Directory for the Year Ended 31 March 2006
Trustees: John Farry (chairperson), Dunedin; Hilary Allison (deputy chairperson), Dunedin; Duncan Butcher, Cromwell; Sally Hope, Oamaru; Russell Hendry, Dunedin; Alan McLay, Oamaru; Barbara Payton, Dunedin; Raewynne Pedofski, Dunedin; Mark Ryan, Dunedin; David Shepherd, Dunedin; Nicola Taylor, Dunedin; Bill Thomson, Balclutha.
Chief Executive: Keith Ellwood.
Registered Office: Second Floor, Community Trust House, corner of Filleul Street and Moray Place, Dunedin.
Auditor: Polson Higgs, Dunedin.
Solicitor: Anderson Lloyd Caudwell, Dunedin.
Investment Advisors: Russell Investment Group, Auckland.
Bankers: Westpac, Dunedin.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2006
Note 2006 2005
$000 $000
Revenue 1 24,130 11,865
Expenditure 2 (1,327) (1,271)
Surplus before tax 22,803 10,594
Taxation – –
Net surplus 22,803 10,594
This net surplus has been allocated to uncommitted surplus
Consolidated Statement of Movement in Trust Funds for the Year Ended 31 March 2006
2006 2005
$000 $000
Net surplus for the year 22,803 10,594
Total recognised revenues and expenses 22,803 10,594
Less donations approved (5,545) (4,694)
Movements in trust funds for the year 17,258 5,900
Trust funds opening balance 171,916 166,016
Trust funds closing balance 189,174 171,916
Consolidated Statement of Financial Position as at 31 March 2006
Note 2006 2005
$000 $000
Source of funds—
Trust funds 3 189,174 171,916
Current liabilities:
Accounts payable 104 70
Donations payable 4,139 3,667
193,417 175,653
Employment of funds—
Current assets:
Current account 171 170
Short term bank deposits 1,450 371
Debtors – 2
1,621 543
Non current assets:
Managed funds 4 190,441 173,726
Fixed assets 5 1,107 1,136
Advance to Dunedin Community House Trust 10 248 248
191,796 175,110
193,417 175,653
Approved on behalf of the board:
JOHN FARRY. RUSSELL HENDRY.
Chairperson. Trustee.
27 June 2006. 27 June 2006.
Consolidated Statement of Cashflows for the Year Ended 31 March 2006
Note 2006 2005
$000 $000
Cashflow from operating activities—
Cash was provided from:
Interest 40 47
Other 117 115
157 162
Cash was disbursed on:
Payment to suppliers and staff 811 863
Fund managers’ fees 432 409
(1,243) (1,272)
Net cash inflow/(outflow) from operating activities 7 (1,086) (1,110)
Cashflow from investing activities—
Cash was provided from:
Receipts from fund managers 7,259 7,487
Cash was disbursed on:
Purchase of fixed assets (20) (4)
Net cash inflow from investing activities 7,239 7,483
Cashflow from funding activities—
Cash was provided from:
Long term loan repayment – 2
Cash was disbursed on:
Donations paid (5,073) (7,098)
Net cash inflow/(outflow) from funding activities (5,073) (7,096)
Net cash inflow/(outflow) from activities 1,080 (723)
Add opening cash brought forward 541 1,264
Ending cash carried forward 1,621 541
Cash comprises:
Cash at bank 171 170
Term deposits 1,450 371
1,621 541
Notes to the Consolidated Financial Statements for the Year Ended 31 March 2006
Basis of Preparation
The Community Trust of Otago was incorporated as a charitable trust in accordance with the provisions of the Community Trusts Act 1999.
These are the consolidated financial statements of The Community Trust of Otago and its wholly owned subsidiaries: The Community Trust Amateur Sports Co Limited, The Community Trust District Improvement Company Limited and Fillmor House Limited.
The financial statements have been prepared to comply with the Financial Reporting Act 1993 and comprise consolidated statements of the following: Financial performance, movement in trust funds, financial position, cashflows, as well as notes
to these financial statements.
The financial statements are prepared on the basis of historical cost, except for the revaluation of managed funds.
Specific Accounting Policies
Income
Income from managed funds includes both realised and unrealised income and is recorded gross of fund management expenses.
Interest is recognised on an accrual basis.
Foreign Currencies
All amounts denominated in foreign currencies are converted to New Zealand dollars at balance date. All realised and unrealised gains and losses are recognised in the statement of financial performance.
Taxation
With effect from 1 April 2004, community trusts, including The Community Trust of Otago, became exempt from income tax pursuant to section CW of the Income Tax Act 2004.
Fillmor House Limited is the only subsidiary liable for income tax. Income tax is recognised on the surplus available for distribution before taxation, adjusting for differences between taxable and accounting income. Future tax benefits are not recognised unless realisation of the asset is virtually certain.
Fixed Assets
Fixed assets are recorded at cost less accumulated depreciation.
