Consolidated Statement of Financial Performance for the Year Ended 31 March 2004
Note 2004 2004 2003
Group Parent Parent
$ $ $
Total operating revenue 1 23,709,160 23,971,429 (11,180,259)
Total expenditure 2 3,488,977 1,504,951 1,303,143
Net surplus/(deficit) before taxation 20,220,183 22,466,478 (12,483,402)
Taxation 7 - - -
Net surplus/(deficit) after taxation 20,220,183 22,466,478 (12,483,402)
Revaluation of property 17 (251,228) (251,228) -
Net surplus/(deficit) for the year before distribution 19,968,955 22,215,250 (12,483,402)
Transfer to capital maintenance reserve (2,866,327) (2,866,327) (4,369,401)
Donations to tax approved entities (48,766) (48,766) (1,183,800)
Net surplus/(deficit) transferred to grants maintenance reserve 17,053,862 19,300,157 (18,036,603)
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2004
2004 2004 2003
Group Parent Parent
$ $ $
Net surplus/(deficit) for year transferred to grants maintenance reserve 17,053,862 19,300,157 (18,036,603)
Increase in capital maintenance reserve 2,866,327 2,866,327 4,369,401
Less: Grants paid from capital (6,874,279) (6,874,279) (7,305,691)
Retained earnings of subsidiary not previously recognised (3,857) - -
Movements in equity for the year 13,042,053 15,292,205 (20,972,893)
Equity at beginning of year 149,451,844 149,451,844 170,424,737
Equity at end of year 162,493,897 164,744,049 149,451,844
Consolidated Statement of Financial Position as at 31 March 2004
2004 2004 2003
Group Parent Parent
Funds employed: Note $ $ $
Trust capital 9 158,460,000 158,460,000 158,460,000
Reserves 8 4,033,897 6,284,049 (9,008,156)
Total capital and reserves 162,493,897 164,744,049 149,451,844

Liabilities-
Current liabilities:
Accounts payable and accrued expenses 158,427 131,501 118,045
Grants committed but not paid 8,034,804 8,034,804 5,819,620
Total liabilities 8,193,231 8,166,305 5,937,665
Total capital and liabilities 170,687,128 172,910,354 155,389,509
Assets-
Current assets:
Bank and deposits 3,050,816 45,454 25,466
Accounts receivable and interest accrual 10 48,153 18,189 10,836
Back Country Foods Limited 11 2,995 - -
Taxation 46,636 - -
Current portion of debt funding 12 628,403 - -
Total current assets 3,777,003 63,643 36,302
Non current assets:
Property, plant and equipment 17 1,092,825 776,933 1,061,791
Trading bank deposits - - 211,000
Managed funds-
ING (NZ) Limited 18 27,946,841 27,946,841 20,749,630
Tower Asset Management 18 40,696,696 40,696,696 46,749,547
AMP Asset Management 18 38,097,333 38,097,333 37,941,250
State Street Global Advisors 18 - - 45,058,741
Capital International 18 26,322,389 26,322,389 -
Alliance Bernstein 18 30,324,941 30,324,941 -
Loans 13 913,385 913,385 938,055
Debt funding 12 1,354,067 - -
Investment in associates 14 90,000 - -
Investment in subsidiary - 7,768,193 2,643,193
Other investments 71,648 - -
Total non current assets 166,910,125 172,846,711 155,353,207
Total assets 170,687,128 172,910,354 155,389,509
Consolidated Statement of Cash Flows for the Year Ended 31 March 2004
2004 2004 2003
Group Parent Parent
Cash flows from operating activities- Note $ $ $
Cash was provided from/(applied to):
Receipts from customers 44,161 - -
Interest received 13,528,703 13,138,165 7,308,978
Dividends received 2,730,525 2,730,525 -
Revaluation of investments 10,360,923 10,360,923 (18,631,581)
Taxation refund received 15,416 - -
Payments to suppliers and employees (1,789,053) (1,418,382) (1,242,266)
Grants paid (6,917,054) (6,917,054) (8,367,518)
Income taxes paid (46,636) - -
Net cash flows from operating activities 16 17,926,985 17,894,177 (20,932,387)

Cash flows from investing activities-
Cash payment was provided from/(applied to):
Repayment of debt funding advanced 185,426 - -
Drawdown of debt funding from recipients (1,007,567) - -
Investments (12,704,691) (12,678,032) 21,228,575
Property, plant and equipment (60,171) (52,827) (46,156)
Loans (18,330) (18,330) (209,284)
Net cash flows from investing activities (13,605,333) (12,749,189) 20,973,135

Cash flows from financing activities-
Cash was provided from/(applied to):
Purchase of Invest South Limited shares (2,625,000) (5,125,000) -
