Consolidated Statement of Financial Performance for the Year Ended 31 March 2006
Note 2006Group 2005Group 2006Parent 2005Parent
Total operating revenue 1 38,337,802 14,593,170 37,546,414 14,012,522
Total expenditure 2 2,158,737 2,196,928 1,850,807 1,867,343
Net surplus/(deficit) before taxation 36,179,065 12,396,242 35,695,607 12,145,179
Taxation 7 – – – –
Net surplus/(deficit) after taxation 36,179,065 12,396,242 35,695,607 12,145,179
Revaluation of property 17 96,859 51,858 96,859 51,858
Net surplus/(deficit) before distribution 36,275,924 12,448,100 35,792,466 12,197,037
Transfer to capital maintenance reserve (6,168,561) (4,914,318) (6,168,561) (4,914,318)
Donations to tax approved entities (6,838,605) (517,859) (6,838,605) (517,859)
Net surplus/(deficit) transferred to grants maintenance reserve 23,268,758 7,015,923 22,785,300 6,764,860
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2006
2006Group 2005Group 2006Parent 2005Parent
Net surplus/(deficit) transferred to grants maintenance reserve 23,268,758 7,015,923 22,785,300 6,764,860
Increase in capital maintenance reserve 6,168,561 4,914,318 6,168,561 4,914,318
Less: Grants paid from capital (631,317) (6,620,142) (631,317) (6,620,142)
Movements in equity for the year 28,806,002 5,310,099 28,322,544 5,059,036
Equity at beginning of year 167,803,996 162,493,897 169,803,085 164,744,049
Equity at the end of the year 196,609,998 167,803,996 198,125,629 169,803,085
Consolidated Statement of Financial Position as at 31 March 2006
Note 2006Group 2005Group 2006Parent 2005Parent
Funds employed:
Trust capital 9 158,460,000 158,460,000 158,460,000 158,460,000
Reserves 8 38,149,998 9,343,996 39,665,629 11,343,085
Total capital and reserves 196,609,998 167,803,996 198,125,629 169,803,085
Liabilities—
Current liabilities:
Accounts payable and accrued expenses 250,855 225,647 201,504 198,478
Grants committed but not paid 9,799,098 10,277,629 9,799,098 10,277,629
Total liabilities 10,049,953 10,503,276 10,000,602 10,476,107
Total capital and liabilities 206,659,951 178,307,272 208,126,231 180,279,192
Assets—
Current assets:
Bank and deposits 1,193,311 1,604,179 12,458 128,145
Accounts receivable and interest accrued 10 110,749 548,906 25,479 509,540
Other deposits 2,766 1,475,421 2,766 103,248
Back Country Foods Limited 11 2,995 5,995 – –
Taxation – 1,379 – –
Goods and services taxation 11,114 – – –
GAS – receivership – 54,999 – –
Current portion of debt funding 12 751,038 296,925 – –
Total current assets 2,071,973 3,987,804 40,703 740,934
Non current assets:
Property, plant and equipment 17 811,115 1,069,665 807,635 782,433
Managed funds:
ING (NZ) Limited 18 35,461,385 30,943,776 35,461,385 30,943,776
Tower Asset Management 18 46,918,637 44,135,403 46,918,637 44,135,403
AMP Asset Management 18 29,366,863 34,049,593 29,366,863 34,049,593
Capital International 18 36,478,490 25,779,726 36,478,490 25,779,726
Alliance Bernstein 18 49,917,310 35,038,298 49,917,310 35,038,298
Loans 13 1,367,015 1,040,836 1,367,015 1,040,836
Debt funding 12 3,767,992 1,768,807 – –
Investment in associates 14 149,171 143,364 – –
Investment in subsidiary – – 7,768,193 7,768,193
Other investments 350,000 350,000 – –
Total non current assets 204,587,978 174,319,468 208,085,528 179,538,258
Total assets 206,659,951 178,307,272 208,126,231 180,279,192
Consolidated Statement of Cash Flows for the Year Ended 31 March 2006
Note 2006Group 2005Group 2006Parent 2005Parent
Cash flows from operating activities—
Cash was provided from/(applied to):
Receipts from customers 113,585 118,935 – –
Interest received 3,132,256 5,257,725 2,526,773 4,895,478
Dividends received 6,717,084 2,730,662 6,713,001 2,726,959
Revaluation of investments 28,808,823 5,887,720 28,808,823 5,887,720
Taxation refund received 1,379 46,636 – –
Payments to suppliers and employees (2,077,846) (2,015,872) (1,794,248) (1,712,775)
Grants to the community (7,908,453) (4,854,996) (7,908,453) (4,854,996)
Interest paid (91) – – –
