The Community Trust of Mid and South Canterbury Inc. Trustee Banks Restructuring Act 1988 Annual Report and Consolidated Financial Statements for the Year Ended 31 March 1998 Trust Particulars The Community Trust of Mid and South Canterbury Inc. was incorporated as a charitable trust in accordance with the provisions of the Trustee Banks Restructuring Act 1988. The purpose of the community trust is to provide charitable, cultural, philanthropic and recreational benefits to the community. Trustees Mr J. E. Thompson (Chairman), Ms R. A. Carruthers, Mr L. K. Cooney, Mr A. R. McKay, Mr P. F. McIlraith, Mrs J. J. Rayne, Mrs M. B. Ross, Mr J. R. Sutton, M.P., Mr D. B. Timpany and Mr R. J. Underdown. Bankers Westpac Trust, 243 Stafford Street, Timaru. Auditors Martin Wakefield, Chartered Accountants, 26 Canon Street, Timaru. Secretary K. A. Churcher, Chartered Accountant, P.O. Box 591, 39 George Street, Timaru. Trustee's Report for the Year Ended 31 March 1998 On behalf of the trustees of the Community Trust of Mid and South Canterbury I am pleased to present this tenth annual report which highlights our activities for the area between the Rakaia and Waitaki Rivers. Objectives of the Trust These are to provide financial assistance to organisations carrying on charitable, cultural and philanthropic and recreational work which is of benefit to the community principally in the regions of Mid and South Canterbury. Policies and Structure of the Trust All purposes of the trusts are deemed to be charitable, to administer capital and to distribute income for charitable purposes in our area. The community trust now comprises 10 trustees who are representatives of the Mid and South Canterbury communities. Trustees are appointed by the Minister of Finance, they reside in the area and their appointment is for a term of 4 years. Trustees retire by rotation and during the year the terms of office expired on the 31st day of May 1997 for Ms R. A. Carruthers and Messrs A. R. McKay and C. P. Sparrow. Ms R. A. Carruthers and Mr A. R. McKay were reappointed. Mr Sparrow did not seek reappointment for health reasons and I wish to pay tribute for the outstanding service he has given over a long period of time. He was first appointed a trustee of the bank in 1970 and has been a trustee of the community trust since its inception. Mrs M. B. Ross of Ashburton has been appointed in his place. Activities of the Trust The past year has seen increased activity in many areas of the trust's operation. Our investments are under prudent management and subject to constant review. Although interest rates have been varied our income at $2.3 million is close to that of the previous year. Likewise the distribution of donations was on a similar scale. Of the many projects with which we became associated it was exciting to witness the official opening of the Community Trust Sports Centre (previously known as Aorangi Stadium). This, of course, was the trust's largest grant to date. A further venture was the leasehold acquisition of a building to be known as Community House. This, we hope, will bring together a wide cross section of voluntary organisations. At present advice is awaited on the appointment of 2 trustees. A new trustee appointment is similarly awaited to replace myself. These terms officially expire on the 31st day of May 1998. When these appointments are notified to us by the Minister of Finance a new chairperson will be elected by the board. During the coming year our secretary, Mr Ken Churcher, will retire on the 1st day of August 1998. He has held the position since 1991 when the then Trust Bank New Zealand Limited ruled that bank staff could not hold any official position in the community trust. Trustees hold him in regard and acknowledge his competence and dedication. The trust is pleased that Mr Bruce Strathern, a well known businessman and entertainment personality, will assume the position of executive director. J. E. THOMPSON, Chairperson. Consolidated Statement of Financial Pperformance for the Year Ended 31 March 1998 Note 1998$ 1997$ Income Interest 2,241,326 2,707,813 Dividends 258,202 0 Total income 2,499,528 2,707,813 Less expenditure Advertising 26,076 20,649 Auditor's fees 1,875 1,571 Interest 365 0 Investment administration 30,508 26,001 Legal fees 4,172 2,541 Postage, tolls and fax 1,769 1,355 Printing and stationery 3,243 4,350 