Net cash flow from financing activities (2,625,000) (5,125,000) -
Net increase/(decrease) in cash held 1,696,652 19,998 40,748
Cash balances at beginning of year 1,354,164 25,466 (15,282)
Cash balances at end of year 3,050,816 45,454 25,466
Statement of Significant Accounting Policies for the Year Ended 31 March 2004
A. Basis of Preparation
The Community Trust of Southland was formed under the Trustee Banks Restructuring Act 1988 and is incorporated under the Charitable Trusts Act 1957. The financial statements presented are those for The Community Trust of Southland ("the trust"), Southland Community Trust Charities Limited, making up the parent. The group consists of The Community Trust of Southland ("the trust"), and its wholly owned subsidiary companies, Southland Community Trust Charities Limited and Invest South Limited group.
The financial statements comply with the Financial Reporting Act 1993 and the Community Trusts Act 1999 and the Companies Act 1993. They comprise statements of the following: significant accounting policies, financial performance, movements in trust funds, financial position, cash flows, as well as notes to these statements.
The financial statements are prepared on the basis of historical cost except that investment assets are stated at valuation, as is the trust's property at 62 Don Street, Invercargill.
B. Consolidation Method
The financial statements of the trust's wholly owned company Southland Community Trust Charities Limited are included in the financial statements of the parent. The financial statements of the trust's wholly owned company, Invest South Limited Group are included in the financial statements of the group using the purchase method of consolidation.
C. Associates
Associates are entities in which the group has significant influence, but not control over the operating and financial policies.
The financial statements include the group's share of the net surplus of associates since acquisition on an equity accounted basis.
D. Goodwill Arising on Acquisition of Associates
Goodwill arising on the acquisition of an associate represents the excess of the purchase consideration over the fair value of the identifiable assets acquired. Goodwill is stated at cost and amortised to the statement of financial performance on a straight line basis over the period during which benefits are expected to be derived - a period not exceeding 20 years.
E. Trust Capital
Following the sale of the trust's shares in Trust Bank New Zealand Limited in April 1996 for $158,460,000, the trustees agreed that the value of the trust at that time should be maintained for the benefit of current and future generations living in the region. For this purpose, the trustees agreed that $158,460,000 would be considered as the "trust capital" value of the parent. Trustees further agreed that over the long term the net assets of the parent would not be allowed to reduce to a level below the inflation-adjusted real value of this trust capital.
F. Capital Maintenance Reserve
The capital maintenance reserve represents the additional amount necessary to preserve the real value of the trust capital allowing for inflation as measured by the Consumers Price Index (all groups) and payments of grants out of capital.
G. Grants Maintenance Reserve
While the trustees have adopted a long-term investment strategy, they accept that annual returns from investments are likely to fluctuate from year to year. In recognition of this, a grants maintenance reserve is maintained. In years when net income from investments is higher than the grant levels, surplus income will be transferred to this reserve. In years when there is insufficient income to sustain the level of grants, an appropriate amount will be transferred from the grants maintenance reserve to income.
H. Basis of Recognising Components of the Financial Statements
The following general accounting policies are adopted:
Assets
A transaction results in an asset being recognised in the statement of financial position when it will probably give rise to ongoing benefits for the group and those benefits can be measured with reliability.
