Annual Report and Financial Statements for the Year Ended 31 March 2008 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: Nicola Hornsey (chairperson) B.A., L.L.B.; Lee Burdon, Stephen Wills, Sheryl Frew B. COM., Peter Dalziel L.L.B., Simon Dorman L.L.B., Heather Sim, Geoffrey Geering Q.S.O., Kate Mattingley DIP. GRAD S.W. (Otago), Wynne Raymond L.L.B., Q.S.O.
Bankers: Westpac Bank, 243 Stafford Street, Timaru.
Auditors: Martin Wakefield, Chartered Accountants, 26 Canon Street, Timaru.
Executive Director: John Wilson, PO Box 983, Community House, Timaru.
Administration Officer: Sally Marsh, PO Box 983, Community House, Timaru.
Chairperson's Report for the Trust's Financial Year Ended 31 March 2008
On behalf of my fellow trustees, I have much pleasure in presenting the annual report of The Community Trust of Mid & South Canterbury Incorporated for the year ended 31 March 2008.
The annual public meeting for 2008 is to be held at the new Ashburton Events Centre, a community facility towards which the trust has now contributed $500,000. Holding the annual meeting in Ashburton provides the trust with an opportunity to publicly recognise the efforts of the local community in providing and obtaining funding for projects such as the Ashburton Trust Event Centre, the Aviation Museum, Ashburton Senior Citizens and the Safer Community Council.
It is also an opportune time to publicly acknowledge the work of the local trustees - Geoff Geering and Heather Sim. Geoff and Heather have worked tirelessly on behalf of the Ashburton and Methven Districts to ensure that these areas receive an equitable share of the trust's funds. They have an in-depth knowledge of the people and organisations that are working and volunteering in their communities.
Donations
Over a million dollars was distributed to more than 120 community groups in the last financial year. Many hours of
non-financial support were also provided to groups and my thanks go to trust executive manager John Wilson and office administrator Sally Marsh for this work.
In 2007 the trust moved to improve its donation policy so that the needs of the community could be better served. As a result, the trust now has four donation rounds that consider applications of up to $10,000 and two donation rounds that consider applications over $10,000. The aim of these changes is to allow community organisations to apply for funding at a time that
is more suited to their needs.
Large donations tend to be for capital projects and this year was no exception: $175,000 was donated to the Ashburton Aviation Museum for the construction of a new hangar, the Ashburton Vintage Car Club received $50,000 to assist with the extension to their buildings and $100,000 was donated to the SBS Events Centre in Timaru to extend their kitchen and storage facilities. The South Canterbury Hospice received $80,000 towards their new building and the Te Runaka o Arowhenua Society received a donation of $75,000 to assist with the upgrading of their facilities.
Financial Investments
The most disappointing aspect of this report is the performance of the trust's investments. For the year ended 31 March 2008, our return was -3.66% compared to 6.01% the previous year. The return was significantly less than expected. The position was largely caused by the volatility of the markets across all asset classes during the second half of the year.
The trust undertook a thorough review of the appointment of its financial adviser in November 2007. This review was undertaken by the trustees so as to ensure that they were receiving the best possible advice in order to set and meet their investment policies and objectives. I am pleased to advise that Michael Chamberlain of MCA (NZ) Limited has been reappointed as the financial adviser to the trust for the next three years.
Community House
The Community House in Timaru has now been operating for a complete financial year. The house was fully occupied within three months of opening and is operating as intended - a home base for over 30 community groups who share resources and facilities. Increasing use of the facilities is being made by outside organisations and feedback has been very positive. Community House is proving to be a sound social investment.
The finishing touch to Community House is the clock at the top of the building. The clock enhances the heritage facade of the building and provides Timaru with a very visible timepiece. The Timaru Suburban Lions Club jointly funded the project as part of their celebrations recognising 50 years of Lions in New Zealand. We are most grateful to them for this generous gift to our region.
Staff
There have been no changes in staffing for the trust. Sally Marsh (administration officer) and John Wilson (executive manager) continue to provide efficient and loyal service to the trust and Community House.
Trustees
There were no changes to trustees during this financial year. Four trustees attended the Community Trusts Conference in March 2008. The West Coast Community Trust hosted the conference and we look forward to hosting the conference in 2012.
NICOLA HORNSEY, Trust Chairperson.
Date: 31 March 2008.
