Directory for the Year Ended 31 March 2002
Trustees: Clive Matthewson (chairperson), Dunedin; Hilary Allison, Dunedin; Nancy Bamford, Balclutha; Duncan Butcher, Cromwell; John Farry, Dunedin; Russell Hendry, Dunedin (appointed May 2001); Sally Hope, Oamaru (appointed May 2001); Ele Ludemann, Oamaru (retired May 2001); Richard McKnight, Dunedin (retired May 2001); Alan McLay, Oamaru; Barbara Payton, Dunedin; Mark Ryan, Dunedin; David Shepherd, Wanaka; Gail Tipa Dunedin.
Chief Executive: Keith Ellwood.
Registered Office: Second Floor, Community Trust House, corner of Filleul Street and Moray Place, Dunedin.
Auditor: Taylor McLachlan, Dunedin.
Solicitor: Anderson Lloyd Caudwell, Dunedin.
Investment Advisors: Frank Russell Limited, Auckland.
Bankers: WestpacTrust, Dunedin.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2002
Note 2002 2001
$000 $000
Revenue 1 (588) 5,668
Expenditure 2 (1,754) (1,794)
Surplus/(deficit) before donations (2,342) 3,874
Donations paid from income 4 - (5,315)
Trustee surplus prior to tax (2,342) (1,441)
Trustee (deficit)/surplus (2,342) (1,441)
This (deficit)/surplus has been allocated to:
Capital maintenance reserve - -
Uncommitted surplus (2,342) (1,441)
(2,342) (1,441)
Consolidated Statement of Movement in Trust Funds for the Year Ended 31 March 2002
Note 2002 2001
$000 $000
Opening trust funds 180,344 182,715
Donations paid from capital 4 (9,721) (930)
170,623 181,785
Trustee (deficit)/surplus (2,342) (1,441)
Closing trust funds 168,281 180,344
Consolidated Statement of Financial Position as at 31 March 2002
Note 2002 2001
$000 $000
Source of funds-
Trust funds 3 168,281 180,344
Current liabilities:
Creditors 120 149
Taxation payable - -
168,401 180,493
Employment of funds-
Current assets:
Current account - WestpacTrust 330 130
Short term bank deposits 621 302
Debtors 4 9
Stock on hand 12 8
Accrued interest - 35
967 484
Non current assets:
Managed funds 5 165,880 178,402
Fixed assets 6 1,304 1,357
Advance to Dunedin Community House Trust 11 250 250
167,434 180,009
168,401 180,493
Approved on behalf of the board:
JOHN FARRY RUSSELL HENDRY
Chairperson. Trustee.
21 June 2002.
Consolidated Statement of Cashflows for the Year Ended 31 March 2002
2002 2001
$000 $000
Cashflows from operating activities-
Cash was provided from:
Managed funds (764) 5,472
Interest received on investments 76 24
Net managed funds withdrawn 2,801 1,399
Other 136 121
Capital withdrawn 9,721 930
11,970 7,946
Cash was disbursed on:
Payment to suppliers and staff 983 929
Fund management 721 837
Donations paid from income - 5,315
Donations paid from capital 9,721 930
11,425 8,011
Net cash inflow/(outflow) from operating activities 545 (65)
Cashflows from investing activities-
Cash was disbursed on:
Purchase of fixed assets 26 43
26 43
Net cash (outflow) from investing activities (26) (43)
Net increase/(decrease) in cash held 519 (108)
Add opening cash brought forward 432 540
Ending cash carried forward 951 432
Ending cash comprises:
Cheque accounts 330 130
Term deposits 621 302
951 432
Notes to the Consolidated Financial Statements for the Year Ended 31 March 2002
Basis of Preparation
These are the consolidated financial statements of The Community Trust of Otago, Otago Community Trust Charities Limited, The Community Trust Amateur Sports Co Limited, The Community Trust District Improvement Co Limited and Fillmor House Limited. The Community Trust of Otago was incorporated as a charitable trust in accordance with the provisions of the Community Trusts Act 1999.
The financial statements have been prepared to comply with the Financial Reporting Act 1993 and comprise consolidated statements of the following: Financial performance, movement in trust funds, financial position, cashflows, as well as notes to these financial statements.
The financial statements are prepared on the basis of historical cost, except for the revaluation of managed funds.
Specific Accounting Policies
Income
Income from managed funds includes both realised and unrealised income and is recorded gross of fund management expenses.
Interest is recognised on an accrual basis.
Donations
Donations are accounted for as they are distributed.
