Trust Particulars
The trust was initially incorporated on 5 August 1988 as the Trust Bank Bay of Plenty Community Trust in accordance
with the provisions of the Trustee Banks Restructuring Act 1988. It continues under the provisions of the Community Trusts Act 1999. The purpose of the trust is to provide charitable, cultural, philanthropic, recreational and other benefits to Bay of Plenty communities. In April 1998, the name was changed to the Bay of Plenty Community Trust Inc. In March 2006, the trust adopted the name BayTrust for operational purposes.
Trustees: Ms P. Thompson (Chairperson), Ms T. J. Eggleton, Ms S. Kai Fong, Mr B. Kerr, Mrs J. Knudsen J.P., Mr L. Martin J.P., Mrs P. J. McLeod M.N.Z.M., Mr R. Morrison, Mrs M. Ngatai Q.S.M., J.P., Mr. R. Sharp, Ms A. Simpson, Ms A. von Tunzelmann.
Trust Manager: Mr B. W. Cronin, J.P.
Accountants: Staples Rodway Tauranga Limited, Tauranga.
Auditors: Ingham Mora, Tauranga.
Bankers: BNZ, Tauranga.
Westpac, Tauranga.
Financial Advisers: Russell Investment Group Limited, Auckland.
Solicitors: Sharp Tudhope, Tauranga.
Tax Advisers: KPMG, Christchurch.
Chairperson's Report for the Year Ended 31 March 2007
BayTrust beneficiaries, that is all those people normally resident in the Bay of Plenty, can feel hugely satisfied that their trust has again performed well. It has performed well in its investments, in its grants and in how it is positioning itself for the future.
Highlights of the year to 31 March 2007:
- Excellent return on investments: 9.9% ($13m). Although this was down on the previous year's record return of 14%, it was again very healthy against an expectation of 7.2% p.a. ($8.6m) over the long term.
- Total grants paid rose to a record $4.6m, a significant improvement on $2.8m the previous year and on the average of $2.5m over the previous five years.
- After two exceptionally good income years, the trust further strengthened its investment position by reducing its allocation to short-term investments and by further diversifying its investment portfolio.
- BayTrust continues to keep its overseas investments fully hedged to the New Zealand dollar so that asset values and returns cannot be impaired by a rising New Zealand dollar.
- The trust has entered into an agreement with the Taupo-based Philips Search and Rescue trust to fund the Rotorua-based BayTrust Rescue Helicopter for three years at $200,000 a year.
- The trust has developed a new Strategic Plan 2007-2010 which gives further guidance to the way the trust intends to work with and for Bay of Plenty communities.
The trust continues to be the foundation and backbone supporter of Sport BoP's hugely successful CoachForce programme. Since its inception as a Sport BoP/BayTrust partnership in 1997, the trust has contributed nearly $5m to this critically important programme. We congratulate Sport BoP and all those involved in now taking the programme out nationally.
After almost six years as chairperson of BayTrust, Ray Sharp of Opotiki stood down from that role in February of this year, in preparation for his scheduled retirement from the trust on 31 May 2007. We pay a very sincere and heart-felt compliment to Ray for his leadership and for the skills, insights and professionalism he brought to the position. Ray led the trust through some very difficult investment times in the early 2000s and the trust's present strong position is a credit to him and indeed to all trustees.
During the year under review, trustees Maureen Waaka (Rotorua) and Enid Leighton (Whakatane) retired and their places were taken by Ray Morrison (Rotorua) and Anne Simpson (Whakatane). Maureen had served two terms (eight years) with the trust and is particularly remembered for her passion for matters Maori and her deep involvement with the trust's Dillon Scholarship programme. Enid had served one term and during that time was a strong contributor to the trust overall.
Our sincere thanks to all trustees and staff for the part they have played in BayTrust's highly successful 2006/07 year. Making grants to help build, strengthen and enhance Bay of Plenty communities is certainly very rewarding but it involves a huge amount of hard work and dedication too, and all trustees and staff can feel rightly pleased to have been part of the year's excellent results.
PAULA THOMPSON, Chairperson.
BRUCE W. CRONIN, Trust Manager.
Date: 3 July 2007.
Statement of Financial Performance for the Year Ended 31 March 2007
2007 2006
$000 $000
Income:
Dividends 3,238 3,495
Interest 1,693 2,594
Investment gains/(losses) 8,128 11,107
Grants cancelled and refunded 4 4
13,063 17,200
Less expenditure:
Advertising/public reporting 61 54
Audit fees 7 8
Accountancy fees 9 10
Portfolio management and advisory fees 643 660
Office administration 259 237
Office rental 61 34
Other administration costs 75 119
Trustees' fees 155 159
Trustees' expenses 46 46
1,316 1,327
Depreciation 16 7
Loss on disposal of assets 2 -
Total operating costs 1,334 1,334
Net surplus/(deficit) before grants 11,729 15,866
Less grants 3,552 2,987
Net surplus/(deficit) after grants 8,177 12,879
Plus/(less) transfers:
Income fluctuation reserve (3,030) (9,034)
Inflation and population growth reserve (4,985) (3,577)
(8,015) (12,611)
Net surplus/(deficit) after reserve transfers 162 268
The accompanying notes form part of these financial statements.
