Annual Report and Consolidated Financial Statements for the Year Ended 31 March 2005
Trust Particulars
The Community Trust of Mid & South Canterbury Incorporated was incorporated as a charitable trust in accordance with the provisions of the Trustee Banks Restructuring Act 1988. The purpose of the community trust is to provide charitable, cultural, philanthropic and recreational benefits to the community.
Trustees: Mr P. F. McIlraith B.A. (chairperson), Mrs C. E. Brand B.COM., C.A. (retired), Ms R. A. Carruthers LL.B.,
Mr P. C. Dalziel LL.B., Mr S. J. Dorman LL.B., Mrs H. A. Sim, Mr G. J. Geering Q.S.O., Mrs K. I. Mattingley DIP.GRAD. (Otago), M.N.Z.A.S.W., Mrs M. B. Ross B.A., DIP.TCH., Mrs H. Weeks.
Bankers: Westpac Bank, 243 Stafford Street, Timaru.
Auditors: Martin Wakefield, Chartered Accountants, 26 Canon Street, Timaru.
Executive Manager: Mr J. B. Wilson, P.O. Box 983, Community House, Timaru.
Chairperson’s Report for the Year Ended 31 March 2005
It is with pleasure that I report to our community on the financial accounts and the operations of the Community Trust of Mid & South Canterbury Incorporated for the year ended 31 March 2005.
Financial Considerations
I am pleased to report that, while not the exceptional performance of last year, a solid return on investments to the year ending 31 March 2005 of 8.4% was achieved.
The trust sets itself a long-term objective return of 7% p.a. and this year’s result slightly outperformed that figure.
This result was accomplished by:
? Net income from investments of $1,050,667 before recognition of the net expenses in running Community House; and
? Net increase in managed funds of $1,464,646.
The Community Trust of Mid & South Canterbury Incorporated uses a multi manager system to manage their asset classes and contract MCA NZ Limited of Auckland as consultant.
Donations
Donations were made of some $566,426 to a wide number of organisations. Of special note was the donation to the Timaru Mental Health Support Trust that was able to extend its residential care facilities. The trust also made a substantial grant to Search and Rescue for the benefit of the entire Mid and South Canterbury region. It was evident to us that this region has a large hinterland of alpine playground in a unique geographical setting, where many local and visiting recreationalists hike and camp. Inevitably there are situations of mishap and this small group of volunteers come to the rescue. Our donation was specifically directed at providing greater safety to those who conduct the rescue in what can be life-endangering situations.
Mission
“To work with community groups to achieve a region of healthy, vibrant, and caring communities”
The Community Trust of Mid & South Canterbury Incorporated is only a very small part of the fabric that makes up the civil society of our region. This trust could not achieve any part of its mission without the dedication and enthusiasm of the people of this community. Your trust has looked hard at the needs, as outlined in the social research paper (Mid & South Canterbury: A Profile, to guide our donation principles and priorities.
The trust works within the confines of its trust deed to enhance the health and vibrancy of the community by making grants in the following categories:
? Education
? Community health and welfare
? Recreational and sport
? Cultural and heritage
? Youth activities
? The environment
In addition, the trustees believe that the greatest impact in attaining this mission is achieved by enhancing the occurrence of civil association. This means, in plain language, the more people who volunteer to be involved in community-based activities, clubs and groups, the more healthy and vibrant that community becomes. The trust believes that its purpose is not an end in itself, but that it can create synergies with other organisations to build what is known in the sector as social capital.
In order to achieve this purpose, the trust has adopted a general “funding services” policy in which it attempts to help all
not-for-profit applicant groups by making a grant within the donation policy criteria. For those who do not qualify or need extra funding above the capacity of this trust, our staff redirects them to other possible sources of fundraising. This service has led to a collaborative role, whereby the trust co-ordinates several funding bodies to achieve a project result.
In addition, the trust works with other grant makers to try to co-ordinate the grant-making environment. I would like to make special note of the work and assistance that Jennifer Williamson, of the Department of Internal Affairs, has given to this collaborative approach. Jennifer organises an annual funder’s forum within Mid and South Canterbury, which complements our involvement with Philanthropy New Zealand and results in a better informed and skilled grant-making sector in our region.