Depreciation
Depreciation has been charged to the financial statement using rates which will write off the cost of assets less their estimated residual value over their estimated economic lives. The depreciation rates used are:
Buildings 4% diminishing value
Office furniture and equipment 12-48% diminishing value
Donations Payable
Donations payable represents donations approved by the trustees but unpaid as at balance date.
Receivables
Receivables are stated at estimated realisable value after providing against debts where collection is doubtful. Bad debts are written off during the period in which they are identified.
GST
Subsidiaries of The Community Trust of Otago, Fillmor House Limited and The Community Trust District Improvement Company Limited are registered for GST. Accordingly, their financial performance and financial position have been consolidated within the accounts on a GST exclusive basis. Subject to the above, the trust is not registered for GST purposes and the financial statements have been prepared on a GST inclusive basis.
Basis of Consolidation
The Community Trust of Otago, Fillmor House Limited, The Community Trust District Improvement Company Limited
and The Community Trust Amateur Sports Company Limited have been consolidated using the purchase method of consolidation.
Investments
Investments are valued at period end market value. All realised and unrealised gains and losses are recognised in the statement of financial performance.
Hedging Instruments
The trust, through its fund managers, enters into hedging instruments such as forward exchange contracts. These are converted to the New Zealand dollar rate at balance date with all realised and unrealised gains and losses being recognised in the statement of financial performance as income from managed funds.
Statement of Cashflows
Cash comprises cash at bank and call deposits but does not include cash or deposits held by the fund managers.
Financial Instruments
All assets and liabilities of the trust with the exception of fixed assets are financial instruments and are recognised in the statement of financial position. All financial instruments are recorded at market value or fair value or are not materially different from market value or fair value.
Fund managers utilise 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. These are converted to
the New Zealand dollar rate at balance date with all realised and unrealised gains and losses being recognised in the statement of financial performance.
The quantitative disclosures required by FRS 31 Disclosure of Information About Financial Instruments have been included throughout the financial statements where material.
Changes in Accounting Policies
There have been no changes in accounting policies during the year.
1. Revenue
Note 2006 2005
$000 $000
Interest 3,332 3,961
Pooled managed funds 18,377 8,986
Realised gains/(losses) 999 (572)
Unrealised gains/(losses) 1,307 (620)
Other 115 110
Total operating revenue 24,130 11,865
2. Expenditure
Depreciation 51 50
Fund managers’ fees 432 409
Occupancy 70 65
Other operating 124 102
Professional fees 154 156
Promotion 35 54
Public and statutory reporting 17 14
Staff 254 266
Trustee fees 11 166 142
Trustee expenses 24 13
1,327 1,271
Professional fees—
Audit fees 10 10
Accounting and other support 13 11
Computer support 17 2
Legal advisers 2 5
Professional investment advisers 92 90
Tax advice 11 19
Other professional advice 9 19
154 156
3. Trust Funds
Trust Capital
The trust capital represents the realised value of its original asset, being shares in Trust Bank.
2006 2005
$000 $000
Opening balance 131,467 131,467
Closing balance 131,467 131,467
Capital maintenance reserve:
Opening balance 30,203 25,913
Transfer from uncommitted surplus 5,570 4,290
Closing balance 35,773 30,203
The capital maintenance reserve represents the additional amount necessary to preserve the real value of the capital allowing for inflation as measured by the Consumers’ Price Index (CPI).
Uncommitted surplus:
Opening balance 10,246 8,636
Donations approved during the year (5,545) (4,694)
Trustee surplus 22,803 10,594
Transfer to capital maintenance reserve (5,570) (4,290)
Closing balance 21,934 10,246
Total closing trust funds 189,174 171,916
Available for non taxable distribution to donees:
Opening balance 165,851 166,016
Deduct donations approved during the year to non tax exempt donees (201) (165)
Closing balance 165,650 165,851
Balance available for taxable distribution to donees:
Opening balance 6,065 –
Current year surplus 22,803 10,594
Deduct donations approved during the year to exempt donees (5,344) (4,529)
Closing balance 23,524 6,065
Total trust funds 189,174 171,916
4. Managed Funds
2006 2005
$000 $000
Managed by external managers:
Opening balance 173,726 169,505
Gross income 23,973 11,708
Fund managers’ fees – deducted (432) (409)
Withdrawals (6,828) (7,078)
Closing balance 190,441 173,726
Investments comprise:
Cash and deposits 11,512 11,396
Bonds 97,087 110,769
Equities 72,430 51,561
Hedge funds and futures 9,412 –
Total managed funds 190,441 173,726
Allocated as follows—
New Zealand:
Bonds and deposits 49,838 65,006
Equities 10,251 9,465
60,089 74,471
Overseas:
Bonds and deposits 58,761 57,159
Equities 52,443 42,096
Hedge funds and futures 19,148 –
130,352 99,255
Total:
Bonds and deposits 108,599 122,165
Equities 62,694 51,561
Hedge funds and futures 19,148 –
190,441 173,726
5. Fixed Assets
2006 2005
Book Value Book Value
$000 $000
Land:
At cost 432 432
Buildings:
At cost 1,026 1,026
Accumulated depreciation (395) (361)
631 665
Office furniture and equipment:
At cost 258 237
Accumulated depreciation (214) (198)
44 39
Total net carrying value 1,107 1,136
Depreciation:
Buildings 34 37
Office furniture and equipment 17 13
51 50
6. Financial Instruments
Currency Risk
The trust, through its fund managers, invests in securities that are denominated in foreign currencies and therefore result in
a currency risk. The trusts fund managers actively monitor this risk and hedge positions in accordance with their investment guidelines.