Secretarial and accountancy fees 44,527 28,948 Special reports 5,693 0 Sundry administration expenses 5,870 3,567 Travelling expenses 5,593 9,922 Trustees fees 29,312 15,339 Depreciation marquees 0 3,966 Write off of debit balance in revaluation reserve 0 60,208 Loss on redemption of Government stock 29,041 0 Total expenditure 188,044 178,417 Nett income 2,311,484 2,529,396 Plus capital profit on sale of investments 0 24,698,148 Unrealised capital gain on equity investments 222,956 0 Surplus transferred to the trust fund $2,534,440 $27,227,544 Consolidated Statement of Movements in Equity for the Year Ended 31 March 1998 1998$ 1997$ Opening equity33,438,962 8,760,245 Nett surplus for year2,534,440 27,227,544 Transfer (from)/to endowment fund0 (16,477) Less donations paid(953,485) (1,780,854) Less donations approved not yet paid(69,630) (751,496) Closing equity$34,950,287 $33,438,962 Consolidated Statement of Financial Position as at 31 March 1998 Note 1998$ 1997$ Trust capital General3 34,950,287 33,438,962 Revaluation reserve4 44,357 0 $34,994,644 $33,438,962 Represented by: Current assets Provision for tax5 27,367 0 Westpac Trust Subsidiary company account 1,365 0 Current account 77,495 31,470 Prime call account 63,062 1,649 Term deposits 7,086,707 12,273,436 National Bank of New Zealand term deposits 5,356,950 6,000,000 ANZ Banking Group term deposits 2,664,150 8,892,007 Sundry debtors 32,547 5,873 Prepayments 13,770 1,256 Interest accrued 368,540 66,450 Short term debt investments2 2,400,000 2,400,000 18,091,953 29,672,141 Less current liabilities Sundry creditors 16,652 34,939 Donations approved not yet paid7 69,630 751,496 Total current liabilities 86,282 786,435 Working capital 18,005,671 28,885,706 Add non current assets Investments Debt2 9,146,548 1,615,616 Equity 7,842,425 2,937,640 Nett assets $34,994,644 $33,438,962 Signed on behalf of the board of trustees: J. E. THOMPSON, Chairperson. R. A. CARRUTHERS, Trustee. Dated this 23rd day of June 1998. Consoliated Statement of Cash Flows for the Year Ended 31 March 1998 1998$ 1997$ Cash flows from operating activities Cash was provided from: Interest on deposits1,939,082 2,662,152 Dividends230,989 0 2,170,071 2,662,152 Cash was applied to: Suppliers of goods and services(216,478) (116,495) Donations paid(1,704,981) (1,835,974) (1,921,459 (1,952,469) Nett cash flows from operating activities248,612 709,683 Cash flows from investing activities Cash was provided from: Sale of Trust Bank New Zealand Limited shares0 32,087,148 Redemption of Government stock1,000,000 0 Loan repayment: St Vianney's Home0 20,000 Proceeds from endowment fund0 23,358 1,000,000 32,130,506 Cash was applied to: Purchase of local body stock(1,500,000) 0 Purchase of Australian shares(663,282) 0 Purchase of New Zealand Goverment stock(5,754,048) (4,007,081) Purchase of New Zealand shares(2,497,290) (2,009,724) Purchase of New Zealand property shares(846,534) (546,861) Purchase of Australian property shares(674,723) (449,798) Reimbursement of contribution from endowment fund0 (19,724) Purchase of other debt investments(1,261,568) 0 (13,197,445) (7,033,188) Nett cash flows from investing activities(12,197,445) 25,097,318 Increase/(decrease) in cash held(11,948,833) 25,807,001 Add opening cash 1 April 199727,198,562 1,391,561 Cash as at 31 March 1998$15,249,729 $27,198,562 Reconciliation of Net Surplus and Net Cash Flows From Operating Activities 1998$ 1997$ Net surplus transferred to equity2,534,440 27,227,544 Add Revaluation reserve write-off 60,208 Depreciation marquees 3,966 Loss on redemption of Government stock29,041 0 2,563,481 27,291,718 Deduct Capital profit on TBNZ shares 24,698,148 Unrealised capital gain on equity investments222,956 Donations paid1,704,981 1,835,974 Movements in working capital Decrease in creditors18,287 (22) Increase in tax refund due27,367 0 Increase in accrued interest302,090 46,679 Increase in prepayments12,514 1,256 Increase in debtors26,674 0 2,314,869 26,582,035 Net cash flow from operating expenses$248,612 $709,683 Cash at 31 March 1998 comprises the subsidiary company account, current account, the prime call account and the money market deposit account at WestpacTrust and deposits at National Bank of New Zealand and ANZ Banking Group. Notes to the Consolidated Financial Statements for the Year Ended 31 March 1998 1. Statement of Accounting Policies Reporting