Annual Report and Financial Statements for the Year Ended 31 March 2007
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: Ms N. Hornsey (chairperson), Mrs L. Burdon, Mr S. Wills, Ms S. Frew, Mr P. C. Dalziel L.L.B., Mr S. J. Dorman L.L.B., Mrs H. A. Sim, Mr G. J. Geering Q.S.O., Mrs K. I. Mattingley DIP. GRAD (Otago), M.N.Z.A.S.Co., Mr W. Raymond L.L.B., Q.S.O., Mrs C. A. Brand, Mr P. F. McIlraith.
Bankers: Westpac Bank, 243 Stafford Street, Timaru.
Auditors: Martin Wakefield, Chartered Accountants, 26 Canon Street, Timaru.
Executive Manager: J. Wilson, PO Box 983, Community House, Timaru.
Trustees’ Report for the Year Ending 31 March 2007
On behalf of my fellow trustees, I have great pleasure in presenting the annual report for The Community Trust of Mid
& South Canterbury Incorporated for the year ending 31 March 2007.
Major Projects
The year was marked by the purchase, refurbishment and opening of the new community house on Strathallan Street in Timaru. Housing the offices of a great variety of not-for-profit organisations, the building also contains the trust’s offices and has well utilised meeting spaces that are available for use by the public.
That this major project, representing an investment of $2.4 million, was completed on time and within budget, is a credit to
the efforts of Simon Dorman and the property committee as well as the trust staff – John Wilson and Sally Marsh, the contractor Ranger Construction, subcontractors and project manager, all of whom worked very well together to create
the wonderful facility.
Another significant project was the facilitation of the establishment of the Volunteering Canterbury organisation in our region. This organisation complements the work of the community trust by training and supporting volunteers and doing much to recognise and promote the value of volunteers in our society.
In the general distribution rounds, 119 donations were made to a wide variety of groups from throughout the region, ranging from very small to $150,000 for the Ashburton Aviation Heritage Museum. The wide variety of applications received always continues to impress the trustees as it is an indication of a healthy, vibrant and caring community.
Financial Position
The new community house building was purchased and refurbished by the trust during a time of strong investment returns. This was fortunate as the returns for the first quarter of 2007 were down significantly. Distributions were maintained at a level consistent with other years and the trust is continuing to build reserves so that the community will be able to be well provided for in the future.
Trustees
In May 2006, the trust farewelled Peter McIlraith, Carole Brand and Huriata Weeks. Peter McIlraith served the trust for 12 years and led the trustees as chairman from 1999 to 2005.
Carole Brand and Huriata Weeks both gave eight years of dedicated service and contributed greatly to the governance of the trust with their complementary skills. Carole Brand was deputy chairman from 1999 to 2005 and chairman from November 2005 until May 2006.
Sheryl Frew from the Waimate District, Lee Burdon from the Geraldine District and Stephen Wills from Timaru were welcomed to the board of trustees in June 2006. The considerable skills and community knowledge of all three new trustees means that the succession of the trust remains well balanced.
Trust Staff
There were no changes to the trust staff – John Wilson (executive manager) and Sally Marsh (administration officer) continue to serve the trustees and the community in a professional, friendly and helpful manner.
Professional Development
In March 2007, the Community Trusts of New Zealand held a combined conference with Philanthropy New Zealand at
Te Papa in Wellington. Stephen Wills, Sheryl Frew, John Wilson and I attended this very thought-provoking event. Philanthropists, representatives of organisations that received funding and experts in the field of philanthropy from
New Zealand and around the world, all told their stories and shared their knowledge and ideas willingly.
The knowledge that was gained will help to inform many of this trust’s future decisions and has already helped trustees to better understand the role the trust can play in making grants and collaborating with other funders and the importance of having meaningful dialogue with the organisations seeking grants and providing services to the community.
NICOLA HORNSEY, Chairperson.
Date: 31 March 2007.