Liabilities
A transaction results in a liability being recognised in the statement of financial position when it will probably give rise to the need for the group to sacrifice assets in the future and those sacrifices can be measured with reliability.
Revenue
Revenue is recognised in the statement of financial performance when a transaction gives rise to an increase in the value of the group's net assets, and that increase can be measured with reliability.
Expenses
An expense is recognised in the statement of financial performance when a transaction results in a decrease in the value of the group's net assets, and that decrease can be measured with reliability.
Classification of Assets and Liabilities Between Current and Non-current
An amount is classified as current when it is expected to be settled or extinguished within one year of the date of the financial statements. All other amounts are classified as non-current.
I. Property, Plant and Equipment (Parent)
Property, plant and equipment are initially stated at cost and then depreciated on a straight line basis. Land and buildings are stated at valuation as determined by an independent registered valuer. The basis of valuation of the land and buildings is highest and best use. The estimated useful lives of fixed assets are as follows:
Land Indefinite
Buildings 30-40 years
Furniture and fittings 3-15 years
Office equipment 3-8 years
Motor vehicles 5-8 years
J. Property, Plant and Equipment (Group)
Property, plant and equipment are initially stated at cost and then depreciated using maximum rates approved for taxation purposes. The rates and method applied are as follows:
Furniture and fittings 11.4% - 18.0% diminishing value
Office equipment 22.0% - 60.0% diminishing value
Motor vehicles 7.5% diminishing value
Other assets 48.0% diminishing value

K. Investments With Fund Managers
Investments with fund managers are stated at market value and report realised and unrealised gains or losses on holding these investments in the statement of financial performance. These gains or losses are shown in the statement of financial performance as income from revaluation of investments.
L. Other Investments
Cash investments are stated at cost plus interest credited or accrued to balance date.
M. Accounts Receivable
Accounts receivable are stated at expected realisable value.
N. Rental Payments
Invest South Limited Group leases its premises in addition to certain items of plant and equipment. Operating lease payments, where the lessor effectively retains substantially all the risks and benefits of ownership of the leased items, are included in the determination of the operating surplus/(deficit) in equal instalments over the lease term.
O. Debt Funding Advances
Invest South Limited (a subsidiary) has advanced monies to non-related entities as part of its core business activity. Interest is charged on these advances and accrued where necessary. The investments are recorded at expected realisable value.
P. Impairment
If the estimated recoverable amount of an asset is less than its carrying amount, the asset is written down to its estimated recoverable amount and an impairment loss is recognised in the statement of financial performance.
Q. Grants
Grants are recognised when they are approved by the trustees. Unpaid grants are recorded as a liability.
R. Goods and Services Tax
The parent is not registered for goods and services tax. The parent financial statements are prepared using G.S.T. inclusive accounting. The subsidiary of Invest South Limited Group is registered for G.S.T and all assets and liabilities have been stated exclusive of G.S.T with the exception of receivables and payables which are stated inclusive of G.S.T.
S. Income Tax
The parent provides for income tax on its net income after adjusting for tax accounting differences and any beneficiaries' income determinations made pursuant to section OBI (226) of the Income Tax Act 1994.
Invest South Limited Group follows the income taxes payable method for accounting for income tax.
T. Statement of Cash Flows
Operating cash flows includes interest and dividends paid or credited to investment funds under management and any upward or downward revaluation of funds during the period. Cash movements in funds invested are recognised in investing activities.
U. Changes in Accounting Policies
Land and buildings of the trust have been stated at valuation this year. Last year, land was stated at cost and buildings were stated at cost, depreciated as outlined in the depreciation policy. This had the effect of decreasing the net surplus by $251,228 and decreasing property, plant and equipment by $251,228.
With the exception of the above change in accounting policy, uniform accounting policies have been applied throughout the trust and group and on a consistent basis with those of the previous period.
