Notice Type
General Section
Notice Title

The Community Trust of Southland

Consolidated Statement of Financial Performance for the Year Ended 31 March 2007
Note 2007Group 2006Group 2007Parent 2006Parent
Total operating revenue 1 8,330,880 38,337,802 7,671,984 37,546,414
Revaluation of land and buildings 17 135,773 96,859 135,773 96,859
8,466,653 38,434,661 7,807,757 37,643,273
Total expenditure 2 2,325,114 2,158,737 1,989,947 1,850,807
Total operating surplus before distributions 6,141,539 36,275,924 5,817,810 35,792,466
Less: Distributions
Donations to tax approved entities:
– relating to current year 7,766,094 6,838,605 7,766,094 6,838,605
– relating to future years 4,004,000 – 4,004,000 –
11,770,094 6,838,605 11,770,094 6,838,605
Net surplus/(deficit) (5,628,555) 29,437,319 (5,952,284) 28,953,861

The surplus/(deficit) has been allocated to:
Capital maintenance reserve 4,827,366 6,168,561 4,827,366 6,168,561
Grants maintenance reserve (10,455,921) 23,268,758 (10,779,650) 22,785,300
(5,628,555) 29,437,319 (5,952,284) 28,953,861
Consolidated Statement of Movements in Equity for the Year Ended 31 March 2007
2007Group 2006Group 2007Parent 2006Parent
Net retained surplus/(deficit) (5,628,555) 29,437,319 (5,952,284) 28,953,861
Less: Grants paid from capital – (631,317) – (631,317)
(5,628,555) 28,806,002 (5,952,284) 28,322,544
Equity at beginning of year 196,609,998 167,803,996 198,125,629 169,803,085
Equity at the end of the year 190,981,443 196,609,998 192,173,345 198,125,629
Consolidated Statement of Financial Position as at 31 March 2007
Note 2007Group 2006Group 2007Parent 2006Parent
Funds employed:
Trust capital 9 158,460,000 158,460,000 158,460,000 158,460,000
Reserves 8 32,521,443 38,149,998 33,713,345 39,665,629
Total capital and reserves 190,981,443 196,609,998 192,173,345 198,125,629
Liabilities—
Current liabilities:
Accounts payable and accrued expenses 301,114 250,855 215,148 201,504
Grants committed but not paid 9,689,194 9,799,098 9,689,194 9,799,098
Total current liabilities 9,990,308 10,049,953 9,904,342 10,000,602
Non current liabilities:
Grants committed but not paid 16 4,004,000 – 4,004,000 –
Total liabilities 13,994,308 10,049,953 13,908,342 10,000,602
Total capital and liabilities 204,975,751 206,659,951 206,081,687 208,126,231
Assets—
Current assets:
Bank and deposits 206,164 1,193,311 2,796 12,458
Accounts receivable and interest accrual 10 218,047 110,749 157,781 25,479
Other deposits 132,753 2,766 132,753 2,766
Back Country Foods Limited 11 2,995 2,995 – –
Taxation – – – –
Trading stock 84,515 – – –
Goods and services taxation 19,434 11,114 – –
Current portion of other investments 350,000 – – –
Current portion of loan funding 12 1,212,656 751,038 – –
Total current assets 2,226,564 2,071,973 293,330 40,703
Non current assets:
Property, plant and equipment 17 936,165 811,115 933,967 807,635
Managed funds:
ING (NZ) Limited 18 36,996,072 35,461,385 36,996,072 35,461,385
Tower Asset Management 18 50,233,161 46,918,637 50,233,161 46,918,637
AMP Asset Management 18 35,150,374 29,366,863 35,150,374 29,366,863
Capital International 18 35,338,274 36,478,490 35,338,274 36,478,490
Alliance Bernstein 18 37,273,175 49,917,310 37,273,175 49,917,310
Loans 13 2,095,141 1,367,015 2,095,141 1,367,015
Loan funding 12 4,084,108 3,767,992 – –
Investment in associates 14 517,717 149,171 – –
Investment in subsidiary – – 7,768,193 7,768,193
Other investments 125,000 350,000 – –
Total non current assets 202,749,187 204,587,978 205,788,357 208,085,528
Total assets 204,975,751 206,659,951 206,081,687 208,126,231
Consolidated Statement of Cash Flows for the Year Ended 31 March 2007
Note 2007Group 2006Group 2007Parent 2006Parent
Cash flows from operating activities—
Cash was provided from/(applied to):
Receipts from customers 27,890 113,585 – –
Interest received 3,949,616 3,132,256 3,250,020 2,526,773