Income taxes paid (11,114) (1,379) – –
Net cash flows from operating activities 15 28,775,623 7,169,431 28,345,896 6,942,386
Cash flows from investing activities—
Cash was provided from/(applied to):
Repayment of debt funding advanced – 282,185 – –
Drawdown of debt funding from recipients (2,453,298) (365,447) – –
Investments (26,723,232) (8,337,369) (28,095,404) (6,661,844)
Property, plant and equipment 350,218 (27,988) – (30,402)
Dividends received on investment in associates 6,000 – – –
Loans (366,179) (167,449) (366,179) (167,449)
Net cash flows from investing activities (29,186,491) (8,616,068) (28,461,583) (6,859,695)
Cash flows from financing activities—
Cash was provided from/(applied to):
Purchase of Invest South Limited shares – – – –
Net cash flows from financing activities – – – –
Net increase/(decrease) in cash held (410,868) 1,446,637 (115,687) 82,691
Cash balances at beginning of the year 1,604,179 3,050,816 128,145 45,454
Cash balance at end of year 1,193,311 1,604,179 12,458 128,145
Statement of Significant Accounting Policies for the Year Ended 31 March 2006
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”) and Southland Community Trust Charities Limited, making up the parent. The group consists of The Community Trust of Southland (“the trust”), its wholly owned subsidiary company 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 company Southland Community Trust Charities Limited are included in the financial statements of the parent. The financial statements of the trust’s wholly owned company, Invest South Limited Group, 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 acquisiton 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 and that this value would be maintained. Trustees further agreed that over the long term, the net assets of the parent would not be allowed to reduce to a level below the inflation-adjusted real value of this trust capital.
F. Capital Maintenance Reserve
The capital maintenance reserve represents the additional amount necessary to preserve the real value of the trust capital allowing for inflation as measured by the Consumers Price Index (all groups) and payments of grants out of capital.
G. Grants Maintenance Reserve
While the trustees have adopted a long-term investment strategy, they accept that annual returns from investments are likely to fluctuate from year to year. In recognition of this, a grants maintenance reserve is maintained. In years when net income from investments is higher than the grant levels, surplus income will be transferred to this reserve. In years when there is insufficient income to sustain the level of grants, an appropriate amount will be transferred from the grants maintenance reserve to income.
H. Basis of Recognising Components of the Financial Statements
The following general accounting policies are adopted:
Assets
A transaction results in an asset being recognised in the statement of financial position when it will probably give rise to ongoing benefits for the group and those benefits can be measured with reliability.
Liabilities
A transaction results in a liability being recognised in the statement of financial position when it will probably give rise to the need for the group to sacrifice assets in the future and those sacrifices can be measured with reliability.
Revenue
Revenue is recognised in the statement of financial performance when a transaction gives rise to an increase in the value of the group’s net assets, and that increase can be measured with reliability.
Expenses
An expense is recognised in the statement of financial performance when a transaction results in a decrease in the value of the group’s net assets, and that decrease can be measured with reliability.
Classification of Assets and Liabilities Between Current and Non-current
An amount is classified as current when it is expected to be settled or extinguished within one year of the date of the financial statements. All other amounts are classified as non-current.
