Annual Report and Consolidated Financial Statements for the Year Ended 31 March 2006
Trust Particulars
The Community Trust of Mid & South Canterbury Inc. 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) (March – November 2005), Mrs C. E. Brand B.COM., C.A. (retired) (chairperson) (November – March 2006), Ms R. A. Carruthers LL.B. (retired May 2005), Mr P. C. Dalziel LL.B., Mr S. J. Dorman LL.B.,
Mrs H. A. Sim, Mr G. J. Geering Q.S.O., Ms N. Hornsey B.A., L.L.B. (appointed May 2005), Mrs K. I. Mattingley DIP.GRAD. (Otago), Mr W. Raymond Q.S.O., L.L.B. (appointed May 2005), Mrs M. B. Ross B.A., DIP.TCH. (retired May 2005), Mrs H. Weeks.
Bankers: Westpac, 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.
Trustees’ Report for the Year Ending 31 March 2006
It is with pleasure that I present this annual report for the 2005/2006 financial year. As can be seen from the annual accounts, the return on investments for the year was 15.8%, which equates to $5.9 million. This greatly exceeded our target figure of
7% and, as a result, we have been able to restore inflation reserves and begin building a general reserve in order to be able to provide for the future needs of the community.
A New Community House
Having resolved to establish a permanent community house for not-for-profit community groups, the trust was fortunate in being able to purchase the former Pyne Gould Guinness Building on Strathallan Street, Timaru. We are proud to be able to be involved in the preservation of one of Timaru’s historic buildings. It is planned that the trust will move into the building by December 2006, and we look forward to supporting the voluntary sector by having up to 32 groups sharing the facilities with us. The meeting and interview room facilities in the new community house will also be available to non-resident groups.
Trustees
In May 2005, the trust farewelled two long-serving and dedicated trustees: Rosemary Carruthers Q.S.O., who gave 12 years’ service, and Marion Ross, who gave eight years’ service. Their expertise and contributions to the trust were significant.
On behalf of my fellow trustees, I wish to express our appreciation and gratitude to both Rosemary and Marion.
A particular highlight during their terms of service was their involvement in the social research project, commissioned by this trust. This research brought together the views of the community at large and when combined with a huge array of census and other data, gave a very accurate overview of the social needs of the entire Mid and South Canterbury region. This had never been done before and the research is now widely used by a large number of groups and individuals. The trustees use the outcomes of the research to help guide them when making distributions to the community.
Wynne Raymond Q.S.O. and I were appointed as new trustees at this time.
Peter McIlraith, who served the trust for 12 years, retired as chairperson in November 2005. Peter served in the chair for five years and this tremendous commitment was highlighted with many achievements at both local and national level. Notably, Peter’s drive and passion for the voluntary sector was behind the introduction of the Johns Hopkins University (U.S.A.) study that will measure and compare the sector in New Zealand with that of 41 other countries. This important exercise will have
a positive impact on the response of central government to the voluntary sector at large.
Carole Brand succeeded Peter as the chairperson. Trustees are appointed by the Minister of Finance for a term of four years. Trustees may be appointed for a further term and, in rare circumstances, for a third term. While the trust supported the appointment of Carole Brand for a third term, it was unsuccessful and so we lost the benefit of Carole’s vision and considerable skills in May 2006.
We will be paying tribute to Peter, Carole and Huriata Weeks more appropriately in next year’s annual report.
Staff and Advisers
My thanks to John Wilson, the trust’s executive manager, and Sally Marsh, the administration officer, for the valuable contribution that they make to the running of the trust. They should both be complimented on the manner in which they appropriately respond to all those who approach the trust, both for grants and for general funding advice.
To Paul Wolffenbuttel, who provides the trust with financial advice and assistance, to Michael Chamberlain our investment advisor and to the trust’s other professional advisers, we express our appreciation for the services they provide to the trust.
Volunteers
The volunteers, who so untiringly give their time and energy to so many causes, make a huge impact on the well-being of our community. Recognition of the contribution volunteers make to society is being enhanced through the work of the office for the community and voluntary sector, which is part of the Ministry of Social Development. The value of the contribution made by volunteers is also the subject of an international study being conducted by the Johns Hopkins University (U.S.A) All the community trusts in New Zealand are supporting this study.