Dividends received 4,981,052 6,717,084 4,957,348 6,713,001
Revaluation of investments – 28,808,823 – 28,808,823
Taxation refund received – 1,379 – –
Payments to suppliers and employees (2,311,093) (2,077,846) (1,916,878) (1,794,248)
Grants to the community (7,835,998) (7,908,453) (7,835,998) (7,908,453)
Interest paid (79) (91) – –
Income taxes paid – (11,114) – –
Net cash flows from operating activities 15 (1,188,612) 28,775,623 (1,545,508) 28,345,896
Cash flows from investing activities—
Cash was provided from/(applied to):
Repayment of debt funding advanced – – – –
Drawdown of debt funding from recipients (461,618) (2,453,298) – –
Investments 1,919,913 (26,723,232) 2,336,030 (28,095,404)
Increase in associate investments (375,246) – – –
Purchase of property, plant and equipment (56,799) 350,218 (56,799) –
Proceeds on sale of property, plant and equipment 4,615 – 4,500 –
Increase in trading stock (84,515) – – –
Dividends received on investment in associates 3,000 6,000 – –
Loan advances (800,000) (366,179) (800,000) (366,179)
Loan repayments 52,115 – 52,115 –
Net cash flows from investing activities 201,465 (29,186,491) 1,535,846 (28,461,583)
Net increase/(decrease) in cash held (987,147) (410,868) (9,662) (115,687)
Cash balances at beginning of the year 1,193,311 1,604,179 12,458 128,145
Cash balances at end of year 206,164 1,193,311 2,796 12,458
Statement of Significant Accounting Policies for the Year Ended 31 March 2007
A. Basis of Preparation
The Community Trust of Southland was formed under the Trustee Banks Restructuring Act 1988 and is incorporated under the Charitable Trusts Act 1957. The financial statements presented are those for The Community Trust of Southland (“the trust”) making up the parent. The group consists of The Community Trust of Southland (“the trust”), its wholly owned subsidiary companies Southland Community Trust Charities Limited and Invest South Limited Group.
The financial statements comply with the Financial Reporting Act 1993, the Community Trusts Act 1999 and the Companies Act 1993. They comprise statements of the following: Significant accounting policies, financial performance, movements in trust funds, financial position, cash flows, as well as notes to these statements.
The financial statements are prepared on the basis of historical cost except that investment assets are stated at valuation, as is the trust’s property at 62 Don Street, Invercargill.
B. Consolidation Method
The financial statements of the trust’s wholly owned companies are included in the financial statements of the group using the purchase method of consolidation.
C. Associates
Associates are entities in which the group has significant influence, but not control over the operating and financial policies.
The financial statements include the group’s share of the net surplus of associates since acquisition on an equity accounted basis.
D. Goodwill Arising on Acquisition of Associates
Goodwill arising on the acquisition of an associate represents the excess of the purchase consideration over the fair value of the identifiable assets acquired. Goodwill is stated at cost and amortised to the statement of financial performance on a straight line basis over the period during which benefits are expected to be derived – a period not exceeding 20 years.
E. Trust Capital
Following the sale of the trust’s shares in Trust Bank New Zealand Limited in April 1996 for $158,460,000, the trustees agreed that the value of the trust at that time should be maintained for the benefit of current and future generations living in the region. For this purpose, the trustees agreed that $158,460,000 would be considered as the “trust capital” value of the parent. Trustees further agreed that over the long term, the net assets of the parent would not be allowed to reduce to a level below the
inflation-adjusted real value of this trust capital.