Trustees
In June 2004, the Minister of Finance, Dr Michael Cullen, supported our recommendation and appointed Peter Dalziel as a new trustee. This appointment resulted from a vacancy created by the departure of Trevor MacIntyre in 2003. We are delighted to have Peter Dalziel on board and he has proven to be a very worthy representative for the Temuka area. Peter attended the combined community trust conference, along with our executive manager and myself, in Auckland earlier this year.
All trustees have worked hard to carry out their duties, which are quite arduous in the modern world. Knowledge of financial investment, as well as in-depth awareness of the needs of the community, is essential in enabling a fair and equitious distribution of large sums of money back into the community voluntary sector. I wish to pay special thanks to Carole Brand, my deputy chairperson, whose skill and time commitment has been a real asset to this organisation. As an entity, we have limited control of our succession plan. However, it is gratifying that we have such an excellent mix of skills and a good geographical representation of trustees. From a personal perspective, this board is a pleasure to chair.
Staff
John Wilson has proven a lively and enthusiastic executive manager for this trust. John has lifted the public profile of the trust and presents a welcoming and user-friendly interface between the board and the public. John is developing new and innovative ideas to be more effective and accessible to community needs.
Under John’s guidance, Strategic Planning, Trustee Performance Reviews, and Statement of Investment Policy and Objectives (SIPO) reviews are regular features of our business calendar. Given all this scrutiny, the executive manager’s review is also a regular event.
Sally Marsh very ably assisted John in the administration workload as administration officer. Sally has been with the trust for seven years and is a valued member of the team. Her loyalty and skills in carrying out this role are acknowledged.
External Relations
Through this trust’s involvement in the combined community trust group, we have achieved some significant successes. During the past year, the combined group was a participant in a regulation review of the Department of Internal Affairs’ charges imposed on the community trusts. This process involved an independent consultant completing this process under the instruction of the Minister of Finance.
Our trust played a significant part in producing evidence of positive social externalities within the whole community. The resulting policy change relieves all 12 community trusts of their existing cost burden to the Department of Internal Affairs. This, in effect, leaves more money to be distributed back to the community and is recognition from government of the substantial contribution of social capital made by the combined community trusts annually. To the year ended 31 March 2004, the total distributed funds throughout the communities of New Zealand by the combined community trusts were in excess of $75,000,000. It is anticipated that the figure for the year ended 31 March 2005, once known, will prove to be much higher.
Also, successful lobbying has seen the requirement of Statistics New Zealand to gather data on all not-for-profit organisations as a complement to New Zealand’s official statistics. This will eventually lead to a global comparative analysis of the financial input of the voluntary sector in New Zealand against the voluntary sector in other countries. It is recognition of the value and impact that the voluntary sector has in this country, and will provide a valuable measure as to how well we compare on an international basis in the way we interact with, and show compassion for, our fellow human beings, rather than just the measure of profit in government’s current statistical analysis.
Appointment of Auditor
The trust has again appointed Martin Wakefield, Chartered Accountants of Timaru, to act as auditors to the trust.
PETER F. MCILRAITH, Chairperson.
