the statement of financial performance.

(h) Cash Flows

For the purpose of the statement of cash flows, cash includes cash on hand, deposits held at call with banks, net of bank overdrafts, which are used as part of day-to-day cash management.

(i) Financial Instruments

Financial instruments recognised in the statement of financial position include cash balances, receivables, payables and investments. Revenues and expenses relating to all financial instruments are recognised in the statement of financial performance. Except for items accounted for by a separate accounting policy, all financial instruments are shown at their fair value.

(j) Investments

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

(k) Changes in Accounting Policies

There have been no changes in accounting policies since the previous annual financial statements. All other 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.

2006 2005
$’000 $’000

3. Revenue
   Comprises:

Interest 11,325 8,502

Dividends 2,405 9,232

Sundry income 40 40

Realised gains/(losses) 2,914 647

Unrealised gains/(losses) 13,845 (293)

            30,529      18,128