F. Capital Maintenance Reserve
The capital maintenance reserve represents the additional amount necessary to preserve the real value of the trust capital allowing for inflation as measured by the Consumers Price Index (all groups) and payments of grants out of capital.
G. Grants Maintenance Reserve
While the trustees have adopted a long-term investment strategy, they accept that annual returns from investments are likely to fluctuate from year to year. In recognition of this, a grants maintenance reserve is maintained. In years when net income from investments is higher than the grant levels, surplus income will be transferred to this reserve. In years when there is insufficient income to sustain the level of grants, an appropriate amount will be transferred from the grants maintenance reserve to income.
H. Basis of Recognising Components of the Financial Statements
The following general accounting policies are adopted:
Assets
A transaction results in an asset being recognised in the statement of financial position when it will probably give rise to ongoing benefits for the group and those benefits can be measured with reliability.
Liabilities
A transaction results in a liability being recognised in the statement of financial position when it will probably give rise to the need for the group to sacrifice assets in the future and those sacrifices can be measured with reliability.
Revenue
Revenue is recognised in the statement of financial performance when a transaction gives rise to an increase in the value of the group’s net assets, and that increase can be measured with reliability.
Expenses
An expense is recognised in the statement of financial performance when a transaction results in a decrease in the value of the group’s net assets, and that decrease can be measured with reliability.
Classification of Assets and Liabilities Between Current and Non-current
An amount is classified as current when it is expected to be settled or extinguished within one year of the date of the financial statements. All other amounts are classified as non-current.
I. Property, Plant and Equipment (Parent)
Property, plant and equipment are initially stated at cost and then depreciated on a straight line basis. Land and buildings are stated at valuation as determined by an independent registered valuer. The basis of valuation of the land and buildings is highest and best use. Revaluation surpluses are taken directly to the revaluation reserve. Decreases in value are debited directly to the revaluation reserve to the extent they reserve previous surpluses and are otherwise recognised as expenses (and income on subsequent reversal) in the statement of financial performance. The estimated useful lives of fixed assets are as follows:
Land Indefinite
Buildings 30–40 years
Furniture and fittings 3–15 years
Office equipment 3–8 years
Motor vehicles 5–8 years
J. Property, Plant and Equipment (Group)
Property, plant and equipment are initially stated at cost and then depreciated using maximum rates approved for taxation purposes. The rates and method applied are as follows:
Furniture and fittings 11.4% – 18.0% diminishing value
Office equipment 22.0% – 60.0% diminishing value
Motor vehicles 7.5% diminishing value
Other assets 48.0% diminishing value
K. Investments with Fund Managers
Investments with fund managers are stated at market value. Realised and unrealised gains or losses on holding these investments are recognised in the statement of financial performance. These gains or losses are shown in the statement of financial performance as income from revaluation of investments.
L. Other Investments
Cash investments are stated at cost plus interest credited or accrued to balance date.
M. Accounts Receivable
Accounts receivable are stated at expected realisable value.
N. Rental Payments
Invest South Limited Group leases its premises in addition to certain items of plant and equipment. Operating lease payments, where the lessors effectively retain substantially all the risks and benefits of ownership of the leased items, are included in the determination of the operating surplus/(deficit) in equal instalments over the lease term.
O. Loan Funding Advances
Invest South Limited (a subsidiary) has advanced monies to non-related entities as part of its core business activity. Interest is charged on these advances and accrued where necessary. The investments are recorded at expected realisable value.
P. Impairment
If the estimated recoverable amount of an asset is less than its carrying amount, the asset is written down to its estimated recoverable amount and an impairment loss is recognised in the statement of financial performance.
Q. Grants
Grants are recognised when they are approved by the trustees. Unpaid grants are recorded as a liability.
R. Goods and Services Tax
The parent is not registered for goods and services tax. The parent financial statements are prepared using GST inclusive accounting. The subsidiary of Invest South Limited Group is registered for GST and all assets and liabilities have been stated exclusive of GST with the exception of receivables and payables which are stated inclusive of GST.