Date: 31 March 2005.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2005
2005 2004
$ $
Income:
Interest: Managed funds 1,234,186 978,393
Interest: Other 340 825
Dividends: Managed funds 166,784 187,246
Total income 1,401,310 1,166,464

Less expenses—
Direct investment expenditure:
Management fees 70,626 63,350
Consultancy fees 30,317 14,882
Total direct investment expenditure 100,943 78,232
1,300,367 1,088,232
Less operating expenditure:
Advertising 11,546 8,941
Auditors’ fees 5,650 4,950
Interest – –
Legal fees 1,304 738
Postage, tolls and fax 527 354
Printing and stationery 6,033 2,318
Salary and wages 87,276 96,301
Telephone and tolls 4,292 –
Professional fees:
– Accountancy and advisory 17,511 13,056
– Socio-economic study – 4,243
– Taxation 9,512 17,349
– Bequest programme 668 448
– Angoa project 513 516
Sundry administration expenses 6,377 9,313
Conference expenses 4,744 7,356
Department of Internal Affairs’ costs 4,021 4,919
Trustees:
– Meeting expenses 57,514 45,297
– Travel 5,636 3,595
– Honoraria 20,908 21,029
Trustees’ insurance 3,725 4,569
Trustees’ training 1,943 –
Staff recruitment – 10,159
Total operating expenditure 249,700 255,451
Net income before movement in managed funds and community house rental account 1,050,667 832,781
Movement in Managed Funds
Offshore debt/foreign exchange 555,265 46,358
Offshore equity 365,470 2,770,406
New Zealand debt (148,558) 93,865
New Zealand equity 692,469 767,655
Net increase/(decrease) in managed funds 1,464,646 3,678,284
Consolidated Statement of Financial Performance for the Year Ended 31 March 2005
2005 2004
$ $
Statement of financial performance:
Net income from investments 1,050,667 832,781
Net income/(deficit) from community house account (50,900) –
Net increase/(decrease) in managed funds 1,464,646 3,678,284
Net income/(deficit) transferred to capital account 2,464,413 4,511,065
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2005
2005 2004
$ $
Opening equity: 35,329,637 31,136,967
Net surplus/(deficit) for year 2,464,413 4,511,065
Plus distribution from Community House Trust 43,343 –
Less prior period taxation (4,319) –
Plus donations lapsed 5,000 23,897
Less donations approved (566,426) (342,292)
Closing equity 37,271,648 35,329,637
Consolidated Statement of Financial Position as at 31 March 2005
Note 2005 2004
$ $
Trust capital:
Capital fund 2 32,087,148 32,087,148
Inflation reserve 3 5,184,500 3,242,489
General reserves 4 – –
37,271,648 35,329,637
Represented by—
Current assets:
Provision for tax 579 4,319
WestpacTrust:
– Subsidiary company account 777 1,143
– Current account 22,320 41,400
Sundry debtors 7,680 15,425
G.S.T. refund due 5,303 –
36,659 62,287
Less current liabilities:
Sundry creditors 58,934 51,639
Donations approved not yet paid 5 232,000 105,400
Total current liabilities 290,934 157,039
Working capital (254,275) (94,752)
Add non current assets—
Fixed assets
Leasehold improvements 30,078 –
Plant and equipment 24,516 –
Total fixed assets 54,594 –
Managed funds investments:
– New Zealand debt 2 19,381,381 18,426,714
– New Zealand equity 2 4,379,979 3,701,056
– Offshore debt 6,216,983 6,001,900
– Offshore equity 7,492,986 7,294,719
Total managed funds 37,471,329 35,424,389
Net assets 37,271,648 35,329,637
Signed on behalf of the board of trustees:
FINANCE AND INVESTMENT COMMITTEE: 31 March 2005.
Chairperson: C. E. BRAND.
Dated: 23 August 2005.
Consolidated Statement of Cash Flows for the Year Ended 31 March 2005
2005 2004
$ $
Cash flows from operating activities—
Cash was provided from:
Interest on deposits 340 825
Operating income 19,891 –
Distribution from Community House Trust 43,343 –
Taxation refund – 4,763
63,574 5,588
Cash was applied to:
Suppliers of goods and services (349,913) (281,180)
Donations paid (434,826) (674,899)
(784,739) (956,079)
Net cash flows from operating activities (721,165) (950,491)
Cash flows from investing activities—
Cash was provided from:
Withdrawal of managed funds 764,758 915,492
764,758 915,492
Cash was applied to:
Fixed assets (63,039) –
Net cash flows from investing activities 701,719 915,492
Increase/(decrease) in cash held (19,446) (34,999)
Add opening cash 1 April 2004 42,543 77,542
Cash as at 31 March 2005 23,097 42,543
Comprised of—
WestpacTrust:
Subsidiary company account 777 1,143
Current account 22,320 41,400
23,097 42,543
Reconciliation of Net Surplus and Net Cash Flows From Operating Activities
2005 2004
$ $
Net surplus transferred to equity 2,464,413 4,511,065
Plus donations returned 5,000 23,897
Less donations approved (566,426) (342,292)
1,902,987 4,192,670
Plus/(less) non cash items:
Managed funds gains/losses (1,330,344) (4,804,824)
Depreciation 8,445 –
Transfer from Aorangi Park Trust – 40,000
(1,321,899) (4,764,824)
581,088 (572,154)
Movements in working capital:
Increase/(decrease) in donations approved not yet paid 126,600 (356,504)
Increase/(decrease) in creditors 7,295 (44,973)
(Increase)/decrease in G.S.T. (5,303) –
(Increase)/decrease in tax refund due 3,740 6,913
(Increase)/decrease in sundry debtors 7,745 16,227
Movements in working capital 140,077 (378,337)
Net cashflow from operating activities 721,165 (950,491)
Notes to the Consolidated Financial Statements for the Year Ended 31 March 2005
1. Statement of Accounting Policies
Reporting Entity
The Community Trust of Mid & South Canterbury Incorporated is a charitable trust incorporated under the Trustee Banks Restructuring Act 1988. The financial statements have been prepared in accordance with the Financial Reporting Act 1993 and generally accepted accounting policies.