Statement of Financial Performance for the Year Ended 31 March 2007
2007 2006
$ $
Investment account—
Income:
Interest: Managed funds 1,105,761 1,352,486
Other 494 403
Dividends: Managed funds 196,115 198,559
Total income 1,302,370 1,551,448
Less expenses—
Direct investment expenditure:
Management fees 78,404 78,984
Consultancy fees 28,516 17,281
Total direct investment expenditure 106,920 96,265
1,195,450 1,455,183
Less operating expenditure:
Advertising 16,017 7,556
Auditors’ fees 4,800 5,594
Legal fees 4,863 2,320
Postage, tolls and fax 1,143 762
Printing and stationery 6,844 8,231
Salary and wages 95,397 88,467
Telephone and tolls 1,952 6,605
Professional fees:
– Accountancy and advisory 9,501 15,160
– Project costs 954 6,290
Sundry administration expenses 12,165 9,269
Conference expenses 2,828 9,029
Department of Internal Affairs’ costs 1,610 4,087
Trustees:
– Meeting expenses 67,608 65,990
– Travel 10,246 8,556
– Honoraria 20,262 20,799
Trustees’ insurance 1,400 3,425
Trustees’ training 2,722 2,228
Total operating expenditure 260,312 264,368
Net income before movement in managed funds and community house rental account 935,138 1,190,815
Community house account—
Income:
Lease rentals 31,995 31,126
Printing and facsimile charges reimbursed 2,442 2,494
Car park rental 2,240 –
Total income 36,677 33,620
Less operating expenditure—
Rent 38,000 57,080
Heating and power 10,613 3,826
Maintenance 5,607 5,707
Cleaning 6,600 5,486
Rates 4,456 1,745
Insurance 8,722 3,496
Security and alarms 2,372 1,264
Staff expenses – 1,883
General administration 4,333 3,491
Depreciation: Improvements 31,987 2,896
Plant and equipment 11,689 10,061
Loss on disposal of fixed assets 23,275 –
Total operating expenditure 147,654 96,935
Net income/(deficit) from rental account (110,977) (63,315)
Movement in Managed Funds
Offshore debt/foreign exchange 420,312 470,940
Offshore equity 18,826 2,925,177
New Zealand debt (124,006) 216,660
New Zealand/Australian equity 771,889 1,159,133
Net increase/(decrease) in managed funds 1,087,021 4,771,910
Statement of financial performance:
Net income from investments 935,138 1,190,815
Net income/(deficit) from rental account (110,977) (63,315)
Net increase/(decrease) in managed funds 1,087,021 4,771,910
Net income/(deficit) transferred to capital account 1,911,182 5,899,410
Statement of Movements in Equity for the Year Ended 31 March 2007
2007 2006
$ $
Opening equity: 42,118,617 37,271,648
Net surplus/(deficit) for year 1,911,182 5,899,410
Plus donations received 46,489 –
Less prior period taxation (579) –
Plus donations lapsed 18,500 4,300
Less donations approved (1,056,661) (1,056,741)
Closing equity 43,037,548 42,118,617
Statement of Financial Position as at 31 March 2007
Note 2007 2006
$ $
Trust capital:
Capital fund 2 32,087,148 32,087,148
Inflation reserve 3 8,121,257 6,974,389
General reserve 4 2,829,143 3,057,080
43,037,548 42,118,617
Represented by—
Current assets:
Provision for tax – 579
Westpac Bank: Current account 16,485 26,609
Sundry debtors 3,142 364
GST refund due 6,133 170,361
25,760 197,913
Less current liabilities:
Sundry creditors 52,257 49,124
Donations approved not yet paid 5 1,109,300 658,448
Total current liabilities 1,161,557 707,572
Working capital (1,135,797) (509,659)
Add non current assets—
Fixed assets:
Property 2,368,548 1,364,104
Plant and equipment 58,392 37,956
Total fixed assets 2,426,940 1,402,060
Managed funds investments:
– New Zealand debt 15,632,460 18,250,685
– New Zealand/Australian equity 6,568,720 5,869,443
– Offshore debt 7,099,475 6,679,163
– Offshore equity 12,445,750 10,426,925
Total managed funds 41,746,405 41,226,216
Net assets 43,037,548 42,118,617
Signed on behalf of the board of trustees:
NICOLA HORNSEY, Trustee.
Date: 23 March 2007.
Statement of Cash Flows for the Year Ended 31 March 2007
2007 2006
$ $
Cash flows from operating activities—
Cash was provided from:
Interest on deposits 494 403
Operating income 33,899 40,936
Donations received 46,489 –
80,882 41,339
Cash was applied to:
Suppliers of goods and services (net of GST) (202,749) (619,479)
Donations paid (587,309) (625,993)
(790,058) (1,245,472)
Net cash flows from operating activities (709,176) (1,204,133)
Cash flows from investing activities—
Cash was provided from:
Withdrawal of managed funds 1,790,883 2,568,068
Sale of fixed assets 3,907 –
1,794,790 2,568,068
Cash was applied to:
Fixed assets (1,095,738) (1,360,423)
Net cash flows from investing activities 699,052 1,207,645
Increase/(decrease) in cash held (10,124) 3,512
Add opening cash 1 April 2006 26,609 23,097
Cash as at 31 March 2007 16,485 26,609
Comprised of—
Westpac Bank:
Current account 16,485 26,609
16,485 26,609
Reconciliation of Net Surplus and Net Cash Flows From Operating Activities
2007 2006
$ $
Net surplus transferred to equity 1,911,182 5,899,410
Plus Donations returned 18,500 4,300
Donations received 46,489 –
Less Donations approved (1,056,661) –
Prior period tax (579) (1,056,741)
918,931 4,846,969
Plus/(less) non cash items:
Managed funds gains/(losses) (2,311,072) (6,322,955)
Depreciation and loss on sale 66,951 12,957
(2,244,121) (6,309,998)
(1,325,190) (1,463,029)
Movements in working capital:
Increase/(decrease) in donations approved not yet paid 450,852 426,448
Increase/(decrease) in creditors 3,133 (9,810)
(Increase)/decrease in GST 164,228 (165,048)
(Increase)/decrease in tax refund due 579 –
(Increase)/decrease in sundry debtors (2,778) 7,316
Movements in working capital 616,014 258,896
Net cashflow from operating activities (709,176) (1,204,133)
Notes to the Financial Statements for the Year Ended 31 March 2007
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 cash flows.
