Notice Type
General Section
Notice Title

Bay of Plenty Community Trust Incorporated

Annual Report for the Year Ended 31 March 2003
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.
Mr R. B. Sharp (Chair), Mrs H. A. Brown, Ms T. J. Eggleton, Ms S. Kai Fong (appointed 1 June 2002), Mrs J. Knudsen,
Mrs E. Leighton (appointed 1 June 2002), Mrs P. J. McLeod, Mr E. E. Ogier (term expired 31 May 2002), Mrs B. M. Ross,
Ms M. Waaka, Ms K. Withers (term expired 31 May 2002), Mr L. Martin, Mrs M. Ngatai, Mr V. Payne.
Trust Manager:
Mr B. W. Cronin.
Staples Rodway, Tauranga.
Ingham Mora, Tauranga.
BNZ, Tauranga.
WestpacTrust, Tauranga.
Financial Advisors:
Frank Russell Company (N.Z.) Ltd, Auckland.
Sharp Tudhope, Tauranga
Tax Advisors:
KPMG, Christchurch.
Chairman's Report for the Year Ended 31 March 2003
The trust has experienced a year of extremely disappointing investment results to 31 March 2003, mainly due to the further significant decline in the value of the international equity investments held by the trust. Despite the trust's relatively conservative portfolio (69% invested in fixed interest securities), the large drop in value of the portion of the trust's investment in Global Equities (25.7% at 31 March 2003) gave rise to the trust showing a $5.248 million loss before expenditure and donations.
The trustees have, under advice, not changed the strategic asset allocation. While the resolve of trustees has been tested by the above result, our advice and my belief is that the investment mix we have is still the most appropriate for long term growth and income flow within the objectives of this trust.
It appears the trustees' faith in the investment policy may be giving rise to appropriate results in the current year to date. Since the balance date, the international equities portion of the trust's investment portfolio has increased in value by approximately $3.6 million in two months. We hope that this recovery is sustained and continues so that we will be clear of the concerns about poor returns and its negative impact on funds available for donations into our community. The balance of the trust's investment portfolio has continued to perform to expectation relative to the returns available on fixed interest securities and cash deposits.
We maintain a long-term perspective in our investment philosophy consistent with the nature of the community trust fund we administer. I have discussed the appropriateness of this with the Minister of Finance.
Your trustees have spent considerable time and effort developing a strategic plan for the trust this year and this will be posted on our web site shortly. We would welcome your input on its appropriateness and suggestions for improvement.
The strategic plan documents the philosophy of the trust. There is an element of change evolving in our policies. This is pursuant to our trustees' belief that we may be able to better enhance the well-being of the more deprived sections of our community by a change in our investment and donation policy. By working in liaison with other key stakeholders in our community, we may be able to identify some key community agreed initiatives which we can jointly fund to raise the economic prospect for those communities where the need is greatest. If we can achieve this, we will have the prospect of making a greater positive impact long term. We believe that to address deprivation, improved economic options and income flows need to be made available in those areas of need.
The Bay of Plenty population is continuing to grow at a rapid rate. The trust has, in the past, had a policy of building its capital by reserving out of income sufficient funds to maintain the real value of the trust's capital relative to both inflation and population growth within the Bay of Plenty. With reducing interest rates and long-term investment return expectations, this policy would appear to be unsustainable if the trust wishes to continue distributions to the community at reasonable and meaningful levels. Trustees have therefore decided to reduce our reserving policy in relation to population growth to 50% of the rate of increase instead of 100% as in the past.
During the past year, the trust has made donations of $2,256,000.00. These donations have been made despite the loss experienced this year by using a further portion of reserves put aside in the past in anticipation of possible poor investment results.
Trustees have worked hard to help obtain additional funding for the CoachForce programme run by Sport Bay of Plenty.
The hugely successful model is now in the process of being adopted nationwide through the regional sports trusts. The Bay of Plenty Community Trust has funded the programme fully for the last six years but needed to reduce its ongoing commitment. I am pleased to signal that this has been successful and the programme should be able to continue long term with the Bay of Plenty Community Trust providing half the external (non-sports) funding and Sport and Recreation New Zealand sourcing the balance.
The trustees have considered ways to increase the capital of the trust. To this end, we have produced a brochure appealing to individuals to consider the trust as an appropriate beneficiary in their wills. A contribution to the trust would create a lasting legacy with security of knowledge that it will be appropriately targeted to enhance our community by responsible trustees from throughout the region with high levels of local knowledge and empathy. Our hope is that this trust will have an even greater positive impact on our community in the future and we commend this legacy option to you.