Donations
In 2005, the trust introduced a quarterly donation policy for applications up to and including $1,000.00 The policy was placed on a 12-month trial, with an annual allocation of $50,000.00. To date, this policy has proved to be very successful in meeting the trust’s objective to better meet the needs of the community by providing funding for groups at times that best suit those groups. This trial will continue until February 2007 when it will be reviewed by the trust.
Readers of this report will be able to note from the annual accounts the diversity of the donations made during the year. It is always a very difficult task to allocate monies when there are not enough to meet the total applied for. In determining donations, the trustees must take into account the social and other needs of each community, the provisions of the donation policy and then make a fair and equitable distribution. This is a challenging task but we are satisfied that our systems ensure a fair and equitable distribution across the region.
The trust’s evaluation processes tell us that the grants provided do make a positive difference, no matter how small. We also know that the other advice offered by the trust in trying to secure funds has been beneficial to many groups.
Finally, one of the most rewarding aspects of being a trustee of this trust is the opportunity to meet with some of the most caring, compassionate and committed people in our community, who are devoted to providing a wide range of services to those in society who, for various reasons, would otherwise miss out. As trustees, our association with such groups and individuals constantly humbles us.
NICOLA HORNSEY, Trustee.
Date: 31 March 2006.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2006
2006 2005
$ $
Income:
Interest: Managed funds 1,352,486 1,234,186
Interest: Other 403 340
Dividends: Managed funds 198,559 166,784
Total income 1,551,448 1,401,310
Less expenses—
Direct investment expenditure:
Management fees 78,984 70,626
Consultancy fees 17,281 30,317
Total direct investment expenditure 96,265 100,943
1,455,183 1,300,367
Less operating expenditure:
Advertising 7,556 11,546
Auditors’ fees 5,594 5,650
Legal fees 2,320 1,304
Postage, tolls and fax 762 527
Printing and stationery 8,231 6,033
Salary and wages 88,467 87,276
Telephone and tolls 6,605 4,292
Professional fees:
– Accountancy and advisory 15,160 17,511
– Taxation – 9,512
– Project costs 6,290 668
– Angoa project – 513
Sundry administration expenses 9,269 6,377
Conference expenses 9,029 4,744
Department of Internal Affairs’ costs 4,087 4,021
Trustees:
– Meeting expenses 65,990 57,514
– Travel 8,556 5,636
– Honoraria 20,799 20,908
Trustees’ insurance 3,425 3,725
Trustees’ training 2,228 1,943
Total operating expenditure 264,368 249,700
Net income before movement in managed funds and community house rental account 1,190,815 1,050,667
Consolidated Statement of Financial Performance for the Year Ended 31 March 2006
2006 2005
$ $
Income:
Lease rentals 31,126 18,334
Printing and facsimile charges reimbursed 2,494 1,876
Car park rental – 116
Total income 33,620 20,326
Less operating expenditure—
Rent 57,080 42,304
Heating and power 3,826 3,940
Maintenance 5,707 4,257
Cleaning 5,486 5,276
Rates 1,745 1,563
Insurance 3,496 544
Security and alarms 1,264 514
Staff expenses 1,883 833
General administration 3,491 3,550
Depreciation – improvements 2,896 2,346
Depreciation – plant and equipment 10,061 6,099
Total operating expenditure 96,935 71,226
Nett income/(deficit) from rental account (63,315) (50,900)
Movement in Managed Funds
Offshore debt/foreign exchange 470,940 555,265
Offshore equity 2,925,177 365,470
New Zealand debt 216,660 (148,558)
New Zealand equity 1,159,133 692,469
Net increase/(decrease) in managed funds 4,771,910 1,464,646
Consolidated Statement of Financial Performance for the Year Ended 31 March 2006
2006 2005
$ $
Statement of financial performance:
Net income from investments 1,190,815 1,050,667