Statement of Movements in Equity for the Year Ended 31 March 2007
2007 2006
$000 $000
Equity at 1 April 2006 135,940 123,329
Net surplus/(deficit) for the year 162 268
136,102 123,597
Less grants paid from capital:
Grants round (85) (184)
Dillon Scholarship (77) (84)
Increase in income fluctuation reserve 3,030 9,034
Increase in inflation and population growth reserve 4,985 3,577
Equity at 31 March 2007 143,955 135,940
The accompanying notes form part of these financial statements.
Statement of Financial Position as at 31 March 2007
Note 2007 2006
$000 $000
Equity: 2
Trust capital 89,308 89,308
Income fluctuation reserve 26,949 23,919
Inflation and population growth reserve 27,698 22,713
Total equity 143,955 135,940
Represented by-
Current assets:
Westpac-
Current account 37 14
Bank of New Zealand-
Term deposit 729 664
Interest free loans 408 430
Accounts receivable - 4
1,174 1,112
Non current assets:
Interest free loans 291 557
Portfolio investments 5 142,717 135,527
Fixed assets 3 55 58
143,063 136,142
Total assets 144,237 137,254
Current liabilities:
Accounts payable (267) (1,298)
Employee entitlements payable (15) (16)
Total liabilities (282) (1,314)
Total net assets 143,955 135,940
Signed on behalf of the Board of Trustees:
PAULA THOMPSON, Chairperson.
ADRIENNE VON TUNZELMANN, Trustee.
Date: 26 June 2007.
The accompanying notes form part of these financial statements.
Statement of Cash Flows for the Year Ended 31 March 2007
2007 2006
$000 $000
Cash flows from operating activities-
Cash was provided from:
Investment income 6,602 10,743
Other 5 4
6,607 10,747
Cash was dispersed to:
Suppliers of goods and services (1,098) (1,097)
Trustees (157) (204)
Grants to the community (4,731) (2,847)
Dillon Memorial Scholarship (77) (84)
(6,063) (4,232)
Net cash flows from operating activities 544 6,515
Cash was provided from:
Sale of investments 34,000 54,362
Cash was applied to:
Purchase of fixed assets (15) (42)
Purchase of investments (34,506) (60,863)
Net cash flows from investing activities (521) (6,543)
Increase/(decrease) in cash held 23 (28)
Add cash at 1 April 2006 14 42
Cash at 31 March 2007 37 14
Reconciliation of net surplus and net cash flows from operating activities-
Net surplus transferred to equity 8,177 12,879
Less payments out of capital (net) (162) (268)
Accrued income included in investments (6,460) (6,460)
Add/(less) non cash items:
Depreciation of fixed assets 16 7
Loss on disposal of assets 2 -
Movement in working capital:
(Increase)/decrease in accounts receivable 4 8
Increase/(decrease) in accounts payable (1,033) 349
Net cash flows from operating activities 544 6,515
The accompanying notes form part of these financial statements.
Notes to the Financial Statements for the Year Ended 31 March 2006
1. Statement of Accounting Policies
Reporting Entity
The trust is a charitable trust in accordance with the provisions of the Community Trusts Act 1999.
The financial statements have been prepared as required by the Community Trusts Act 1999 and the Trust Deed dated
17 August 2000 and in accordance with the Financial Reporting Act 1993.
Measurement Base
The accounting principles recognised as appropriate for the measurement and reporting of financial performance and financial position on a historical cost basis are followed by the trust, with the exception of investments which are stated at market value.
Specific Accounting Policies
The following specific accounting policies which materially affect the measurement of financial performance and the financial position have been applied:
(a) Grants:
Grants made during the year from revenue are included in the statement of financial performance. Those made from trust capital have been included in the statement of movements in equity.
(b) Investments:
All investments are stated at assessed market value (refer Note 5).
(c) Fixed assets:
Fixed assets are stated at cost less accumulated depreciation.
(d) Depreciation:
Depreciation is charged to write off the cost of fixed assets over their expected economic lives using the diminishing value method at rates from 11.4% to 50% per annum.
(e) Accounts receivable:
Accounts receivable are recorded at their estimated realisable value.
