Annual Report for the Year Ended 31 March 2002
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.
Trustees:
Mr R. B. Sharp (Chair), Mrs H. A. Brown, Ms T. J. Eggleton, Mrs J. Knudsen, Mrs P. J. McLeod, Mr E. E. Ogier, Mrs B. M. Ross, Mr B. J. Scantlebury (term expired 13 June 2001), Mrs G. P. Searancke (term expired 13 June 2001), Mr T. M.
te Heuheu (term expired 13 June 2001), Ms M. Waaka, Ms K. Withers, Mr L. Martin (appointed 6 August 2001), Mrs M. Ngatai (appointed 13 June 2001), Mr V. Payne (appointed 13 June 2001).
Trust Manager:
Mr B. W. Cronin.
Accountants:
Murray Crossman & Partners, Tauranga.
Auditors:
Ingham Mora, Tauranga.
Bankers:
BNZ, Tauranga.
WestpacTrust, Tauranga.
Financial Advisors:
Frank Russell Company (N.Z.) Ltd, Auckland.
Solicitors:
Sharp Tudhope, Tauranga
Tax Advisors:
KPMG, Christchurch.
Chairman's Report for the Year Ended 31 March 2002
"Disappointing Returns May Impact Donations"
As most people will be aware, the 12 months ended 31 March 2002 was a disappointing investment period. Global equity returns were down dramatically and interest rates declined gradually over the period.
Fortunately, your trust has a well-diversified and reasonably conservative investment portfolio which returned $2.4m over the year; not a huge gain on a $114m portfolio, but at least not a loss.
Despite the disappointing returns and thanks to the trust's reserving policies, we were still able to pay out donations totalling $3.5m, not far down from last year's record level of $3.9m. Prominent among these payments was $1m to the Whakatane District Aquatic Centre (approved the previous year) and $600,000 to Sport Bay of Plenty's Coach Force programme.
The contribution to the Aquatic Centre used up the balance in the trust's major community facilities reserve. It is unlikely that this reserve, which has been used to fund projects recommended by the Bay of Plenty's seven mayors through a mayoral forum protocol, can be funded again until investment returns improve.
Two consecutive poor investment years is unusual. Certainly they came after a run of several years of very good returns but the fact remains that donations have exceeded income for two years now and clearly this cannot continue indefinitely.
Your trust continues to be guided by leading international investment advisors and I am totally satisfied that your trustees have maintained appropriate investment and reserving policies and have confidence that better returns will come - history and expert advice support this view.
But for the present, we have had to take decisions acknowledging that we cannot go on donating more than we earn indefinitely. Last year we re-instituted prior trust policies that we would not generally consider applications until at least 50% of a project's funding was committed; and that we would not generally contribute towards organisations' salary and wage costs. These measures have reduced the demand on trust funds to some extent, but applications still significantly exceed funds' availability.
If investment returns do not improve as the 2002/03 year progresses, trustees will have to consider further measures to reduce demand and this might even mean foregoing the third donations round planned for November.
Despite the limitations imposed by reduced returns, I am enthusiastic about the trust and its benefits to our community. The wider Bay of Plenty, which we serve, is a magnificent region and the communities have wonderful potential. I continue to be astounded by the many valuable volunteer-based organisations which make such a contribution to the fabric of our society and which set our communities above most of those I have seen elsewhere in the world.
I believe the significance of the trust's contributions to our communities is major. Many organisations we help involve large volunteer inputs but funds are hard to raise - especially in poorer communities. Our donations often make a key difference to significant achievements and these really do enhance our communities.
Trustees are continually reviewing our policies to obtain improved leverage for the limited money available. One of the benefits of the trust's structure is that decisions are made by trustees who live locally and who know their communities well. We are constantly looking at ways we can work better to make a difference. This includes looking at ways we can co-ordinate with other funders in our region.
One way the trust could make a greater difference and be more innovative would be to have greater funds available. I see this trust as being an ideal community-administered charitable trust to be the recipient for individual's bequests where they want to leave an enduring benefit for the Bay of Plenty community. The structure and administration is here within the Bay of Plenty Community Trust.
I would urge those who are able, to consider this as an option in their wills.
This is one way the trust's capital base could be expanded to make more funds available in the future. It is in all our interests to strive to maintain and enhance the quality of our community, which I know most of us are justifiably proud of.
I thank my fellow trustees for their excellent input to the trust. We have had three retirements - Glenys Searancke, Brian Scantlebury and Timi te Heuheu. I thank them sincerely for their valuable contributions to our trust over many years and welcome Maria Ngatai, Vaughan Payne and Luke Martin as their replacements.
Each of our trustees offers valuable experience, perspective and knowledge. This not only ensures that the trust remains in touch with the needs of its communities, but the changes ensure that the trust continues to develop and grow and remain entirely relevant for our ever-changing communities.
Lastly, I say thank you to the trust's staff, manager Bruce Cronin and donations officer Cindy Currie for the enthusiasm and effort in administering the Bay of Plenty Community Trust.
