Trust Directory for the Year Ended 31 March 2004
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, 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. C. Dent, L. H. Jeffs, F. M. Jessep, P. B. Lowe-Johnson, M. E. O'Connor,
A. H. Reriti-Crofts, E. M. Richards, P. J. Richardson, P. J. Sigglekow, 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 (R. Harris).
Custodial Trustee: Trustees Executive.
Fund Investment Advisor: Forsyth Barr Funds Management (S. Loomans).
Bankers: Westpac.
Solicitors: Chapman Tripp Sheffield Young, P.O. Box 2510, Christchurch (J. L. Holland).
Trustees' Report for the Year Ended 31 March 2004
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 $131,583 (2003 - $145,100).
Review of Results and Financial Position
The total distribution from the trust and charitable company was $11.483 million (2003 $11.476 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: 28 June 2004.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2004
Note 2004 2003
Revenue 2 45,744,598 7,148,864
Less investment fees 2 1,175,455 923,459
Less expenses 2 1,180,206 1,227,204
Net surplus before taxation 43,388,937 4,998,201
Less retentions:
Transfer to capital base reserve 4 5,979,954 9,803,245
Available for distribution 37,408,983 (4,805,044)
Donations to tax approved entities 3 9,350,307 8,193,208
Net surplus transferred to trust funds 28,058,676 (12,998,252)
Consolidated Statement of Movements in Trust Funds for the Year Ended 31 March 2004
Note 2004 2003
Total trust funds at beginning of year 421,419,006 427,897,483
Less donations paid from capital 3 (2,132,967) (3,283,470)
419,286,039 424,614,013
Add net surplus for the year 28,058,676 (12,998,252)
Increase in capital base reserve 5,979,954 9,803,245
Total trust funds at end of year 453,324,669 421,419,006
Represented by:
Core real capital base reserve 4 371,422,000 358,000,000
Accumulated income reserve 4 33,739,400 22,753,691
Capital base reserve 4 48,163,269 40,665,315
453,324,669 421,419,006
Consolidated Statement of Financial Position as at 31 March 2004
Note 2004 2003
Trust funds 4 453,324,669 421,419,006
Represented by-
Current assets:
WestpacTrust operating accounts 7,726 25,644
Bank deposits 1,406,536 858,757
Property manager operating account 21,720 89
Accounts receivable 37,608 1,666
Taxation refund due 14 153 188
Good and services tax - 6,597
1,473,743 892,941
Investments:
Property investments 7 7,080,000 8,365,236
Managed funds 13 443,205,408 412,156,932
450,205,408 420,522,168
Fixed assets 8 1,691,028 114,186
Total assets 453,450,179 421,529,295
Current liabilities:
Accounts payable and goods and services tax 117,841 80,764
Rents received in advance - 29,525
Goods and services tax 7,669 -
Total liabilities 125,510 110,289
Net assets 453,324,669 421,419,006
Consolidated Statement of Cash Flows for the Year Ended 31 March 2004
Note 2004 2003
Cash was provided by (used for)-
Operations: 5
Income from investments 33,572,024 9,727,615
Payments to suppliers, employees and trustees (2,002,929) (2,144,284)
Payments of taxation 35 71
Payments of goods and services tax (35,734) (10,009)
Donations to the community (11,483,274) (11,476,678)
20,050,122 (3,903,285)
Investing:
Managed funds investments (19,335,102) 4,503,737
Movement in term deposits (547,779) 564,205
Sale (purchase) of fixed assets (185,159) (1,162,055)
(20,068,040) 3,905,887
Increase (decrease) in cash (17,918) 2,602
Cash at beginning of year 25,644 23,042
Cash at end of year 7,726 25,644
Represented by:
WestpacTrust operating accounts 7,726 25,644
Notes to the Financial Statements for the Year Ended 31 March 2004
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) 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.
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
Fixed assets 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.
Investment properties are stated at open market value less estimated costs of disposal as determined by independent valuers at balance date. Unrealised changes in the value of investment properties are included in revenue. Investment properties are not depreciated.