(f) Consolidation:
The 2006 comparatives include the Bay of Plenty Community Trust and its subsidiary charitable company. The company was wound up during the financial year ended 31 March 2006 and its assets and liabilities were acquired by the Bay of Plenty Community Trust.
(g) Financial instruments:
The trust includes all financial instrument arrangements in the balance sheet using the concept of accrual accounting. Financial instruments are valued as per Note 1, measurement base. These instruments arise as a result of everyday operations and include bank, accounts receivable, accounts payable and investments. Revenues and expenses in relation to all financial instruments are recognised in the statement of financial performance. Financial instruments are shown at their fair values.
Changes in Accounting Policies
There have been no changes in accounting policies. All policies have been applied on bases consistent with those used in previous years.
2007 2006
$000 $000
2. Equity
Trust capital- 89,308 89,308
General fund:
Opening balance - -
Net surplus/(deficit) 8,177 268
Less grants from capital (162) (268)
Less transfer to income fluctuation reserve (3,030) -
Less transfer to inflation and population growth reserve (4,985) -
Closing balance - -
Income fluctuation reserve:
Opening balance 23,919 14,885
Increase in reserve 3,030 9,034
26,949 23,919
Inflation and population growth reserve:
Opening balance 22,713 19,136
Increase in reserve 4,985 3,577
27,698 22,713
Total equity 143,955 135,940
2007 2006
$000 $000
3. Fixed Assets
Office furniture and equipment:
Cost 116 107
Less Accumulated depreciation (61) (49)
Book value 55 58
4. Financial Instruments
Investments managed by financial institutions are stated at market value as at balance date. Accrued interest, accounts payable and grants approved not yet paid are stated at the amounts expected to be received or paid. Accordingly, the trustees consider that the fair value of each class of financial assets and financial liabilities is the same as the carrying value in the financial position.
Concentration of Investments
Ninety-eight point nine percent (98.9%) of the assets of the trust are represented by investments held with a range of financial institutions (2006 - 98.5%). However, the trustees consider the risk of non-recovery of these investments to be minimal. Maximum exposure to credit risk as at balance date is:
2007 2006
$000 $000
Bank balances 37 14
Bank term deposits 729 664
Accounts receivable 0 4
Interest free loans 699 987
Investments 142,717 135,527
Currency Risk
The trust incurs currency risk as a result of investment transactions entered into by fund managers. The trust has a policy of fully hedging global bonds and global equities.
Interest Rate Risk
The investments of the trust are sensitive to changes in interest rates: Bank call accounts and deposits, government and local authority securities, and securities held by fund managers.
Fair Value
The carrying value is considered to be the fair value for financial instruments.
5. Investments
The value of investments which are held in equities, fixed interest, property and hedge funds are subject to market
fluctuations. The total investment portfolio is diversified in such a way that over time, reductions in value in particular asset classes should be more than offset by increases in other classes. Investments are disclosed at market value at balance date and any gains (losses) arising from that treatment are shown as "investment gains (losses)" in the statement of financial performance. Therefore, no provision has been made for potential gains or losses that could occur due to future market fluctuations. The investment portfolio as at 31 March 2007 is diversified as follows:
TowerAsset Management SSGA AMPCapital Investors Russell Investment Group Total
$000 $000 $000 $000 $000
New Zealand equities 7,973 0 0 0 7,973
Collateralised commodity futures 0 7,406 0 0 7,406
New Zealand cash 143 0 3,149 0 3,292
Global bonds (fully hedged) 0 0 28,502 27,871 56,373
Global equities (fully hedged) 33 0 6,174 45,099 51,306
Global property 0 0 0 9,132 9,132
Hedge fund of funds 0 0 0 7,235 7,235
Total 2007 8,149 7,406 37,825 89,337 142,717
Total 2006 44,802 0 36,035 54,690 135,527
The balance date figures above are reflected in the trust's asset allocations:
2007 2006
Policy Actual Policy Actual
(%) (%) (%) (%)
New Zealand equities 5 6 5 5
New Zealand bonds 0 0 25 23
Collateralised commodity futures 5 5 0 0
New Zealand cash 5 3 5 6
Global bonds (fully hedged) 40 39 25 26
Global equities (fully hedged) 35 36 30 30
Global property 5 6 5 5
Hedge fund of funds 5 5 5 5
100 100 100 100
6. Taxation
Bay of Plenty Community Trust is exempt from income tax with effect from 1 April 2004, under section CW 44 of the Income Tax Act 2004.
7. 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.
8. Related Party Transactions
There were no related party transactions during the year.
9. Adoption of International Financial Reporting Standards (NZ IFRS)
In December 2002, the New Zealand Accounting Standards Review Board announced that International Reporting Standards (NZ IFRS) will apply to all New Zealand entities for periods beginning on or after 1 January 2007. Entities also have the option of a voluntary early adoption of NZ IFRS for periods beginning on or after 1 January 2005.