Net income/(deficit) from rental account (63,315) (50,900)
Net increase/(decrease) in managed funds 4,771,910 1,464,646
Net income/(deficit) transferred to capital account 5,899,410 2,464,413
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2006
2006 2005
$ $
Opening equity: 37,271,648 35,329,637
Net surplus/(deficit) for year 5,899,410 2,464,413
Plus distribution from Community House Trust – 43,343
Less prior period taxation – (4,319)
Plus donations lapsed 4,300 5,000
Less donations approved (1,056,741) (566,426)
Closing equity 42,118,617 37,271,648
Consolidated Statement of Financial Position as at 31 March 2006
Note 2006 2005
$ $
Trust capital:
Capital fund 2 32,087,148 32,087,148
Inflation reserve 3 6,974,389 5,184,500
General reserves 4 3,057,080 –
42,118,617 37,271,648
Represented by—
Current assets:
Provision for tax 579 579
Westpac:
– Subsidiary company account – 777
– Current account 26,609 22,320
Sundry debtors 364 7,680
GST refund due 170,361 5,303
197,913 36,659
Less current liabilities:
Sundry creditors 49,124 58,934
Donations approved not yet paid 5 658,448 232,000
Total current liabilities 707,572 290,934
Working capital (509,659) (254,275)
Add non current assets—
Fixed assets
Property 1,364,104 30,078
Plant and equipment 37,956 24,516
Total fixed assets 1,402,060 54,594
Managed funds investments:
– New Zealand debt 18,250,685 19,381,381
– New Zealand equity 5,869,443 4,379,979
– Offshore debt 6,679,163 6,216,983
– Offshore equity 10,426,925 7,492,986
Total managed funds 41,226,216 37,471,329
Net assets 42,118,617 37,271,648
Signed on behalf of the board of trustees:
NICOLA HORNSEY, Trustee.
Date: 23 August 2006.
Consolidated Statement of Cash Flows for the Year Ended 31 March 2006
2006 2005
$ $
Cash flows from operating activities—
Cash was provided from:
Interest on deposits 403 340
Operating income 40,936 19,891
Distribution from Community House Trust – 43,343
41,339 63,574
Cash was applied to:
Suppliers of goods and services (619,479) (349,913)
Donations paid (625,993) (434,826)
(1,245,472) (784,739)
Net cash flows from operating activities (1,204,133) (721,165)
Cash flows from investing activities—
Cash was provided from:
Withdrawal of managed funds 2,568,068 764,758
2,568,068 764,758
Cash was applied to:
Fixed assets (1,360,423) (63,039)
Net cash flows from investing activities 1,207,645 701,719
Increase/(decrease) in cash held 3,512 (19,446)
Add opening cash 1 April 2005 23,097 42,543
Cash as at 31 March 2006 26,609 23,097
Comprised of—
Westpac:
Subsidiary company account – 777
Current account 26,609 22,320
26,609 23,097
Reconciliation of Net Surplus and Net Cash Flows From Operating Activities
2006 2005
$ $
Net surplus transferred to equity 5,896,004 2,464,413
Plus donations returned 4,300 5,000
Less donations approved (1,056,741) (566,426)
4,843,563 1,902,987
Plus/(less) non cash items:
Managed funds gains/losses (6,322,955) (1,330,344)
Depreciation 16,363 8,445
(6,306,592) (1,321,899)
(1,463,029) 581,088
Movements in working capital:
Increase/(decrease) in donations approved not yet paid 426,448 126,600
Increase/(decrease) in creditors (9,810) 7,295
(Increase)/decrease in GST (165,058) (5,303)
(Increase)/decrease in tax refund due – 3,740
(Increase)/decrease in sundry debtors 7,316 7,745
Movements in working capital 258,896 140,077
Net cashflow from operating activities (1,204,133) 721,165
Notes to the Consolidated Financial Statements for the Year Ended 31 March 2006
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.
? The trust qualifies for differential reporting and the financial statements have been prepared taking advantage of the differential reporting exemptions with the exception of the preparation of a statement of cashflows.
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) General reserves – intended to enable the trustees to continue with distributions should the trust incur a deficit in a particular income year.
(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
There have been no changes in accounting policy.
