Trust Directory for the Year Ended 31 March 2002
Trust Particulars: The Community Trust was incorporated as a charitable trust in accordance with the provisions of the trustee provisions of the Community Trusts Act 1999. The purpose of The Community Trust is to provide charitable, cultural and philanthropic and recreational benefits to the community.
Date of Trust Deed: 30 May 1988.
Settlor: Minister of Finance.
Trustees: R. J. Todd (Chair), D. C. Close, D. W. Dormer, B. G. Hadlee, L. H. Jeffs, F. M. Jessep (Marlborough), B. Lowe-Johnson, P. H. Malone (Nelson), M. E. O'Connor (Nelson), P. J. Richardson, P. J. Sigglekow, S. S. J. Wong.
Trust Manager: W. P. Ward.
Accountants: Hadlee Kippenberger & Partners, P.O. Box 577, Christchurch (M. J. Hadlee).
Taxation Consultant: KPMG, P.O. Box 274, Christchurch (O. M. Wallis).
Auditors: PricewaterhouseCoopers, P.O. Box 13-244, Christchurch (J. A. Orr).
Fund Managers: Alliance Capital Management (to 22 March 2002), AMP Henderson Global Investors (NZ) Limited, BT Funds Management (NZ) Limited, Lazard Asset Management Pacific Company (to 22 March 2002), Marvin and Palmer Associates Inc. (to 22 March 2002), Merrill Lynch Investment Managers (to 22 March 2002), Tower Asset Management, Russell Investment Management Limited - Russell Internations Share Fund (appointed 22 March 2002).
Custodial Trustee: J. P. Morgan.
Fund Investment Advisors: Frank Russell Company (NZ) Limited.
Bankers: WestpacTrust.
Solicitors: Chapman Tripp Sheffield Young, P.O. Box 2510, Christchurch (L. Alexander).
Trustees' Report for the Year Ended 31 March 2002
Objectives of the Trust and Charitable Company Subsidiary
To provide charitable, cultural, philanthropic and recreational benefits to the communities of Canterbury, Marlborough
and Nelson.
Policies and Structure of the Trust and Charitable Company Subsidiary
These organisations are structured to include community representatives from the three regions. Their policies are to manage and distribute their income and capital to the community they serve.
Activities of the Trust
During the period under review, the trust and its charitable subsidiary have provided financial assistance to a wide range of community groups in Canterbury, Marlborough and Nelson. In addition to responding to applications for assistance, these organisations have initiated several new projects of benefit to community groups.
Trustees' Remuneration
During the period, the trustees of the trust received fees of $133,945 (2001 $139,975).
Review of Results and Financial Position
The total distribution from the trust and charitable company was $19.5 million (2000 $19.0 million) donations to community groups during the last 12 months.
Signed on behalf of the Board of Trustees:
Chairperson: R. J. TODD.
Trustee: S. S. J. WONG.
Date: 27 May 2002.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2002
Note 2002 2001
Revenue 2 3,608,728 7,171,127
Less investment fees 2 1,983,212 2,106,611
Less expenses 2 1,085,221 1,053,692
Net surplus before taxation 540,295 4,010,824
Less retentions:
Transfer to capital base reserve 4 9,803,417 11,278,948
Available for distribution (9,263,122) (7,268,124)
Donations to tax approved entities 3 13,332,387 12,076,139
Net surplus/(deficit) transferred to trust funds (22,595,509) (19,344,263)
Consolidated Statement of Movements in Trust Funds for the Year Ended 31 March 2002
Note 2002 2001
Total trust funds at beginning of year 446,919,113 461,946,701
Less donations paid from capital 3 (6,229,538) (6,962,273)
440,689,575 454,984,428
Add net surplus/(deficit) for the year (22,595,509) (19,344,263)
Increase in capital base reserve 9,803,417 11,278,948
Total trust funds at end of year 427,897,483 446,919,113
Represented by:
Core real capital base reserve 4 358,000,000 358,000,000
Accumulated income reserve 4 39,035,413 67,860,460
Capital base reserve 4 30,862,070 21,058,653
427,897,483 446,919,113
Consolidated Statement of Financial Position as at 31 March 2002
Note 2002 2001
Trust funds 4 427,897,483 446,919,113
Represented by-
Current assets:
WestpacTrust operating accounts 23,042 108,237
Bank deposits 1,422,962 1,304,416
Colliers Jardine operating account 10,936 -
Accounts receivable 10,905 89,411
Taxation refund due 14 259 301
1,468,104 1,502,365
Investments:
Property investments 7 7,530,632 5,771,863
Managed funds 13 419,093,410 439,684,440
Community loans - 6,833
426,624,042 445,463,136
Fixed assets 8 81,364 108,024
Total assets 428,173,510 447,073,525
Current liabilities:
Accounts payable and goods and services tax 276,027 154,412
Total liabilities 276,027 154,412
Net assets 427,897,483 446,919,113
Consolidated Statement of Cash Flows for the Year Ended 31 March 2002
Note 2002 2001
Cash was provided by (used for)-
Operations: 5