Foreign Currencies
All amounts denominated in foreign currencies are converted to New Zealand dollars at balance date. All realised and unrealised gains and losses are recognised in the statement of financial performance.
Taxation
Income tax is recognised on the surplus after distribution, adjusting for differences between taxable and accounting income.
Future tax benefits are not recognised unless realisation of the asset is virtually certain.
Fixed Assets
Fixed assets are recorded at cost less accumulated depreciation.
Depreciation
Depreciation has been charged to the financial statement using rates which will write off the cost of assets less their estimated residual value over their estimated economic lives. The depreciation rates used are:
Buildings 4%
Office furniture and equipment 12-48%
G.S.T.
Subsidiaries of The Community Trust of Otago, Fillmor House Limited and The Community Trust District Improvement Company Limited are registered for G.S.T.
Accordingly, their 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.
Basis of Consolidation
The Community Trust of Otago, Otago Community Trust Charities Limited, Fillmor House Limited, The District Improvement Company Limited and The Community Trust Amateur Sports Company Limited have been consolidated using the purchase method of consolidation.
Capital Maintenance Reserve
The capital maintenance reserve represents the additional amount necessary to preserve the real value of the capital allowing for inflation as measured by the Consumers' Price Index (C.P.I.).
Investments
Investments are valued at year end market value. All realised and unrealised gains and losses are recognised in the statement of financial performance.
Hedging Instruments
The trust through its investment managers enters into hedging instruments such as futures, options and forward exchange contracts. These are converted to the New Zealand dollar rate at balance date with all realised and unrealised gains and losses being recognised in the statement of financial performance as income from managed funds.
Statement of Cashflows
Cash comprises cash at bank and call deposits but does not include cash or deposits held by the fund managers.
Financial Instruments
Financial instruments all relate to cash, accounts receivable and accounts payable, and all revenues and expenses relating to these are recognised in the statement of financial performance in the period that any gain or loss becomes certain.
Cash and investments are stated at cost. Receivables are stated at net realisable value.
Payables are stated at amounts owed to those entities at balance date.
The maximum exposure to credit risk is represented by the carrying value of each of the financial assets and liabilities in the statement of financial position.
Income Tax
Income tax expense is recognised on the surplus available for distribution before taxation, adjusting for differences between taxable and accounting income.
Changes in Accounting Policies
There have been no changes in accounting policies during this accounting period.
Changes in Comparative Figures
Where applicable, certain comparatives have been restated to comply with the accounting presentation adopted for the current period.
1. Revenue
2002 2001
$000 $000
Interest 41 59
Managed funds (764) 5,472
Other 135 137
(588) 5,668
2. Expenditure
Bad debts 1 -
Depreciation 79 80
Fund managers' fees 721 838
Occupancy 49 50
Other operating 122 123
Professional fees 232 197
Promotion 72 34
Public & statutory reporting 66 64
Staff 229 222
Trustee fees 157 154
Trustee expenses 26 32
1,754 1,794
Professional fees-
Payments to auditors:
Audit fees 8 8
Accounting and other support 9 17
Computer support 6 13
Legal advisers 5 4
Professional investment advisers 124 80
Tax advice 29 28
Other professional advice 51 47
232 197
3. Trust Funds
Trust Capital
The trust capital represents the realised value of its original asset, being shares in Trust Bank. They were sold, partly in 1994 when Trust Bank listed on the NZ Stock Exchange and the balance in 1996 when Westpac took over Trust Bank.
2002 2001
$000 $000
Opening balance 131,467 131,467
Transfer from uncommitted surplus - -
Closing balance 131,467 131,467
Capital maintenance reserve:
Opening balance 15,603 11,181
Transfers 4,010 4,422
Closing balance 19,613 15,603
Uncommitted surplus:
Opening balance 33,274 40,067
Donations paid from capital (9,721) (930)
Trustee (deficit)/surplus (2,342) (1,441)
Transfer to capital maintenance reserve (4,010) (4,422)
Closing balance 17,201 33,274
Total trust funds at 31 March 2002 168,281 180,344

4. Donations
2002 2001
$000 $000
Donations paid from income - 5,315
Donations paid from capital 9,721 930
9,721 6,245
Donations which the trust has conditionally approved but not yet paid are shown in the accounts as a contingent liability
(see Note 10).