Statement of Financial Performance for the Year Ended 31 March 2008
2008 2007
$ $
Investment account-
Income:
Interest: Managed funds 1,088,164 1,105,761
Other 5,283 494
Sundry 2,461 -
Dividends: Managed funds 243,075 196,115
Total income 1,338,983 1,302,370
Less expenses-
Direct investment expenditure:
Management fees 76,759 78,404
Consultancy fees 35,271 28,516
Total direct investment expenditure 112,030 106,920
1,226,953 1,195,450
Less operating expenditure:
Advertising 12,650 16,017
Auditors' fees 5,045 4,800
Legal fees 6,486 4,863
Postage, tolls and fax 1,031 1,143
Printing and stationery 6,759 6,844
Salary and wages 95,952 95,397
Professional fees:
- Accountancy and advisory 7,819 9,501
- Project costs 911 954
Sundry administration expenses 15,684 12,255
Conference expenses 5,006 2,828
Department of Internal Affairs costs 1,380 1,610
Trust rental 7,090 -
Trustees:
- Meeting expenses 61,011 67,608
- Travel 10,277 10,246
- Honoraria 20,536 20,262
Trustees' insurance 1,760 1,400
Trustees' training 1,599 2,722
Total operating expenditure 260,996 258,450
Net income before movement in managed funds and Community House rental account 965,957 937,000
Community house account-
Income:
Lease rentals 59,862 31,995
Printing and facsimile charges reimbursed 17,283 2,442
Car park rental 6,708 2,240
83,853 36,677
Less operating expenditure-
Rent - 38,000
Heating and power 15,475 10,613
Maintenance 9,571 5,607
Cleaning 6,645 6,600
Rates 1,417 4,456
Insurance 8,220 8,722
Security and alarm 3,671 2,372
Telephone and tolls 13,999 1,952
Staff expenses 549 -
General administration 2,414 4,333
Depreciation: Improvements 62,893 31,987
Plant and equipment 15,686 11,689
Loss on disposal of fixed assets - 23,275
Total operating expenditure 140,540 149,606
Net income/(deficit) from rental account (56,687) (112,929)
Movement in Managed Funds
Offshore cash and bonds/debt/foreign exchange 710,273 420,312
Offshore equity (2,145,734) 18,826
New Zealand cash and bonds (575,304) (124,006)
New Zealand/Australian equity (650,888) 771,889
Net increase/(decrease) in managed funds (2,661,653) 1,087,021
Statement of financial performance:
Net income from investments 965,957 937,000
Net income/(deficit) from rental account (56,687) (112,929)
Net increase/(decrease) in managed funds (2,661,653) 1,087,021
Net income/(deficit) transferred to capital account (1,752,383) 1,911,092
Statement of Movements in Equity for the Year Ended 31 March 2008
2008 2007
$ $
Opening equity 43,037,458 42,118,617
Net surplus/(deficit) for year (1,752,383) 1,911,092
Plus donations received - 46,489
Less prior period taxation - (579)
Plus donations no longer required 6,715 18,500
Less donations approved (1,086,842) (1,056,661)
Closing equity 40,204,948 43,037,458
Statement of Financial Position as at 31 March 2008
Note 2008 2007
$ $
Trust capital:
Capital fund 2 32,087,148 32,087,148
Inflation reserve 3 8,117,800 8,121,257
General reserve 4 - 2,829,053
40,204,948 43,037,458
Represented by-
Current assets:
Westpac Bank: Current account 11,988 16,395
Sundry debtors 58,112 3,142
GST refund due 3,665 6,133
73,765 25,670
Less current liabilities:
Sundry creditors 70,462 52,257
Donations approved not yet paid 5 918,550 1,109,300
Total current liabilities 989,012 1,161,557
Working capital (915,247) (1,135,887)
Add non current assets-
Fixed assets:
Land and buildings 2,397,733 2,368,548
Plant and equipment 67,547 58,392
Total fixed assets 2,465,280 2,426,940
Managed funds investments:
- New Zealand cash and bonds 13,401,368 15,632,460
- New Zealand/Australian equity 5,840,133 6,568,720
- Offshore cash and bonds 7,573,201 7,099,475
- Offshore equity 11,840,213 12,445,750
Total managed funds 38,654,915 41,746,405
Net assets 40,204,948 43,037,548
Signed on behalf of the board of trustees:
NICOLA HORNSEY, Chairperson.
Date: 31 March 2008.