Notes to the Financial Statement for the Year Ended 31 March 2004
Note 2004 2004 2003
Group Parent Parent
1. Operating Revenue $ $ $
Dividends and distributions 13,138,165 13,138,165 4,452,442
Interest received 3,159,511 2,730,525 2,787,056
Change in value of investments 8,102,739 8,102,739 (18,631,581)
Share of associates earnings (735,416) - 211,824
Directors' fees 3,500 - -
Lease income 24,000 - -
Other revenue 16,661 - -
23,709,160 23,971,429 (11,180,259)
2. Expenditure
Amortisation of goodwill 75,978 - -
Audit fees 3 28,290 19,752 12,921
Bad debts expense 377,027 - -
Communications 17,914 17,914 18,623
Conference costs 41,990 41,990 7,462
Depreciation 101,025 70,044 74,153
Directors' fees 65,000 - -
Loss/(gain) on disposal of property, plant and equipment 413 413 5,660
Fund manager fees 570,192 570,192 445,915
General expenses 310,426 47,640 36,735
Impairment of debt 1,125,599 - -
Impairment of equity investment 7,547 - -
Insurance 13,328 13,328 12,263
Occupancy costs 19,038 19,038 17,089
Office expenses 21,626 20,937 20,403
Professional fees 4 185,806 166,913 160,709
Promotion, reporting and compliance expenses 59,674 59,674 52,919
Rent 10,988 - -
Salaries and staff costs 243,231 243,231 254,862
Trustees' fees 5 196,151 196,151 167,433
Vehicle expenses 17,734 17,734 15,996
3,488,977 1,504,951 1,303,143
3. Auditors' Remuneration
During the year the following amounts were paid to auditors:
To Ward Wilson, the Group auditors, for audit work 20,182 11,644 12,921
To Ward Wilson, the Group auditors, for grants' audits 4,927 4,927 -
To other auditors, for grants' audits 3,181 3,181 -
28,290 19,752 12,921

4. Professional Fees $ $ $
Financial/taxation advisory 135,368 135,368 140,064
Legal 36,140 17,247 5,091
Other 14,298 14,298 15,554
185,806 166,913 160,709
5. Trustees' Fees
Meeting fees and honorariums were paid to trustees as follows:
Meetings Parent Parent
Attended 2004 2004
$ $
T. W. Harpur 61 44,265 39,257
C. S. Ballantyne (retired June 2003) 4 2,192 12,258
A. R. MacDonald (retired June 2003) 0 974 11,546
F. G. Cardno 26 16,985 13,222
S. G. Palmer 33 19,450 16,872
J. D. Frampton (retired June 2003) 3 1,181 13,082
A. A. Broad 29 18,825 17,342
N. J. Wyeth 31 19,495 16,092
P. B. Redpath 29 18,185 14,698
D. Williams 31 17,280 13,064
M. Hawes (appointed June 2003) 16 10,538 -
K. S. Henderson (appointed June 2003) 21 12,708 -
G. M. Neave (appointed June 2003) 22 14,073 -
196,151 167,433
Trustee fees and honorariums are set by the Minister of Finance. As from 1 June 2002 the Minister approved a fee increase
of approximately 13%.