S. Income Taxation
From 1 April 2004, section CB4(1)(m) of the Income Tax Act 1994, exempts the trust from income tax. Invest South Limited Group follows the income taxes payable method for accounting for income tax.
T. Statement of Cash Flows
Operating cash flows includes interest and dividends paid or credited to investment funds under management. Cash movements in funds invested are recognised in investing activities.
U. Inventories
Stock and work in progress are stated at the lower of cost and net realisable value. Cost is determined on a first in, first out basis (or weighted average cost method).
V. Changes in Accounting Policies
Non Current Grants Committed but not Paid
The group has changed its accounting policy for non-current grants committed but not paid to comply with FRS-15: Provisions, Contingent Liabilities and Contingent Assets.
Grants Recognised as an Expense
The group has changed its accounting policy for treatment of grants. In the current year they are recognised as an expense, instead of as a distribution. This is consistent with the statement of concepts.
Other Changes
With the exception of the above changes in accounting policies, accounting policies have been applied on a consistent basis with those to the previous year.
W. Changes to Comparatives
Certain comparatives have been changed to give a more meaningful comparison.
Notes to the Financial Statements for the Year Ended 31 March 2007
1. Operating Revenue
Note 2007Group 2006Group 2007Parent 2006Parent
Bad debts recovered (113,594) 48,249 – –
Change in value of investments (685,612) 28,711,436 (685,612) 28,711,436
Depreciation recovered – 68,488 – –
Dividends and distributions 5,111,039 6,435,932 5,087,335 6,412,069
Interest received 3,969,857 3,019,334 3,270,261 2,422,909
Lease income – 4,083 – –
Other revenue 27,890 41,473 – –
Share of associates’ earnings 21,300 8,807 – –
8,330,880 38,337,802 7,671,984 37,546,414
2. Expenditure
Note 2007Group 2006Group 2007Parent 2006Parent
Audit fees 3 36,547 26,973 32,047 23,473
Communications 32,982 33,749 17,566 19,302
Depreciation 67,407 73,835 66,240 71,655
Directors’ fees 57,500 70,000 – –
Loss/(gain) on disposal of property, plant and equipment (4,500) 158 (4,500) –
Fund manager fees 955,755 892,103 955,755 892,103
General expenses 117,116 119,093 72,150 78,954
Insurance 23,232 20,238 17,244 14,212
Interest 79 91 – –
Occupancy costs 23,759 23,817 23,759 23,817
Office expenses 27,308 22,218 27,308 22,218
Professional fees 4 165,639 177,838 120,882 148,435
Promotion, reporting and compliance expenses 127,806 76,582 109,566 68,865
Rent – – – –
Salaries and staff costs 465,766 396,521 323,212 262,252
Trustees’ fees 5 201,433 204,876 201,433 204,876
Vehicle expenses 27,285 20,645 27,285 20,645
2,325,114 2,158,737 1,989,947 1,850,807
3. Auditors’ Remuneration
During the year the following amounts were paid to auditors: 2007Group 2006Group 2007Parent 2006Parent
To Ward Wilson, the former group auditors, for audit work 26,138 19,385 21,638 15,885
To Ward Wilson, the former group auditors, for grants audits 6,383 3,791 6,383 3,791
To other auditors, for grants audits 4,026 3,797 4,026 3,797
36,547 26,973 32,047 23,473
Audit fees are recognised on a cash basis – Deloitte were appointed auditors with effect from 1 April 2006.