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 except the accounting for investment properties from which the trust is deriving rental income. From 31 March 2004 these properties, which were previously recorded at cost less accumulated depreciation, have been valued at market value. The effect of this change is an increase in revenue of $401,630 and is included in the statement of financial performance. All other policies have been applied on bases consistent with those used last year.
2. Revenue and Expenses
2004 2003
Revenue:
Rents received 694,661 603,729
Interest received 47,381 184,477
Investment income 44,591,994 6,105,948
Commissions received 8,932 254,710
Gain on revaluation of investment properties 401,630 -
45,744,598 7,148,864
Investment fees:
Fund managers' fees 811,649 696,566
Custodial fees 193,608 134,932
Advisory fees 170,198 91,961
1,175,455 923,459
Expenses:
Advertising, public relations, distribution and other costs 236,525 223,440
Computer and system review costs 27,453 17,351
Depreciation, loss on sale and depreciation recovered 295,180 294,632
Professional fees 97,335 183,850
Property costs 138,313 135,979
Salaries and staff recruiting fees 253,817 226,852
Trustees' fees 131,583 145,100
1,180,206 1,227,204
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.
2004 2003
Donations paid from income 9,350,307 8,193,208
Donations paid from capital 2,132,967 3,283,470
(Includes prior year adjustments for cancellation, refunds, etc.) 11,483,274 11,476,678
Future commitments 340,000 748,000
Donations approved from income 9,555,183 7,520,066
Donations approved from capital 2,037,678 2,636,241
Donations approved for year 11,592,861 10,156,307
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. The allocation of donations between regions is based on population statistics for each region.
4. Trust Funds
2004 2003
Core real capital base reserve:
Balance brought forward 358,000,000 358,000,000
Donations paid from capital (2,132,967) (3,283,470)
Transfer from accumulated income reserve 2,132,967 3,283,470
Adjustment - Increase in core capital 13,422,000
371,422,000 358,000,000
Accumulated income reserve:
Balance brought forward 22,753,691 39,035,413
Net surplus/(deficit) for year 28,058,676 (12,998,252)
Transfer to core real capital base reserve (2,132,967) (3,283,470)
Adjustment - Increase in Core Capital (14,940,000) -
33,739,400 22,753,691
Capital base reserve:
Balance brought forward 40,665,315 30,862,070
Retention as per statement of financial performance 5,979,954 9,803,245
Core capital increase - inflation adjustment 1,518,000 -
48,163,269 40,665,315
Total trust funds 453,324,669 421,419,006
The capital base reserve is an allowance for the erosion of the value of the core real capital base reserve, due to inflation.
For 2004, this was calculated based on inflation at 1.5% on a core real capital base reserve of $398,665,315, being the original core real capital base reserve of $358,000,000 plus the adjusted capital base reserve of $40,665,315.
The core real capital adjustment recognises an amendment to the trust's capital position to capitalise previously set aside income reserves following the 1996 sale of the Trust Bank NZ Limited shareholding, and also includes an inflationary movement for that adjustment.
5. Reconciliation of Net Surplus to Net Operating Cashflow
2004 2003
Net surplus from statement of financial performance 28,058,676 (12,998,252)
Adjustments for non cash items in net surplus:
Depreciation 295,180 294,632
Gain on revalution of investment properties (401,630)
Managed funds income unrealised (11,713,371) 2,432,742
16,238,855 (10,270,878)
Adjustments for changes in working capital:
Decrease/(increase) in accounts receivable (35,942) 9,238
Decrease/(increase) in Colliers Jardine operating account (21,631) 10,847
Increase/(decrease) in accounts payable, rents received in advance, and goods and services tax 21,818 (172,338)
Increase/(decrease) in taxation payable 35 71
16,203,135 (10,423,060)
Add capital base reserve transfer 5,979,954 9,803,245
Deduct donations paid from capital (2,132,967) (3,283,470)
Net operating cash flow 20,050,122 (3,903,285)
6. Capital Commitments
At balance date, the trust had capital commitments of $268,000 (2003 - Nil).
7. Investment Properties
The investment properties held at 31 March 2004 are valued at market value as follows:
(Comparative values reflect book values at 31 March 2003).
