Annual Report for the Year Ended 31 March 2008
Trust Particulars
The trust was initially incorporated on 5 August 1988 as the Trust Bank Bay of Plenty Community Trust in accordance
with the provisions of the Trustee Banks Restructuring Act 1988. It continues under the provisions of the Community Trusts Act 1999. The purpose of the trust is to provide charitable, cultural, philanthropic, recreational and other benefits to Bay of Plenty communities. In April 1998, the name was changed to the Bay of Plenty Community Trust Inc. In March 2006, the trust adopted the name BayTrust for operational purposes.
Trustees: Ms P. Thompson (Chair), Mr F. Cookson, Ms T. J. Eggleton, Ms L. Hudson, Ms S. Kai Fong, Mr B. Kerr,
Mr L. Martin J.P., Mrs P. J. McLeod M.N.Z.M., Mrs M. Ngatai Q.S.M., J.P., Ms A. Simpson, Ms A. von Tunzelmann, Mr R. Morrison.
Trust Manager: Mr B. W. Cronin, J.P.
Accountants: Staples Rodway, Tauranga.
Auditors: Ingham Mora, Tauranga.
Bankers: BNZ, Tauranga; Westpac, Tauranga.
Financial Advisers: Russell Investment Group Limited, Auckland.
Solicitors: Sharp Tudhope, Tauranga.
Tax Advisers: KPMG, Christchurch.
Chairperson’s Report for the Year Ended 31 March 2008
What a year! In the 12 months to 31 March 2008, BayTrust paid out over $4,000,000 in grants to essential Bay of Plenty causes, from arts, heritage and cultural groups to sports clubs, schools, hospices, churches and welfare groups, from Katikati to Turangi to Waihau Bay. It also paid a total of $83,543 to 34 people with Dillon Scholarships, supporting tertiary study for those with disabilities.
Highlights of BayTrust’s Year included:
? A joint venture partnership with the Rotorua-based Waiariki Institute of Technology to increase student numbers from low decile schools. BayTrust and Waiariki will each contribute $240,000 over three years.
? A grant of $250,000 to the Taupo District Council to assist with the upgrade of the Turangi Swimming Pool complex.
? A contribution of $100,000 to the inaugural BoP Searchlight Tattoo at Rotorua’s International Stadium on 23 and
24 February. With a total cast of around 2,000 and including 20 pipe and brass bands (four from overseas), it was a roaring success, despite some very dodgy, unseasonal weather.
? Almost $93,000 towards the establishment of an innovative Maintenance Engineering Learning Centre in Kawerau.
? $100,000 to Te Manu Toroa for the upgrade and expansion of its Te Akau Hauora at Papamoa.
? $120,000 to the Opotiki Heritage & Agricultural Society towards the Opotiki District Museum building.
CoachForce remains one of BayTrust’s prime investments. Since its inception as a Sport BoP/BayTrust partnership in 1997, the trust has contributed over $5.2m to this critically important programme encouraging more and better coaches in Bay sport. We congratulate Sport BoP and all those involved in CoachForce’s continuing success.
All that’s the good news. Investment returns are the bad news of course – BayTrust is not immune from the significant volatility and investment losses that have impacted world financial markets following the sub-prime mortgage crisis that first broke in the USA in mid-2007. BayTrust is well-advised by its asset consultants, the Russell Investment Group, and has its investments well-diversified, but despite this, sustained an investment loss of $5.855m (4.1%) over the year.
More positively, the trust has built up a good buffer (the “income fluctuation reserve”) against investment losses over the past few years, so is confident it can continue to make annual grants of around $4m – $5m p.a. into the future.
During the year under review, trustees Jeanette Knudsen (Tauranga) and Ray Sharp (Opotiki) retired and their places were taken by Linda Hudson (Whakatane) and Fred Cookson (Opotiki). Jeanette and Ray had both served two terms (eight years) with the trust (Ray six years as chair) and were passionate and fulsome contributors to all elements of BayTrust’s operations.
