Statement of Financial Performance for the Year Ended 31 March 2007
Note 2007 2006
$000 $000
Income received from:
Investments 2 89,060 93,210
Other income 2,804 438
Total income for the year 91,864 93,648
Direct expenditure incurred:
Fund management, custodian and advisory fees 2,703 730
89,161 92,918
Other expenditure incurred 8 2,715 1,246
Net surplus for year 86,446 91,672
Statement of Movement in Trust Funds for the Year Ended 31 March 2007
Trust funds 1 April 1,043,943 460,670
Net surplus for year 86,446 91,672
Less grants committed during year 6.1 (67,635) (33,069)
1,062,754 519,273
Trust funds received from ASB Charitable Trust on distribution 3 – 524,670
Total trust funds 1,062,754 1,043,943
The notes to these financial statements form part of and should be read in conjunction with this statement of financial performance and statement of movement in trust funds.
Statement of Financial Position as at 31 March 2007
Note 2007 2006
$000 $000
Current assets:
Cash at bank 15,717 1,242
Sundry accounts receivable 355 3
16,072 1,245
Fixed assets 4 2,011 1,983
Investments:
Managed funds 5.1 1,114,340 1,089,043
Total investments 1,114,340 1,089,043
Total assets 1,132,423 1,092,271
Less liabilities:
Sundry accounts payable 1,035 794
Outstanding grants payable 6.2 68,634 47,534
69,669 48,328
Net assets at 31 March 1,062,754 1,043,943
Represented by—
Trust funds:
Original capital 7.1 579,106 579,106
Capital maintenance reserve 7.2 188,483 169,761
General reserve 7.3 200,000 200,000
Community innovation reserve 7.4 51,679 65,000
Retained surplus 7.5 43,486 30,076
Total trust funds as 31 March 1,062,754 1,043,943
Approved on behalf of the board:
S. K. PRIME, Chairman.
P. N. SNEDDEN, Deputy Chairman.
Date: 28 May 2007.
The notes to these financial statements form part of and should be read in conjunction with this statement of financial position.

Statement of Cash Flows for the Year Ended 31 March 2007
Note 2007 2006
$000 $000
Cash flows from operating activities—
Cash was provided from:
Income received on other activities and investments 2,470 438
Cash was disbursed on:
Payment to suppliers, trustees and staff (2,558) (63)
Refunds to ASB Charitable Trust for the services of suppliers, trustees and staff – (859)
Fund management and advisory fees (2,542) (771)
(5,100) (1,693)
Net cash outflow from operating activities 12 (2,630) (1,255)
Cash flows from investing activities—
Cash was provided from:
Receipts from fund managers 88,952 43,736
Cash was disbursed on:
Transfers to fund managers (25,189) (12,000)
Purchase of fixed assets (123) –
Net cash inflow from investing activities 63,640 31,736
Cash flows from funding activities—
Cash was disbursed on:
Grants to community organisations (46,535) (30,185)
Net cash outflow from funding activities (46,535) (30,185)
Net cash (outflow)/inflow from activities 14,475 296
Add: Cash at bank 1 April 2006 1,242 322
ASB Charitable Trust cash received on distribution – 624
Cash at bank at 31 March 2007 15,717 1,242
Cash at bank at 31 March 2007 comprises:
Cash at bank 55 18
Call deposits 15,662 1,224
15,717 1,242
The notes to these financial statements form part of and should be read in conjunction with this statement of cash flows.
Notes to the Financial Statements for the Year Ended 31 March 2007
1. Statement of Accounting Policies
The ASB Community Trust (“the trust”) is the reporting entity. The trust was formed on 30 May 1988 through the creation of a trust deed in compliance with the Trustee Banks Restructuring Act 1988. Under the terms of the trust deed, the trust was settled with 60 million $1 fully paid ordinary shares in ASB Bank Limited representing 100% of the issued capital. As at 31 March 1988, the net tangible asset backing of those 60 million shares was $147,655,000. In 1989, 45 million shares were sold to the Commonwealth Bank of Australia for $252,000,000 which was then donated to the ASB Charitable Trust. In October 2000, the remaining 15 million shares were sold to the Commonwealth Bank of Australia for $545,000,000.