2004 2003
262 Oxford Terrace 4,450,000 4,451,688
95 Oxford Terrace - 1,801,171
141 Hereford Street 2,630,000 2,977,317
Less accumulated depreciation - (864,940)
7,080,000 8,365,236
The investment properties were valued at 31 March 2004 by an independent valuer, G. R. Sellars of Fright Aubrey, who is a Fellow of the New Zealand Institute of Valuers.
8. Fixed Assets
Cost AccumulatedDepreciation 2004BookValue 2003BookValue
Land and Buildings - 95 Oxford Terrace, Christchurch 1,801,171 232,943 1,568,228 -
Computer 174,092 125,737 48,355 65,474
Office equipment 28,352 18,325 10,027 10,636
Furniture and fittings 127,808 63,390 64,418 38,076
Fixed assets 2,131,423 440,395 1,691,028 114,186
9. Contingent Liabilities
There are no contingent liabilities at balance date (2003 - 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 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. The trustees consider the risk of non-recovery of these investments to be mitigated by prudent investment strategies and an appropriately diversified portfolio.
Currency Risk
The trust incurs currency risk as a result of investment transactions entered into by fund managers. Such risks are mitigated by foreign currency hedges where appropriate.
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.
13. Managed Funds Investment
2004 2003
The trust held the following funds at balance date:
Managed funds - Custodian Settlements - 4,036
Managed funds - NZ Cash 151,721,125 176,233,435
Managed funds - NZ Fixed Interest 115,877,740 88,954,222
Managed funds - NZ Equities 31,660,671 32,043,616
Managed funds - NZ Property 2,072,891 -
Managed funds - Australasian Equities 30,873,240 19,213,042
Managed funds - Australasian Property Equities 5,127,866 8,358,789
Managed funds - Global Bonds 44,616,142 53,681,710
Managed funds - Global Equities 25,410,995 -
Managed funds - Emerging Market Debt 9,512,482 11,619,694
Managed funds - Alternative Assets 26,332,256 7,638,615
Managed funds - Mortgage Backed Securities - 14,409,773
443,205,408 412,156,932
14. Taxation
2004 2003
Net income before taxation as per statement of financial performance 43,388,937 4,998,201
Add non deductible expenditure: 150,554 198,419
Imputation credits received 505,192 571,642
Witholding taxes on investments 50,161 21,570
Canterbury Trust House Limited loss 188,757 202,214
Revaluation of equities (11,435,357) 3,287,771
Charitable company exemption (21,288,957) 1,412,411
Gain on Revaluation of Investment Properties (401,630) -
Less Donations to tax approved entities (9,350,307) (9,144,343)
Assessable income for tax purposes 1,807,350 1,547,885
Less loss carry forward entitlement (1,515,152) (1,265,424)
Taxable income 292,198 282,461
Taxation @ 33% 96,426 93,212
Less imputation credits received (505,192) (571,642)
Resident withholding tax (153) (188)
Foreign tax credits on overseas dividends (50,161) (21,570)
Add excess imputation credits 458,928 500,000
Taxation payable (refund) as per the statement of financial position (153) (188)
Excess imputation credits converted to loss carry forward ($458,928) 1,390,689 1,515,152
Canterbury Trust House Limited losses to carry forward 1,101,283 912,526
Consolidated losses to carry forward 2,491,972 2,427,678
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 2004 and their financial position as at that date. This information is stated in accordance with the accounting policies set out in Note 1.
Trustees' Responsibilities
The trustees are responsible for the preparation and presentation of the consolidated financial statements which present fairly the financial position of the trust and subsidiaries as at 31 March 2004, 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 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 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, the consolidated financial statements:
? comply with generally accepted accounting practice in New Zealand; and
? present fairly the financial position of the trust and subsidiaries as at 31 March 2004, and their financial performance and cash flows for the year ended on that date.
Our audit was completed on 28 June 2004 and our unqualified opinion is expressed as at that date.
PRICEWATERHOUSECOOPERS, Chartered Accountants, Christchurch.
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A full list of all distributions of income by way of donations for the year ended 31 March 2004 is available from the trust's office on request.