Income from investments 10,841,892 23,529,369
Payments to suppliers, employees and trustees (2,728,941) (2,906,234)
Payments of taxation 42 (180)
Payments of goods and services tax 6,315 (4,159)
Donations to the community (19,561,924) (21,846,412)
(11,442,616) (1,227,616)
Investing:
Managed funds investments 13,436,372 866,544
Movement in term deposits (118,546) 2,192,531
Community loans 6,833 47,749
Sale (purchase) of fixed assets (1,967,238) (1,789,719)
11,357,421 1,317,105
Increase in cash (85,195) 89,489
Cash at beginning of year 108,237 18,748
Cash at end of year 23,042 108,237
Represented by:
WestpacTrust operating accounts 23,042 108,237
Notes to the Financial Statements for the Year Ended 31 March 2002
1. Statement of Accounting Policies
General Accounting Policies
The following general accounting policies have been adopted in the preparation of the financial statements.
(i) The Community Trust was incorporated as a charitable trust in accordance with the provisions of Community Trusts Act 1999. These financial statements have been prepared in accordance with applicable financial reporting standards.
(ii) Community Trust Charities Limited is a charitable company incorporated under the Companies Act 1993 and is a reporting entity for the purposes of the Financial Reporting Act 1993. The financial reports of Community Trust Charities Limited have been prepared in accordance with the Financial Reporting Act 1993.
(iii) Canterbury Trust House Limited was incorporated on 18 December 1995 under the Companies Act 1993. Canterbury Trust House Limited is a reporting entity for the purposes of the Financial Reporting Act 1993. The financial statements of Canterbury Trust House Limited have been prepared in accordance with the Financial Reporting Act 1993.
(iv) The measurement base adopted is that of historical cost, except for the revaluation of investments. Reliance is placed on the fact that the trust is a going concern.
(v) The matching of revenue earned and expenses incurred using accrual accounting concepts.
Specific Accounting Policies
Depreciation
Depreciation has been charged in the financial statements using rates allowed by the Inland Revenue Department which will write off the cost of assets less their estimated residual value over their estimated economic lives.
The depreciation rates used are:
Buildings 3% c.p.
Office equipment 6-60% c.p.
Furniture and fittings 14-40% d.v.
Computer 28-48% d.v
Fixed Assets and Investment Property
Fixed assets and investment property are recorded at cost less accumulated depreciation.
Investments
Investments are shown at market value. Net income including realised and unrealised gains or losses from holding or trading these investments is recorded in the statement of financial performance.
Donations
Donations are accounted for on a cash basis.
Dividend Income
Dividend income is included in the statement of financial performance when it is received.
Income Tax
Income tax expense is recognised on the surplus available for distribution before taxation, adjusting for differences between taxable and accounting income.
Goods and Services Tax
The subsidiary of Community Trust Charities Limited, Canterbury Trust House Limited, is registered for G.S.T. Accordingly, its financial performance and financial position have been consolidated within the accounts on a G.S.T. exclusive basis.
Subject to the above, the trust is not registered for G.S.T. purposes and therefore, the financial statements have been prepared on a G.S.T. inclusive basis.
Financial Instruments
Foreign currency transactions are translated to New Zealand currency at the exchange rate ruling at the dates of the transactions. Amounts receivable and payable in foreign currencies at balance date are translated at the exchange rate at that date. Exchange differences arising from the translation of amounts payable and receivable in foreign currencies are recognised in the statement of financial performance.
Off-balance sheet financial instruments that are designated as hedges are recognised on the same basis as the underlying hedged item. Off-balance sheet transactions that do not constitute specific hedges are stated at market value and any resultant gain or loss is recognised in the statement of financial performance.
Cash
For the purpose of the statement of cash flows, cash comprises WestpacTrust balances only. Cash excludes bank deposits not used as part of the trust's day-to-day cash management.
Basis of Consolidation
The Community Trust, Community Trust Charities Limited and its subsidiaries, Canterbury Trust House Limited, Amateur Game or Sport Promoter Limited and District Improvement Organisation Limited, have been consolidated using the purchase method of consolidation.
