Annual Report for the Year Ended 31 March 2005
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), Ms T. J. Eggleton, Ms S. Kai Fong, Mr B. Kerr, 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, Ms P. Thompson and 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 Limited, Auckland.
Solicitors:
Sharp Tudhope, Tauranga
Tax Advisors:
KPMG, Christchurch.
Chairman’s Report for the Year Ended 31 March 2005
It is my pleasure to report to you on the operation of the Bay of Plenty Community Trust for the year ended 31 March 2005. It has been an interesting and challenging year. The trust has increased its donations into our Bay of Plenty Region to $2.9m and in addition has made interest free loans of $1.1m into community projects with some further loans to be drawn down after balance date.
The trust received an $8.3m return on its investments for the year ended 31 March 2005. While this is down significantly on the previous year, it must be remembered that the trust’s earnings for the year to 31 March 2004 were outstanding and not expected to be repeated. The return of 7.50% this year was slightly ahead of budget.
After donations and costs, the trust had a net surplus of $4.6m which supplements its capital to help preserve its real value relative to inflation and population growth, as well as to restore reserves nearer a level that the trustees have been advised is prudent to ensure our ability to maintain donations into our community when income is lower.
The net equity of the trust increased from $118.9m to $123.3m over the year as a result of the above.
Trustees’ expenses and trust administration costs have increased largely because of a significant increase in workload over the year. This reflects the trustees’ more active liaison with its main stakeholders and other community organisations to try to improve the effectiveness and align the trust’s strategies to the communities’ needs. We can work better by working together.
The trustees allocated up to $600,000 of funding during the 2005 financial year to the trust’s community development fund. The objective of this was to make funds available for projects aimed at addressing deprivation issues or regional development projects which improve the economies and employment opportunities in our region. This is a significant change of emphasis with the trust without abandoning our traditional role of supporting the community and voluntary sector which is so important to the wellbeing of our communities. Pursuant to this strategy, the trust has committed to a $1m grant to the Rotorua Energy Events Centre. This development will bring significant economic and employment gains by adding to and building on Rotorua’s present tourism, convention and events infrastructure.
The trust has continued to fund the Sport BoP CoachForce project which aims at coaching and sport development especially at grass roots sport in the Bay of Plenty region. We congratulate those involved in that project for their effort and achievement. The encouragement of sport and recreational activity is seen by the trust as one key component of our communities’ wellbeing.
In January, Dillon Scholarships totalling $71,250 were awarded to 39 tertiary students with disabilities to assist them in meeting the additional costs of their studies. Not all the scholarships had been uplifted at balance date.
The trust is in good hands with caring trustees who have an excellent range of skills and who have contributed a lot of effort to running the trust this year. The trust’s funds are invested conservatively and securely in a diversified manner with a long-term perspective under internationally leading advisors. Trustees have looked at many options for investment and will continue to do so seeking ways to improve returns if possible without incurring risks they are not comfortable with.
I thank my trustees and the trust’s staff for their contribution to another successful year. I also thank particularly all of those in our communities who contributed in so many ways to the sporting and voluntary organisations and our local territorial authorities. They are so important to us. We are lucky to be able to help some with valuable funding through this trust.
RAY SHARP, Chairman.
Date: 8 June 2005.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2005
2005 2004
$(000) $(000)
Income:
Dividends 2,316 2,944
Interest 3,330 2,799
Investment gains/(losses) (refer Note 5) 2,729 9,129
Donations cancelled and refunded 8 6
8,383 14,878
Less expenditure:
Advertising/public reporting 51 45
Audit fees 7 7
Accountancy fees 9 9
Portfolio management and advisory fees 337 314
Office administration 240 207
Office rental 15 14
Other administration costs 75 85
Trustees’ fees 163 153
Trustees’ expenses 56 50
953 884
Depreciation 9 7
Loss on disposal of assets 1 –
Total operating costs 963 891
Net surplus/(deficit) before donations 7,420 13,987
Donations round 2,808 1,278
Net surplus/(deficit) after donations 4,612 12,709
Plus/(less) transfers:
Income fluctuation reserve (1,236) (10,233)
Inflation and population growth reserve (3,240) (2,354)
(4,476) (12,587)
Net surplus/(deficit) after reserve transfers 136 122
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2005
2005 2004
$(000) $(000)
Equity at 1 April 2004 118,853 106,266
Less donations paid from capital:
Donations round (73) (77)
Dillon Scholarship (63) (45)
118,717 106,144
Net surplus 136 122
Increase/(decrease) income fluctuation reserve 1,236 10,233
Increase/(decrease) inflation and population growth reserve 3,240 2,354
Total recognised revenue and expenses for the year 4,612 12,709
Equity at 31 March 2005 123,329 118,853
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Financial Position as at 31 March 2005
Note 2005 2004
$(000) $(000)
Equity: 2
Trust capital 89,308 89,308
Income fluctuation reserve 14,885 13,649
Inflation and population reserve 19,136 15,896
Total equity 123,329 118,853
Represented by—
Current assets:
Westpac—
Current account 26 6
Call account 16 2
Bank of New Zealand—
Term deposit 280 2
Interest free loans 1,053 30
Accounts receivable 11 31
1,386 71
Non current assets:
Investments 5 122,885 118,958
Fixed assets 3 23 28
122,908 118,986
Total assets 124,294 119,057
Current liabilities:
Accounts payable (939) (179)
Employees’ entitlement payable (26) (25)
(965) (204)
Total net assets 123,329 118,853
Signed on behalf of the Board of Trustees:
RAY SHARP, Chairman.
