Trust Particulars: The Canterbury 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 Canterbury 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 (Chairperson), 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 Limited, 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 Executors.
Fund Investment Advisor: Forsyth Barr Funds Management (S. Loomans).
Bankers: Westpac, P.O. Box 13-113, Christchurch.
Solicitors: Chapman Tripp Sheffield Young, P.O. Box 2510, Christchurch (J. L. Holland).
The Canterbury Community Trust Trustees’ Report for the Year Ended 31 March 2005
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 $123,193 (2004 – $131,583).
Review of Results and Financial Position
The total distribution from the trust and charitable company was $13.280 million (2004 – $11.483 million) donations to community groups during the last 12 months.
Signed on behalf of the Board of Trustees:
Chairperson: BOB TODD.
Trustee: DAVID CLOSE.
Date: 30 May 2005.
The Canterbury Community Trust Consolidated Statement of Financial Performance for the Year Ended 31 March 2005
Note 2005 2004
Revenue 2 38,119,934 45,744,598
Less investment fees 2 1,158,150 1,175,455
Less expenses 2 1,026,764 1,180,206
Net surplus before retentions and donations 35,935,020 43,388,937
Less retentions:
Transfer to capital base reserve 4 11,538,595 5,979,954
Available for distribution 24,396,425 37,408,983
Donations to tax approved entities 3 10,838,176 9,350,307
Net surplus transferred to trust funds 13,558,249 28,058,676
The Canterbury Community Trust Consolidated Statement of Movements in Trust Funds for the Year Ended 31 March 2005
Note 2005 2004
Total trust funds at beginning of year 453,324,669 421,419,006
Less donations paid from capital 3 (2,444,054) (2,132,967)
450,882,615 419,286,039
Add net surplus for the year 13,558,249 28,058,676
Increase in capital base reserve 11,538,595 5,979,954
Total trust funds at end of year 475,979,459 453,324,669
Represented by:
Core real capital base reserve 4 371,422,000 371,422,000
Accumulated income reserve 4 44,855,595 33,739,400
Capital base reserve 4 59,701,864 48,163,269
475,979,459 453,324,669
The Canterbury Community Trust Consolidated Statement of Financial Position as at 31 March 2005
Note 2005 2004
Trust funds 4 475,979,459 453,324,669
Represented by—
Current assets:
Westpac operating accounts 7,503 7,726
Bank deposits 1,711,436 1,406,536
Property manager operating account 1,168 21,720
Accounts receivable 225,077 37,608
Taxation refund due 14 135 153
1,945,319 1,473,743

Community loans 15 1,199,985 –

Investments:
Property investments 7 7,850,000 7,080,000
Managed funds 13 463,620,591 443,205,408
471,470,591 450,285,408
Fixed assets 8 1,580,803 1,691,028
Total assets 476,196,698 453,450,179
Current liabilities:
Accounts payable 203,180 117,841
Goods and services tax 14,059 7,669
Total liabilities 217,239 125,510
Net assets 475,979,459 453,324,669
The Canterbury Community Trust Consolidated Statement of Cash Flows for the Year Ended 31 March 2005
Note 2005 2004
Cash was provided by (used for)—
Operations: 5
Income from investments 37,287,360 33,572,024
Payments to suppliers, employees and trustees (2,037,246) (2,002,929)
Payments of taxation – 35
Payments of goods and services tax – (35,734)
Donations to the community (13,280,230) (11,483,274)
21,969,884 20,050,122
Investing:
Managed funds investments (20,158,107) (19,335,102)
Movement in term deposits (304,900) (547,779)
Community loans (1,199,985) –
Sale (purchase) of fixed assets (307,115) (185,159)
(21,970,107) (20,068,040)
Increase (decrease) in cash (223) (17,918)
Cash at beginning of year 7,726 25,644
Cash at end of year 7,503 7,726
Represented by:
Westpac operating accounts 7,503 7,726
The Canterbury Community Trust Notes to the Financial Statements for the Year Ended 31 March 2005
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 Canterbury Community Trust was incorporated as a charitable trust in accordance with the provisions of the 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% d.v.