2004 2004 2003
Group Parent Parent
6. Grants Approved $ $ $
Grants approved this year 7,260,486 7,260,486 9,207,483
Less: Prior year's grants cancelled (337,441) (337,441) (717,992)
6,923,045 6,923,045 8,489,491

7. Taxation Calculation
Net surplus/(deficit) before taxation 20,220,183 22,466,478 (12,695,226)

Less: Charitable business exemption 2,080,911 2,080,911 2,218,891
Unrealised gains on New Zealand equities 3,173,634 3,173,634 -
Unrealised gain on grey-list equities 9,797,860 9,797,860 5,673,306
15,052,405 15,052,405 7,892,197
5,167,778 7,414,073 (20,587,423)
Add: Unrealised loss on New Zealand equities - - 475,160
Non deductible expenditure 2,424,985 480,025 453,975
Imputation credits received 305,052 305,052 268,869
Accrual 366,427 366,427 -
Withholding taxation - - 162
3,096,464 1,151,504 1,198,166
Total taxable income/(loss) 8,264,242 8,565,577 (19,389,257)
Less: Allocation of beneficiaries' income to the charitable company - - -
Allocation of beneficiaries' income to tax exempt entities (48,766) (48,766) (1,183,800)
(48,766) (48,766) (1,183,800)
Total trustee's income/(loss) 8,215,476 8,516,811 (20,573,057)
Tax losses brought forward ($21,807,028): amount claimed (8,526,007) (8,516,811) -
Assessable income for taxation purposes (310,531) - (20,573,057)
Taxation at 33% - - -
Opening balance (15,416) - -
Income tax refund received 15,416 - -
RWT paid (1,057) - -
Provisional tax paid (45,579) - -
Taxation payable/refund due (46,636) - -
Excess imputation credits converted to loss to carry forward (924,400) (814,755)
Current year loss to carry forward - (20,573,057)
Loss Brought forward from 2003 unclaimed (13,290,217) (419,217)
Total loss to carry forward (14,214,617) (21,807,029)
Imputation credits available to trustees through subsidiaries 148,748
2004 2004 2003
Group Parent Parent
8. Reserves $ $ $
(i) Capital Maintenance Reserve
Opening balance 7,103,390 7,103,390 10,039,680
Transfer from statement of financial performance 2,866,327 2,866,327 4,369,401
Transfer to trust capital reserve (6,874,279) (6,874,279) (7,305,691)
3,095,438 3,095,438 7,103,390
(ii) Grants Maintenance Reserve
Opening balance (16,111,546) (16,111,546) 1,925,057
Transfer from statement of financial performance 17,053,862 19,300,157 (18,036,603)
Retained earnings of subsidiary not previously recognised (3,857) - -
938,459 3,188,611 (16,111,546)

Total reserves 4,033,897 6,284,049 (9,008,156)

9. Trust Capital
Opening balance 158,460,000 158,460,000 158,460,000
Transfer from capital maintenance reserve 6,874,279 6,874,279 7,305,691
Grants paid from capital (6,874,279) (6,874,279) (7,305,691)
158,460,000 158,460,000 158,460,000

10. Accounts Receivable
Accounts receivable 80,085 18,189 10,836
Provision for doubtful debts (31,932) - -
48,153 18,189 10,836
11. Back Country Foods Limited The advance to Back Country Foods Limited recorded in the Group Statement of Financial Position as at 31 March 2004 represents a dividend paid to Invest South Limited on 20 June 2003 by way of a credit to Invest South Limited's shareholder current account. The advance is repayable upon demand and is interest free.
12. Debt Funding
In August 2003, Invest South Limited appointed a receiver to Abalone NZ Limited to recover the $550,000 debt owed.
As of 31 March 2004 the receivership was nearing completion, however the final proceeds have not yet been paid to Invest South Limited. The final payment is estimated to be $197,566. The directors have resolved to write-off the remaining balance of $352,434 as it has been determined to be irrecoverable. The write-off has been recorded in the financial year ended
31 March 2004.
Total Debt Recognised SpecificProvisions Balance
$ $ $
Total debt 3,076,137 (1,093,667) 1,982,470
Represented by:
Current portion of debt funding 628,403 - 628,403
Non-current portion of debt funding 2,447,734 (1,093,667) 1,354,067
The specific provision totalling $1,093,667 relates to the full impairment of the loan to Tulip International Limited of $720,000 and the full impairment of the loan to Gas Hornby Limited of $373,667. The balances of interest owed to Invest South Limited in relation to both loans of $17,753 and $14,179 respectively have been impaired also.
