NEW ZEALAND GAZETTE, No. 69

3 APRIL 2008

Consolidated Statement of Cash Flows for the Year Ended 31 March 2007

| Cash flows from operating activities—
Cash was provided from/(applied to): | 2007 Group | 2006 Group | 2007 Parent | 2006 Parent |
|---------------------------------------------------------------|-------------|-------------|-------------|-------------|
| Receipts from customers | 27,890 | 113,585 | – | – |
| Interest received | 3,949,616 | 3,132,256 | 3,250,020 | 2,526,773 |
| Dividends received | 4,981,052 | 6,717,084 | 4,957,348 | 6,713,001 |
| Revaluation of investments | – | 28,808,823 | – | 28,808,823 |
| Taxation refund received | – | 1,379 | – | – |
| Payments to suppliers and employees | (2,311,093) | (2,077,846) | (1,916,878) | (1,794,248) |
| Grants to the community | (7,835,998) | (7,908,453) | (7,835,998) | (7,908,453) |
| Interest paid | (79) | (91) | – | – |
| Income taxes paid | – | (11,114) | – | – |
| Net cash flows from operating activities | (1,188,612) | 28,775,623 | (1,545,508) | 28,345,896 |

| Cash flows from investing activities—
Cash was provided from/(applied to): | | | | |
|---------------------------------------------------------------|-------------|-------------|-------------|-------------|
| Repayment of debt funding advanced | – | – | – | – |
| Drawdown of debt funding from recipients | (461,618) | (2,453,298) | – | – |
| Investments | 1,919,913 | (26,723,232)| 2,336,030 | – |
| Increase in associate investments | (375,246) | – | – | – |
| Purchase of property, plant and equipment | (56,799) | 350,218 | (56,799) | – |
| Proceeds on sale of property, plant and equipment | 4,615 | – | 4,500 | – |
| Increase in trading stock | (84,515) | – | – | – |
| Dividends received on investment in associates | 3,000 | 6,000 | – | – |
| Loan advances | (800,000) | (366,179) | (800,000) | (366,179) |
| Loan repayments | 52,115 | – | 52,115 | – |
| Net cash flows from investing activities | 201,465 | (29,186,491)| 1,535,846 | (28,461,583)|
| Net increase/(decrease) in cash held | (987,147) | (410,868) | (9,662) | (115,687) |
| Cash balances at beginning of the year | 1,193,311 | 1,604,179 | 12,458 | 128,145 |
| Cash balances at end of year | 206,164 | 1,193,311 | 2,796 | 12,458 |

Statement of Significant Accounting Policies for the Year Ended 31 March 2007

A. Basis of Preparation

The Community Trust of Southland was formed under the Trustee Banks Restructuring Act 1988 and is incorporated under the Charitable Trusts Act 1957. The financial statements presented are those for The Community Trust of Southland ("the trust") making up the parent. The group consists of The Community Trust of Southland ("the trust"), its wholly owned subsidiary companies Southland Community Trust Charities Limited and Invest South Limited Group.

The financial statements comply with the Financial Reporting Act 1993, the Community Trusts Act 1999 and the Companies Act 1993. They comprise statements of the following: Significant accounting policies, financial performance, movements in trust funds, financial position, cash flows, as well as notes to these statements.

The financial statements are prepared on the basis of historical cost except that investment assets are stated at valuation, as is the trust’s property at 62 Don Street, Invercargill.

B. Consolidation Method

The financial statements of the trust’s wholly owned companies are included in the financial statements of the group using the purchase method of consolidation.

C. Associates

Associates are entities in which the group has significant influence, but not control over the operating and financial policies. The financial statements include the group’s share of the net surplus of associates since acquisition on an equity accounted basis.

D. Goodwill Arising on Acquisition of Associates

Goodwill arising on the acquisition of an associate represents the excess of the purchase consideration over the fair value of the identifiable assets acquired. Goodwill is stated at cost and amortised to the statement of financial performance on a straight line basis over the period during which benefits are expected to be derived – a period not exceeding 20 years.

E. Trust Capital

Following the sale of the trust’s shares in Trust Bank New Zealand Limited in April 1996 for $158,460,000, 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 region. For this purpose, the trustees agreed that $158,460,000 would be considered as the "trust capital" value of the parent.