Our sincere thanks to all trustees and staff for their commitment to BayTrust over the past 12 months. Whilst there have been some quite challenging times, there have been some very rewarding ones too as the trust continues to help build, strengthen and enhance Bay communities.
PAULA THOMPSON, Chairperson.
BRUCE W. CRONIN, Trust Manager.
Date: 9 July 2008.

Balance Sheet as at 31 March 2008 in New Zealand Dollars
Note 2008 2007
$000 $000
Assets:
Property, plant and equipment 8 50 55
Loans 157 218
Investments, including derivatives 9, 13 131,471 142,717
Total non-current assets 131,678 142,990

Loans 77 306
Cash and cash equivalents 11 1,128 766
Total current assets 1,205 1,072
Total assets 132,882 144,062
Trust funds:
Trust capital 12 89,308 89,308
Income fluctuation reserve 12 12,087 26,774
Inflation and population reserve 12 31,167 27,698
Total funds 16 132,562 143,780
Liabilities:
Trade and other payables, including derivatives 320 281
Total current liabilities 320 281
Total liabilities 320 281
Total equity and liabilities 132,882 144,062
Signed on behalf of the Board of Trustees:
PAULA THOMPSON, Chairperson.
BRUCE W. CRONIN, Trust Manager.
Date: 9 July 2008.
The accompanying notes form part of these financial statements.
Income Statement for the Year Ended 31 March 2008 in New Zealand Dollars
Note 2008 2007
$000 $000
Revenue 5 (5,761) 13,120
Portfolio management and advisory fees 600 643
Profit before tax
Other expenses 6 721 691
Income Tax 10
Profit/(loss) for the year (7,082) 11,786
Statement of Recognised Income and Expense for the Year Ended 31 March 2008 in New Zealand Dollars
Note 2008 2007
$000 $000
Profit/(loss) for the year (7,082) 11,786
Total recognised income and expenses for the year 12 (7,082) 11,786
The Notes are an integral part of these financial statements.
Statement of Cashflows for the Year Ended 31 March 2008 in New Zealand Dollars
Note 2008 2007
$000 $000
Cashflows from operating activities:
Investment income 2,750 6,602
Other income 94 61
Cash paid to suppliers, employees and trustees (1,263) (1,254)
Grants paid to the community (4,136) (4,804)
Net cash from operating activities 15 (2,555) 605


Cashflows from investment activities:
Acquisition of property, plant and equipment 8 (15) (15)
Disposal of investments 16,907 34,000
Acquisition of investments (13,357) (34,567)
Net cash from/used in investing activities 3,535 (582)
Net (decrease)/increase in cash and cash equivalents 980 23
Cash and cash equivalents at 1 April 37 14
Cash and cash equivalents at 31 March 1,017 37
Notes to the Financial Statements in New Zealand Dollars
Significant Accounting Policies
1 Reporting Entity
The Bay of Plenty Community Trust is a charitable trust, domiciled in New Zealand, incorporated in accordance with the provisions of The Community Trusts Act 1999. The trust is a public benefit entity.
The Bay of Plenty Community Trust is a charitable trust which distributes income from its investment activities to the Bay of Plenty communities.
2 Basis of Preparation
(a) Statement of Compliance
The financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 1993 and Generally Accepted Accounting Practice in New Zealand (NZ GAAP). They comply with New Zealand equivalents to International Financial Reporting Standards, and its interpretations (NZ IFRS) and other applicable Financial Reporting Standards, as appropriate for public benefit entities. Compliance with NZ IFRS ensures that the financial statements comply with International Financial Reporting (“IFRS”). These are the trust’s first financial statements and NZ IFRS 1 has been applied.
An explanation of how the transition to NZ IFRS has affected the reported financial position, financial performance and cash flows of the trust is provided in note 18. A description and the impact of changes in accounting policies are also described in note 18.
The accounting policies set out below have been applied consistently to all periods presented in these financial statements and in preparing an opening NZ IFRS balance sheet at 1 April 2006 for the purposes of the transition to NZ IFRS.