General Accounting Policies
The general accounting policies adopted in the preparation of these financial statements are:
? 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.
? The matching of revenues earned and expenses incurred using accrual accounting.
Particular Accounting Policies
The following are the particular accounting policies which have a material effect on the measurement of results and financial position:
(a) Dividend Income
Dividend income is included in the consolidated statement of financial performance when it is received.
(b) Donations
Donations, special projects and community loans are accounted for when they are approved for payment.
(c) Investments
Investments held as managed funds are shown at market value. Net income including unrealised gains or losses from holding such investments are recorded in the consolidated statement of financial performance.
(d) Trust Capital
Trust capital is made up of:
(i) Capital fund – which records initial capital fund (being the realised value of trust bank shares).
(ii) Inflation reserve – it is intended to increase the inflation reserve each year by applying the consumer price index to the sum of the initial capital fund and opening inflation reserve. This amount to be allocated from trust profit on an annual basis.
(iii) Uncommitted surplus represents the balance of any profit remaining.
(e) Basis of Consolidation
The Community Trust of Mid & South Canterbury Incorporated and its subsidiary the Trust Bank South Canterbury Community Trust Charities Limited have been consolidated using the purchase method of consolidation.
(f) Depreciation
The assets of the trust are stated at cost price less depreciation based on rates as allowed by the Inland Revenue Department.
Changes in Accounting Policies
(a) While the trust has not changed its policy with respect to the capital and reserves of the trust, unfortunately prior year financial results depleted the capital and reserves:
(i) Capital fund – The initial capital fund (being the realised value of trust bank shares) was $32,087,148.
(ii) Inflation reserve – It is intended to increase the inflation reserve each year by applying the consumer price index to the sum of the initial capital fund and opening inflation reserve. The nominal inflation reserve required under this policy at 31 March 2005 is $5,860,728 and it is the trustees’ intention to restore the inflation reserve accordingly.
(b) The trust registered for G.S.T. during the income year. The trust previously recognised income and expenditure on a G.S.T. inclusive basis. In line with generally accepted accounting practice, the trust now prepares its financial statements on a G.S.T. exclusive basis.
(c) The trust purchased a number of fixed assets during the year. These assets are depreciated at rates as determined by the Inland Revenue Department.
(d) There have been no other changes in accounting policy.
