Directory for the Year Ended 31 March 2007
Trustees: John Farry (chairperson), Dunedin; Hilary Allison (deputy chairperson), Dunedin; Duncan Butcher, Cromwell;
Sally Hope, Oamaru; Russell Hendry, Dunedin; Alan McLay, Oamaru (retired May 2006); Barbara Payton, Dunedin; Raewynne Pedofski, Dunedin; Mark Ryan, Dunedin; David Shepherd, Dunedin; Nicola Taylor, Dunedin; Bill Thomson, Balclutha; Stuart Walker, Dunedin (appointed June 2006).
Chief Executive: Keith Ellwood.
Registered Office: 2nd Floor, Community Trust House, corner of Filleul Street and Moray Place, Dunedin.
Auditor: Polson Higgs, Dunedin.
Solicitor: Anderson Lloyd, Dunedin.
Investment Advisers: Russell Investments Limited, Auckland.
Bankers: Westpac, Dunedin.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2007
Note 2007 2006
$000 $000
Revenue 1 12,110 24,130
Expenditure 2 (1,312) (1,327)
Surplus before tax 10,798 22,803
Taxation – –
Net surplus 10,798 22,803
This net surplus has been allocated to uncommitted surplus
Consolidated Statement of Movement in Trust Funds for the Year Ended 31 March 2007
2007 2006
$000 $000
Net surplus for the year 10,798 22,803
Total recognised revenues and expenses 10,798 22,803
Less donations approved (7,748) (5,545)
Movements in trust funds for the year 3,050 17,258
Trust funds opening balance 189,174 171,916
Trust funds closing balance 192,224 189,174
Consolidated Statement of Financial Position as at 31 March 2007
Note 2007 2006
$000 $000
Source of funds—
Trust funds 3 192,224 189,174
Current liabilities:
Accounts payable 93 104
Donations payable 5,337 4,139
197,654 193,417
Employment of funds—
Current assets:
Current account 52 171
Short term bank deposits 833 1,450
Debtors 1 –
GST refund 26 –
912 1,621
Non current assets:
Managed funds 4 195,428 190,441
Fixed assets 5 1,066 1,107
Advance to Dunedin Community House Trust 11 248 248
196,742 191,796
197,654 193,417
Approved on behalf of the board:
BILL THOMSON. RUSSELL HENDRY.
Chairperson. Trustee.
26 June 2007. 26 June 2007.
Consolidated Statement of Cashflows for the Year Ended 31 March 2007
Note 2007 2006
$000 $000
Cashflow from operating activities—
Cash was provided from:
Interest 51 40
Other 72 117
123 157
Cash was disbursed on:
Payment to suppliers and staff 838 811
Fund managers’ fees 426 432
(1,264) (1,243)
Net cash (outflow) from operating activities 7 (1,141) (1,086)
Cashflow from investing activities—
Cash was provided from:
Receipts from fund managers 6,956 7,259
Cash was disbursed on:
Purchase of fixed assets (1) (20)
Net cash inflow from investing activities 6,955 7,239
Cashflow from funding activities—
Cash was disbursed on:
Donations paid (6,550) (5,073)
Net cash (outflow) from funding activities (6,550) (5,073)
Net cash inflow/(outflow) from activities (736) 1,080
Add opening cash brought forward 1,621 541
Ending cash carried forward 885 1,621
Cash comprises:
Cash at bank 52 171
Term deposits 833 1,450
885 1,621
Notes to the Consolidated Financial Statements for the Year Ended 31 March 2007
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 Company Limited, The Community Trust District Improvement Company Limited and Fillmor House Limited.
The Community Trust Amateur Sports Company Limited and The Community Trust District Improvement Company Limited were liquidated during the year.
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
Pursuant to section CW of the Income Tax Act 2004, The Community Trust of Otago is exempt from income tax.
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
The trust became registered for GST on 10 August 2006. Accordingly, items (as relevant) in the consolidated statement of financial performance are stated on a GST inclusive basis prior to and exclusive subsequent to this date. Fillmor House Limited, a subsidiary of The Community Trust of Otago, was registered for GST for the full year.
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.
Capital Maintenance Reserve
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).