2004 2004 2003
Group Parent Parent
13. Loans $ $ $
Loan balances outstanding as at 31 March were as follows:
Troopers Memorial Corner Charitable Trust 195,000 195,000 195,000
Topoclimate South Charitable Trust 33,513 33,513 98,493
Southland Museum and Art Gallery 29,115 29,115 34,190
Ringa Ringa Heights Golf Club 36,000 36,000 39,000
Nga Hau E Wha Society 43,257 43,257 34,872
Croydon Aviation Museum 280,000 280,000 280,000
Tuatapere Hump Ridge Track 120,000 120,000 160,000
Invercargill Artificial Sports Surface Trust 96,500 96,500 96,500
Northern Southland Medical Trust 50,000 50,000 -
Otautau Community Health Trust 30,000 30,000 -
913,385 913,385 938,055
Each loan is repayable on demand. All loans are interest free, with the exception of the loans to Topoclimate South Charitable Trust, which attracts interest at the 90 Day Bank Bill rate plus a margin of 2%, and the loan to Nga Hau E Wha Society, which attracts interest of 7%.
14. Investment In Associates
(a) Carrying Amount of Associates
Carrying amount at beginning of year 3,555,128 2,643,193 2,431,369
Equity accounted earnings of associates (811,394) - 211,824
Dividends from associates (2,995) - -
Impairment of investment (7,546) - -
Disposal of associate (2,643,193) (2,643,193) -
Carrying amount at end of year 90,000 - 2,643,193

(b) Goodwill Included in Carrying Amount of Associates
Carrying amount at beginning of year 75,978 - -
Amortisation of goodwill (75,978) - -
Carrying amount at end of year - - -
(c) Equity Accounted Earnings of Associates
Equity accounted earnings comprise:
Surplus/(deficit) before income tax (723,617) - -
Amortisation of goodwill (75,978) - -
Income tax (11,799) - -
Net surplus/(deficit) (811,394) - -
15. Tulip International Limited
The group financial statements include the equity accounted earnings of Tulip International Limited based on unaudited financial statements for the period to 31 March 2004. As at the date of these financial statements, the financial statements
of Tulip International Limited for the years ended 31 March 2004 and 31 March 2003 have still not been audited. Prior
period adjustments which existed at 31 March 2003 have been finalised at $27,800 reflecting rental expense for the 2003 financial year which is to be included as part of the final result for the 2004 financial year. No reassessment of the
2003 financial statements is to take place. In addition, as a result of a stock take at 31 March 2004, $2,023,551 of the stock
on hand of Tulip International Limited was written off reflecting an actual book value of stock on hand of $750,000. This write-down of stock is reflected in the directors' assessment of the carrying value of the investment in Tulip International Limited as at 31 March 2004.
2004 2004 2003
Group Parent Parent
16. Reconciliation With Operating Surplus $ $ $
Net surplus/(deficit) before distribution 19,968,955 22,215,250 (12,483,402)
Less: Grants (6,923,045) (6,923,045) (8,489,491)
13,045,910 15,292,205 (20,972,893)
Add/(less) movements in working capital items:
Increase/(decrease) in accounts payable and accrued expenses 9,875 13,456 (15,923)
Increase/(decrease) in grants committed but not paid 2,215,184 2,215,184 (918,027)
(Increase)/decrease in accounts receivable (14,065) (7,353) 66,467
(Increase)/decrease in taxation refund due (31,220) - -
2,179,774 2,221,287 (867,483)
Add/(less) non-cash items:
Amortisation of goodwill 75,978 - -
Bad debts expense 377,027 - -
Depreciation 101,025 70,044 74,153
Impairment of debt 1,125,599 - -
Impairment of equity investment 7,547 - -
Less: Interest written off (included in impairment of debt above) (31,932) - -
Loss/(gain) on disposal of property, plant and equipment 413 413 5,660
Revaluation of property 251,228 251,228 -
Share of associates earnings 735,416 - 211,824
2,642,301 321,685 291,637
Add/(less) items classified as investing/financing activities:
Accounts receivable amount relating to sale of asset 16,000 16,000 -
Loan repayment by way of a grant approval 43,000 43,000 616,352
59,000 59,000 616,352
Net cash from operating activities 17,926,685 17,894,177 (20,932,387)

2004Cost 2004 Accum Depn 2004Book Value 2003Book Value
17. Property, Plant and Equipment $ $ $ $
Parent:
Land - at valuation 160,000 - 160,000 457,419
Buildings - at valuation 440,000 - 440,000 415,667
Office equipment 184,948 136,551 48,397 60,454
Furniture and fittings 152,991 109,355 43,636 57,704
Motor vehicles 122,314 37,414 84,900 70,547
Other assets - - - -
1,060,253 283,320 776,933 1,061,791

Group:
Land - at valuation 160,000 - 160,000
Buildings - at valuation 440,000 - 440,000
Office equipment 203,228 148,143 55,085
Furniture and fittings 160,367 112,369 47,998
Motor vehicles 478,004 88,767 389,237
Other assets 1,423 918 505
1,443,022 350,197 1,092,825
Land and buildings have been revalued as at 31 March 2004 and are stated at their revalued amounts as determined by Chadderton Valuation, an independent registered valuer (a member firm of the New Zealand Institute of Valuers). The original cost of land was $457,419 and the original cost of the building was $523,063.