The financial statements have been approved by the board of trustees on 7 July 2008.
(b) Basis of Measurement
The financial statements have been prepared on the historical cost basis except for the following:
? Derivative financial instruments are measured at fair value.
? Financial instruments at fair value through profit or loss are measured at fair value.
The methods used to measure fair values are discussed further in note 4.
(c) Functional and Presentation Currency
These financial statements are presented in thousands of New Zealand dollars ($000s). All financial information presented in New Zealand dollars has been rounded to the nearest thousand.
(d) Use of Estimates and Judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected.
In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are relate to the valuation of investments are discussed further in note 4.
3 Significant Accounting Policies
(a) Foreign Currency
Foreign currency transactions
Transactions in foreign currencies are translated to the respective functional currencies of trust entities at exchange rates at the date of transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date.
(b) Financial Instruments
(i) Non-derivative financial instruments
Non-derivative financial instruments comprise investments in equity and debt securities, trade and other receivables, cash and cash equivalents, and trade and other payables.
Non-derivative financial instruments are recognised initially at fair value plus, for instruments not at fair value derivative financial instruments are measured as described below.
Cash and cash equivalents comprise cash balances and call deposits.
Instruments at fair value through profit or loss
An instrument is classified as at fair value through profit or loss if it held for trading or is designated as such upon initial recognition. Financial instruments are designated at fair value through profit or loss if the trust manages such investments and makes purchase and sale decisions based on their fair value. Upon initial recognition, attributable transactions costs are recognised in profit or loss when incurred. Subsequent to initial recognition, financial instruments at fair value through profit or loss are measured at fair value, and changes therein are recognised in profit or loss.
Trade and other receivables
Trade and other receivables are stated at their cost less impairment losses.
Trade and other payables
Trade and other payables are stated at cost.
(ii) Derivative financial instruments
The trust uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from investment activities. In accordance with its policy, the trust does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments.
Derivative financial instruments are recognised initially at fair value and transaction costs are expensed immediately. Subsequent to initial recognition, derivative financial instruments are stated at fair value. The gain or loss on remeasurement to fair value is recognised immediately in profit or loss.
(c) Property, Plant and Equipment
(i) Recognition and measurement
Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment losses.
Cost includes expenditures that are directly attributable to the acquisition of the asset.
When parts of an item of property, plant and equipment have different useful lives, they are accounted for as separate items (major components) of property, plant and equipment.
(ii) Subsequent costs
The cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of the item if it is probable that the future economic benefits embodied within the part will flow to the trust and its cost can be measured reliably. The costs of the day-to-day servicing of property, plant and equipment are recognised in profit or loss as incurred.
(iii) Depreciation
Depreciation is recognised in profit or loss on a diminishing value basis over the estimated useful lives of each part of an item of property, plant and equipment. Land is not depreciated.
The depreciation rates for the current and comparative periods are from 11.4% to 60%
Depreciation methods, useful lives and residual values are reassessed at the reporting date.
(d) Impairment
The carrying amounts of the trust’s assets are reviewed at each balance date to determine whether there is any indication of impairment.
An impairment loss is recognised whenever the carrying amount of an asset exceeds its recoverable amount. Impairment losses directly reduce the carrying amount of assets and are recognised in the income statement.
(i) Impairment of debt instruments and receivables
The recoverable amount of the trust’s receivables carried at amortised cost is calculated as the present value of estimated future cashflows, discounted the original effective interest rate (ie. the effective interest rate computed at initial recognition of these financial assets). Receivables with a short duration are not discounted.
(ii) Non-financial assets
The carrying amounts of the trust’s non-financial assets, are reviewed at each reporting date to determine whether there is any indication of impairment. If any such indication exists, then the asset’s recoverable amount is estimated.
(e) Employee Benefits
There are no employee benefits at 31 March 2008.