The Bay of Plenty Community Trust intends to implement NZ IFRS in its annual financial statements for the year ending
31 March 2008.
Transition Management
The Bay of Plenty Community Trust has started a project to:
- assess the key differences in accounting policies under NZ IFRS and current accounting policies;
- determine the impacts on the financial statements from transition; and
- determine and to implement processes to deal with any related business impacts.
Change in Accounting Policies on Transition to NZ IFRS
Significant differences identified by The Bay of Plenty Community Trust are outlined below. It should not be regarded as a complete list of changes in accounting policies that will result from the transition to NZ IFRS, as some decisions have not yet been finalised where choices of accounting policies are available.
The Bay of Plenty Community Trust has not yet completed an exercise to quantify the effects of the differences in accounting policies discussed below, and are therefore currently unable to reliably quantify impacts on the financial statements, which will arise from transitioning to NZ IFRS. It is possible that the actual impact of adopting NZ IFRS may vary from the information presented below, and the variation may be material.
Financial Instruments
The Bay of Plenty Community Trust current accounting policy is to recognise financial instruments at fair value with movements through the profit and loss account. Under NZ IFRS, the trust will continue to adopt this accounting policy. However, the trust envisages that further work will be required to ensure that the valuation techniques used to value financial instruments are consistent with the requirements of NZ IFRS.
It is also noted that financial instruments should be initially measured at fair value. This may result in a re-measurement of the trust's loans and receivables.
10. Segment Information
The trust's only activity is to receive income to allocate for charitable, cultural, philanthropic, recreational and other purposes beneficial to the community, principally in the Bay of Plenty area.
11. Contingent Liabilities
The trust has no contingent liabilities other than those disclosed in Note 12 (2006 - Nil).
12. Grant Commitments
The following unconditional future grants have been approved:
2008 2009 2010
Grants Recipient
Sport BOP 350,000 350,000 350,000
Phillips SRT 200,000 200,000 100,000
Shakti Ethnic Women's Group (Central Region) 18,000 18,000 18,000
Opotiki Kiwican Charitable Trust 25,000 0 0
Total unconditional future grants 593,000 568,000 468,000
The following conditional future grants have been approved but are subject to the applicants satisfying specific criteria in each case:
Grants Recipient
St Andrews Presbyterian Church of Te Puke 15,000
Waihau Bay Volunteer Rural Fire Force 30,000
Shakti Ethnic Women's Group (Central Region) 5,000
Whakarewarewa Rugby Community Sports Inc 5,000
Tuwharetoa Social Services 10,000
Pongakawa Community Trust 10,000
Nga Whare Oranga Trust 51,020
Tauranga Millennium Track Trust 100,000
Total conditional future grants 226,020
13. Commitments
Capital commitments:
There are no capital commitments (2006 - Nil).
Lease commitments:
Lease commitments under non-cancellable operating leases:
Less than one year $61,562
(2006 - $45,082).
Schedule of Distributions of Income by Way of Grants for the Year Ended 31 March 2007
Grants made by the trust may be summarised as follows:
2007 2006
$000 $000
Grants 3,637 3,171
Dillon Memorial Scholarship 77 84
3,714 3,255
Auditor's Report
To the Trustees of Bay of Plenty Community Trust Incorporated
We have audited the financial statements. The financial statements provide information about the past financial performance and financial position of the trust and its financial position as at 31 March 2007. This information is stated in accordance with the accounting policies.
Trustees' Responsibilities
The trustees are responsible for the preparation of financial statements, which give a true and fair view of the financial position of the trust as at 31 March 2007, and of the results of operations and cash flows for the year ended on that date.
Auditors' Responsibilities
It is our responsibility to express to you an independent opinion on the financial statements presented by the trustees.
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 judgments made by the trustees in the preparation of the financial statements; and
- whether the accounting policies are appropriate to the trust's circumstances, consistently applied and adequately disclosed.
We conducted our audit in accordance with New Zealand Auditing Standards. 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 give 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.
Other than in our capacity as auditors, we have no relationship with or interest in the trust.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion, the financial statements:
- comply with generally accepted accounting practice in New Zealand; and
- fairly reflect the financial position of the trust and group as at 31 March 2007 and the results of operations and cash flows for the year ended on that date:
Our audit was completed on 26 June 2007 and our unqualified opinion is expressed as at that date.
INGHAM MORA, Tauranga.
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(A full list of all distributions by way of grants for the year ended 31 March 2007 is available from the trust office on request, info@baytrust.org.nz or telephone (07) 578 6546.)