Statement of Cash Flows for the Year Ended 31 March 2008
2008 2007
$ $
Cash flows from operating activities-
Cash was provided from:
Interest on deposits 5,283 494
Operating income 87,051 33,899
Donations received - 46,489
92,334 80,882
Cash was applied to:
Suppliers of goods and services (net of GST) (340,024) (202,839)
Donations paid (1,270,877) (587,309)
(1,610,901) (790,148)
Net cash flows from operating activities (1,518,567) (709,266)
Cash flows from investing activities-
Cash was provided from:
Withdrawal of managed funds 1,631,079 1,790,883
Sale of fixed assets - 3,907
1,631,079 1,794,790
Cash was applied to:
Fixed assets (116,919) (1,095,738)
Net cash flows from investing activities 1,514,160 699,052
Increase/(decrease) in cash held (4,407) (10,214)
Add opening cash 1 April 2007 16,395 26,609
Cash as at 31 March 2008 11,988 16,395
Comprised of-
Westpac Bank:
Current account 11,988 16,395
11,988 16,395
Reconciliation of Net Surplus and Net Cash Flows From Operating Activities
2008 2007
$ $
Net surplus/(deficit) transferred to equity (1,752,383) 1,911,092
Plus Donations returned 6,715 18,500
Donations received - 46,489
Less Donations approved (1,086,842) (1,056,661)
Prior period tax - (579)
(2,832,510) 918,841
Plus/(less) non cash items:
Managed funds gains/(losses) 1,407,173 (2,311,072)
Depreciation and loss on sale 78,579 66,951
1,485,752 (2,244,121)
(1,346,758) (1,325,280)
Movements in working capital:
Increase/(decrease) in donations approved not yet paid (190,750) 450,852
Increase/(decrease) in creditors 18,204 3,133
(Increase)/decrease in GST 2,468 164,228
(Increase)/decrease in tax refund due - 579
(Increase)/decrease in sundry debtors (1,731) (2,778)
Movements in working capital (171,809) 616,014
Net cashflow from operating activities (1,518,567) (709,266)
Depreciation Schedule for the Year Ended 31 March 2008
Rate
&
Type Initial
Cost Accum
Depn Opening
WDV Additions Depn Closing
WDV
Land and buildings:
Community House - land - 399,539 - 399,539 - - 399,539
Community House - buildings 3.000P 1,995,972 31,946 1,964,026 90,732 62,345 1,992,413
Community House - signage 9.500D 5,024 41 4,983 1,346 548 5,781
2,400,535 31,987 2,368,548 92,078 62,893 2,397,733
Depreciation Schedule for the Year Ended 31 March 2008
Rate
&
Type Initial
Cost Accum
Depn Opening
WDV Additions Depn Closing
WDV
Plant and equipment:
Fuji Xerox copier 33.000D 19,125 12,185 6,940 - 2,290 4,650
Shelving/joinery 9.500D 720 149 571 - 54 517
Various (1998) 15.000D 1,644 590 1,054 - 158 896
Office furniture (1999) 15.000D 624 224 400 - 60 340
Filing cabinet 12.000D 125 37 88 - 11 77
Boiler and brew unit 9.000D 389 89 300 - 27 273
Television and video 33.000D 35 24 11 - 4 7
Cleaner 50.000D 2 2 - - - -
Refrigerator 9.500D 222 54 168 - 16 152
Xerox copier and facsimile 33.000D 579 383 196 - 65 131
Laptop computer 40.000D 264 197 67 - 27 40
Personal computer 40.000D 227 170 57 - 23 34
Microwave 9.500D 178 43 135 - 13 122
Computers (2) 40.000D 3,492 2,612 880 - 352 528
Electronic whiteboard 33.000D 2,989 1,979 1,010 - 333 677
Printer 40.000D 269 162 107 - 43 64
Shredder 40.000D 177 103 74 - 30 44
Computer 40.000D 3,415 1,981 1,434 - 574 860
Laminator 40.000D 289 168 121 - 48 73
Banner 15.000D 351 82 269 - 40 229
Office chair 15.000D 339 69 270 - 40 230
Plants/roses 15.000D 1,050 202 848 - 127 721
Toyota Camry (motor vehicle) 20.000D 17,000 4,302 12,698 - 2,540 10,158
Curtains 15.000D 611 98 513 - 77 436
Refrigerator 9.500D 1,129 44 1,085 - 103 982
Office furniture (November 2006) 15.000D 18,292 1,135 17,157 - 2,574 14,583
Drapes/blinds 15.000D 1,260 63 1,197 - 180 1,017
Office furniture (December 2006) 15.000D 9,844 490 9,354 - 1,403 7,951
New computer 40.000D 1,600 212 1,388 - 555 833
Phone system 33.000D - - - 2,323 767 1,556
Vacuum cleaner 50.000D - - - 529 154 375
Window shades/curtains 15.000D - - - 5,410 812 4,598
Large clock 15.000D - - - 8,296 724 7,572
Board table 15.000D - - - 5,079 381 4,698
Computer and printer 40.000D - - - 2,655 1,062 1,593
Shredder 40.000D - - - 549 19 530
86,241 27,849 58,392 24,841 15,686 67,547
Total assets 2,486,776 59,836 2,426,940 116,919 78,579 2,465,280
Notes to the Financial Statements for the Year Ended 31 March 2008
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 on the basis that it is not publicly accountable and does not have revenue greater than $20m or have greater than 50 employees. 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 receivable.