Changes in Accounting Policies
There have been no changes in accounting policies. All policies have been applied on bases consistent with those used last year.
2. Revenue and Expenses
2002 2001
Revenue:
Rents received 469,263 413,263
Interest received 73,323 113,511
Investment income 3,039,445 6,621,385
Commissions received 26,697 22,968
3,608,728 7,171,127
Investment fees:
Fund managers' fees 1,438,023 1,540,191
Custodial fees 357,559 373,703
Advisory fees 187,630 192,717
1,983,212 2,106,611
Expenses:
Advertising, public relations, distribution and other costs 230,998 272,424
Computer and system review costs 13,250 18,719
Depreciation, loss on sale and depreciation recovered 235,129 219,838
Professional fees 177,494 150,077
Property costs 64,728 41,466
Salaries and staff recruiting fees 229,677 211,193
Trustees' fees 133,945 139,975
1,085,221 1,053,692
3. Donations
The names of organisations to whom distributions have been made by the trust under section 13 of the Community Trusts Act 1999 during the financial year and the amounts distributed are shown in the annual report.
2002 2001
Donations paid from income 13,332,387 12,076,139
Donations paid from capital 6,229,538 6,962,273
(Includes prior year adjustments for cancellation, refunds, etc.) 19,561,925 19,038,412
Future commitments 522,000 614,975
Donations approved from income 11,337,130 14,375,358
Donations approved from capital 5,709,399 9,416,993
Donations approved for year 17,046,529 23,792,351
Donations have, in previous years, been recorded on an approved accruals basis. From the 2001 year end, donations are recorded on a cash paid basis. There were, however, unpaid approved donations at balance date totalling $2,052,225 (2001 - $4,479,364).
Funds carried forward as accumulated income are available for the payment of donations in future years.
Budgeted donations unspent in the current year are to be distributed in the following year.
Future donation commitments represent donations approved in the current or previous years which are to be distributed from either capital or future income sources.
The trustees recognise that there is a need to ensure a fairness and equity between the regions as far as payments of donations are concerned in relation to budgetary allocations.
4. Trust Funds
2002 2001
Core real capital base reserve:
Balance brought forward 358,000,000 358,000,000
Donations paid from capital (6,229,538) (6,962,273)
Transfer from accumulated income reserve 6,229,538 6,962,273
358,000,000 358,000,000
Accumulated income reserve:
Balance brought forward 67,860,460 96,746,996
Net surplus/(deficit) for year (22,595,509) (19,344,262)
Transfer to core real capital base reserve (6,229,538) (6,962,273)
Adjustment to capital base reserve - (2,580,000)
39,035,413 67,860,460
Capital base reserve:
Balance brought forward 21,058,653 7,199,705
Retention as per statement of financial performance 9,803,417 11,278,948
Adjustment to capital base reserve - 2,580,000
30,862,070 21,058,653
Total trust funds 427,897,483 446,919,113
The capital base reserve is an allowance for the erosion of the value of the core real capital base reserve, due to inflation.
For 2002, this was calculated based on inflation at 2.6% on a core real capital base reserve of $379,058,653, being the original core real capital base reserve of $358,000,000 plus the adjusted capital base reserve of $21,058,653.
5. Reconciliation of Net Surplus to Net Operating Cashflow
2002 2001
Net surplus from statement of financial performance (22,595,509) (19,344,263)
Adjustments for non cash items in net surplus:
Depreciation 235,129 219,838
Managed funds income unrealised 7,154,659 16,423,870
(15,205,721) (2,700,555)
Adjustments for changes in working capital:
Decrease/(increase) in accounts receivable 78,506 (83,156)
Decrease/(increase) in Colliers Jardine operating account (10,936) -
Increase/(decrease) in accounts payable and goods and services tax 121,614 47,600
Increase/(decrease) in donations payable - (2,808,000)
Increase/(decrease) in taxation payable 42 (180)
(15,016,495) (5,544,291)
Add capital base reserve transfer 9,803,417 11,278,948
Deduct donations paid from capital (6,229,538) (6,962,273)
Cash flow from operations (11,442,616) (1,227,616)
6. Capital Commitments
At balance date, the trust has capital commitments for the investment property situated at 141 Hereford Street totalling
$1.3 million (2001 - Nil).
7. Investment Properties
The investment property of the trust is valued at cost less accumulated depreciation. Payments made on the investment property as at 31 March 2002 consist of the purchase of the land and adjoining property, architectural and legal fees, stamp duty, building consent permits and building costs to date. A further investment property was purchased during the year, situated at 141 Hereford Street.