(f) Revenue
Investment income
Dividend income is recognised on the date that the trust’s right to receive payment is established. Interest income is recognised as it accrues.
(g) Grants Payable
Grants payable are recognised as a distribution from equity when the payment of the grant has been approved by the trustees and the recipient of the grant does not have any further obligations to meet in order to receive the grant.
(h) New Standards and Interpretations Not Yet Adopted
A number of new interpretations are not yet effective for the year ended 31 March 2008, and have not been applied in preparing these financial statements:
? NZ IFRS 8 Operating Segments. NZ IFRS 8, which becomes mandatory for the trust’s 2010 financial statements, is not expected to have any impact on the financial statements.
? NZ IFRS 1 Presentation of financial Statements (revised). NZ IFRS 1 will become mandatory for the trust’s 2010 financial statements. The trust has not yet determined the potential effect of the interpretation.
? NZ IFRS 4 I. Insurance Contracts – Amendments. NZ IFRS 4, which becomes mandatory for the trust’s 2010 financial statements, is not expected to have any impact on the financial statements.
? NZ IAS 23 Borrowing Costs. NZ IAS 23 will become mandatory for the trust’s 2010 financial statements, and is not expected to have any impact on the financial statements.
? NZ IFRIC 12 Service Concession Arrangements. NZ IFRIC 12 will become mandatory for the trust’s 2009 financial statements, and is not expected to have any impact on the financial statements.
? NZ IFRIC 13 Customer Loyalty programmes. NZ IFRIC 13 will become mandatory for the trust’s 2009 financial statements, and is not expected to have any impact on the financial statements.
? NZ IFRIC 14 The Limit on a defined benefit Asset. Minimum funding requirements and their interaction.
NZ IFRIC 14 will become mandatory for the trust’s 2009 financial statements, and is not expected to have any impact on the financial statements.
4. Determination of Fair Values
A number of the trust’s accounting policies and disclosures require the determination of fair value, for both financial and
non-financial assets and liabilities. Fair values have been determined for measurement and/or disclosure purposes based on the following methods. Where applicable, further information about the assumptions made in determining fair values is disclosed in the notes specific to that asset or liability.
(a) Investments in Equity and Debt Securities
The fair value of financial assets at fair value through profit or loss, is determined by reference to their quoted bid price at the reporting date wherever this information is available. Certain investments in emerging markets are only traded on certain days. In this instance, the trades that occurred on the date nearest to the balance date have been used.
(b) Loans
The fair value of loans is estimated as the present value of future cash flows, discounted at the market rate of interest
at the reporting date.
(c) Derivatives
The fair value of forward exchange contracts is based on their listed market price, if available. If a listed market price is not available, then fair value is estimated by discounting the difference between the contractual forward price and the current forward price for the residual maturity of the contract using a risk-free interest rate (based on government bonds).
2008 2007
$000 $000
5. Revenue
Dividends received 2,198 3,238
Interest received 553 1,693
Investment gains and losses (8,605) 8,128
Other 94 61
Total revenue (5,761) 13,120
2008 2007
$000 $000
6. Other expenses
Advertising public relations, distribution and other costs 56 61
Accountancy fees 6 9
Depreciation 19 16
Loss on disposal of property, plant and equipment 0 2
Office administration fees 76 71
Office lease expenses 64 62
Other administration fees 88 74
Wages and salaries 194 188
Trustee fees 157 155
Trustee expenses 53 46
713 684
Auditor’s remuneration to Ingham Mora
– audit of financial statements 8 7
Total auditor’s remuneration 8 7
Total other expenses 721 691
7. Grants