On 27 February 2006, the trustees of the ASB Charitable Trust resolved to distribute, on or before 31 March 2006, the capital of that trust (including all accumulations of income and capital to that date less accrued liabilities) in specie to the ASB Bank Community Trust. Subsequent to this distribution, the ASB Charitable Trust was wound up.
The ASB Bank Community Trust formally changed its name to the ASB Community Trust by way of deed dated 17 July 2006.
The measurement basis adopted is that of historical cost adjusted for the revaluation of certain assets. Reliance is placed on the fact that the trust is a going concern. The financial statements have been prepared in accordance with the requirements of
the Financial Reporting Act 1993.
Consolidated Financial Statements
Consolidated financial statements have not been prepared as the subsidiary companies have not traded since incorporation.
Statement of Cash Flows
Cash comprises cash at bank and call deposits but does not include cash or deposits held by the fund managers. Therefore, the statement of cash flows does not reflect the cash flows within the fund managers’ portfolios.
Dividends, Pooled Funds and Interest
Dividends are recognised as income on declaration date, and are recorded net of any imputation tax credits. Income from pooled funds is recognised on declaration date. Interest is recognised as income on an accrual basis.
Grants
Grants are accounted for as they are committed to be distributed to eligible organisations as approved by the trustees.
Expenses
Prior to 31 March 2006, some expenses were shared jointly between the ASB Community Trust and the ASB Charitable Trust. Whilst each trust bore its own specific costs, the joint expenses were allocated between each trust on the basis of the number of applications processed by each.
Joint expense allocations were:
2007 2006
This trust 100% 50%
ASB Charitable Trust 50%
Fixed Assets
Fixed assets are valued at cost, less accumulated depreciation.
Depreciation
Depreciation is provided over the useful life of the assets. Buildings are depreciated on a straight line basis. Vehicle, office equipment and furniture are depreciated on a diminishing value basis. The rates used are those recommended by the Inland Revenue Department.
Land and buildings 2.5% – 3.0%
Office equipment and furniture 9.5% – 60.0%
Foreign Currencies
All amounts denominated in foreign currencies are converted to New Zealand dollars at balance date and all realised and unrealised gains and losses are recognised in income and expenditure for the period.
Investments
Investment in managed funds and other investments are stated at market value. Any gains or losses are recognised in income and expenditure for the period. Investment transactions are recorded by the fund managers on a settlement date basis.
Financial Instruments
All assets and liabilities of the trust are financial instruments and are recognised in the statement of financial position. All financial instruments are recorded at market value which equates to fair value.
The trust uses financial instruments 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 income and expenditure statement.
The quantitative disclosures required by FRS 31 Disclosure of Information about Financial Instruments have been included throughout the financial statements where material.
Reserves
Transfers to the capital maintenance reserve are based on the annual movement in the consumer price index. Transfers to all other reserves from the unallocated surplus are made at the discretion of the trustees.
Taxation
The Income Tax Act 1994 provides exemption from income tax for community trusts established under the Trustee Banks Restructuring Act 1988. The amendment applied from the 2005 income year, and consequently no taxation has been provided for in these financial statements.
Changes in Accounting Policies
There have been no material changes in accounting policies during the period.