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 Westpac balances only. Cash excludes bank deposits not used as part of the trust’s day-to-day cash management.
Basis of Consolidation
The Canterbury Community Trust, Community Trust Charities Limited and its subsidiaries, Canterbury Trust House Limited, Amateur Game or Sport Promoter Limited and District Improvement Organisation Limited have been consolidated using the purchase method of consolidation.
Changes in Accounting Policies
There have been no changes in accounting policies.
All policies have been applied on basis consistent with those used last year.
2. Revenue and Expenses
2005 2004
Revenue:
Rents received 751,682 694,661
Interest received 163,151 47,381
Investment income 36,746,924 44,591,994
Commissions received 4,580 8,932
Gain on revaluation of investment properties 453,597 401,630
38,119,934 45,744,598
Investment fees:
Fund managers’ fees 862,945 811,649
Custodial fees 149,609 193,608
Advisory fees 145,596 170,198
1,158,150 1,175,455
Expenses:
Advertising, public relations, distribution and other costs 233,471 236,525
Computer and system review costs 26,987 27,453
Depreciation, loss on sale and depreciation recovered 100,939 295,180
Professional fees 102,254 97,335
Property costs 153,232 138,313
Salaries and staff recruiting fees 286,688 253,817
Trustees’ fees 123,193 131,583
1,026,764 1,180,206
Investment income includes a one-off write down in the value of the investment held in CSA Absolute Return Fund Limited (in liquidation). Trustees, on advice from the liquidator, have written the investment down to the current estimated realisable value, resulting in an adjustment of $674,262. The current estimated realisable value is 75% of the asset value, although over time a full recovery is anticipated.
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.
2005 2004
Donations paid from income 10,838,176 9,350,307
Donations paid from capital 2,442,054 2,132,967
(Includes prior year adjustments for cancellation, refunds, etc.) 13,280,230 11,483,274
Future commitments 835,000 340,000
Donations approved from income 11,329,961 9,555,183
Donations approved from capital 2,541,607 2,037,678
Donations approved for year 13,871,568 11,592,861
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
2005 2004
Core real capital base reserve:
Balance brought forward 371,422,000 358,000,000
Donations paid from capital (2,442,054) (2,132,967)
Transfer from accumulated income reserve 2,442,054 2,132,967
Adjustment – increase in core capital – 13,422,000
371,422,000 371,422,000
Accumulated income reserve:
Balance brought forward 33,739,400 22,753,691
Net surplus for year 13,558,249 28,058,676
Transfer to core real capital base reserve (2,442,054) (2,132,967)
Adjustment – Increase in Core Capital – (14,940,000)
44,855,595 33,739,400
Capital base reserve:
Balance brought forward 48,163,269 40,665,315
Retention as per statement of financial performance 11,538,595 5,979,954
Core capital increase – inflation adjustment – 1,518,000
59,701,864 48,163,269
Total trust funds 475,979,459 453,324,669
Available for tax free distribution 458,482,166 453,324,669
Available for taxable distribution 17,497,293 –
Total trust funds 475,979,459 453,324,669
The capital base reserve is an allowance for the erosion of the value of the core real capital base reserve, due to inflation.
For 2005, this was calculated based on inflation at 2.75% on a core real capital base reserve of $419,585,269, being the original core real capital base reserve of $371,422,000 plus the adjusted capital base reserve of $48,163,269.
The prior year, core real capital adjustment recognised 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 included an inflationary movement for that adjustment.
Even though The Canterbury Community Trust is exempt from income tax with effect from 1 April 2004, all taxable distributions after that date will still be subject to tax in the donee’s hands, if the donee does not have tax exempt status.