(a) The following future grants have been approved but have not been paid. Payments are conditional on the continual viability of the projects and are expected to be paid as follows:
2009 2010 2011
Grants Recipient
Sport BOP 370 370 –
Phillips SRT 200 100 –
Multi-Sport Opotiki 20 20 –
Whakatane CAB 15 15 –
Waiariki Institute 80 80 80
Shakti Ethnic Women’s Group (Central Region) 18 18 –
Kiwican Charitable Trust 25 25 –
Total 728 628 80
(b) The following conditional future grants have been approved but are subject to the applicants satisfying specific criteria in each case:
2009
Grants Recipient
Murupara Community Fac 7
Back-Up NZ 8
Propel Community Trust 6
Tuporo Kohanga Reo 10
Waipapa Charitable Trust 23
Opotiki District Council 140
Total 194
8. Property, Plant and Equipment
Furniture& fittings Officeequipment Total
Cost:
Balance at 1 April 2006 62 45 107
Additions 2 12 14
Disposals (4) (2) (6)
Balance as at 31 March 2007 60 55 115
Balance at 1 April 2007 60 55 115
Other additions 17 17
Disposals (3) (3)
Balance as at 31 March 2008 60 69 129
Depreciation:
Balance at 1 April 2006 12 33 45
Depreciation for the year 8 8 16
Balance as at 31 March 2007 20 41 61
Balance at 1 April 2007 20 42 62
Depreciation for the year 7 13 20
Balance as at 31 March 2008 27 55 82
Carrying amounts
At 1 April 2006 50 12 62
At 31 March 2007 41 14 55
At 1 April 2007 41 14 55
At 31 March 2008 34 16 50
9. Other Investments
2008 2007
$000 $000
Non-current investments:
Financial assets designated at fair value through profit or loss 131,471 142,717
Current investments:
There are no current investments at 31 March 2008
10. Taxation
Bay of Plenty Community Trust Inc is exempt from income tax with effect 1 April 2004, under section CW 44 of the Income Tax Act 2004.
11. Net Cash and Cash Equivalents
2008 2007
$000 $000
Bank balances 1,018 37
Call deposits 110 729
Cash and cash equivalents 1,128 766
12. Trust Funds
Trust Capital Income Fluctuation Reserve Inflation & Population GrowthReserve Total
Balance at 1 April 2006 89,308 23,683 22,713 135,704
Total recognised income and expense 11,786 – – 11,786
Distributions in the form of donations (3,710) – – (3,710)
Reserves transfers (8,076) 3,091 4,985 –
Balance at 31 March 2007 89,308 26,774 27,698 143,780
Balance at 1 April 2007 89,308 26,774 27,698 143,780
Total recognised income and expense (7,082) – – (7,082)
Distributions in the form of donations (4,136) – – (4,136)
Reserves transfers 11,218 (14,687) 3,469 –
Balance at 31 March 2008 89,308 12,087 31,167 132,562
Balance at 1 April 2006 89,308 23,683 22,713 135,704
Balance at 31 March 2007 89,308 26,774 27,698 143,780
Balance at 1 April 2007 89,308 26,774 27,698 143,780
Balance at 31 March 2008 89,308 12,087 31,167 132,562
Income Fluctuation Reserve
The income fluctuation reserve relates to a capital maintenance reserve established and maintained at the trustees’ discretion.
Inflation and Population Growth Reserve
The inflation and population growth reserve relates to a capital maintenance reserve based on an inflation factor (CPI) and 50% population growth in the region.
13 Financial instruments
Exposure to credit, interest rate, foreign currency, equity price and liquidity risks arises in the normal course of the trust’s business. The trust’s risk management policies and procedures for financial instruments are formally documented and approved by the trustees in the trust’s statement of investment policies and objectives (“SIPO”)
Credit risk
The trust’s SIPO stipulates value ranges that may be held in New Zealand equities, overseas equities, overseas fixed interest, New Zealand cash, hedge funds, global property and collateralised commodity futures. Within each of these investment
sub-trusts, there are maximum limits that can be invested within one investment group and with one investment manager. This diversified investment strategy reduces the credit risk exposure of the trust.
The trust makes loans only to entities that are well established and have demonstrated a robust ability to make regular repayments.
The SIPO states minimum credit ratings of investment bonds.