2. Income
2007 2006
$000 $000
Investments:
Pooled funds (13,017) 95,246
Dividends 8,257 2,669
Interest 16,934 6,514
Realised gains 72,983 7,426
Unrealised gains/(losses) (46,105) 4,892
Realised foreign exchange gains 19,062 (3,490)
Unrealised foreign exchange gains/(losses) 30,946 (20,047)
89,060 93,210
3. Distribution of ASB Charitable Trust Funds
The following trust funds, assets and liabilities were received by way of distribution from the ASB Charitable Trust on
31 March 2006:
2006
$000
Trust funds:
Original capital 251,786
Capital maintenance reserve 125,243
General reserve 75,000
Retained surplus 72,641
Total trust funds 524,670
Investments:
Managed funds 538,703
Call deposits 614
Total investments 539,317
Current assets:
Cash at bank 10
Sundry accounts receivable 3
Total current assets 13
Fixed assets (at depreciated values):
Land and buildings 1,800
Office furniture and equipment 183
Total fixed assets 1,983
Sundry accounts payable 651
Outstanding grants payable:
Committed in prior years 4,336
Committed this year 12,086
Total committed unpaid grants 16,422
4. Fixed Assets
2007 2006
Cost AccumulatedDepreciation Book Value Cost AccumulatedDepreciation Book Value
$000 $000 $000 $000 $000 $000
Land and buildings 2,079 300 1,779 2,079 279 1,800
Office equipment and furniture 837 605 232 733 550 183
Total fixed assets 2,916 905 2,011 2,812 829 1,983
5. Investments
2007 2006
$000 $000
5.1 Managed by External Managers
Balance as at 1 April 1,089,043 488,866
Movement in market value and investment income 89,060 93,210
Net withdrawals (63,763) (31,736)
Investments received on distribution from ASB Charitable Trust – 538,703
1,114,340 1,089,043
Investments managed by external managers comprise:
Cash, deposits and miscellaneous 80,373 33,083
Bonds 494,027 467,913
Equities 481,913 588,047
Collateralised commodity futures 58,027 –
Portfolio total 1,114,340 1,089,043
6. Grants
2007 2006
$000 $000
6.1 For This Year
Committed and disbursed 19,954 8,651
Committed but not yet disbursed 47,918 25,814
Total grants approved 67,872 34,465
Grants written back (237) (1,396)
Grants committed this year 67,635 33,069
6.2 Outstanding Grants Payable
Committed in previous years 20,732 5,298
Committed this year 47,902 25,814
68,634 31,112
Liability assumed for outstanding grants payable on distribution of ASB Charitable Trust Fund:
Committed in previous years – 4,336
Committed this year – 12,086
68,634 47,534
7. Trust Funds and Reserves
2007 2006
$000 $000
7.1 Trust Capital
Original capital 579,106 327,320
Original capital received on distribution from ASB Charitable Trust – 251,786
Total trust capital 579,106 579,106
7.2 Capital Maintenance Reserve
Opening balance 169,751 32,142
Transfer from retained surplus 18,722 12,376
Capital maintenance reserve received on distribution from ASB Charitable Trust – 125,243
Total capital maintenance reserve 188,483 169,761
7.3 General Reserve
Opening balance 200,000 75,000
Transfer from retained surplus – 50,000
General reserve received on distribution from ASB Charitable Trust – 75,000
Total general reserve 200,000 200,000
7.4 Community Innovation Reserve
As a result of the exceptional investment returns achieved in the 2005/2006 year, the trustees resolved to establish a community innovation reserve of $65 million. The fund will be administered according to specific policies and guidelines which will be developed during the 2006/2007 financial year.
Balance at 1 April 65,000 –
Transfer from retained surplus – 65,000
65,000 65,000
Committed this year 13,321 –
Total community innovation reserve 51,679 65,000
7.5 Retained Surplus
Retained surplus 1 April 30,076 26,208
Surplus for year 86,446 91,672
Transfer from community innovation reserve 13,321 –
Retained surplus received on distribution from ASB Charitable Trust – 72,641
129,843 190,521
Less: Grants committed during year (67,635) (33,069)
Transfer to capital maintenance reserve (18,722) (12,376)
Transfer to general reserve – (50,000)
Transfer to community innovation reserve – (65,000)
Retained surplus 31 March 43,486 30,076
These reserves maintain the capital base of the trust.
8. Other Expenditure
2007 2006
$000 $000
Audit fees 40 18
Depreciation 95 –
Facilities rental – 33
Legal fees 112 9
Occupancy costs 153 61
Other operating costs 453 256
Public and statutory reporting 123 72
Staff expenses 1,400 644
Trustees’ fees 233 97
Trustees’ expenses 106 56
2,715 1,246
9. Related Party Information
During the 2005/2006 financial year, joint expenses were charged to this trust by ASB Charitable Trust.
The following companies were established by the trust:
Name Interest Held Balance Date Principal Activity
ASB Trusts Amateur Public Sports Promotion Limited 100% 31 March Grants to amateur sport bodies
ASB Trusts Public Amenities Development Limited 100% 31 March Grants to public beautification bodies
These subsidiaries were incorporated on 29 March 2001. They have not traded since incorporation.