Interest Rate Risk
The trust, through its fund managers, invests in securities that are subject to interest rate risk. The trusts fund managers monitor this risk and change asset allocations and maturity profiles in accordance with their investment guidelines.
Credit Risk
The trust, in the normal course of business, enters into arrangements with other parties. These arrangements give rise to credit risk for the trust and hence policies and procedures are maintained so that the risk is minimised. No collateral is required
in respect of financial assets.
For all classes of financial assets held by the trust, the maximum credit risk exposure to the trust is the carrying value
as disclosed in the financial statements at balance date.
Due to the diversification of the investment portfolio and the policies and procedures in place, there are no significant concentrations of credit risk.
Fair Values
All financial instruments are carried at market value.
7. Reconciliation of Reported Surplus to Net Cashflow From Operating Activities
2006 2005
$000 $000
Surplus for the period 22,803 10,594
Add:
Non-cash items:
Depreciation 51 50
Managed fund (revaluation)/devaluation (23,974) (11,708)
(23,923) (11,658)
Movements in working capital items:
Increase/(decrease) in creditors 32 (60)
(Increase)/decrease in debtors 2 14
34 (46)
Net cashflow/(outflow) from operating activities (1,086) (1,110)
8 Related Party Transactions
Several of the trustees of the community trust are also members of the governing body of organisations which were recipients of community trust donations during the year. The details are as follows:
Donation Amount
Trustees Recipient Organisation $
Hilary Allison Anglican Family Care 65,860
Russell Hendry Otago Cricket Association 60,000
Sally Hope Oamaru Victorian Heritage Celebrations 5,600
Alan McLay Waitaki District Council 5,000
WDC-Waitaki Development Board 80,000
Barbara Payton Basketball Otago 70,000
Otago Employment Trust 2,860
Raewynne Pedofski IDEA Services Otago 16,500
Mark Ryan Otago Polytechnic 2,000
Nicola Taylor Otago Polytechnic 2,000
Pikiake Te Rito 2,860
Trustees of the Purakanui Urupa 2,000
Bill Thomson Heartland Otago/Southland Life Education Trust 51,400
9. Contingent Liabilities
Contingent liabilities at 31 March 2006 – $Nil. (2005 – $Nil).
10. Advance to Dunedin Community House Trust (Inc.)
A 10-year term, interest free advance was made to the Dunedin Community House Trust (Inc.) in December 1999.
11. Trustee Remuneration
Rates of trustees’ remuneration are set by the Minister of Finance. Remuneration includes the honoraria and meeting fees.
Board Meetings Other Official Honorarium and
No. Held No. Attended Meetings Attended Meeting Fees Paid
$
Hilary Allison 11 10 13 15,442
Duncan Butcher 11 11 15 14,765
John Farry 11 9 21 26,470
Russell Hendry 11 11 23 17,855
Sally Hope 11 7 14 11,155
Alan McLay 11 10 12 12,715
Barbara Payton 11 10 13 10,735
Raewynne Pedofski 11 11 19 14,065
Mark Ryan 11 7 6 7,165
David Shepherd 11 11 16 13,435
Nicola Taylor 9 9 9 8,193
Bill Thomson 11 10 13 13,820
Total remuneration 165,815
12. Trustee Register of Interests
The trust maintains a “Register of Interests” which is held at its office and which is available for public inspection.
13. Trustee Liability Insurance
The trust has insured its trustees against liability to other parties that may arise from their position as trustees. The insurance does not cover liabilities arising from criminal actions.
Audit Report
To the Trustees of The Community Trust of Otago
We have audited the financial report. The financial report provides information about the past financial performance and financial position of the trust and group as at 31 March 2006. This information is stated in accordance with the accounting policies.
Trustees’ Responsibilities
The trustees are responsible for the preparation of a financial report which fairly reflects the financial position of the trust and group as at 31 March 2006, and the results of its operations and cashflows for the year ended on that date.
Auditors’ Responsibilities
It is our responsibility to express an independent opinion on the financial report 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 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’s and group’s circumstances, consistently applied and adequately disclosed.
We have 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 obtain 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 our capacity as auditor 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, the financial report fairly reflects the financial position of the trust and group as at 31 March 2006 and the results of its operations and cash flows for the year ended on that date.
Our audit was completed on 27 June 2006 and our unqualified opinion is expressed as at that date.
POLSON HIGGS, Chartered Accountants, Dunedin.
–––––––––––––––
(A summary of donations approved during the financial year ended 31 March 2006 is available on request from the office of the trust – freephone 0800 101 240 or email info@cto.org.nz or by writing to the Trust at P.O. Box 5751, Dunedin.)