RAY SHARP, Chairman.
Date: 20 June 2002.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2002
2002 2001
$(000) $(000)
Income:
Dividends 6,440 4,804
Interest 2,811 2,846
Other investment income (including unrealised income) (6,844) (5,187)
Donations cancelled and refunded 18 11
2,425 2,474
Less expenditure:
Advertising/public reporting 48 62
Audit fees 6 6
Accountancy fees 9 17
Portfolio management and advisory fees 327 295
Office administration 190 164
Office rental 14 14
Other administration costs 32 25
Trustees' fees 103 91
Trustees' expenses 72 64
801 738
Depreciation 8 8
Loss on disposal of assets 1 -
Total operating costs 810 746
Net surplus before donations 1,615 1,728
Donations round 3,233 3,682
Net surplus/(deficit) after donations (1,618) (1,954)
Plus/(less) transfers:
Income fluctuation reserve 1,005 4,119
Inflation and population reserve (62) (2,897)
Regional facilities reserve 926 1,000
1,869 2,222
Net surplus after reserve transfers 251 268
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2002
2002 2001
$(000) $(000)
Equity at 1 April 2001 116,554 118,776
Less donations paid from capital:
Donations round (207) (222)
Dillon Scholarship (44) (46)
116,303 118,508
Net surplus 251 268
Increase/(decrease) in income fluctuation reserve (1,005) (4,119)
Increase/(decrease) in inflation and population reserve 62 2,897
Increase/(decrease) in regional facilities reserve (926) (1,000)
Total recognised revenue and expenses for the year (1,618) (1,954)
Equity at 31 March 2002 114,685 116,554
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Financial Position as at 31 March 2002
Note 2002 2001
$(000) $(000)
Equity: 2
Trust capital 89,308 89,308
Income fluctuation reserve 11,835 12,840
Inflation and population reserve 13,542 13,480
Regional facilities reserve - 926
Total equity 114,685 116,554
Represented by-
Current assets:
WestpacTrust-
Current account 2 30
Call account 1 21
Bank of New Zealand-
Term deposit 33 192
Accounts receivable 3 13
Community loans - 6
39 262
Non current assets:
Investments 5 115,217 116,527
Fixed assets 3 26 19
115,243 116,546
Total assets 115,282 116,808
Current liabilities:
Accounts payable (578) (242)
Employees' entitlement payable (19) (12)
(597) (254)
Total net assets 114,685 116,554
Signed on behalf of the Board of Trustees:
RAY SHARP, Chairman.
TERRI EGGLETON, Trustee.
Date: 20 June 2002.
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Cash Flows for the Year Ended 31 March 2002
2002 2001
$(000) $(000)
Cash flows from operating activities-
Cash was provided from:
Investment income 2,407 2,459
Other 23 2
2,430 2,461
Cash was dispersed to:
Suppliers of goods and services (697) (639)
Trustees (97) (92)
Donations to the community (3,100) (3,854)
Dillon Memorial Scholarship (44) (46)
(3,938) (4,631)
Net cash flows from operating activities (1,508) (2,170)
Cash flows from investing activities-
Cash was provided from:
Sale of investments 3,650 4,500
Cash was applied to:
Purchase of fixed assets (16) (1)
Purchase of investments (2,174) (2,381)
Net cash flows from investing activities 1,460 2,118
Increase/(decrease) in cash held (48) (52)
Add cash at 1 April 2001 51 103
Cash at 31 March 2002 3 51
Reconciliation of net surplus and net cash flows from operating activities-
Net surplus transferred to/(from) equity (1,618) (1,954)
Less payments out of capital (net) (251) (268)
Plus non cash items:
Depreciation of fixed assets 8 8
Loss on disposal of assets 1 -
Movement in working capital:
Decrease/(increase) in accounts receivable 10 (13)
Increase/(decrease) in accounts payable 342 57
Net cash flows from operating activities (1,508) (2,170)
(The accompanying notes form part of these financial statements.)
Notes to the Financial Statements for the Year Ended 31 March 2002
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 group consists of Bay of Plenty Community Trust Incorporated and its subsidiary Bay of Plenty Community Trust Charities Limited.
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 an historical cost basis are followed by the group, with the exception of investments which are stated at market value as at 31 March 2002.
Specific Accounting Policies
The following specific accounting policies which materially affect the measurement of financial performance and the financial position have been applied:
(a) Donations:
Donations made during the year from revenue are included in the income statement. 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.
(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 12% to 50% per annum.
(e) Accounts receivable:
Accounts receivable are recorded at their estimated realisable value.
(f) 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.
(g) Consolidation:
The Bay of Plenty Community Trust and its subsidiary charitable company, Bay of Plenty Community Trust Charities 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 in previous years.