I. Property, Plant and Equipment (Parent)
Property, plant and equipment are initially stated at cost and then depreciated on a straight line basis. Land and buildings are stated at valuation as determined by an independent registered valuer. The basis of valuation of the land and buildings is highest and best use. The estimated useful lives of fixed assets are as follows:
Land Indefinite
Buildings 30-40 years
Furniture and fittings 3-15 years
Office equipment 3-8 years
Motor vehicles 5-8 years
J. Property, Plant and Equipment (Group)
Property, plant and equipment are initially stated at cost and then depreciated using maximum rates approved for taxation purposes. The rates and method applied are as follows:
Furniture and fittings 11.4% – 18.0% Diminishing value
Office equipment 22.0% – 60.0% Diminishing value
Motor vehicles 7.5% Diminishing value
Other assets 48.0% Diminishing value
K. Investments With Fund Managers
Investments with fund managers are stated at market value and report realised and unrealised gains or losses on holding these investments in the statement of financial performance. These gains or losses are shown in the statement of financial performance as income from revaluation of investments.
L. Other Investments
Cash investments are stated at cost plus interest credited or accrued to balance date.
M. Accounts Receivable
Accounts receivable are stated at expected realisable value.
N. Rental payments
Invest South Limited Group leases its premises in addition to certain items of plant and equipment. Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased items, are included in the determination of the operating surplus/(deficit) in equal instalments over the lease term.
O. Debt Funding Advances
Invest South Limited (a subsidiary) has advanced monies to non-related entities as part of its core business activity. Interest is charged on these advances and accrued where necessary. The investments are recorded at expected realisable value.
P. Impairment
If the estimated recoverable amount of an asset is less than its carrying amount, the asset is written down to its estimated recoverable amount and an impairment loss is recognised in the statement of financial performance.
Q. Grants
Grants are recognised when they are approved by the trustees. Unpaid grants are recorded as a liability.
R. Goods and Services Tax
The parent is not registered for goods and services tax. The parent financial statements are prepared using GST inclusive accounting. The subsidiary of Invest South Limited Group is registered for GST and all assets and liabilities have been stated exclusive of GST with the exception of receivables and payables which are stated inclusive of GST.
S. Income Taxation
The parent provides for income tax on its net income after adjusting for tax accounting differences and any beneficiaries’ income determinations made pursuant to section OB1 (226) of the Income Tax Act 1994. However, with effect from 1 April 2004, community trusts, including the Community Trust of Southland, became exempt from income tax pursuant to CB4 (1) (m) of the Income Tax Act 1994.
Invest South Limited Group follows the income taxes payable method for accounting for income tax.
T. Statement of Cash Flows
Operating cash flows includes interest and dividends paid or credited to investment funds under management and any upward or downward revaluation of funds during the period. Cash movements in funds invested are recognised in investing activities.
U. Changes in Accounting Policies
Uniform accounting policies have been applied throughout the trust and group and on a consistent basis with those of the previous period.
Notes to the Financial Statements for the Year Ended 31 March 2006
1. Operating Revenue
Note 2006Group 2005Group 2006Parent 2005Parent
Bad debts recovered 48,249 – – –
Change in value of investments 28,711,436 6,390,085 28,711,436 6,390,085
Depreciation recovered 68,488 – – –
Dividends and distributions 6,435,932 4,899,181 6,412,069 4,895,478
Interest received 3,019,334 3,153,423 2,422,909 2,726,959
Lease income 4,083 24,500 – –
Other revenue 41,473 94,617 – –
Share of associates earnings 8,807 31,364 – –