(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 the 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 2008 2007
$ $
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 8,121,257 6,974,389
Transfer to general reserves (3,457) 1,146,868
Balance at end of year 8,117,800 8,121,257
4. General Reserves
Balance at beginning of the year 2,829,053 3,056,990
Add: Surplus for the year (1,752,383) 1,911,182
Donations received - 46,489
Donations returned 6,715 18,500
1,083,385 5,033,161
Deduct: Donations approved (1,086,842) (1,056,661)
Tax adjustment - (579)
Transfer to inflation reserve 3,457 (1,146,868)
Balance at end of the year - 2,829,053
5. Donations Approved Not Yet Paid
Approved donations not yet paid out include:
2008 2007
$ $
Anglican Care South Canterbury - 5,000
Ashburton Aviation Museum 175,000 -
Ashburton Museum & Historical Society - 500
Ashburton Regent Charitable Trust - 300,000
Ashburton Vintage Car Club 50,000 -
Athletics SC All Weather Track - 100,000
Bluestone House 20,000 -
Bone Marrow Cancer Trust - 50,000
Fairlie Volunteer Fire Brigade 50,000 50,000
Geraldine Aged Persons Welfare Assn Inc 80,000 80,000
Geraldine Riding for Disabled 3,050 -
Lister Home Inc - 100,000
Longbeach School 4,000 -
Methven District Heritage Association Inc 150,000 150,000
Muscular Dystrophy 1,200 -
Order of St John : McKenzie Area - 65,000
People First Ashburton 500 -
Photographic Society 1,000 -
Project Waimate Inc - 50,000
Royal NZ Plunket Society 3,000 -
SBS Events Centre 100,000 -
SC Drama League 4,000 -
SC Hospice 80,000 -
SC Mammography 30,000 -
SC War Memorial Society Inc 20,000 20,000
Sport Mid Canterbury 1,800 4,800
Sport South Canterbury - 4,000
St Mary's Restoration Trust 55,000 55,000
Te Runaka and Arowhenua 75,000 -
Temuka and District Project Trust - 10,000
Tennis South Canterbury Inc - 50,000
The Geraldine Players Inc 15,000 15,000
918,550
1,109,300 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 as at 31 March 2008 (2007 - $Nil).
9. Contingent Liabilities
There were no contingent liabilities at 31 March 2008 (2007 - $Nil).
Contingent Assets
The trust granted a donation to Project Waimate to assist with the purchase of a building. The donation was provided on the basis that should the property for which the grant was used be sold the donation should be paid back to the trust. The trust has a second registered mortgage over the property.
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 2008 is $9,475,334.
(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-two 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:
2008 2006
$ $
Debtors 58,112 3,142
GST refund due 3,665 6,133
Managed fund equities 17,680,346 19,014,470
17,742,123 19,023,745
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 2008. The information is stated in accordance with the accounting policies set out above.
Board of Trustee's Responsibilities
The board of trustees 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 2008 and of the results of operations for the 12 months ended 31 March 2008.
Auditors' Responsibilities
It is our responsibility to express an independent opinion on the financial report presented by the board of trustees and report our opinion to you.
Basis of Opinion
An audit includes examining, on a test basis, evidence relevant to the amounts and disclosures in the financial report. It also includes assessing:
- the significant estimates and judgements made by the board of trustees 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 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 2008 and the results of its operations for the year ended on that date.
Our audit was completed on 18 August 2008 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 2008 is available from the trust's office on request at 27 Strathallan Street, PO Box 983, Timaru or email msccomtrust@xtra.co.nz