Entity The Community Trust of Mid and South Canterbury Inc. is a charitable trust incorporated under the Trustee Banks Restructuring Act 1988. The financial statements have been prepared in accordance with the Financial Reporting Act 1993 and generally accepting accounting policies. General Accounting Policies The general accounting policies adopted in the preparation of these financial statements are: The measurement base is that of historical cost, except for the revaluation of investments. Reliance is placed on the fact that the trust is a going concern. The matching of revenues earned and expenses incurred using accrual accounting. Particular Accounting Policies The following are the particular accounting policies which have a material effect on the measurement of results and financial position: (a) Dividend Income Dividend income is included in the consolidated statement of financial performance when it is received. (b) Donations Donations, special projects and community loans are accounted for on an accruals basis. (c) Investments Investmments held as managed funds are shown at market value. Net income including unrealised gains or losses from holding such investments are recorded in the consolidated statement of financial performance. Other investments representing assets to be held to maturity are shown at market value. Unrealised gains or losses from holding such investments are transferred directly to the revaluation reserve. Differences between sale proceeds and book value of investments are recorded in the statement of financial performance. (d) Fixed Assets Fixed assets are recorded at cost less accumulated depreciation. (e) Basis of Consolidation The Community Trust of Mid and South Canterbury Inc. and its subsidiary the South Canterbury Community Trust Charities Limited have been consolidated using the purchase method of consolidation. Changes in Accounting Policies The policy with respect to investments has changed during the year from stating unrealised gains/losses on managed fund investments to the revaluation reserve to stating these gains/losses directly to the statement of financial performance on an annual basis. The value of this change has resulted in an increased operating surplus of $222,956. The other accounting policies remain unchanged from the previous year. 2. Investments 1998$ 1997$ New Zealand Government stock8,835,342 4,015,616 New Zealand local authority stock1,490,240 0 New Zealand debentures1,010,580 0 New Zealand capital notes210,386 0 New Zealand shares4,526,660 1,951,380 Australian shares795,000 0 New Zealand property shares1,204,110 544,700 Australian property shares1,316,655 441,560 19,388,973 6,953,256 Less New Zealand Government stock short term(2,400,000) (2,400,000) $16,988,973 $4,553,256 3. General Fund Balance brought forward33,438,962 8,760,245 Plus: surplus from statement of financial performance2,534,440 27,227,544 35,973,402 35,987,789 Less: Donations paid(953,485) (1,780,854) Donations approved but not paid(69,630) (751,496) Endowment fund transfer0 (16,477) $34,950,287 $33,438,962 4. Revaluation Reserve Opening balance as 1 April 19970 0 Unrealised gains on debt investments44,357 0 Balance at 31 March 1998$44,357 $0 5. Taxation Net income before donations2,311,484 2,529,396 Add: imputation credits65,727 Non deductible expenditure34,274 112,094 2,411,485 2,641,490 Deduct: distributed as beneficiaries income to South Canterbury Community Trust Charities Limited2,212,313 2,641,490 Taxable income199,172 Nil Tax @ 33 percent65,727 0 Less: tax credits93,094 0 Tax refund due$27,367 $Nil 6. Goods and Services Tax The trust is not registered for goods and services tax purposes. Accordingly these financial statements are stated on a G.S.T. inclusive basis. 7. Donations Approved Not Yet Paid Approved donations not yet paid out include: 1998$ 1997$ Otipua Wetland Charitable Trust25,000 Methven Anglican Parish 2,000 QEII National Trust 2,000 Task Force Green Community Employm,ent initiative6,380 25,080 Age Concern Ashburton Inc. 5,000 Ashburton Sports Turf Trust 15,000 Hinds School on Behalf of Community Organisation 1,000 St Andrews Presbyterian Church (Ashburton)1,000 1,000 Caroline Bay Seating Cover Project 5,000 S C War Memorial Society Inc. 5,000 Timaru Squash Club10,000 10,000 Glenavy Tennis Club 750 Waimate Health and Fitness Trust 2,500 Hieracium Control Trust 10,000 Cave Pistol Club 500 Aorangi Park Trust 666,666 Barnabas Christian Trust13,750 Waikakahi Centennial3,000 Sound Shell Roof Cover project10,000 South Rangitata Reserve500 $69,630 $751,496 8. Capital Commitments There were no capital commitments (1977 Nil). 