38,337,802 14,593,170 37,546,414 14,012,522
2. Expenditure
Note 2006Group 2005Group 2006Parent 2005Parent
Audit fees 3 26,973 21,201 23,473 14,288
Communications 19,302 18,971 19,302 18,971
Depreciation 73,677 92,795 71,655 66,366
Directors’ fees 70,000 70,000 – –
Loss/(gain) on disposal of property, plant and equipment 158 10,872 – 10,393
Fund manager fees 892,103 798,601 892,103 798,601
General expenses 281,710 304,464 78,954 90,827
Insurance 14,212 16,792 14,212 16,792
Interest 91 23 – –
Occupancy costs 23,817 21,976 23,817 21,976
Office expenses 22,218 33,181 22,218 33,009
Professional fees 4 177,838 260,423 148,435 252,091
Promotion, reporting and compliance expenses 68,865 66,205 68,865 66,205
Rent – 3,600 – –
Salaries and staff costs 262,252 249,472 262,252 249,472
Trustees’ fees 5 204,876 207,236 204,876 207,236
Vehicle expenses 20,645 21,116 20,645 21,116
2,158,737 2,196,928 1,850,807 1,867,343
3. Auditors’ Remuneration
During the year the following amounts were paid to auditors: 2006Group 2006Group 2006Parent 2006Parent
To Ward Wilson, the group auditors, for audit work 19,385 17,601 15,885 10,688
To Ward Wilson, the group auditors, for grants audits 3,791 3,600 3,791 3,600
To other auditors, for grants audits 3,797 – 3,797 –
26,973 21,201 23,473 14,288
4. Professional Fees
2006 2005 2006 2005
Group Group Parent Parent
Financial/taxation advisory 114,930 151,193 114,930 151,193
Legal 33,562 15,401 4,159 7,069
Schools’ review mediation – 43,243 – 43,243
Strategic review 18,828 31,708 18,828 31,708
Other 10,518 18,878 10,518 18,878
177,838 260,423 148,435 252,091
5. Trustees’ Fees
Meeting fees and honorariums were paid to trustees as follows:
Meetings Parent Parent
Attended 2006 2005

A. A. Broad 73 38,945 27,196
D. Williams 56 22,600 18,643
F. G. Cardno (retired June 2005) 4 2,408 17,755
G. M. Neave 49 20,230 17,980
T. J. Hicks (appointed June 2005) 32 14,893 –
K. S. Henderson 31 14,935 15,705
M. Hawes 28 13,500 15,495
N. J. Wyeth 50 21,600 19,555
P. B. Redpath 38 18,070 19,985
S. G. Palmer 50 20,605 20,800
T. W. Harpur 37 17,000 34,122
204,786 207,236
Trustee fees and honorariums are set by the Minister of Finance.
6. Grants Approved
2006 2005 2006 2005
Group Group Parent Parent
Grants approved this year 7,565,035 7,535,654 7,656,035 7,535,654
Less prior year’s grants cancelled (95,113) (397,653) (95,113) (397,653)
Net grants approved 7,469,922 7,138,001 7,469,922 7,138,001
7. Taxation and Tax Free Distributions
With effect from 1 April 2004, community trusts, including the Community Trust of Southland, became exempt from income tax pursuant to section CB4 (1) (m) of the Income Tax Act 1994.
Amounts available for tax free distribution in the future 2006Group 2005Group
(Charitable Trust and Charitable Company)
Total at 31 March 2005 158,211,531 162,497,754
Net surplus – charitable company 2,917,111 2,333,919
Less: Grants from charitable company (2,801,302) (2,232,998)
Less: Grants paid during the year to non tax exempt grantees (631,317) (4,387,144)
Total at 31 March 2006 157,696,023 158,211,531
Amounts available for tax free distribution in the future
(Charitable Trust only)
Total at 31 March 2005 9,592,465 –
Net surplus before distribution 33,358,813 10,110,324
Less: Donations as beneficiary income (4,037,303) (517,859)
Total at 31 March 2006 38,913,975 9,592,465
Total trust funds at 31 March 2006 196,609,998 167,803,996
The charitable company Southland Community Trust Charities Limited (SCTCL) was not liquidated prior to 31 March 2006, and therefore the funds of SCTCL do not (and never will) form part of the trust’s reserves that may be distributed tax free under section HH3 (5) and (5A) of the Income Tax Act 2004.
However, on a consolidated basis, funds of SCTCL have been included in “amounts available for tax free distribution” as these can only be distributed to charities under SCTCL’s constitution. Unlike the trust, SCTCL’s funds do not technically carry the tax free nature, however, as there is the restriction in SCTCL’s constitution, no tax should ever be payable on these funds and therefore they have been disclosed with the trust’s tax free amounts.
