Annual Report for the Year Ended 31 March 2004
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 (term expired 31 May 2003), Ms T. J. Eggleton, Ms S. Kai Fong, Mr B. Kerr (appointed 1 June 2003), Mrs J. Knudsen J.P., Ms E. Leighton Q.S.O., Mr L. Martin J.P., Mrs P. J. McLeod M.N.Z.M.,
Mrs M. Ngatai J.P., Mr V. Payne, Mrs B. M. Ross (term expired 31 May 2003), Ms P. Thompson (appointed 1 June 2003),
Ms M. Waaka M.N.Z.M.
Trust Manager:
Mr B. W. Cronin.
Accountants:
Staples Rodway, Tauranga.
Auditors:
Ingham Mora, Tauranga.
Bankers:
BNZ, Tauranga.
Westpac, Tauranga.
Financial Advisors:
Russell Investment Group Ltd, Auckland.
Solicitors:
Sharp Tudhope, Tauranga
Tax Advisors:
KPMG, Christchurch.
Chairman's Report for the Year Ended 31 March 2004
I am delighted to report a highly successful year for your trust: investment returns have improved substantially, the trust hosted an excellent annual community trusts' conference, and we completed and began implementing our three-year strategic plan.
Last year in this report, I said: "- trustees' faith in the investment policy may be giving rise to appropriate results in the current year to date." The global equities recovery continued throughout the year and this has enabled the trust to rebuild reserves depleted in the previous three years and has reinforced the trust's long-term, disciplined approach to investments.
In February, this trust hosted the combined community trusts' annual conference in Wairakei, Taupo. It is a credit to my trustees, the trust staff and ex-trustee Hilary Brown, our conference organiser, that this event, which significantly benefits trusts and trustee development, was so successful.
I am very happy to have the support of an excellent board of trustees. Their wide range of talent is leading the development and exploration of ways that this trust can improve its effectiveness in enhancing our communities. We have continued to develop our thinking and strategies on how we can improve our objective of enhancing Bay of Plenty communities. This has led us to set aside some funding for the coming year for investigation and pursuit of regional initiatives that have the potential to improve the economics of more deprived areas in our region. The trust has continued its support of the many volunteer, social and community enhancement projects that it has traditionally supported.
Please read this report and share with me the pride I have in this trust. As Bay of Plenty communities, we are very lucky to have such a fund dedicated to the many needs and wants of our area controlled at a grass roots level within our region.
RAY SHARP, Chairman.
Date: 3 June 2004.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2004
2004 2003
$(000) $(000)
Income:
Dividends 2,944 1,964
Interest 2,799 3,007
Investment gains/(losses) (refer note 5) 9,129 (10,247)
Donations cancelled and refunded 6 28
14,878 (5,248)
Less expenditure:
Advertising/public reporting 45 50
Audit fees 7 7
Accountancy fees 9 9
Portfolio management and advisory fees 314 322
Office administration 207 207
Office rental 14 14
Other administration costs 85 94
Trustees' fees 153 109
Trustees' expenses 50 45
884 857
Depreciation 7 11
Loss on disposal of assets - 1
Total operating costs 891 869
Net surplus/(deficit) before donations 13,987 (6,117)
Donations round 1,278 2,205
Net surplus/(deficit) after donations 12,709 (8,322)
Plus/(less) transfers:
Income fluctuation reserve (10,233) 8,419
Inflation and population growth reserve (2,354) -
(12,587) 8,419
Net surplus/(deficit) after reserve transfers 122 97
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2004
2004 2003
$(000) $(000)
Equity at 1 April 2003 106,266 114,685
Less donations paid from capital:
Donations round (77) (52)
Dillon Scholarship (45) (45)
106,144 114,588
Net surplus 122 97
Increase/(decrease) income fluctuation reserve 10,233 (8,419)
Increase/(decrease) inflation and population growth reserve 2,354 -
Total recognised revenue and expenses for the year 12,709 (8,322)
Equity at 31 March 2004 118,853 106,266
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Financial Position as at 31 March 2004
Note 2004 2003
$(000) $(000)
Equity: 2
Trust capital 89,308 89,308
Income fluctuation reserve 13,649 3,416
Inflation and population reserve 15,896 13,542
Total equity 118,853 106,266
Represented by-
Current assets:
Westpac-
Current account 6 79
Call account 2 1
Bank of New Zealand-
Term deposit 2 90
Interest free loans 30 0
Accounts receivable 31 -
71 170
Non current assets:
Investments 5 118,958 106,261
Fixed assets 3 28 25
118,986 106,286
Total assets 119,057 106,456
Current liabilities:
Accounts payable (179) (163)
Employees' entitlement payable (25) (27)
(204) (190)
Total net assets 118,853 106,266
Signed on behalf of the Board of Trustees:
RAY SHARP, Chairman.
TERRI EGGLETON, Trustee.
Date: 17 June 2004.