4. Professional Fees
2007 2006 2007 2006
Group Group Parent Parent
Financial/taxation advisory 92,202 114,930 92,202 114,930
Legal 50,251 33,562 5,494 4,159
Strategic review – 18,828 – 18,828
142,453 167,320 97,696 137,917
5. Trustees’ Fees
Meeting fees and honorariums were paid to trustees as follows:
Meetings Parent Parent
Attended 2007 2006

A. A. Broad 62 38,290 38,945
P. B. Redpath 44 26,401 18,070
T. W. Harpur 44 16,125 17,000
F. G. Cardno (retired June 2005) 0 – 2,408
S. G. Palmer (retired June 2006) 8 3,758 20,605
N. J. Wyeth 45 18,870 21,600
D. Williams 42 20,700 22,600
M. Hawes 28 14,737 13,500
K. S. Henderson 38 17,070 14,935
G. M. Neave 36 16,555 20,230
J. T. Hicks (appointed June 2005) 29 14,270 14,983
P. Lindsay (appointed June 2006) 29 14,657 –
201,433 204,876
Trustee fees and honorariums are set by the Minister of Finance.
6. Grants Approved
2007 2006 2007 2006
Group Group Parent Parent
Grants approved this year 8,180,856 7,565,035 8,180,856 7,565,035
Less: Prior year’s grants cancelled (414,774) (95,113) (414,774) (95,113)
Net grants approved 7,766,082 7,469,922 7,766,082 7,469,922
7. Taxation and Tax Free Distributions
The Taxation (GST, Trans-Tasman Imputation and Miscellaneous Provisions) Act 2003 amended the Income Tax Act 1994 to exempt the trust from income tax from 1 April 2004 and the trust is not required to prepare an income tax return beyond
31 March 2004. The trust can continue to make distributions to community organisations without an income tax liability.
8. Reserves
2007Group 2006Group 2007Parent 2006Parent
(i) Capital Maintenance Reserve
Opening balance 12,990,499 1,284,664 38,031,734 1,284,664
Transfer from grants maintenance reserve – 6,168,591 – 31,209,826
Transfer from statement of financial performance 4,827,366 6,168,561 4,827,366 6,168,561
Transfer to trust capital reserve – (631,317) – (631,317)
17,817,865 12,990,499 42,859,100 38,031,734
(ii) Grants Maintenance Reserve
Opening balance 25,159,499 8,059,332 1,633,895 10,058,421
Transfer to capital maintenance reserve – (6,168,591) – (31,209,826)
Transfer from statement of financial performance (10,455,921) 23,268,758 (10,779,650) 22,785,300
14,703,578 25,159,499 (9,145,755) 1,633,895
Total reserves 32,521,443 38,149,998 33,713,345 39,665,629
9. Trust Capital
Opening balance 158,460,000 158,460,000 158,460,000 158,460,000
Transfer from capital maintenance reserve – 631,317 – 631,317
Grants paid from capital – (631,317) – (631,317)
158,460,000 158,460,000 158,460,000 158,460,000
10. Accounts Receivable
Accounts receivable 218,047 110,749 157,781 25,479
Provision for doubtful debts – – – –
218,047 110,749 157,781 25,479
11. Back Country Foods Limited
The advance to Back Country Foods Limited recorded in the group statement of financial position as at 31 March 2007, represents dividends paid to Invest South Limited by way of a credit to Invest South Limited’s shareholder current account. The advance is interest free and repayable upon demand.
12. Loan Funding
As at 31 March 2007, the following issues are relevant regarding the current loan funding:
? The board of Invest South Limited has initiated legal proceedings against Enno Oudshoorn and Klaas Smak under the terms of the investors’ agreement signed when Invest South Limited initially invested $680,000 capital in Tulip International Limited. The agreement provides that in the event of default, Invest South Limited has the right to put the shares back to Enno Oudshoorn and Klaas Smak at original cost. Default occurred on the loan advanced to Tulip International Limited and the company was placed into receivership.
? Woodlands Apiary Limited have defaulted on their loan payments and on 8 May 2007, Invest South Limited exercised its power under the loan agreement and appointed John White as receiver.