8. Reserves 2006Group 2005Group 2006Parent 2005Parent
(i) Capital Maintenance Reserve
Opening balance 1,284,664 3,095,438 1,284,664 3,095,438
Transfer from grants maintenance reserve 6,168,591 – 31,209,826 –
Transfer from statement of financial performance 6,168,561 4,914,318 6,168,561 4,914,318
Transfer to trust capital reserve (631,317) (6,725,092) (631,317) (6,725,092)
12,990,499 1,284,664 38,031,734 1,284,664
(ii) Grants Maintenance Reserve
Opening balance 8,059,332 938,459 10,058,421 3,188,611
Transfer to capital maintenance reserve (6,168,591) – (31,209,826) –
Transfer from statement of financial performance 23,268,758 7,120,873 22,785,300 6,869,810
25,159,499 8,059,332 1,633,895 10,058,421
Total reserves 38,149,998 9,343,996 39,665,629 11,343,085
9. Trust Capital
Opening balance 158,460,000 158,460,000 158,460,000 158,460,000
Transfer from capital maintenance reserve 631,317 6,725,092 631,317 6,725,092
Grants paid from capital (631,317) (6,725,092) (631,317) (6,725,092)
158,460,000 158,460,000 158,460,000 158,460,000
10. Accounts Receivable
Accounts receivable 110,749 580,838 25,479 509,540
Provision for doubtful debts – (31,932) – –
110,749 548,906 25,479 509,540
11. Back Country Foods Limited
The advance to Back Country Foods Limited recorded in the group statement of financial position as at 31 March 2006, represents dividends paid to Invest South Limited by way of a credit to Invest South Limited’s shareholder current account. The advance is interest free and repayable upon demand.
12. Debt Funding
As at 31 March 2006, the following issues are relevant regarding the current debt funding:
The receivership of Abalone NZ Limited was completed on 15 July 2005. Invest South Limited had provided for a loss on
the investment in Abalone NZ Limited of $355,000. However, at the conclusion of the receivership, Invest South Limited recovered $17,427.
The receivership of Gas Hornby Limited was completed on 23 September 2005. Invest South Limited provided for a loss on the investment of $373,667. However, at the conclusion of the receivership, Invest South Limited recovered $48,249 and total receiver’s fees of $55,973 being $38,413 relating to the 2005 financial year and $17,560 in the 2006 year.
The board of Invest South Limited has initiated legal proceedings against Enno Oudshoorn and Klaas Smak under the terms of the investors’ agreement signed when Invest South Limited initially invested $680,000 capital in Tulip International Limited. The agreement provides that in the event of default, Invest South Limited has the right to put the shares back to Enno Oudshoorn and Klaas Smak at original cost. Default occurred on the loan advanced to Tulip International Limited and the company was placed into receivership.
2006 2005
Investment in finance leases 249,148 –
Other advances 4,269,882 2,065,732
Total debt 4,519,030 2,065,732
Represented by:
Current 751,038 296,925
Non current 3,767,992 1,768,807
13. Loans
Loan balances outstanding as at 31 March were as follows: 2006Group 2005Group 2006Parent 2005Parent
Troopers Memorial Corner Charitable Trust 195,000 195,000 195,000 195,000
Southland Museum and Art Gallery 14,115 29,115 14,115 29,115
Ringa Ringa Heights Golf Club 36,000 36,000 36,000 36,000
Nga Hau E Wha Society – 42,221 – 42,221
Croydon Aviation Museum 280,000 280,000 280,000 280,000
Tuatapere Hump Ridge Track 40,000 80,000 40,000 80,000
Invercargill Artificial Sports Surface Trust 96,500 96,500 96,500 96,500
Northern Southland Medical Trust 50,000 50,000 50,000 50,000
Otautau Community Health Trust 24,000 27,000 24,000 27,000
Troopers Memorial Corner Charitable Trust – Yule House 180,000 180,000 180,000 180,000
Southland Heritage Buildings Preservation Trust 25,000 25,000 25,000 25,000
Wyndham Rest Home 100,000 – 100,000 –
Parata Rest Home 15,000 – 15,000 –
Borland Lodge 311,400 – 311,400 –
1,367,015 1,040,836 1,367,015 1,040,836
Each loan is repayable on demand. All loans are interest free, with the exception of the loan to Nga Hau E Wha Society, which attracts interest of 7% and the loan to Troopers Memorial Corner Charitable Trust which attracts interest of 7.285% and is paid by way of a grant.