Liquidity risk
Liquidity risk represents the trust’s ability to meet its contractual obligations. The trust evaluates its liquidity measurements on an ongoing basis. In general, the trust generates sufficient cash flows from its activities to meet its obligations arising from its financial liabilities.
Market risk
Market risk is the risk that changes in market prices, such as interest rates or equity prices, will affect the trust’s profit or valuation of net assets. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk.
The risk is mitigated by the policies and procedures outlined in the trust’s SIPO. These include diversification of the investment portfolio and prudent investment strategies.
Foreign currency risk
The trust is exposed to foreign currency risk as a result of investment transactions entered into by fund managers in a currency other than the trust’s functional currency, New Zealand dollars ($), which is the presentation currency of the trust. Fund managers typically hedge investments denominated in a foreign currency where appropriate with foreign exchange contracts.
Interest rate risk
The trust has bank call and deposit accounts, government and local authority securities and other investment held by the trust’s fund managers that are exposed to interest rate risk. Interest rate swaps have been entered into to achieve an appropriate mix of fixed and floating rate exposure within the trust’s policy.
Other market price risk
The entity is not exposed to substantial other market price risk arising from financial instruments.
Quantitative Disclosure
Credit and interest rate risk
The carrying amount of financial assets represents the trust’s maximum credit exposure.
The trust’s maximum exposure to credit risk for investments by geographic regions and investment type and information relating to the interest rate risk is as follows:
2008 2007
Carrying amount $000 $000
New Zealand cash 8,738 3,292
New Zealand equities 5,280 7,973
Collateralised commodity futures – 7,406
Global bonds 59,272 56,373
Global equities 45,286 51,306
Global property 6,043 9,132
Hedge fund of funds 6,852 7,235
Total financial assets 131,471 142,717
Management of the interest rate risk is performed by the fund managers by use of interest rate swaps.
The average interest rate is determined inclusive of interest rate swaps that are embedded with the funds.
Liquidity Risk
The following table sets out the contractual cash flows for all financial assets, liabilities and for derivatives that are settled on a gross cash flow basis:
Trust 2008 Balance sheet Contractual cash flows 6 monthsor less 6–12 months 1–2 years 2–5 years More than5 years
Trade and other payables 320 320 320 – – – –
Total non-derivative liabilities 320 320 320
Investments 131,471 – – – – – –
Loans 234 234 38 38 65 93 –
Total non-derivative assets
Trust 2007
Trade and other payables 281 281 281 – – – –
Total non-derivative liabilities 281 281 281 – – – –
Investments 142,717 – – – – – –
Loans 524 524 352 27 55 90 –
Total non-derivative assets
Global bonds, equities and property are investments denominated in foreign currencies. These are hedged to New Zealand dollars within the fund by way of foreign exchange contracts.
Capital Management
The trust’s capital includes trust capital, Income fluctuation reserve and inflation and population growth reserve.
The trust’s policy is to maintain a strong capital base so as to maintain investor confidence and to sustain future development of the trust.
The trust is not subject to any externally imposed capital requirements.
The trust’s policies in respect of capital management and allocation are reviewed regularly by the board of trustees.
There have been no material changes in the trust’s management of capital during the period.
Sensitivity Analysis
Table 1 shows the asset allocation for the trust’s portfolio as at 31 March 2008 as well as the long term expected return for each asset class. The return one standard deviation above and below the expected return is also shown.
Table 1: Sensitivity Analysis for the Trusts Portfolio 31 March 2008
Asset Class Asset Allocation(31 March 2008) Long Term Expected Return p.a. –1 Std Deviation Return p.a. +1 Std Deviation Return p.a.
NZ Equities 5.2% 9.2% –7.8% 26.2%
Global Equities 33.5% 8.7% –6.2% 23.6%
Global Bonds 45.1% 6.3% 3.0% 9.6%
NZ Cash 6.4% 5.7% 4.2% 7.2%
Global Property 4.6% 8.1% –3.9% 20.1%
CCF’s 0.0% 7.8% –10.2% 25.8%
Hedge Funds 5.2% 8.3% 0.3% 16.3%
Total 100.00% 7.4% 1.2% 13.6%
From Table 1, the long term expected return for the trust’s portfolio is 7.4% per annum and there is approximately a 68% probability that the return in any one year will be within the range of 1.2% and 13.6%.