18. Investments With Fund Managers
The group has funds with five investment managers (fund managers), being Alliance Bernstein, AMP Capital, Capital International, ING (NZ) Limited and Tower Asset Management. Market values and asset allocations of these investments as at balance date were as follows:
Alliance Bernstein (NZ$m) AMP(NZ$m) Capital Int'national (NZ$m) ING(NZ)Limited (NZ$m) Tower Asset Management(NZ$m) 2004Total (NZ$m) 2003Total(NZ$m)
New Zealand equities - - - 17.33 - 17.33 16.65
Overseas equities 30.32 - 26.32 - - 56.64 45.06
New Zealand fixed interest - 33.92 - - - 33.92 34.20
Overseas fixed interest - - - - 40.70 40.70 46.75
Property - 0.50 - - - 0.50 -
Cash - 3.67 - 10.61 - 14.28 10.48
Totals 30.32 38.09 26.32 27.94 40.70 163.37 153.14
Exposure to currency, interest rate and credit risk arises in the normal course of the fund managers' management of the group's investments. A range of hedging policies are in place whereby the fund managers use derivative financial instruments as a means of managing exposure to fluctuations in foreign exchange rates and interest rates. While these financial instruments are subject to the risk of market rates changing subsequent to acquisition, such changes would generally be offset by opposite effects on the items being hedged.
19. Group Investments
Name Ownership Interest Held Balance Date Principal Activity
2004 2003
Subsidiaries
Southland Community Trust Charities Limited 100% 100% 31 March Distribution of grants to charitable organisations.
Invest South Limited 100% 50% 31 March Debt funding and equity investment.
Invest South Asset Management Limited - - 31 March Asset management.
Associates
Back Country Foods Limited - - 31 March Manufactures freeze dried prepared meals.
Tulip International Limited - - 31 May Cultivates and sells bulbs and cut flowers (primarily tulips) to both the domestic and export market.
Mercury Television (2002) Limited - - 31 March A regional television station and related entertainment business.
Ownership interest in Invest South Limited is 50% at 31 March 2003 and 100% at 31 March 2004. The Community Trust purchased the additional 50% shareholding in Invest South Limited on 1 April 2003. As such, the Invest South Limited
group was consolidated into The Community Trust of Southland group financial statements along with its associate investments and subsidiaries.