14. Investment in Associates
(a) Carrying amount of associates
Carrying amount at beginning of year 143,364 115,000 – –
Equity accounted earnings of associates 8,807 31,364 – –
Dividends from associates (3,000) (3,000) – –
Impairment of investment – – – –
Disposal of associate – – – –
Carrying amount at end of year 149,171 143,364 – –
(b) Equity accounted earnings of associates
Equity accounted earnings comprise:
Surplus/(deficit) before income tax 8,807 31,364 – –
Amortisation of goodwill – – – –
Income tax – – – –
Net surplus/(deficit) 8,807 31,364 – –
15. Reconciliation With Operating Surplus
2006Group 2005Group 2006Parent 2005Parent
Net surplus/(deficit) before distribution 36,275,924 12,448,100 35,792,466 12,197,037
Less: Grants (7,469,922) (7,138,001) (7,469,922) (7,138,001)
28,806,002 5,310,099 28,322,544 5,059,036
Add/(less) movements in working capital items
Increase/(decrease) in accounts payable and accrued expenses 14,094 67,218 3,026 66,975
Increase/(decrease) in grants committed but not paid (478,531) 2,242,825 (478,531) 2,242,825
(Increase)/decrease in accounts receivable 493,156 (555,752) 484,061 (491,351)
(Increase)/decrease in taxation refund due 1,379 45,257 – –
30,098 1,799,548 8,556 1,818,449
Add/(less) non-cash items
Depreciation 73,677 92,613 71,655 66,366
Depreciation recovered (68,488) – – –
Loss/(gain) on disposal of property, plant and equipment – 10,393 – 10,393
Revaluation of property (96,859) (51,858) (96,859) (51,858)
Share of associates earnings (8,807) (31,364) – –
(100,477) 19,784 25,204 24,901
Add/(less) items classified as investing/financing activities
Accounts receivable amount relating to sale of asset – – – –
Loan repayment by way of a grant approval 40,000 40,000 40,000 40,000
40,000 40,000 40,000 40,000
Net cash from operating activities 28,775,623 7,169,431 28,345,896 6,942,386
16. Capital Commitments and Contingencies
Commitments of $2,540,000 exist for grants which will be distributed from either capital or future income sources in
future years. These grants have not been recorded in either the statement of financial performance or financial position. Specific commitments are as follows:
Parent2006 Parent2005
Child Health Research Foundation – 200,000
Croydon Aviation Museum 280,000 280,000
Families First Trust 40,000 80,000
Invercargill City Council – Civic Theatre – 600,000
Murihiku Whanau Services – 100,000
Queenstown Aquatic Centre 1,500,000 1,500,000
South Catlins Environment and Development Trust 500,000 750,000
Southland District Health Board – 1,000,000
Southland Indoor Leisure Centre Charitable Trust 80,000 160,000
Tuatapere Hump Ridge Track 40,000 80,000
Venture Southland – Broadband – –
Wakatipu Trails Trust 100,000 300,000
2,540,000 5,050,000
The years in which these commitments fall due are as follows:
Year ending 31 March 2006 – 1,865,000
Year ending 31 March 2007 790,000 1,435,000
Year ending 31 March 2008 550,000 550,000
Year ending 31 March 2009 350,000 350,000
Year ending 31 March 2010 400,000 400,000
Year ending 31 March 2011 450,000 450,000
2,540,000 5,050,000
Commitments of up to $5,300,000 exist for loans which trustees have approved, but which had not been drawn down as at balance date. The approved loans are as follows:
Parent 2006 Parent 2005
Awarua Social Services 200,000 200,000
Borland Lodge – 293,850
Living Fiordland Charitable Trust 3,700,000 3,700,000
Parata Anglican Charitable Trust – 15,000
South Catlins Environment and Development Trust 600,000 600,000
Southland Indoor Leisure Centre Trust 800,000 –
Wyndham & Districts Community Rest Home – 100,000
5,300,000 4,908,850
A commitment has been made to invest up to $2,000,000 in the AMP Property Opportunity Fund. As at 31 March 2006, $942,719 of this committed amount had been paid.
