Trust Directory for the Year Ended 31 March 2003
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, B. G. Hadlee, L. H. Jeffs, F. M. Jessep (Marlborough), P. B. Lowe-Johnson,
M. E. O'Connor (Nelson), T. Potiki (resigned December 2002), E. M. Richards (Nelson), P. J. Richardson, P. J. Sigglekow (Marlborough), P. R. Taylor.
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: AMP Henderson Global Investors (NZ) Limited (to October 2002), BT Funds Management (NZ) Limited (to October 2002), Tower Asset Management, Russell Investment Management Limited - Russell International Share Fund
(to July 2002), Priton Offshore (appointed November 2002), Challenger International Group (appointed November 2002).
Custodial Trustee: Tower Trust (appointed November 2002).
Fund Investment Advisors: Forsyth Barr Funds Management (appointed September 2002).
Bankers: WestpacTrust.
Solicitors: Chapman Tripp Sheffield Young, P.O. Box 2510, Christchurch (L. Alexander).
Trustees' Report for the Year Ended 31 March 2003
Objectives of the Trust and Charitable Company Subsidiary
To provide charitable, cultural, philanthropic and recreational benefits to the communities of Canterbury, Marlborough, Nelson, and the Chatham Islands.
Policies and Structure of the Trust and Charitable Company Subsidiary
These organisations are structured to include community representatives from the four 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, Nelson and the Chatham Islands. 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 $145,100 (2002 $133,945).
Review of Results and Financial Position
The total distribution from the trust and charitable company was $11.5 million (2002 $19.5 million) donations to community groups during the last 12 months.
Signed on behalf of the Board of Trustees:
Chairperson: R. J. TODD.
Trustee: D. C. CLOSE.
Date: 26 May 2003.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2003
Note 2003 2002
Revenue 2 7,148,864 3,608,728
Less investment fees 2 923,459 1,983,212
Less expenses 2 1,227,204 1,085,221
Net surplus before taxation 4,998,201 540,295
Less retentions:
Transfer to capital base reserve 4 9,803,245 9,803,417
Available for distribution (4,805,044) (9,263,122)
Donations to tax approved entities 3 8,193,208 13,332,387
Net deficit transferred to trust funds (12,998,252) (22,595,509)
Consolidated Statement of Movements in Trust Funds for the Year Ended 31 March 2003
Note 2003 2002
Total trust funds at beginning of year 427,897,483 446,919,113
Less donations paid from capital 3 (3,283,470) (6,229,538)
424,614,013 440,689,575
Add net deficit for the year (12,998,252) (22,595,509)
Increase in capital base reserve 9,803,245 9,803,417
Total trust funds at end of year 421,419,006 427,897,483
Represented by:
Core real capital base reserve 4 358,000,000 358,000,000
Accumulated income reserve 4 22,753,691 39,035,413
Capital base reserve 4 40,665,315 30,862,070
421,419,006 427,897,483
Consolidated Statement of Financial Position as at 31 March 2003
Note 2003 2002
Trust funds 4 421,419,006 427,897,483
Represented by-
Current assets:
WestpacTrust operating accounts 25,644 23,042
Bank deposits 858,757 1,422,962
Property manager operating account 89 10,936
Accounts receivable 1,666 10,905
Taxation refund due 14 188 259
Good and services tax 6,597 -
892,941 1,468,104
Investments:
Property investments 7 8,365,236 7,530,632
Managed funds 13 412,156,932 419,093,410
420,522,168 426,624,042
Fixed assets 8 114,186 81,364
Total assets 421,529,295 428,173,510
Current liabilities:
Accounts payable and goods and services tax 80,764 269,326
Rents received in advance 29,525 -
Goods and services tax - 6,693
Total liabilities 110,289 276,019
Net assets 421,419,006 427,897,491
Consolidated Statement of Cash Flows for the Year Ended 31 March 2003
Note 2003 2002
Cash was provided by (used for)-
Operations: 5
Income from investments 9,727,615 10,841,892
Payments to suppliers, employees and trustees (2,144,284) (2,728,941)
Payments of taxation 71 42
Payments of goods and services tax (10,009) 6,315
Donations to the community (11,476,678) (19,561,924)
(3,903,285) (11,442,616)
Investing:
Managed funds investments 4,503,737 13,436,372
Movement in term deposits 564,205 (118,546)
Community loans - 6,833
Sale (purchase) of fixed assets (1,162,055) (1,967,238)
3,905,887 11,357,421
Increase in cash 2,602 (85,195)
Cash at beginning of year 23,042 108,237
Cash at end of year 25,644 23,042
Represented by:
WestpacTrust operating accounts 25,644 23,042
Notes to the Financial Statements for the Year Ended 31 March 2003
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
2003 2002
Revenue:
Rents received 603,729 469,263
Interest received 184,477 73,323
Investment income 6,105,948 3,039,445
Commissions received 254,710 26,697
7,148,864 3,608,728
Investment fees:
Fund managers' fees 696,566 1,438,023
Custodial fees 134,932 357,559
Advisory fees 91,961 187,630
923,459 1,983,212
Expenses:
Advertising, public relations, distribution and other costs 223,440 230,998
Computer and system review costs 17,351 13,250
Depreciation, loss on sale and depreciation recovered 294,632 235,129
Professional fees 183,850 177,494
Property costs 135,979 64,728
Salaries and staff recruiting fees 226,852 229,677
Trustees' fees 145,100 133,945
1,227,204 1,085,221
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.