20. Capital Commitments and Contingencies
Commitments of $3,623,320 exist for grants which will be distributed from either capital or future income sources in future years. These grants have not been recorded in either the statements of financial performance or financial position. Specific commitments are as follows:
Parent2004 Parent2003
$ $
Southern Institute of Technology - 839,128
Tuatapere Hump Ridge Track 120,000 160,000
Venture Southland - Broadband 223,320 423,320
Invercargill City Council - Civic Theatre 3,000,000 2,500,000
Croydon Aviation Museum 280,000 280,000
3,623,320 4,202,448
The years in which these commitments fall due are as follows:
Year ending 31 March 2004 - 1,359,128
Year ending 31 March 2005 1,543,320 1,263,320
Year ending 31 March 2006 1,040,000 1,040,000
Year ending 31 March 2007 1,040,000 540,000
3,623,320 4,202,448
Commitments of up to $646,850 exist for loans which trustees have approved, but which had not been drawn down as at balance date. The approved loans are as follows:
Borland Lodge 293,850 293,850
Northern Southland Medical Trust - 50,000
Wyndham & Districts Community Rest Home 100,000 80,000
Southland Heritage Building Preservation Trust 50,000 50,000
Queenstown Childcare Centre 24,000 -
Troopers Memorial Corner Charitable Trust 179,000 -
646,850 473,850
A commitment has been made to invest up to $2,000,000 in the AMP Property Opportunity Fund. As at 31 March 2004,
$503,806 of this committed amount had been paid.
At 31 March 2004, Invest South Limited had a commitment to pay the uncalled share capital of the 100% owned company, Invest South Asset Management Limited.
21. Segmental Information
The trust's specified area includes all of the areas of Invercargill City Council, Southland District Council and Gore District Council, the Heriot and Tapanui areas of Clutha District Council, and the Wakatipu Basin area of Queenstown Lakes
District Council. The trust's principal activities are to invest the trust capital, both within the specified area and outside of the region, and to distribute grants for charitable, cultural, philanthropic, recreational and other purposes being purposes beneficial to the community principally within the trust's specified area.
22. Financial Instruments
General
The group states its investments in managed funds at estimated market value. The trustees consider that the fair value of the financial assets is identical to the value in the statement of financial position.
Concentration of Credit Risk
The group, from time to time, has significant funds in trading bank deposits. The group limits risk by spreading the deposits over several trading banks. The group has not required collateral or other security to support its financial statements. The group further limits risk through its policy of placing investment funds with five separate fund managers, with each fund manager having an investment mandate which requires that they diversify their investments on the group's behalf. The group has sought and obtained the advice of professional financial advisers prior to making its investment allocation and placement decisions.
Interest Rate Risk
The bank deposits are sensitive to changes in interest rates, as are a proportion of the funds managed by the fund managers, and the loans to Topoclimate South Charitable Trust and Nga Hau E Wha Society.
23. Related Parties
There were no related party transactions during the year.
24. Subsequent Events
Subsequent to 31 March 2004, the following events took place which readers of the financial statements need to be aware:
Gas Hornby Limited was placed into receivership by Invest South Limited. Due to directors' assessment of the company's position post balance date, the full value of the loan has been written off as a doubtful debt as recovery of any portion of the debt is regarded as doubtful.
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Audit Report
To the Trustees of the Community Trust of Southland
We have audited the financial statements. The financial statements provide information about the past financial performance and financial position of the trust and the group as at 31 March 2004. This information is stated in accordance with the accounting policies set out.
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 the results of their operations and cash flows for the year ended on that date.
Auditors' Responsibilities
It is our responsibility to express an independent opinion on the 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 financial statements.
It also includes assessing:
? the significant estimates and judgements made by the trustees in the preparation of the financial statements;
? whether the accounting policies are appropriate to the trust's and group's circumstances, consistently applied and adequately disclosed.
We conducted our audit in accordance with New Zealand Auditing Standards issued by the Institute of Chartered Accountants of New Zealand. 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 obtain 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.
Our firm carries out other assignments for the trust and certain of its subsidiaries in the area of grant audits. The firm has no other 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 as far as appears from our examination of those records;
? the financial statements:
- comply with New Zealand generally accepted accounting practice; 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 their operations and cash flows for the year ended on that date.
Our audit was completed on 31 August 2004 and our unqualified opinion is expressed as at that date.
WARD WILSON, Invercargill.
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(A list of all distributions of income and capital approved by The Community Trust of Southland during the year ended
31 March 2004 is available, on request, from the trust's office.)