Included in amounts available for tax-free distribution is $77,068,296 which will be available for tax-free distribution if Community Trust Charities Limited is liquidated by 31 March 2006. Trustees expect this to be the case.
5. Reconciliation of Net Surplus to Net Operating Cashflow
2005 2004
Net surplus from statement of financial performance 13,558,249 28,058,676
Adjustments for non cash items in net surplus:
Depreciation 100,939 295,180
Gain on revalution of investment properties (453,597) (401,630)
Managed funds income unrealised (257,076) (11,713,371)
12,948,515 16,238,855
Adjustments for changes in working capital:
Decrease/(increase) in accounts receivable (187,453) (35,942)
Decrease/(increase) in Colliers operating account 20,552 (21,631)
Increase/(decrease) in accounts payable, rents received in advance, and goods andservices tax 91,729 21,818
Increase/(decrease) in taxation payable – 35
12,873,343 16,203,135
Add capital base reserve transfer 11,538,595 5,979,954
Deduct donations paid from capital (2,442,054) (2,132,967)
Net operating cash flow 21,969,884 20,050,122
6. Capital Commitments
At balance date, the trust had capital commitments of $Nil (2004 – $268,000).
7. Investment Properties
The investment properties held at 31 March 2005 are valued at market value as follows:
2005 2004
262 Oxford Terrace 4,720,000 4,450,000
141 Hereford Street 3,130,000 2,630,000
7,850,000 7,080,000
The investment properties were valued at 31 March 2005 by an independent valuer, G. R. Sellars of Fright Aubrey, who is
a Fellow of the New Zealand Institute of Valuers.
8. Fixed Assets
AccumulatedDepreciation 2005BookValue 2004BookValue
Land and Buildings – 95 Oxford Terrace, Christchurch 295,622 1,505,549 1,568,228
Computer 152,900 31,040 48,355
Office equipment 20,708 11,635 10,027
Furniture and fittings 70,585 32,579 64,418
Fixed assets 539,815 1,580,803 1,691,028
9. Contingent Liabilities
There are no contingent liabilities at balance date (2004 – 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. At 31 March 2005, the trust had entered into foreign exchange contracts to hedge foreign denominated investments in the amount of $36,044,881.
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. Interest rate risk is mitigated by the use of interest rate swaps where appropriate.
13. Managed Funds Investment
2005 2004
The trust held the following funds at balance date:
Managed funds – NZ Cash 109,235,153 123,962,902
Managed funds – NZ Fixed Interest 122,924,462 115,877,740
Managed funds – NZ Equities 31,114,597 31,660,671
Managed funds – NZ Property 12,315,590 2,072,891
Managed funds – Australian Equities 36,715,837 30,873,240
Managed funds – Australasian Property Equities – 5,127,866
Managed funds – Global Bonds 43,328,475 44,616,142
Managed funds – Global Equities 42,980,164 25,410,995
Managed funds – Emerging Market Debt 9,765,627 9,512,482
Managed funds – Alternative Assets 55,240,686 54,090,479
463,620,591 443,205,408
14. Taxation
The Canterbury Community Trust is exempt from income tax with effect from 1 April 2004. This means that Canterbury Trust House Limited is now the only taxable entity in the group. Canterbury Trust House Limited has a tax loss to carry forward as at 31 March 2005 of $1,298,887 (2004 – $1,101,283). The benefit of these losses is not recognised.
15. Community Loans
The trust has approved four community loans during the year ended 31 March 2005. The loans have been approved with an average term of 10 years and incur an average interest rate of 3% per annum. Where appropriate, the loans have been secured by registered instruments. The loan obligations at balance date were all current and considered collectable.
Auditors’ Report to the Trustees of The Canterbury Community Trust (formerly 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 2005 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 2005, 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 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 2005, and their financial performance and cash flows for the year ended on that date.
Our audit was completed on 30 May 2005 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 2005 is available from the trust’s office on request.