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 except for the method of accounting GST as referred
to above.
1. Revenue
Note 2007 2006
$000 $000
Interest 2,790 3,332
Pooled managed funds 9,741 18,377
Realised gains/(losses) 300 999
Unrealised gains/(losses) (836) 1,307
Other 115 115
Total operating revenue 12,110 24,130
2. Expenditure
Depreciation 47 51
Fund managers’ fees 426 432
Occupancy 62 70
Other operating 97 124
Professional fees 183 154
Promotion 36 35
Public and statutory reporting 19 17
Staff 283 254
Trustee remuneration 12 142 166
Trustee expenses 17 24
1,312 1,327
Professional fees:
Audit fees 9 10
Fees paid to auditors for others services 6 –
Accounting and other support 14 13
Computer support 4 17
Legal advisers 4 2
Investment advisory fees 113 92
Tax advice 16 11
Other professional advice 17 9
183 154
3. Trust Funds
Trust Capital
The trust capital represents the realised value of its original asset, being shares in Trust Bank.
2007 2006
$000 $000
Opening balance 131,467 131,467
Closing balance 131,467 131,467
Capital maintenance reserve:
Opening balance 35,773 30,203
Transfer from uncommitted surplus 4,210 5,570
Closing balance 39,983 35,773
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 21,934 10,246
Donations approved during the year (7,748) (5,545)
Trustee surplus 10,798 22,803
Transfer to capital maintenance reserve (4,210) (5,570)
Closing balance 20,774 21,934
Total closing trust funds 192,224 189,174
Available for non taxable distribution to donees:
Opening balance 165,650 165,851
Deduct donations approved during the year to non tax exempt donees (164) (201)
Closing balance 165,486 165,650
Balance available for taxable distribution to donees:
Opening balance 23,524 6,065
Current year surplus 10,798 22,803
Deduct donations approved during the year to exempt donees (7,584) (5,344)
Closing balance 26,738 23,524
Total trust funds 192,224 189,174
4. Managed Funds
2007 2006
$000 $000
Managed by external managers:
Opening balance 190,441 173,726
Gross income 11,944 23,973
Fund managers’ fees – deducted (415) (432)
Withdrawals (6,542) (6,828)
Closing balance 195,428 190,441
Investments comprise:
Cash and deposits 10,215 11,512
Bonds 102,323 97,087
Equities 72,661 72,430
Hedge funds and futures 10,229 9,412
Total managed funds 195,428 190,441
Allocated as follows—
New Zealand:
Bonds and deposits 49,761 49,838
Equities 10,486 10,251
60,247 60,089
Overseas:
Bonds and deposits 62,777 58,761
Equities 53,502 52,443
Hedge funds and futures 18,902 19,148
135,181 130,352
Total:
Bonds and deposits 112,538 108,599
Equities 63,988 62,694
Hedge funds and futures 18,902 19,148
195,428 190,441
5. Fixed Assets
2007BookValue 2006BookValue
$000 $000
Land:
At cost 432 432
Buildings:
At cost 1,026 1,026
Accumulated depreciation (427) (395)
599 631
Office furniture and equipment:
At cost 259 258
Accumulated depreciation (224) (214)
35 44
Total net carrying value 1,066 1,107
Depreciation:
Buildings 32 34
Office furniture and equipment 14 17
46 51
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 trust’s 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 trust’s 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
2007 2006
$000 $000
Surplus for the period 10,798 22,803
Add:
Non-cash items:
Depreciation 46 51
Managed fund (revaluation)/devaluation (11,947) (23,974)
(11,901) (23,923)
Movements in working capital items:
Increase/(decrease) in creditors (11) 32
(Increase)/decrease in debtors (27) 2
(38) 34
Net cashflow/(outflow) from operating activities (1,141) (1,086)
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 donations during the year. The details are as follows:
Donation Amount
Trustee Recipient Organisation $
Hilary Allison Hospice NZ 10,000
Otago Kidney Society 4,000
John Farry Otago Excursion Train Trust 50,000
Russell Hendry Otago Cricket Association 55,000
Barbara Payton Basketball Otago 60,000
Mark Ryan Otago Polytechnic 7,800
Nicola Taylor Otago Polytechnic 7,800
Te Runanga o Otakou 3,640
In addition, Stuart Walker, a trustee of The Community Trust of Otago, is a partner in Anderson Lloyd, the law firm engaged by the trust. The value of services obtained from Anderson Lloyd to 31 March 2007 was $4,634 (GST inclusive).