As at 31 March 2008, the trust’s portfolio had NZ$131.5m under management. Assuming the long-term return distribution approximates the short-term return distribution, then for the year 31 March 2008 to 31 March 2009 there is approximately a 68% probability that the trust’s revenue profit from investment activities will lie in the range of $1.6m to $17.9m, with an expected value of $9.7m.
Table 2 shows the asset allocation for the trust’s portfolio as at 31 March 2007 as well as the long term expected return for each asset class. The return one standard deviation above and below the expected return is also shown.
Table 2: Sensitivity Analysis for the Trusts Portfolio 31 March 2007
Asset Class Asset Allocation(31 March 2008) Long Term Expected Return p.a. –1 Std Deviation Return p.a. +1 Std Deviation Return p.a.
NZ Equities 5.2% 8.9% –8.1% 25.9%
Global Equities 33.5% 8.4% –6.5% 23.3%
Global Bonds 39.5% 6.0% 2.7% 9.3%
NZ Cash 2.3% 5.4% 3.9% 6.9%
Global Property 6.4% 7.8% –4.2% 19.8%
CCF’s 5.2% 7.5% –10.5% 25.5%
Hedge Funds 5.1% 8.0% 0.0% 16.0%
Total 100.00% 7.3% 0.5% 14.1%
From table 2 the long term expected return for the trust’s portfolio was 7.3% per annum and there was approximately a 68% probability that the return in any one year would be within the range of 0.5% to 14.1%.
As at 31 March 2007, the trust’s Portfolio had NZ$142.8m under management. Assuming the long-term return distribution approximates the short-term return distribution, then for the year 31 March 2007 to 31 March 2008, there is approximately a 68% probability that the trust’s revenue profit from investment activities will lie in the range of $0.7m to $20.1m, with an expected value of $10.4m.
Classification and Fair Values
All financial assets (including investments, loans, trade receivables and cash) are recognised at fair value.
All investments are designated at fair value. Loans and trade receivables are designated as loans and receivables.
Estimation of Fair Value
The methods used in determining the fair values of financial instruments are discussed in note 4.
14. Operating Leases
Leases as lessee
Non-cancellable operating lease rentals are payable as follows:
2008 2007
$000 $000
Less than one year 66 62
Between one and five years 232 277
Lease is for a 6-year term, with 2 rights of renewal for 3 years each.
15. Reconciliation of the Profit for the Period With the Net Cash From Operating Activities
2008 2007
$000 $000
Profit for the period (7,082) 11,786
Adjustments for:
Depreciation 19 16
Loss on disposal of property, plant and equipment 1
Capital grants (4,135) (3,710)
Accrued income included on investments 8,604 (6,460)
Change in trade and other receivables – 4
Change in trade and other payables 39 (1,032)
Net cash from operating activities (2,555) 605
16. Related Parties
There were no related transactions for the year ended 31 March 2008.
17. Subsequent Event
There are no subsequent events at 31 March 2008.
18. Explanation of Transition to NZ IFRS
As stated in note 1(a), these are the trust’s first financial statements for the year ended 31 March 2008, the comparative information presented in these financial statements for the year ended 31 March 2007 and in the preparation of an opening
NZ IFRS balance sheet at 1 April 2006 (the trust’s date of transition).
In preparing its opening NZ IFRS balance sheet, the trust has adjusted amounts reported previously in financial statements prepared in accordance with its old basis of accounting (previously GAAP). An explanation of how the transition from previous GAAP to NZ IFRS has affected the trust’s financial position, financial performance and cash flows is set out in the following tables and the notes that accompany the tables.
In addition, the trust has changed its accounting policies in a number of areas. In accordance with NZ IFRS, the changes in accounting policies have been made retrospectively and therefore adjustments have been made to the trust’s opening balance sheet.