2007 2006
Investment in finance leases 249,148 249,148
Other advances 5,047,616 4,269,882
Total debt 5,296,764 4,519,030
Represented by:
Current 1,212,656 751,038
Non current 4,084,108 3,767,992
Total debt 5,296,764 4,519,030
13. Loans
Loan balances outstanding as at 31 March were as follows: 2007Group 2006Group 2007Parent 2006Parent
Troopers Memorial Corner Charitable Trust 195,000 195,000 195,000 195,000
Southland Museum and Art Gallery – 14,115 – 14,115
Ringa Ringa Heights Golf Club 36,000 36,000 36,000 36,000
Croydon Aviation Museum 280,000 280,000 280,000 280,000
Tuatapere Hump Ridge Track – 40,000 – 40,000
Invercargill Artificial Sports Surface Trust 96,500 96,500 96,500 96,500
Northern Southland Medical Trust 50,000 50,000 50,000 50,000
Otautau Community Health Trust 21,000 24,000 21,000 24,000
Troopers Memorial Corner Charitable Trust – Yule House 170,000 180,000 170,000 180,000
Southland Heritage Buildings Preservation Trust – 25,000 – 25,000
Wyndham Rest Home 100,000 100,000 100,000 100,000
Parata Rest Home 15,000 15,000 15,000 15,000
Borland Lodge 331,641 311,400 331,641 311,400
Southland Indoor Leisure Centre Charitable Trust 800,000 – 800,000 –
2,095,141 1,367,015 2,095,141 1,367,015
Each loan is repayable on demand. All loans are interest free, with the exception of the loan to Borland Lodge, which attracts interest of 6.5%.
14. Investment in Associates
(a) Carrying amount of associates
Carrying amount at beginning of year 149,171 143,364 – –
Equity accounted earnings of associates 21,300 8,807 – –
Addition of associates 375,246 – – –
Dividends from associates (3,000) (3,000) – –
Disposal of associate – – – –
Carrying amount at end of year 517,717 149,171 – –
(b) Equity accounted earnings of associates
Equity accounted earnings comprise:
Surplus/(deficit) before income tax 21,300 8,807 – –
Amortisation of goodwill – – – –
Income tax – – – –
Net surplus/(deficit) 21,300 8,807 – –
15. Reconciliation with Net Surplus
2007Group 2006Group 2007Parent 2006Parent
Net surplus/(deficit) before distribution 6,141,539 36,275,924 5,817,810 35,792,466
Less: Grants (11,770,094) (7,469,922) (11,770,094) (7,469,922)
Net surplus/(deficit) (5,628,555) 28,806,002 (5,952,284) 28,322,544
Add/(less) movements in working capital items
Increase/(decrease) in accounts payable and accrued expenses 41,939 14,094 13,644 3,026
Increase/(decrease) in grants committed but not paid (109,904) (478,531) (109,904) (478,531)
(Increase)/decrease in accounts receivable (107,297) 493,156 (132,302) 484,061
(Increase)/decrease in taxation refund due – 1,379 – –
(175,262) 30,098 (228,562) 8,556
Add/(less) non-cash items
Depreciation 67,407 73,677 66,240 71,655
Depreciation recovered (4,500) (68,488) (4,500) –
Increase/(decrease) in non-current grants committed 4,004,000 – 4,004,000 –
Revaluation of investments 685,612 – 685,612 –
Revaluation of property (135,773) (96,859) (135,773) (96,859)
Non cash interest income (20,241) – (20,241) –
Loan repayment by way of a grant approval 40,000 40,000 40,000 40,000
Share of associates earnings (21,300) (8,807) – –
4,615,205 (60,477) 4,635,338 14,796
Net cash from operating activities (1,188,612) 28,775,623 (1,545,508) 28,345,896
16. Grants Committed Not Paid
Commitments of $4,004,000 exist for grants which will be distributed from either capital or future income sources in future years. Specific commitments are as follows:
Parent2007 Parent2006
Croydon Aviation Museum 280,000 280,000
Deep Cove Outdoor Education Trust 15,000 –
Families First Trust – 40,000
Gore & Districts St James Theatre Trust 400,000 –
Invercargill Repertory Society 20,000 –
Invercargill Student Support Network 1,144,000 –