2. Capital Fund 2005 2004
$ $
Initial capital fund 32,087,148 31,136,967
Transfer from/to general reserves – 950,181
Balance at end of the year 32,087,148 32,087,148
3. Inflation Reserve
Balance at beginning of the year 3,242,489 –
Transfer from/to general reserves 1,942,011 3,242,489
Balance at end of year 5,184,500 3,242,489
4. General Reserves
Balance at beginning of the year – –
Add: Surplus for the year 2,464,413 4,511,065
Distribution from Community House Trust 43,343 –
Add: Donations returned 5,000 23,897
2,512,756 4,534,962
Deduct: Donations approved (566,426) (342,292)
Deduct: Tax adjustment (4,319) –
Transfer to capital – (950,181)
Transfer to inflation reserve (1,942,011) (3,242,489)
Balance at end of the year – –
Approved donations not yet paid out include:
2005 2004
$ $
Ashburton Community Pool 20,000 20,000
Geraldine Pre-school Inc 5,000 –
Hakatere Maori Committee 10,000 –
Hilton Hall Committee 2,000 –
Hockey South Canterbury – 1,000
Holy Name Catholic Parish Ashburton 20,000 –
IHC South Canterbury 1,500 1,500
Lake Clearwater Hutholders Association 2,000 –
Lake Tekapo Promotion Association – 5,000
Mid Canterbury Cricket Association 1,000 1,000
Mid/South Canterbury Search & Rescue 60,000 –
SC Conservation Trust 500 500
SC Cricket Association 5,000 –
SC Cricket Development Trust – 75,000
SC Football Association 8,000 –
SC Womens’ Wellness Centre 500 –
Sport South Canterbury 4,500 1,400
Temuka & Districts Project Trust 10,000 –
The Geraldine Players Inc 15,000 –
Timaru Civic Trust Inc 6,000 –
Timaru Mental Health Support Trust 60,000 –
Waimate Historical Society 1,000 –

232,000 105,400
6. Taxation
The trust is exempt from tax with effect from 1 April 2004 in accordance with section CB 4 (1) (m) of the Income Tax Act 1994.
7. Goods and Services Tax
The trust is registered for Goods and Services Tax purposes during the financial year. These financial statements are stated on a G.S.T. inclusive basis up to the date of G.S.T. registration. From the date of G.S.T. registration, the financial statements are stated on a G.S.T. exclusive basis except for debtors and creditors which are stated on a G.S.T. inclusive basis.
8. Capital Commitments
There were no capital commitments (2004 – $Nil).
9. Contingent Liabilities
There were no contingent liabilities at 31 March 2005 (2004 – $Nil).
10. Advances
There were no advances outstanding at balance date.
11. Financial Instruments
Fair Values
Investments are stated at estimated market value at balance date. Interest accrued, sundry debtors, sundry creditors, term loans 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 statement of financial position.
Credit Risk
Sixty-eight per cent of the assets of the trust are represented by debt investments and current account balances with Westpac and through managed funds. The trustees consider the risk of non-recovery of these investments at balance date to be within satisfactory guidelines.
The maximum exposure to credit risk of other financial instruments are:
2005 2004
$ $
Debtors 7,680 15,425
G.S.T. refund due 5,303 –
Managed fund equities 11,872,965 10,995,775
11,885,948 11,011,200
Currency Risk
The trust is party, through its managed funds, to financial instruments with off balance sheet risk to reduce exposure to fluctuations in foreign currency exchange rates. Forward exchange contracts are entered into to hedge foreign currency transactions. Also, futures contracts are entered into to hedge foreign currency fixed interest transactions.
Interest Rate Risk
The following investments of the trust are sensitive to changes in interest rate: Bank call accounts and term deposits, and various managed fund investments.
Audit Report
To the Readers of the Financial Report of The Community Trust of Mid & South Canterbury Incorporated
We have audited the financial report. The financial report provides information about the past financial performance of
The Community Trust of Mid & South Canterbury Incorporated and its financial position as at 31 March 2005. The information is stated in accordance with the accounting policies set out above.
Trustees’ Responsibilities
The trustees are responsible for the preparation of a financial report which gives a true and fair view of the financial position of the trust as at 31 March 2005 and of the results of operations for the year ended 31 March 2005.
Auditors’ Responsibilities
It is our responsibility to express an independent opinion on the financial report 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 report. It also includes assessing:
? the significant estimates and judgements made by the trustees in the preparation of the financial report; and
? whether the accounting policies are appropriate to the trust circumstances, 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 in order to provide us with sufficient evidence to give reasonable assurance that the financial report is 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 report.
Other than in the normal course of business and in our capacity as auditors, we have no relationship with or interest in
The Community Trust of Mid & South Canterbury Incorporated
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; and
? the financial report
– complies with generally accepted accounting practice; and
– gives a true and fair view of the financial position of trust as at 31 March 2005 and the results of its operations for the year ended on that date.
Our audit was completed on 19 August 2005 and our unqualified opinion is expressed as at that date.
MARTIN WAKEFIELD, Chartered Accountants, Auditor, Timaru.
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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.)