I thank fellow trustees for their excellent input to the trust. We have had two new appointments to the trust. Sandra Kai Fong from Rotorua and Enid Leighton from Whakatane replacing Egan Ogier from Tauranga and Kay Withers from Whakatane. Egan had been a trustee for eight years.
We acknowledge Egan's contribution. His wisdom and financial experience were very valuable to the trust. Kay Withers we thank also. She was an extremely competent trustee with excellent knowledge and skills who contributed in a very worthwhile manner to his community effort.
I also acknowledge the continuing excellent administration team at the trust office. Bruce Cronin and Cindy Currie run an efficient office with enthusiasm. This helps the trustees and the beneficiaries immensely.
RAY SHARP, Chairman.
Date: 10 June 2003.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2003
2003 2002
$(000) $(000)
Dividends 1,964 6,440
Interest 3,007 2,811
Investment gains/(losses) (refer note 5) (10,247) (6,844)
Donations cancelled and refunded 28 18
(5,248) 2,425
Less expenditure:
Advertising/public reporting 50 48
Audit fees 7 6
Accountancy fees 9 9
Portfolio management and advisory fees 322 327
Office administration 207 190
Office rental 14 14
Other administration costs 94 52
Trustees' fees 109 103
Trustees' expenses 45 52
857 801
Depreciation 11 8
Loss on disposal of assets 1 1
Total operating costs 869 810
Net surplus/(deficit) before donations (6,117) 1,615
Donations round 2,205 3,233
Net deficit after donations (8,322) (1,618)
Plus/(less) transfers:
Income fluctuation reserve 8,419 1,005
Inflation and population reserve - (62)
Regional facilities reserve - 926
8,419 1,869
Net surplus after reserve transfers 97 251
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2003
2003 2002
$(000) $(000)
Equity at 1 April 2002 114,685 116,554
Less donations paid from capital:
Donations round (52) (207)
Dillon Scholarship (45) (44)
114,588 116,303
Net surplus 97 251
Increase/(decrease) in income fluctuation reserve (8,419) (1,005)
Increase/(decrease) in inflation and population reserve - 62
Increase/(decrease) in regional facilities reserve - (926)
Total recognised revenue and expenses for the year (8,322) (1,618)
Equity at 31 March 2003 106,266 114,685
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Financial Position as at 31 March 2003
Note 2003 2002
$(000) $(000)
Equity: 2
Trust capital 89,308 89,308
Income fluctuation reserve 3,416 11,835
Inflation and population reserve 13,542 13,542
Total equity 106,266 114,685
Represented by-
Current assets:
Current account 79 2
Call account 1 1
Bank of New Zealand-
Term deposit 90 33
Accounts receivable - 3
170 39
Non current assets:
Investments 5 106,261 115,217
Fixed assets 3 25 26
106,286 115,243
Total assets 106,456 115,282
Current liabilities:
Accounts payable (163) (578)
Employees' entitlement payable (27) (19)
(190) (597)
Total net assets 106,266 114,685
Signed on behalf of the Board of Trustees:
RAY SHARP, Chairman.
Date: 24 June 2003.
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Cash Flows for the Year Ended 31 March 2003
2003 2002
$(000) $(000)
Cash flows from operating activities-
Cash was provided from:
Investment income 2,834 2,407
Other 32 23
2,866 2,430
Cash was dispersed to:
Suppliers of goods and services (735) (697)
Trustees (111) (97)
Donations to the community (2,673) (3,100)
Dillon Memorial Scholarship (45) (44)
(3,563) (3,938)
Net cash flows from operating activities (697) (1,508)
Cash flows from investing activities-
Cash was provided from:
Sale of investments 38,674 3,650
Cash was applied to:
Purchase of fixed assets (12) (16)
Purchase of investments (37,888) (2,174)
Net cash flows from investing activities 774 1,460
Increase/(decrease) in cash held 77 (48)
Add cash at 1 April 2002 3 51
Cash at 31 March 2003 80 3
Reconciliation of net surplus and net cash flows from operating activities-
Net surplus transferred to/(from) equity (8,322) (1,618)
Less payments out of capital (net) (97) (251)
Accrued income included in investments 8,111
Plus non cash items:
Depreciation of fixed assets 11 8
Loss on disposal of assets 1 1
Movement in working capital:
Decrease/(increase) in accounts receivable 3 10
Increase/(decrease) in accounts payable (404) 342
Net cash flows from operating activities (697) (1,508)
(The accompanying notes form part of these financial statements.)