Reconciliation of Equity
Group Note Previous GAAP Effect of transition to NZ IFRS NZ IFRS Previous GAAP Effect of transitionto NZ IFRS NZ IFRS
$000 $000 $000 $000 $000 $000
1 Apr 06 31 Mar 07
Assets:
Property, plant and equipment 58 58 55 55
Investments including derivatives 135,527 135,527 142,717 142,717
Loans (c) 557 (133) 424 291 (73) 218
Total non-current assets 136,142 136,009 143,063 142,990
Loans 430 (103) 327 408 (102) 306
Trade receivables 4 4 – 0
Cash and cash equivalents 678 678 766 766
Total current assets 1,112 1,009 1,174 1,072
Total assets 137,254 137,018 144,237 144,062
Trust funds:
Trust capital (c) 89,308 89,308 89,308 89,308
Income fluctuation reserve 23,919 (236) 23,683 26,949 (175) 26,774
Inflation and population growth reserve 22,713 22,713 27,698 27,698
Total equity 135,940 135,704 143,955 143,780

Trade and other payables 1,298 1,298 267 267
Employee entitlements 16 16 15 15
Total current liabilities 1,314 1,314 282 282
Total liabilities 1,314 1,314 282 282
Total equity and liabilities 137,254 137,018 144,237 144,062
Reconciliation of Profit
Trust Note Previous GAAP Effect of transitionto NZ IFRS NZ IFRS
$000 $000 $000
Revenue (c) 13,059 61 13,120
Portfolio management and advisory fees (643) – (643)
Other expenses (b), (c) (8,706) (8,015) (691)
Grants – profit before income tax (a) (3,548) (3,548) –
Income tax – – –
Profit/(loss) for the year 162 11,624 11,786
Changes in Accounting Policies
NZ IFRS Adjustments
(a) The trust has changed its accounting policy to recognise all donations as distributions from equity. In the previous years’ financial statements, certain distributions had been accounted for as an expense. The impact of the change in accounting policy has to increase profit in the year ended 31 March 2007 by $3,552,000.
(b) The trust has changed its accounting policy in respect of income fluctuation and inflation and population growth reserves transfers. Transfers are now recognised as movements in equity rather than as an expense in the income statement. The impact of the change in accounting policy is to increase profits for the year by $8,015,000.
(c) Under NZ IFRS, loans and receivables should be initially recognised at fair value. Under previous NZ GAAP, loans and receivables were recognised at the face value of the loan. The impact of the adjustment is to reduce the carrying value of the loans by $236,000 at 1 April 2006 and by $175,000 at 31 March 2007. The adjustment increases profit for the year ending 31 March 2007 by $61,000.
19. Contingent Liabilities
There are no contingent liabilities at 31 March 2008.
Auditor’s Report
To the Trustees of Bay of Plenty Community Trust Incorporated
We have audited the financial statements. The financial statements provide information about the past financial performance and financial position of the trust and its financial position as at 31 March 2008. 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 2008, and of the results of operations and cash flows for the year ended on that date.
Auditors’ Responsibilities
It is our responsibility to express to you an independent opinion on the financial statements 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 statements.
It also includes assessing:
? the significant estimates and judgments made by the trustees in the preparation of the financial statements; and
? 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 give 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 auditors, we have no relationship with or interests in the trust.
Unqualified Opinion
We have obtained all the information and explanations we have required.

In our opinion, the financial statements:
? comply with generally accepted accounting practice in New Zealand;
? comply with international financial reporting standards; and
? fairly reflect the financial position of the trust as at 31 March 2008 and the results of operations and cash flows for the year ended on that date:
Our audit was completed on 7 July 2008 and our unqualified opinion is expressed as at that date.
INGHAM MORA, Tauranga.
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(A full list of all distributions by way of grants for the year ended 31 March 2008 is available from the trust office on request, info@baytrust.org.nz or telephone (07) 578 6546.)