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Cash Flows for the Year Ended 31 March 2004
2004 2003
$(000) $(000)
Cash flows from operating activities-
Cash was provided from:
Investment income 8,904 2,834
Other 6 32
8,910 2,866
Cash was dispersed to:
Suppliers of goods and services (753) (735)
Trustees (125) (111)
Donations to the community (1,380) (2,673)
Dillon Memorial Scholarship (45) (45)
(2,303) (3,563)
Net cash flows from operating activities 6,607 (697)
Cash flows from investing activities-
Cash was provided from:
Sale of investments 2,100 38,674
Sale of fixed assets 1 -
Cash was applied to:
Purchase of fixed assets (10) (12)
Purchase of investments (8,770) (37,888)
Net cash flows from investing activities (6,679) 774
Increase/(decrease) in cash held (72) 77
Add cash at 1 April 2003 80 3
Cash at 31 March 2004 8 80
Reconciliation of net surplus and net cash flows from operating activities-
Net surplus transferred to/(from) equity 12,709 (8,322)
Less payments out of capital (net) (122) (97)
Accrued income included in investments (5,966) 8,111
Plus non cash items:
Depreciation of fixed assets 7 11
Loss on disposal of assets - 1
Movement in working capital:
Decrease/(increase) in accounts receivable (31) 3
Increase/(decrease) in accounts payable 10 (404)
Net cash flows from operating activities 6,607 (697)
(The accompanying notes form part of these financial statements.)
Notes to the Financial Statements for the Year Ended 31 March 2004
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 Inc 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 a historical cost basis are followed by the group, with the exception of investments which are stated at market value as at 31 March 2004.
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.
2004 2003
$(000) $(000)
2. Equity
Trust capital- 89,308 89,308
General funds: Trust Company
Opening balance (15,127) 15,127 - -
Less donations from trust capital (122) - (122) (97)
Plus transfer from current year surplus 8,280 (8,158) 122 97
(6,969) 6,969 - -
Income fluctuation reserve:
Opening balance 3,416 11,835
Increase/(decrease) in reserve 10,233 (8,419)
13,649 3,416
Inflation and population reserve:
Opening balance 13,542 13,542
Increase in reserve 2,354 -
15,896 13,542
Total equity 118,853 106,266

2004 2002
$(000) $(000)
3. Fixed Assets
Office furniture and equipment:
Cost 73 79
Accumulated depreciation 45 54
Book value 28 25
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:
2004 2003
$(000) $(000)
Bank balances 8 80
Bank term deposits 2 90
Accounts receivable 31 -
Interest free loans 30 -
Investments 118,958 106,261
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 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 2004 is diversified as follows:
TowerAsset Management AMPCapital Investors Russell International Share Fund Total
New Zealand equities 6,105 - - 6,105
New Zealand fixed interest - 23,678 - 23,678
New Zealand cash 15,249 17,193 - 32,442
Global bonds (fully hedged) 24,443 - - 24,443
Global equities (50% hedged) - -150 32,440 32,290
Total 2004 45,797 40,721 32,440 118,958
Total 2003 41,561 37,675 27,025 106,261
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 20
New Zealand cash 25 27
Global bonds (fully hedged) 20 21
Global equities (50% hedged) 30 27
100 100
2004 2003
$(000) $(000)
6. Taxation
Net surplus (before donations) 13,987 (6,117)
Less non-assessable income (Bay of Plenty Community Trust Charities Limited) (4,213) 1,869
Less unrealised gains/losses
Russell International Share Fund (3,688) 5,616
Tower Asset Management (934) 352
State Street Global Advisors - (5,187)
5,152 (3,467)
Plus non-deductible expenditure 339 325
Plus imputation credits received 65 65
Plus withholding tax 5 1
Total taxable income 5,561 (3,076)
Less beneficiaries distribution: (1,278) (2,204)
Bay of Plenty Community Trust Charities Limited (1,000) -
Less distribution from Bay of Plenty Community Trust Charities Limited 784 1,212
(1,494) (992)
-
Total trustees' income 4,067 (4,068)
Trustees' loss brought forward (4,732) (467)
Imputation credits converted to losses (198) (197)
Assessable trustees' income (863) (4,732)
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 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 05 31 Mar 06
$ $
Arohanui Art & Education Trust 10,000 -
Habitat for Humanity Taupo 4,489 -
Merivale School 25,000 -
Pahoia School 10,000 -
Pukehina School 10,000 -
Rotorua Competitions Society 10,500 -
Rotorua Girls High School 50,000 -
St Andrews Presbyterian Church 15,000 -
Tauranga Civic Art Gallery Trust 333,000 334,000
Western Heights High School 30,000 -
Total contingent liabilities 497,989 334,000
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 financial statements. The financial statements provide information about the past financial performance and financial position of the trust and group as at 31 March 2004. 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 financial statements which give a true and fair view of the financial position of the trust and group as at 31 March 2004 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 financial statements; and
? whether the accounting policies are appropriate to the trust and group's circumstances, and 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 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 or any of its subsidiaries.
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 group as far as appears from our examination of those records; and
? the 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 group as at 31 March 2004 and the results of operations and cash flows for the year ended on that date.
Our audit was completed on 18 June 2004 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 2004 is available from the trust's office on request.)