9. Contingent Liabilities There are no contingent liabilities apart from donation commitments as per notes 1 and 10. 10. Financial Instruments Fair Values Investments are stated at estimated market value at balance date. Interest accrued, sundry debtors, sundry creditors, term loans and donations approved, not yet paid, are stated at the amounts expected to be received or paid. Accordingly, the trustees consider that the fair value of each class of financial assets and financial liabilities is the same as the carrying value in the statement of financial position. Credit Risk Seventy-six percent of the assets of the trust are represented by debt investments and current account balance with WestpacTrust, National Bank of New Zealand and ANZ Banking Group. The trustees consider the risk of non-recovery of these investments at balance date to be within satisfactory guidelines. The maximum exposure to credit risk of other financial instruments are: 1998$ 1997$ Sundry debtors32,547 5,873 Interest accrued368,540 66,450 Long term advances0 30,000 New Zealand shares4,526,660 1,951,380 New Zealand property shares1,204,110 544,700 Australian property shares1,316,655 441,560 Australian shares795,000 0 Currency Risk The trust incurs currency risk as a result of investment in Australian property shares and Australian shares i.e. gives rise to currency risk in Australian dollars. Interest Rate Risk The following investments of the trust are sensitive to changes in interest rate: bank call accounts and term deposits, Government and local authority securities, telenotes, Fletcher Challenge capital notes and various convertible notes. Audit Report to the Readers of the Consolidated Financial Statements of the Community Trust of Mid and South Canterbury Inc. We have audited the attached financial statements. The consolidated financial statements provides information about the past financial performance and financial position of trust and its financial position as at 31 March 1998. This information is stated in accordance with the accounting policies as outlined. Board of Trustees Responsibilities The board of trustees are responsible for the preparation of consolidated financial statements which gives a true and fair view of the financial position of the trust as at 31 March 1998 and of the results of operations and cash flows for the year ended 31 March 1998. Auditor's Responsibilities It is our responsibility to express an independent opinion on the consolidated financial statements presented by the board of 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 report. It also includes assessing: the significant estimates and judgments made by the board of trustees in the preparation of the consolidated financial statements, and whether the accounting policies are appropriate to the trust circumstances, consistently applied and adequately disclosed. We conducted our audit in accordance with generally accepted auditing standards in 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 give reasonable assurance that the consolidated financial statements is 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 consolidated financial statements. Other than in the normal course of business and in our capacity as auditors we have no relationship with or interests in the trust. 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; and the consolidated financial statements: complies with generally accepted accounting practice; gives a true and fair view of the financial position of the trust as at 31 March 1998 and the results of its operations and cash flows for the year ended on that date. Our audit was completed on 22 June 1998 and our unqualified opinion is expressed as at that date. MARTIN WAKEFIELD, Auditors. Timaru. The Hon. Minister of Finance has directed that the Community Trust of Mid and South Canterbury Inc. need not publish the full list of its donations, but a copy of the list is available to anyone upon request to the chairperson, the Community Trust of Mid and South Canterbury Inc., P.O. Box 983, Timaru, or from the offices of the secretary, 39 George Street, Timaru.