5. Managed Funds
2002 2001
$000 $000
Managed by external managers:
Opening balance 178,402 180,731
Gross income (764) 5,471
Fund managers' fees - deducted (758) (800)
Withdrawals to fund donations (11,000) (7,000)
Closing balance 165,880 178,402

Investments comprise:
Cash, deposits and miscellaneous 15,237 19,851
Bonds 84,422 91,945
Equities 66,221 66,606
Total managed funds 165,880 178,402
Held in: New Zealand 72,316 79,325
Offshore 93,564 99,077
165,880 178,402

6. Fixed Assets 2002 2001
2002 Cost $000 Accum
Dep
$000 Book
Value
$000 Book
Value
$000
Land 432 - 432 432
Buildings 1,026 241 785 816
Office furniture and equipment 210 122 88 109
1,668 363 1,305 1,357
7. Financial Instruments
(a) The financial instruments are subject to an interest rate risk.
The investment portfolios are treated as lump sum investments. The fund managers or custodians manage both the credit risk and foreign exchange risk.
No comparison is provided between the carrying value and estimated fair value of financial instruments, due to the carrying value reflecting market price.
2002 2001
$000 $000
New Zealand:
Bonds and deposits 62,627 69,090
Equities 9,689 10,235
72,316 79,325
Overseas:
Bonds and deposits 37,032 42,706
Equities 56,532 56,371
93,564 99,077
Total:
Bonds and deposits 99,659 111,796
Equities 66,221 66,606
165,880 178,402
(b) Credit Risk
At balance date there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying value of each financial asset in the statement of financial position.
(c) There are no off balance sheet financial instruments.
8. Taxation
2002 2001
$000 $000
Net surplus/(deficit) before donations as per statement of financial performance (2,342) 3,874
Less: Unrealised equity gains - -
Charitable business exemption and donations 253 5,072
253 5,072
(2,595) (1,198)
Plus: Unrealised equity losses 5,552 2,977
Non deductible expenditure 276 385
Imputation and withholding tax credits received 199 262
6,027 3,624
Total taxable income 3,432 2,426
Less: Distribution of income to beneficiaries 2,500 868
Total trustees taxable income 932 1,558
Less: Losses brought forward 683 1,446
Assessable income for tax purposes 249 112
Taxation @ 33% 82 37
Less: Overseas withholding tax credits claimed 49 35
33 2
Taxation payable before imputation credits 33
Less: Imputation credits 33 2
Taxation payable - -
Excess imputation credits 117 225
Losses brought forward 683 1,445
Plus: Conversion of excess imputation credits to losses 354 683
Prior year adjustment - 1
Less: Losses claimed this year 683 1,446
Total losses to be carried forward 354 683
9. Reconciliation of Reported Surplus to Net Cashflow From Operating Activities
2002 2001
$000 $000
Surplus/(deficit) for the period (2,342) (1,441)
Add:
Non-cash items:
Depreciation 79 80
Net managed funds drawn down 12,522 2,329
Less:
Non-cash items:
Donations paid from capital 9,721 930
538 38
Movements in working capital items:
Increase/(decrease) in creditors (29) 37
(Increase)/decrease in debtors 5 (9)
Increase/(decrease) in income tax payable - (88)
Increase/(decrease) in stock (4) (8)
(Increase)/(decrease) in accrued interest 35 (35)
7 (103)
Net cashflow from operating activities 545 (65)
10. Contingent Liabilities
Contingent liabilities at 31 March 2002 consist of donations approved but not disbursed of $5,188,003 (2001 - $8,127,326).
11. Loan to Dunedin Community House Trust (Inc.)
The loan was advanced interest free in December 1999. It has a ten year term. The commencement date for principal repayments was extended from December 2000 to December 2001, with trustees' approval.
Audit Report
To the Trustees of The Community Trust of Otago Consolidated
We have audited the consolidated financial statements. The consolidated financial statements provide information about
the past consolidated financial performance of The Community Trust of Otago and its consolidated financial position as at
31 March 2002. This information is stated in accordance with the accounting policies.
Trustees' Responsibilities
The trustees are responsible for the preparation of consolidated financial statements which give a true and fair view of the consolidated financial position of the trust as at 31 March 2002, and the results of its consolidated operations and cashflows for the year ended on that date.
Auditors' Responsibilities
It is our responsibility to express an independent opinion on the consolidated 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 consolidated 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 trust'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 consolidated financial statements.
Our firm carries out other assignments for the trust in the area of special consultancy projects. The firm has no other interests in the trust.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion, the consolidated financial statements:
? comply with New Zealand generally accepted accounting practice; and
? give a true and fair view of the consolidated financial position of the Trust as at 31 March 2002 and the results of its consolidated operations and cashflows for the year ended on that date.
Our audit was completed on 21 June 2002 and our unqualified opinion is expressed as at that date.
TAYLOR MCLACHLAN, Dunedin.