Netball Southland 50,000 –
Queenstown Aquatic Centre 1,500,000 1,500,000
Queenstown Christian Camp 105,000 –
South Catlins Environment and Development Trust 250,000 500,000
Southland Indoor Leisure Centre Charitable Trust – 80,000
Tuatapere Hump Ridge Track – 40,000
University of Otago 240,000 –
Wakatipu Trails Trust – 100,000
4,004,000 2,540,000
The years in which these commitments fall due are as follows:
Year ending 31 March 2007 – 790,000
Year ending 31 March 2008 1,868,800 550,000
Year ending 31 March 2009 748,800 350,000
Year ending 31 March 2010 598,800 400,000
Year ending 31 March 2011 648,800 450,000
Year ending 31 March 2012 138,800 –
4,004,000 2,540,000
Commitments of up to $4,580,000 exist for loans which trustees have approved, but which had not been drawn down as at balance date. The approved loans are as follows:
Parent 2007 Parent 2006
Arrowtown Community Pre-school 30,000 –
Awarua Social Services 200,000 200,000
Living Fiordland Charitable Trust 3,700,000 3,700,000
South Catlins Environment and Development Trust 600,000 600,000
Southland Indoor Leisure Centre Trust – 800,000
Southern Rural Fire Authority 50,000 –
4,580,000 5,300,000
At 31 March 2007, Invest South Limited had no commitments.
(2006: Invest South Limited had a commitment to pay the uncalled share capital of the 100%-owned company Invest South Asset Management Limited).
17. Property, Plant and Equipment
Parent 2007Cost 2007Accum depn 2007Book Value 2006Book Value
Land – at valuation 457,419 217,419 240,000 220,000
Buildings – at valuation 523,063 (56,937) 580,000 485,000
Office equipment 219,714 172,412 47,302 36,742
Furniture and fittings 154,250 144,801 9,449 14,230
Motor vehicles 116,483 59,267 57,216 51,663
1,470,929 546,962 933,967 807,635
Group
Land – at valuation 457,419 217,419 240,000 220,000
Buildings – at valuation 523,063 (56,937) 580,000 485,000
Office equipment 236,797 188,495 48,302 38,724
Furniture and fittings 157,770 147,194 10,576 15,591
Motor vehicles 116,483 59,267 57,216 51,663
Other assets 1,423 1,352 71 137
1,492,955 556,790 936,165 811,115
Land and buildings have been revalued as at 31 March 2007 and are stated at their revalued amounts as determined by Chadderton Valuation, an independent registered valuer (a member firm of the New Zealand Institute of Valuers).
The original cost of land was $457,419 and the original cost of the building was $523,063.
18. Investments With Fund Managers
The parent has funds with five investment managers (fund managers), being Alliance Bernstein, AMP Asset Management, Capital International, ING (NZ) Limited and Tower Asset Management. Market values and asset allocations of these investments as at balance date were as follows:
Alliance Bernstein(NZ$m) AMP(NZ$m) CapitalIntn’l(NZ$m) ING (NZ) (NZ$m) TowerAssetMgmnt(NZ$m) 2006Total(NZ$m) 2005Total(NZ$m)
NZ equities – – – 21,000 – 21,000 24,130
Overseas equities 37,273 – 35,338 – – 72,608 81,400
NZ fixed interest – 23,510 – – – 23,510 24,320
Overseas fixed interest – – – – 50,233 50,230 46,920
Property – 880 – – – 880 940
Cash – 10,760 – 15,996 – 26,756 20,440
37,273 35,150 35,338 36,996 50,233 194,984 198,150
Exposure to currency, interest rate and credit risk arises in the normal course of the fund managers’ management of the group’s investments. A range of hedging policies are in place whereby the fund managers use derivative financial instruments as a means of managing exposure to fluctuations in foreign exchange rates and interest rates. While these financial instruments are subject to the risk of market rates changing subsequent to acquisition, such changes would generally be offset by opposite effects on the items being hedged.