10. Financial Instruments
Currency Risk
The trust invests in securities that are denominated in foreign currencies and therefore result in a currency risk. In order to minimise the currency risk, foreign currency assets are hedged.
2007 2006
$000 $000
Foreign currency denominated assets 680,576 373,212
Less foreign currency contracts 680,576 270,760
ASB Charitable Trust currency risks assumed on distribution:
Foreign currency denominated assets – 340,651
Less foreign currency contracts – 246,165
Total unhedged exposure at 31 March – 196,938
Interest Rate Risk
The trust, through its fund managers, invests in securities that are subject to interest rate risk. The trust actively monitors this risk and changes asset allocations and maturity profiles accordingly.
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 this risk is minimised.
For all classes of financial assets held by the trust, the maximum credit risk exposure to the trust is the carrying value.
Due to the diversification of the investment portfolio and the policies and procedures in place, there are no significant concentrations of credit risk. No collateral is required in respect of financial assets.
Fair Values
All financial instruments are carried at market value, which equates to fair value.
11. Foreign Currency Monetary Assets
As at 31 March 2007, the trust had fully hedged its foreign currency exposure. At 31 March 2006, the trust had the following foreign currency monetary assets (including assets received on distribution from the ASB Charitable Trust) that were not hedged.
2007 2006
$000 $000
Receivables stated in NZ$ equivalents:
USA and Canada – 113,632
UK and Continental Europe – 60,263
Japan and Far East – 23,043
Total foreign currency exposure at 31 March – 196,938
12. Reconciliation of Reported Surplus to Net Cash Flow From Operating Activities
Reported surplus 86,446 91,672
Add Non-cash items:
Depreciation 95 –
Movements in working capital items:
Decrease in creditors 242 (41)
Decrease/(increase) in debtors (353) –
Increase in ASB Charitable Trust – 324
(111) 283
Fund managers’ income reinvested (89,060) (93,210)
Net cash outflow from operating activities (2,630) (1,255)
13. Non Cash Flow Items
The inter-trust current account with the ASB Charitable Trust was settled by way of set off on the distribution of the charitable trust’s capital fund by way of distribution on 31 March 2006.
14. Capital Commitments and Contingent Liabilities
Other than committed grants, the trust has no other capital commitments or contingent liabilities.
15. Conflicts of Interest
During the year, trustees and staff were required to declare either a direct or indirect conflict of interest in a matter being considered by the trust. One hundred and ten (110) such interests were recorded during the year and a register is available for inspection at the trust.
16. Adoption of International Financial Reporting Standards
In December 2002, the New Zealand Accounting Standards Review Board announced that New Zealand equivalents to International Financial Reporting Standards (NZ IFRS) will apply to all New Zealand entities for financial reporting periods commencing on or after 1 January 2007.
The trust has commenced assessing the differences between accounting policies under NZ IFRS and current accounting policies to identify key areas of the financial statements that will be impacted by the transition to NZ IFRS. This review has not been completed at balance date.
Audit Report
To the Trustees of ASB Community Trust:
We have audited the financial statements. The financial statements provide information about the past financial performance of the ASB Community Trust (“the trust”) and its financial position as at 31 March 2007. This information is stated in accordance with the accounting policies.
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 as at 31 March 2007 and the results of its operations and cash flows for the year ended on that date.
Auditors’ Responsibilities
It is our responsibility to express an independent opinion on the financial statements 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 statements.
It also includes assessing:
? the significant estimates and judgements made by the trustees in the preparation of the financial statements;
? whether the accounting policies are appropriate to the trust’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 obtain 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.
Our firm has also provided tax advisory services to the trust in respect of the year ended 31 March 2007. These services have not impaired our independence as auditors of the trust. The firm has no other relationship with, or interest in, the trust.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion, the financial statements:
? comply with New Zealand generally accepted accounting practice;
? give a true and fair view of the financial position of the trust as at 31 March 2007 and the results of its operations and cash flows for the year ended on that date.
Our audit was completed on 28 May 2007 and our unqualified opinion is expressed as at that date.
KPMG, Auckland.
A copy of the list of all distributions of income and capital approved by the ASB Community Trust is available on request from ASB Trusts, PO Box 68048, Newton, Auckland.