2. Capital Fund 2006 2005
$ $
Initial capital fund 32,087,148 32,087,148
Balance at end of the year 32,087,148 32,087,148
3. Inflation Reserve
Balance at beginning of the year 5,184,500 3,242,489
Transfer from/to general reserves 1,789,889 1,942,011
Balance at end of year 6,974,389 5,184,500
4. General Reserves
Balance at beginning of the year – –
Add: Surplus for the year 5,899,410 2,464,413
Distribution from Community House Trust – 43,343
Add: Donations returned 4,300 5,000
5,903,710 2,512,756
Deduct: Donations approved (1,056,741) (566,426)
Deduct: Tax adjustment – (4,319)
Transfer to inflation reserve (1,789,889) (1,942,011)
Balance at end of the year 3,057,080 –
5. Donations Approved Not Yet Paid
Approved donations not yet paid out include:
2006 2005
$ $
Air Training Corp – No 15 Squadron 603 –
Alzheimers Society SC Inc 462 –
Aoraki Community Toy Library 500 –
Ashburton Community Pool – 20,000
Ashburton Domain Pavilion Committee 2,000 –
Ashburton Regent Charitable Trust 300,000 –
Ashburton Safer Community Council 5,000 –
Citizens Advice Bureau 1,000 –
Geraldine Aged Persons Welfare Assn Inc 80,000 –
Geraldine Pre-school Inc – 5,000
Geraldine Vintage Car & Machinery Club 10,000 –
Hakatere Maori Committee – 10,000
Highfield Community Club 424 –
Hilton Hall Committee – 2,000
Hinds History Group 2,500 –
Hinds Squash Racquets Club Inc 15,000 –
Holy Name Catholic Parish Ashburton – 20,000
IHC South Canterbury – 1,500
Lake Clearwater Hutholders Association – 2,000
Mid/South Canterbury Life Education Trust 20,000 –
Mid Canterbury Cricket Association – 1,000
Mid/South Canterbury Search & Rescue – 60,000
Order of St John – Mackenzie Area 65,000 –
Pleasant Point Railway & Historical Society 780 –
Project Waimate Inc 50,000 –
SC Bonsai Society 200 –
SC Conservation Trust – 500
SC Cricket Association – 5,000
SC Football Association 8,000 8,000
SC Neighbourhood Support 360 –
SC Pottery Group Inc 500 –
SC Womens Wellness Inc 328 –
SC Womens’ Wellness Centre – 500
Sport Mid Canterbury 5,400 –
Sport South Canterbury – 4,500
Sport South Canterbury 5,400 –
St Andrews Hockey Club 457 –
St Andrews Playcentre 500 –
St Mary’s Restoration Trust 55,000 –
Temuka & Districts Project Trust 10,000 10,000
Temuka Seido Karate Club Inc 800 –
The Geraldine Players Inc 15,000 15,000
Timaru Civic Trust Inc – 6,000
Timaru Gymnastics Club 510 –
Timaru Mental Health Support Trust – 60,000
Timaru Senior Citizens Assn Inc 500 –
Timaru Tai Kwan Do Club 750 –
Waimate Care & Recreation Centre 750 –
Waimate Croquet Club 324 –
Waimate District Resource Trust 400 –
Waimate Historical Society – 1,000
658,448 232,000
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
These financial statements are stated on a GST exclusive basis except for debtors and creditors which are stated on a GST inclusive basis.
8. Capital Commitments
There were no capital commitments (2005 – $Nil).
9. Contingent Liabilities
There were no contingent liabilities at 31 March 2006 (2005 – $Nil).
10. Advances
There were no advances outstanding at balance date.
11. 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. This nominal inflation reserve required under this policy at 31 March 2006 is $6,974,389.
(iii) General reserves – the trustees intend to compile a minimum general reserve equivalent to 5% of the initial capital fund and inflation reserve. The general reserve is intended to enable the trustees to continue with distributions should the trust incur a deficit in a particular income year.
12. 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 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:
2006 2005
$ $
Debtors 364 7,680
GST refund due 170,361 5,303
Managed fund equities 16,296,368 11,872,965
16,467,093 11,885,948
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.
The trust is also party, through its managed funds, to financial instruments with off balance sheet risk to reduce exposure to fluctuations in foreign currency interest rates. 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 2006. 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 2006 and of the results of operations for the year ended 31 March 2006.
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 2006 and the results of its operations for the year ended on that date.
Our audit was completed on 19 August 2006 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 2006 is available from the trust’s office on request.)