19. Group Investments
Name Ownership Interest Held BalanceDate Principal Activity
Subsidiaries 2007 2006
Southland Community Trust Charities Limited 100% 100% 31 March Distribution of grants to charitable organisations
Invest South Limited 100% 100% 31 March Debt funding and equity investment
Invest South Asset Management Limited – – 31 March Asset management
Associates
Back Country Foods Limited 42% 42% 31 March Manufactures freeze dried prepared meals
Tulip International Limited 33% 33% 31 May In receivership
Bush Road Limited 30% 0% 31 March Processes and wholesales vegetables and associated products
Woodlands Apiary Limited (in receivership) 49% 0% 31 December Manufactures and wholesales honey and associated products
20. International Financial Reporting Standards
In December 2002, the New Zealand Accounting Standards Review Board announced that the 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 trust has decided to adopt IFRS effective from 1 April 2008.
The trust has started to assess the key differences in accounting policies between NZ IFRS and current NZ GAAP with a view to determining the impacts on the financial statements that are expected to arise on transition. As the trust has not yet completed an analysis of the differences between existing NZ GAAP and NZ IFRS, it is unable to reliably estimate the key differences in accounting policies or quantify the impacts to the financial statements that are expected to arise on transition to NZ IFRS.
21. Segmental Information
The trust’s specified area includes all of the areas of Invercargill City Council, Southland District Council, Gore District Council, the Heriot and Tapanui areas of Clutha District Council, and the Wakatipu Basin area of Queenstown Lake
District Council. The trust’s principal activities are to invest the trust capital, both within the specified area and outside of the region, and to distribute grants for charitable, cultural, philanthropic, recreational and other purposes being purposes beneficial to the community principally within the trust’s specified area.
22. Financial Instruments
General
The group states its investments in managed funds at estimated market value. The trustees consider that the fair value of the financial assets is identical to the value in the statement of financial position.
Concentration of Credit Risk
The group from time to time has significant funds in trading bank deposits. The group limits risk by spreading the deposits over several trading banks. The group has not required collateral or other security to support its financial instruments.
The group further limits risk through its policy of placing investment funds with five separate fund managers, with each fund manager having an investment mandate which requires that they diversify their investments on the group’s behalf. The group has sought and obtained the advice of professional financial advisors prior to making its investment allocation and placement decisions.
Interest Rate Risk
The bank deposits are sensitive to changes in interest rates, as are a proportion of the funds managed by the fund managers.
23. Related Parties
There were no related party transactions during the year (2006: Nil).
24. Subsequent Events
Following balance date, Invest South Limited received $105,066 from Bush Road Limited, being a pro rata share repurchase. Invest South Limited has also appointed John White as receiver of Woodlands Apiary Limited as at 8 May 2007. The financial effects of these events have not been recognised in the financial statements.
(2006: There were no significant events of which readers of the financial statements need to be aware).
Audit Report
To the Trustees of the Community Trust of Southland
We have audited the financial statements. The financial statements provide information about the past financial performance and financial position of the trust and the group as at 31 March 2007. This information is stated in accordance with the accounting policies set out.
Board of Trustees’ Responsibilities
The board of trustees is responsible for the preparation, in accordance with New Zealand law and generally accepted accounting practice, of financial statements which give a true and fair view of the financial position of the Community Trust of Southland and group as at 31 March 2007 and of the results of 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 board of trustees.
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 board of trustees in the preparation of the financial statements;
? whether the accounting policies are appropriate to the trust’s and group’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.
Other than in our capacity as auditor, we have no relationship with or interests in the Community Trust of Southland or any of its subsidiaries.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion:
? proper accounting records have been kept by the Community Trust of Southland as far as appears from our examination of those records;
? the financial statements:
– comply with generally accepted accounting practice in New Zealand; and
– give a true and fair view of the financial position of the Community Trust of Southland 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 20 February 2008 and our unqualified opinion is expressed as at that date.
DELOITTE, Chartered Accountants, Dunedin.
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(A list of all distributions of income and capital approved by The Community Trust of Southland during the year ended
31 March 2007 is available, on request, from the trust’s office.)