2003 2002
Donations paid from income 8,193,208 13,332,387
Donations paid from capital 3,283,470 6,229,538
(Includes prior year adjustments for cancellation, refunds, etc.) 11,476,678 19,561,925
Future commitments 748,000 522,000
Donations approved from income 7,520,066 11,337,130
Donations approved from capital 2,636,241 5,709,399
Donations approved for year 10,156,307 17,046,529
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
2003 2002
Core real capital base reserve:
Balance brought forward 358,000,000 358,000,000
Donations paid from capital (3,283,470) (6,229,538)
Transfer from accumulated income reserve 3,283,470 6,229,538
358,000,000 358,000,000
Accumulated income reserve:
Balance brought forward 39,035,413 67,860,460
Net surplus/(deficit) for year (12,998,252) (22,595,509)
Transfer to core real capital base reserve (3,283,470) (6,229,538)
22,753,691 39,035,413
Capital base reserve:
Balance brought forward 30,862,070 21,058,653
Retention as per statement of financial performance 9,803,245 9,803,417
40,665,315 30,862,070
Total trust funds 421,419,006 427,897,483
The capital base reserve is an allowance for the erosion of the value of the core real capital base reserve, due to inflation.
For 2003, this was calculated based on inflation at 2.5% on a core real capital base reserve of $388,862,069 being the original core real capital base reserve of $358,000,000 plus the adjusted capital base reserve of $30,862,069.
5. Reconciliation of Net Surplus to Net Operating Cashflow
2003 2002
Net surplus from statement of financial performance (12,998,252) (22,595,509)
Adjustments for non cash items in net surplus:
Depreciation 294,632 235,129
Managed funds income unrealised 2,432,742 7,154,659
(10,270,878) (15,205,721)
Adjustments for changes in working capital:
Decrease/(increase) in accounts receivable 9,238 78,506
Decrease/(increase) in Colliers Jardine operating account 10,847 (10,936)
Increase/(decrease) in accounts payable, rents received in advance, and goods and services tax (172,338) 121,614
Increase/(decrease) in taxation payable 71 42
(10,423,060) (15,016,495)
Add capital base reserve transfer 9,803,245 9,803,417
Deduct donations paid from capital (3,283,470) (6,229,538)
Cash flow from operations (3,903,285) (11,442,616)
6. Capital Commitments
At balance date, the trust has no capital commitments (2002 - $1.3 million).
7. Investment Properties
The investment properties of the trust is valued at cost less accumulated depreciation. Payments made on the investment property as at 31 March 2003 consist of the purchase of the land and adjoining property, architectural and legal fees, stamp duty, building consent permits and building costs to date.
2003 2002
262 Oxford Terrace 4,451,688 4,451,688
95 Oxford Terrace 1,801,171 1,798,046
141 Hereford Street 2,977,317 1,898,991
Less accumulated depreciation (864,940) (618,093)
8,365,236 7,530,632
The investment properties of the trust have the following market valuations at balance date:
2003
262 Oxford Terrace 2,210,000
95 Oxford Terrace 1,440,000
141 Hereford Street 4,220,000
8. Fixed Assets
Cost Accumulated
Depreciation 2003
Book
Value 2002
Book
Value
Computer 156,401 90,927 65,474 18,417
Office equipment 26,760 16,124 10,636 12,342
Furniture and fittings 91,099 53,023 38,076 50,605
Fixed assets 274,260 160,074 114,186 81,364
9. Contingent Liabilities
There are no contingent liabilities at balance date (2002 - Nil) apart from donation commitments as per note 3.
10. Segmental Reporting
The trust operates as a charitable trust in the Canterbury, Marlborough, Nelson and Chatham Islands 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 and accounts payable 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
2003 2002
The trust held the following funds at balance date:
Managed funds (JP Morgan Custodian) 4,036 238,598,231
Managed funds (Tower Trust Custodian) 386,123,429 72,063,611
Managed funds - Priton Offshore 11,619,694 -
Managed funds - Ashmore EMLIP 14,409,773 -
Managed funds - Russell Investment Management Limited - 108,909,460
Managed funds - AMP Henderson - (477,892)
412,156,932 419,093,410
14. Taxation
2003 2002
Net income before taxation as per statement of financial performance 4,998,201 540,295
Add non deductible expenditure: 198,419 314,629
Imputation credits received 571,642 505,034
Witholding taxes on investments 21,570 180,755
Canterbury Trust House Limited loss 202,214 227,611
Revaluation of equities 3,287,771 8,112,841
Charitable company exemption 1,412,411 7,131,414
Less Donations to tax approved entities (9,144,343) (14,889,368)
Assessable income for tax purposes 1,547,885 2,123,211
Less loss carry forward entitlement (1,265,424) (1,310,488)
Taxable income 282,461 812,723
Taxation @ 33% 93,212 268,199
Less imputation credits received - (505,034)
Tax credits on New Zealand and overseas dividends (571,642) (180,755)
Resident withholding tax (188) (259)
Foreign tax credits on overseas dividends (21,570) -
Add excess imputation credits 500,000 417,590
Taxation payable (refund) as per the statement of financial position (188) (259)
Excess imputation credits converted to loss carry forward ($417,590) 1,515,151 1,265,424
Canterbury Trust House Limited losses to carry forward 912,526 710,312
Consolidated losses to carry forward 2,427,677 1,975,736
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 2003 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 2003 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 2003 and their financial performance and cash flows for the year ended on that date.
Our audit was completed on 26 May 2003 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 2003 is available from the trust's office on request.