Notes to the Financial Statements for the Year Ended 31 March 2003
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 2003.
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 (refer note 5).
(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.
2003 2002
$(000) $(000)
2. Equity
Trust capital- 89,308 89,308
General funds: Trust Company
Opening balance (9,790) 9,790 - -
Less donations from trust capital (97) - (97) (251)
Plus transfer from current year surplus (5,241) 5,338 97 251
(15,128) 15,128 - -
Income fluctuation reserve:
Opening balance 11,835 12,840
Increase/(decrease) in reserve (8,419) (1,005)
3,416 11,835
Regional facilities reserve:
Opening balance - 926
Increase/(decrease) in reserve - (926)
- -
Inflation and population reserve:
Opening balance 13,542 13,480
Increase in reserve - 62
13,542 13,542
Total equity 106,266 114,685

2003 2002
$(000) $(000)
3. Fixed Assets
Office furniture and equipment:
Cost 79 73
Accumulated depreciation 54 47
Book value 25 26
4. Financial Instruments
Investments are stated at market value as at balance date. Accrued interest, accounts payable 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:
2003 2002
$(000) $(000)
Bank balances 80 3
Bank term deposits 90 33
Accounts receivable - 3
Investments 106,261 115,217
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 is diversified in such a way that over time reductions in value in particular asset classes should be more than offset by increases in other classes. Investments are disclosed at market value at balance date and any gains (losses) arising from that treatment are shown as "Investment gains (losses)" in the statement of financial performance. Therefore, no provision has been made for potential gains or losses that could occur due to future market fluctuations. The investment portfolio as at 31 March 2003 is diversified as follows:
ANZ Asset Management State Street Global Advisors Tower Asset Management AMP Henderson RISF Total
New Zealand equities - - 5,660 - - 5,660
New Zealand fixed interest - - - 22,756 - 22,756
New Zealand cash - - 13,512 14,565 - 28,077
Global bonds (fully hedged) - - 22,389 - - 22,389
Global equities (50% hedged) - - - 354 27,025 27,379
Total 2003 - - 41,561 37,675 27,025 106,261
Total 2002 10 35,275 43,327 36,605 - 115,217
The balance date figures above are reflected in the trust's asset allocations:
Policy (%) Actual (%)
New Zealand equities 5 5
New Zealand fixed interest 20 22
New Zealand cash 25 26
Global bonds (fully hedged) 20 21
Global equities (50% hedged) 30 26
100 100
2003 2002
6. Taxation $(000) $(000)
Net surplus (before donations) (6,117) 1,615
Less non-assessable income (Bay of Plenty Community Trust Charities Limited) 1,869 (445)
Less unrealised gains/losses
Russell 5,616 -
Tower asset management 352 (181)
State Street global advisors (5,187) 5,465
(3,467) 6,454
Plus non-deductible expenditure 325 302
Plus imputation credits received 65 59
Plus withholding tax 1 -
Total taxable income (3,076) 6,815
Less beneficiaries' distribution: (2,204) (3,233)
Less distribution from Bay of Plenty Community Trust Charities Limited 1,212 1,448
(992) (1,785)
Bay of Plenty Community Trust Charities Limited - (4,700)
Total trustees' income (4,068) 330
Trustees' loss brought forward (467) (618)
Imputation credits converted to losses (197) (179)
Assessable trustees' income (4,732) (467)
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).
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 04 31 Mar 05
$ $
1st Opotiki Scout Group 7,500 -
Epilepsy Wbop 2,500 -
Habitat for Humanity Taupo 4,489 -
John Paul College 10,000 -
Kawerau District Council 20,000 -
Rotorua BMX Club 10,000 -
Rotorua Competitions Society 7,500 -
Salvation Army Whakatane 5,000 -
Tauranga Civic Art Gallery Trust 333,000 334,000
Western Heights High School 30,000 30,000
Total contingent liabilities 429,989 364,000
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 2003. 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 2003 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 2003 and the financial performance and cash flows for the year ended on that date.
Our audit was completed on 19 June 2003 and our unqualified opinion is expressed as at that date.
INGHAM MORA, Tauranga.
(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.)