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 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 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) 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 policies.
2. Capital Fund 2007 2006
$ $
Initial capital fund 32,087,148 32,087,148
Balance at end of year 32,087,148 32,087,148
3. Inflation Reserve
Balance at beginning of the year 6,974,389 5,184,500
Transfer from/to general reserves 1,146,868 1,789,889
Balance at end of year 8,121,257 6,974,389
4. General Reserves
Balance at beginning of the year 3,057,080 5,899,410
Add: Surplus for the year 1,911,182 –
Donations received 46,489 –
Donations returned 18,500 4,300
5,033,251 5,903,710
Deduct: Donations approved (1,056,661) (1,056,741)
Tax adjustment (579) –
Transfer to inflation reserve (1,146,868) (1,789,889)
Balance at end of the year 2,829,143 3,057,080
5. Donations Approved Not Yet Paid
Approved donations not yet paid out include:
2007 2006
$ $
Air Training Corp – No 15 Squadron – 603
Alzheimers Society SC Inc – 462
Anglican Care South Canterbury 5,000 –
Aoraki Community Toy Library – 500
Ashburton Domain Pavilion Committee – 2,000
Ashburton Museum & Historical Society 500 –
Ashburton Regent Charitable Trust 300,000 300,000
Ashburton Safer Community Council – 5,000
Athletics SC All Weather Track 100,000 –
Bone Marrow Cancer Trust 50,000 –
Citizens Advice Bureau – 1,000
Fairlie Volunteer Fire Brigade 50,000 –
Geraldine Aged Persons Welfare Assn Inc 80,000 80,000
Geraldine Vintage Car and Machinery Club – 10,000
Highfield Community Club – 424
Hinds History Group – 2,500
Hinds Squash Racquets Club Inc – 15,000
Lister Home Inc 100,000 –
Methven District Heritage Association Inc 150,000 –
Mid and South Canterbury Life Education Trust – 20,000
Order of St John – Mackenzie Area 65,000 65,000
Pleasant Point Railway and Historical Society – 780
Project Waimate Inc 50,000 50,000
SC Bonsai Society – 200
SC Football Association – 8,000
SC Neighbourhood Support – 360
SC Pottery Group Inc – 500
SC War Memorial Society Inc 20,000 –
SC Women’s Wellness Inc – 328
Sport Mid Canterbury 4,800 5,400
Sport South Canterbury 4,000 –
Sport South Canterbury – 5,400
St Andrews Hockey Club – 457
St Andrews Play Centre – 500
St Mary’s Restoration Trust 55,000 55,000
Temuka and Districts Project Trust 10,000 10,000
Temuka Seido Karate Club Inc – 800
Tennis South Canterbury Inc 50,000 –
The Geraldine Players Inc 15,000 15,000
Timaru Gymnastics Club – 510
Timaru Senior Citizens Assn Inc – 500
Timaru Tai Kwan Do Club – 750
Waimate Care and Recreation Centre – 750
Waimate Croquet Club – 324
Waimate District Resource Trust – 400
1,109,300 658,448
6. Taxation
The trust is exempt from tax with effect from 1 April 2004 in accordance with section CB4(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 (2006 – $Nil).
9. Contingent Liabilities
There were no contingent liabilities at 31 March 2007 (2006 – $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 2007 is $8,121,257.
(iii) General reserve – 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
Fifty-three per cent of the assets of the trust are represented by debt investments and current account balances with Westpac Bank 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:
2007 2006
$ $
Debtors 3,142 364
GST refund due 6,133 170,361
Managed fund equities 19,014,470 16,296,368
19,023,745 16,467,093
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 trust and its financial position as at 31 March 2007. The information is stated in accordance with the accounting policies set out above.
Committee Responsibilities
The committee is 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 2007 and of the results of operations for the 12 months ended 31 March 2007.
Auditors’ Responsibilities
It is our responsibility to express an independent opinion on the financial report presented by the committee 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 committee 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 trust.
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 2007 and the results of its operations for the year ended on that date.
Our audit was completed on 27 August 2007 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 2007 is available from the trust’s office on request at 27 Strathallan Street, PO Box 983, Timaru or email msccomtrust@xtra.co.nz