2002 2001
262 Oxford Terrace 4,451,688 4,517,618
95 Oxford Terrace 1,798,046 1,676,480
141 Hereford Street 1,898,991 -
Less accumulated depreciation (618,093) (422,235)
7,530,632 5,771,863
8. Fixed Assets
Cost Accumulated
Depreciation 2002
Book
Value 2001
Book
Value
Computer 127,380 108,963 18,417 36,509
Furniture and fittings and office equipment 124,832 61,885 62,947 71,515
Fixed assets 252,212 170,848 81,364 108,024
9. Contingent Liabilities
There are no contingent liabilities at balance date (2001 - Nil) apart from donation commitments as per note 3.
10. Segmental Reporting
The trust operates as a charitable trust in the Canterbury, Marlborough and Nelson areas. As all operations occur within
New Zealand, segmental reporting is not required.
11. Related Party
In the normal course of business, the trust has no related parties with any entity, other than those advised in note 1.
12. Financial Instruments
Investments are stated at market value at balance date. Accounts receivable, accounts payable and community loans 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 percent (98%) of the assets of the trust are represented by investments held with a range of financial institutions. However, the trustees consider the risk of non-recovery of these investments to be minimal.
Currency Risk
The trust incurs currency risk as a result of investment transactions entered into by fund managers.
Interest Rate Risk
The following investments of the trust are sensitive to changes in interest rates: Bank call accounts and deposits, government and local authority and securities held by fund managers.
Some loans and advances with related parties do not carry interest and therefore do not hold any interest rate risk.
13. Managed Funds Investment
2002 2001
The trust held the following funds at balance date:
Managed funds (JP Morgan Custodian) 258,598,231 439,684,440
Managed funds - Tower Asset Management 72,063,611 -
Managed funds - Russell Investment Management Limited 108,909,460 -
Managed funds - AMP Henderson (477,892) -
419,093,410 439,684,440

14. Taxation
2002 2001
Net income before taxation as per statement of financial performance 540,295 4,010,824
Add non deductible expenditure: 314,629 343,078
Imputation credits received 505,034 432,461
Witholding taxes on investments 180,755 193,914
Canterbury Trust House Limited loss 227,611 221,791
Less revaluation of equities 8,112,841 18,225,833
Adjustment for beneficiaries' income 7,131,414 (8,679,076)
Donations to tax approved entities (14,889,368) (12,076,069)
Assessable income for tax purposes 2,123,211 2,672,756
Less loss carry forward entitlement (1,310,488) (2,101,642)
Taxable income 812,723 571,114
Taxation @ 33% 268,199 188,468
Less imputation credits received (505,034) (432,461)
Tax credits on New Zealand and overseas dividends (180,755) (188,468)
Resident withholding tax (259) (301)
Add excess imputation credits 417,590 432,461
Taxation payable (refund) as per the statement of financial position (259) (301)
Excess imputation credits converted to loss carry forward ($417,590) 1,265,424 1,310,488
Canterbury Trust House Limited losses to carry forward 710,312 482,701
Consolidated losses to carry forward 1,975,736 1,793,189
Auditors' Report to the Trustees of The Community Trust
We have audited the consolidated financial statements. The consolidated financial statements provide information about the past financial performance and cash flows of the trust and subsidiaries for the year ended 31 March 2002 and their financial position as at that date. This information is stated in accordance with the accounting policies set out therein.
Trustees' Responsibilities
The trustees are responsible for the preparation and presentation of the consolidated financial statements which give a true and fair view of the financial position of the trust and subsidiaries as at 31 March 2002 and their financial performance and cash flows for the year ended on that date.
Auditors' Responsibilities
We are responsible for expressing an independent opinion on the consolidated financial statements presented by the trustees and reporting 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 consolidated financial statements; and
? whether the accounting policies are appropriate to the circumstances of the trust and subsidiaries, 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 to provide us with sufficient evidence to give reasonable assurance that the consolidated 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 consolidated financial statements.
We have no relationship with or interests in the trust and subsidiaries other than in our capacity as auditors.
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 and subsidiaries as far as appears from our examination of those records; and
? the consolidated financial statements:
- comply with generally accepted accounting practice in New Zealand; and
- give a true and fair view of the financial position of the trust and subsidiaries as at 31 March 2002 and their financial performance and cash flows for the year ended on that date.
Our audit was completed on 27 May 2002 and our unqualified opinion is expressed as at that date.
PRICEWATERHOUSECOOPERS, Chartered Accountants, Christchurch, New Zealand.
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A full list of all distributions of income by way of donations for the year ended 31 March 2002 is available from the trust's office on request.