At 31 March 2006, Invest South Limited had the following commitments:
Invest South Limited had a commitment to pay the uncalled share capital of the 100% owned company, Invest South Asset Management Limited.
(2005: Invest South Limited had a commitment to pay the uncalled share capital of the 100% owned company, Invest South Asset Management Limited. Invest South Limited approved a loan of $125,000 to Modern Transport Trailers Limited (CVC Engineering). The loan was drawn down after 31 March 2005. Invest South Limited granted unconditional approval of a loan of $600,000 to Woodland Apiary Limited. The final approval did not occur until 7 April 2005 and the loan was drawn down after 31 March 2005).
17. Property, Plant and Equipment
Parent 2006Cost 2006Accum depn 2006Book Value 2005Book Value
Land – at valuation 220,000 – 220,000 180,000
Buildings – at valuation 485,000 – 485,000 450,000
Office equipment 210,996 174,254 36,742 53,047
Furniture and fittings 153,841 139,611 14,230 29,214
Motor vehicles 87,363 35,700 51,663 70,172
Other assets – – – –
1,157,200 349,565 807,635 782,433
Group
Land – at valuation 220,000 – 220,000 180,000
Buildings – at valuation 485,000 – 485,000 450,000
Office equipment 228,526 189,802 38,724 56,642
Furniture and fittings 157,362 141,771 15,591 31,075
Motor vehicles 87,363 35,700 51,663 351,684
Other assets 1,423 1,286 137 264
1,179,674 368,559 811,115 1,069,665
Land and buildings have been revalued as at 31 March 2006 and are stated at their revalued amounts as determined by Chadderton Valuation, an independent registered valuer (a member firm of the New Zealand Institute of Valuers).
The original cost of land was $457,419 and the original cost of the building was $523,063.
18. Investments With Fund Managers
The parent has funds with five investment managers (fund managers), being Alliance Bernstein, AMP Asset Management, Capital International, ING (NZ) Limited and Tower Asset Management. Market values and asset allocations of these investments as at balance date were as follows:
Alliance Bernstein(NZ$m) AMP(NZ$m) CapitalIntn’l(NZ$m) ING (NZ) (NZ$m) TowerAssetMgmnt(NZ$m) 2006Total(NZ$m) 2005Total(NZ$m)
NZ equities – – – 24.13 – 24.13 19.74
Overseas equities 44.92 – 36.48 – – 81.40 60.82
NZ fixed interest – 24.32 – – – 24.32 27.93
Overseas fixed interest – – – – 46.92 46.92 44.14
Property – 0.94 – – – 0.94 1.32
Cash 5.00 4.11 – 11.33 – 20.44 16.00
49.92 29.37 36.48 35.46 46.92 198.15 169.95
Exposure to currency, interest rate and credit risk arises in the normal course of the fund managers’ management of the group’s investments. A range of hedging policies are in place whereby the fund managers use derivative financial instruments as a means of managing exposure to fluctuations in foreign exchange rates and interest rates. While these financial instruments are subject to the risk of market rates changing subsequent to acquisition, such changes would generally be offset by opposite effects on the items being hedged.
19. Group Investments
Name Ownership Interest Held BalanceDate Principal Activity
Subsidiaries
Southland Community Trust Charities Limited 100% 100% 31 March Distribution of grants to charitable organisations
Invest South Limited 100% 100% 31 March Debt funding and equity investment
Invest South Asset Management Limited – – 31 March Asset management
Back Country Foods Limited 42% 42% 31 March Manufactures freeze dried prepared meals
20. International Financial Reporting Standards
In December 2002, the New Zealand Accounting Standards Review Board announced that the New Zealand International Financial Reporting Standards (NZ IFRS) will apply to all New Zealand reporting entities for the periods commencing on or after 1 January 2007. Entities have the option to adopt NZ IFRS for periods beginning on or after 1 January 2005. The trust has not yet made a decision with respect to an adoption date.