2002 2001
$(000) $(000)
2. Equity
Trust capital- 89,308 89,308
General funds: Trust Company
Opening balance (4,222) 4,222 - -
Less donations from trust capital (251) - (251) (268)
Plus transfer from current year surplus (5,316) 5,567 251 268
(9,789) 9,789 - -
Income fluctuation reserve:
Opening balance 12,840 16,959
Increase/(decrease) in reserve (1,005) (4,119)
11,835 12,840
Regional facilities reserve:
Opening balance 926 1,926
Increase/(decrease) in reserve (926) (1,000)
- 926
Inflation and population reserve:
Opening balance 13,480 10,583
Increase in reserve 62 2,897
13,542 13,480
Total equity 114,685 116,554

2002 2001
$(000) $(000)
3. Fixed Assets
Office furniture and equipment:
Cost 73 72
Accumulated depreciation 47 53
Book value 26 19
4. Financial Instruments
Investments are stated at market value as at balance date. Accrued interest, accounts payable, community 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 financial position.
Concentration of Investments
Ninety-nine point nine percent (99.9%) 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. Maximum exposure to credit risk as at balance date is:
2002 2001
$(000) $(000)
Bank balances 3 51
Bank term deposits 33 192
Accounts receivable 3 13
Community loans - 6
Investments 115,217 116,527
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 fifty percent (50%) hedging of global equities.
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 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 and fixed interest are subject to market fluctuations. The total investment portfolio has been structured in such a way that any reductions in value in particular asset classes should be offset by increases in other classes; therefore no provision has been made for potential gains or losses that could occur due to market fluctuations. The investment portfolio as at 31 March 2002 is diversified as follows ($000):
ANZ Asset Management State Street Global Advisors Tower Asset Management AMP Henderson Total
New Zealand equities - - 5,526 - 5,526
New Zealand fixed interest - - - 21,890 21,890
New Zealand cash 10 - 14,647 14,715 29,372
Global bonds (fully hedged) - - 23,154 - 23,154
Global equities (50% hedged) - 35,275 - - 35,275
Total 2002 10 35,275 43,327 36,605 115,217
Total 2001 39,475 30,371 46,681 - 116,527

2002 2001
6. Taxation $(000) $(000)
Net surplus (before donations) 1,615 1,728
Less non-assessable income (Bay of Plenty Community Trust Charities Limited) (445) (428)
Less unrealised gains/losses
Tower asset management (181) -
State Street global advisors 5,465 5,659
6,454 6,959
Plus non-deductible expenditure 302 300
Plus imputation credits received 59 54
Holiday pay - -
Total taxable income 6,815 7,313
Less beneficiaries' distribution: (3,233) (3,682)
Less distribution from Bay of Plenty Community Trust Charities Limited 1,448 2,624
(1,785) (1,058)
Bay of Plenty Community Trust Charities Limited (4,700) (5,166)
Total trustees' income 330 1,089
Trustees' loss brought forward (618) (1,539)
Adjustment to losses brought forward - -
Imputation credits converted to losses (179) (168)
Assessable trustees' income (467) (618)
Taxation at 33% - -
7. 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.
8. Related Party Transactions
Bay of Plenty Community Trust Charities Limited (the company) is wholly owned by Bay of Plenty Community Trust Incorporated (the trust). During the year, the trust made a beneficiaries' income distribution to the company of $4.7m.
No related party debts have been written off or forgiven during the year.
9. 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.
10. Contingent Liabilities
The following future donations have been approved but are subject in each case to the applicants satisfying particular criteria specific to each recipient.
Year Ending
Donation Recipient 31 Mar 03 31 Mar 04 Subsequent Years
$ $ $
Aotearoa Employment & Economic Development Corporation 30,000 - -
1st Opotiki Scout Group 7,500 - -
Kawerau District Council 20,000 - -
Paroa School 50,000 - -
Rotorua Competitions Society 7,500 - -
Tarawera Sailing - subcommittee 1,500 - -
Northern Cricket Coaching Trust 10,000 - -
Whakatane District Council 10,000 - -
Tauranga Civic Art Gallery Trust 333,000 333,000 334,000
Total contingent liabilities 469,500 333,000 334,000
11. Commitments
Capital commitments:
There are no capital commitments.
Lease commitments:
Lease commitments under non-cancellable operating leases:
Less than one year $7,000
Auditor's Report
To the Trustees of Bay of Plenty Community Trust Incorporated:
We have audited the consolidated financial statements. The consolidated financial statements provide information about the past financial performance of the trust and subsidiary and its financial position as at 31 March 2002. This information is stated in accordance with the accounting policies set out in Note 1 of the accounts.
Trustees' Responsibilities
The trustees are responsible for the preparation of consolidated financial statements which give a true and fair view of the financial position of the trust and subsidiary as at 31 March 2002 and of the financial performance and cash flows 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 judgments 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 subsidiary, 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 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 financial statements.
Other than in our capacity as auditors, we have no relationship with or interest in the trust and subsidiary.
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 subsidiary 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 subsidiary as at 31 March 2002 and the financial performance and cash flows for the year ended on that date.
Our audit was completed on 20 June 2002 and our unqualified opinion is expressed as at that date.
INGHAM MORA, Tauranga.
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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.)