9. Other Disclosures
The community trust donated a total of $260,000 during the year to the Carisbrook Stadium Trust to be used for feasibility studies on options for the redevelopment of Carisbrook or the development of a new multi-purpose stadium at Awatea Street, Dunedin. John Farry, a trustee of the community trust, is a shareholder in a company which owns a portion of the land at Awatea Street under consideration by the Carisbrook Stadium Trust. John Farry has no involvement with the Carisbrook Stadium Trust and as such, these transactions do not meet the definition of related party transactions within financial reporting standards.
10. Contingent Liabilities
Contingent liabilities at 31 March 2007 – $Nil (2006 – $Nil).
11. 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. The balance of the advance as at 31 March 2007 is $247,500 (2006 – $247,500).
12. 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 20 17 8 12,602
Duncan Butcher 20 19 3 10,665
John Farry 20 18 8 22,730
Russell Hendry 20 20 17 13,588
Sally Hope 20 17 7 11,470
Alan McLay 3 2 2 2,043
Stuart Walker 17 10 3 5,848
Barbara Payton 20 19 7 10,175
Raewynne Pedofski 20 20 11 11,715
Mark Ryan 20 8 2 5,730
David Shepherd 20 19 8 10,525
Nicola Taylor 20 20 12 12,065
Bill Thomson 20 9 8 12,520
Total remuneration 141,676
13. Trustee Register of Interests
The trust maintains a “Register of Interests” which is held at its office and which is available for public inspection.
14. 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.
15. Adoption of International Financial Reporting Standards
In December 2002, the New Zealand Accounting Standards Review Board announced that New Zealand International Financial Reporting Standards (“NZ IFRS”) will apply to all New Zealand reporting entities for the periods commencing on or after 1 January 2007. Entities have the option to adopt NZ IFRS for periods beginning on or after 1 January 2005.
The Community Trust of Otago intends to implement NZ IFRS in its annual financial statements for the year ending 31 March 2008.
Transition Management
The Community Trust of Otago started a project to:
? assess the key differences in accounting policies under NZ IFRS and current accounting policies;
? determine the impacts on the financial statements from transition; and
? determine and to implement processes to deal with any related business impacts.
Change in Accounting Policies on Transition to NZ IFRS
Significant differences identified by The Community Trust of Otago are outlined below. It should not be regarded as
a complete list of changes in accounting policies that will result from the transition to NZ IFRS, as some decisions have not
yet been finalised where choices of accounting policies are available.
The Community Trust of Otago has not yet completed an exercise to quantify the effects of the differences in accounting policies discussed below, and are therefore currently unable to reliably quantify impacts on the financial statements, which will arise from transitioning to NZ IFRS. It is possible that the actual impact of adopting NZ IFRS may vary from the information presented below, and the variation may be material.
Financial Instruments
The Community Trust of Otago’s current accounting policy is to recognise financial instruments at fair value with movements through the profit and loss account. Under NZ IFRS, the trust will continue to adopt this accounting policy. However, the trust envisages that further work will be required to ensure that the valuation techniques used to value financial instruments are consistent with the requirements of NZ IFRS.
It is also noted that financial instruments should be initially measured at fair value. This may result in a remeasurement of the trust’s loans and receivables.
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 2007. 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 gives a true and fair view of the financial position of the trust and group as at 31 March 2007, 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.
We have performed one consulting assignment for the trust during the year. We have no other relationship with, or interest in, the trust or any of its subsidiaries other than in our capacity as auditor.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion, the financial report:
? complies with generally accepted accounting practice in New Zealand; and
? gives a true and fair view of the financial position of the trust and group 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 26 June 2007 and our unqualified opinion is expressed as at that date.
POLSON HIGGS, Chartered Accountants, Dunedin.
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(A summary of donations approved during the financial year ended 31 March 2007 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 PO Box 5751, Dunedin.)