The Community Trust of Southland has not yet started a project to assess the key differences in accounting policies between NZ IFRS and current New Zealand generally accepted accounting principles (GAAP) with a view to determining the impacts on the financial statements that are expected to arise on transition. As The Community Trust of Southland has not yet completed an analysis of the differences between existing NZ GAAP and NZ IFRS, we are unable to reliably estimate the key differences in accounting policies or quantify the impacts to the financial statements that are expected to arise on transition to NZ IFRS.
The Community Trust of Southland intends to provide further information including quantification of the impacts of transitioning to NZ IFRS, in the financial statements for the year ending 31 March 2007.
21. Segmental Information
The trust’s specified area includes all of the areas of Invercargill City Council, Southland District Council, and Gore
District Council, the Heriot and Tapanui areas of Clutha District Council, and the Wakatipu Basin area of Queenstown
Lakes District Council. The trust’s principal activities are to invest the trust capital, both within the specified area and
outside of the region, and to distribute grants for charitable, cultural, philanthropic, recreational and other purposes being purposes beneficial to the community principally within the trust’s specified area.
22. Financial Instruments
General
The group states its investments in managed funds at estimated market value. The trustees consider that the fair value of the financial assets is identical to the value in the statement of financial position.
Concentration of Credit Risk
The group from time to time has significant funds in trading bank deposits. The group limits risk by spreading the deposits over several trading banks. The group has not required collateral or other security to support its financial instruments.
The group further limits risk through its policy of placing investment funds with five separate fund managers, with each fund manager having an investment mandate which requires that they diversify their investments on the group’s behalf. The group has sought and obtained the advice of professional financial advisors prior to making its investment allocation and placement decisions.
Interest Rate Risk
The bank deposits are sensitive to changes in interest rates, as are a proportion of the funds managed by the fund managers.
23. Related Parties
There were no related party transactions during the year (2005: nil).
24. Subsequent Events
Subsequent to 31 March 2006, there were no significant events of which readers of the financial statements need to be aware.
(2005: Subsequent to balance date, Invest South Asset Management Limited received the initial deposit for the sale of the Kingston Flyer to a third party. The agreement for sale of the train was signed prior to 31 March 2005. The final balance completing the sale was received on 14 July 2005.)
Audit Report
To the Trustees of the Community Trust of Southland
We have audited the financial statements. The financial statements provide information about the past financial performance and financial position of the trust and the group as at 31 March 2006. This information is stated in accordance with the accounting policies set out.
Trustees’ Responsibilities
The trustees are responsible for the preparation of financial statements which fairly reflects the financial position of the trust and group as at 31 March 2006 and the results of their operations and cash flows for the year ended on that date.
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.
Basis of Opinion
An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial statements.
It also includes assessing:
? the significant estimates and judgements made by the trustees in the preparation of the financial statements;
? whether the accounting policies are appropriate to the trust’s and group’s circumstances, consistently applied and adequately disclosed.
We conducted our audit in accordance with New Zealand Auditing Standards issued by the Institute of Chartered Accountants of New Zealand. We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to provide us with sufficient evidence to obtain reasonable assurance that the financial statements are free from material misstatements, whether caused by fraud or error. In forming our opinion, we also evaluated the overall adequacy of the presentation of information in the financial statements.
Our firm carries out other assignments for the trust and certain of its subsidiaries in the area of grant audits. The firm has no other interest in the trust or any of its subsidiaries.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion:
? proper accounting records have been kept by the trust as far as appears from our examination of those records;
? the financial statements:
– comply with New Zealand generally accepted accounting practice; and
– fairly reflect the financial position of the trust and group as at 31 March 2006 and the results of their operations and cash flows for the year ended on that date.
Our audit was completed on 22 September 2006 and our unqualified opinion is expressed as at that date.
WARD WILSON, Invercargill.
———————
(A list of all distributions of income and capital approved by The Community Trust of Southland during the year ended
31 March 2006 is available, on request, from the trust’s office.)