TERRI EGGLETON, Trustee.
Date: 24 June 2005.
(The accompanying notes form part of these financial statements.)
Consolidated Statement of Cash Flows for the Year Ended 31 March 2005
2005 2004
$(000) $(000)
Cash flows from operating activities—
Cash was provided from:
Investment income 7,720 8,904
Other 8 6
7,728 8,910
Cash was dispersed to:
Suppliers of goods and services 11 (753)
Trustees (175) (125)
Donations to the community (2,880) (1,380)
Dillon Memorial Scholarship (63) (45)
(3,107) (2,303)
Net cash flows from operating activities 4,621 6,607
Cash flows from investing activities—
Cash was provided from:
Sale of investments 2,250 2,100
Sale of fixed assets – 1
Cash was applied to:
Purchase of fixed assets (5) (10)
Purchase of investments (6,832) (8,770)
Net cash flows from investing activities (4,587) (6,679)
Increase/(decrease) in cash held 34 (72)
Add cash at 1 April 2004 8 80
Cash at 31 March 2005 42 8
Reconciliation of net surplus and net cash flows from operating activities—
Net surplus transferred to/(from) equity 4,612 12,709
Less payments out of capital (net) (136) (122)
Accrued income included in investments (645) (5,966)
Plus non cash items:
Depreciation of fixed assets 9 7
Loss on disposal of assets 1 –
Movement in working capital:
Decrease/(increase) in accounts receivable 20 (31)
Increase/(decrease) in accounts payable 760 10
Net cash flows from operating activities 4,621 6,607
(The accompanying notes form part of these financial statements.)
Notes to the Financial Statements for the Year Ended 31 March 2005
1. Statement of Accounting Policies
Reporting Entity
The trust is a charitable trust in accordance with the provisions of the Community Trusts Act 1999. The group consists of Bay of Plenty Community Trust Incorporated and its subsidiary Bay of Plenty Community Trust Charities Limited.
The financial statements have been prepared as required by the Community Trusts Act 1999 and the Trust Deed dated
17 August 2000 and in accordance with the Financial Reporting Act 1993.
Measurement Base
The accounting principles recognised as appropriate for the measurement and reporting of financial performance and financial position on a historical cost basis are followed by the group, with the exception of investments which are stated at market value as at 31 March 2005.
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 statement financial performance. 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 Incorporated 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.
2005 2004
$(000) $(000)
2. Equity
Trust capital— 89,308 89,308
General funds: Trust Company
Opening balance (6,968) 6,968 – –
Less donations from trust capital (136) – (136) (122)
Plus transfer from current year surplus 3,539 (3,403) 136 122
(3,565) 3,565 – –
Income fluctuation reserve:
Opening balance 13,649 3,416
Increase/(decrease) in reserve 1,236 10,233
14,885 13,649
Inflation and population growth reserve:
Opening balance 15,896 13,542
Increase in reserve 3,240 2,354
19,136 15,896
Total equity 123,329 118,853

2005 2004
$(000) $(000)
3. Fixed Assets
Office furniture and equipment:
Cost 67 73
Accumulated depreciation 44 45
Book value 23 28
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-eight point nine percent (98.9%) 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:
2005 2004
$(000) $(000)
Bank balances 42 8
Bank term deposits 280 2
Accounts receivable 11 31
Interest free loans 1,053 30
Investments 122,885 118,958
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 2005 is diversified as follows:
TowerAsset Management AMPCapital Investors Russell International Share Fund Total
$(000) $(000) $(000) $(000)
New Zealand equities 6,479 – – 6,479
New Zealand fixed interest – 23,137 – 23,137
New Zealand cash 15,741 16,386 – 32,127
Global bonds (fully hedged) 27,755 – – 27,755
Global equities (50% hedged) – 285 33,102 33,387
Total 2005 49,975 39,808 33,102 122,885
Total 2004 45,797 40,721 32,440 118,958
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 19
New Zealand cash 25 26
Global bonds (fully hedged) 20 23
Global equities (50% hedged) 30 27
100 100
6. Taxation
Bay of Plenty Community Trust is exempt from income tax with effect from 1 April 2004, under section CB 4 (1) (m) of the Income Tax Act 1994.
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 06 31 Mar 07
$ $
Omokoroa District Sports and Recreation 5,000 –
Habitat for Humanity 4,489 –
Omanu Beach Surf Lifesaving Club 20,000 –
Pukehina School 10,000 –
St Andrews Presbyterian Church 15,000 –
Tauranga Civic Art Gallery Trust 334,000 –
Total contingent liabilities 388,489 –
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 and its financial position as at 31 March 2005. 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 2005, and of the financial performance and cash flows for the year ended on that date.
Auditors’ Responsibilities
It is our responsibility to express to you an independent opinion on the financial statements presented by the trustees.
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 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, 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 2005 and the results of operations and cash flows for the year ended on that date.
Our audit was completed on 24 June 2005 and our unqualified opinion is expressed as at that date.
INGHAM MORA, Tauranga.
———————
(A full list of all distributions by way of donations for the year ended 31 March 2005 is available from the trust office on request, info@bayfunding.org.nz or telephone (07) 578 6546.)