Directory for the Year Ended 31 March 2003
Trustees: John Farry (chairperson), Dunedin; Hilary Allison (deputy chairperson), Dunedin; Nancy Bamford, Balclutha (retired May 2002); Duncan Butcher, Cromwell; Sally Hope, Oamaru; Russell Hendry, Dunedin; Clive Matthewson, Dunedin (retired May 2002); Alan McLay, Oamaru; Barbara Payton, Dunedin; Raewynne Pedofski, Dunedin (appointed May 2002); Mark Ryan, Dunedin; David Shepherd, Wanaka; Gail Tipa, Dunedin; Bill Thomson, Balclutha (appointed May 2002).
Chief Executive: Keith Ellwood.
Registered Office: Second Floor, Community Trust House, corner of Filleul Street and Moray Place, Dunedin.
Auditor: Taylor McLachlan, Dunedin.
Solicitor: Anderson Lloyd Caudwell, Dunedin.
Investment Advisors: Frank Russell Limited, Auckland.
Bankers: WestpacTrust, Dunedin.
Consolidated Statement of Financial Performance for the Year Ended 31 March 2003
Note 2003 2002
$000 $000
Revenue 1 (5,632) (588)
Expenditure 2 (1,375) (1,754)
Net deficit (7,007) (2,342)
This deficit has been allocated to uncommitted surplus (7.007) (2,342)
Consolidated Statement of Movement in Trust Funds for the Year Ended 31 March 2003
Note 2003 2002
$000 $000
Total trust funds at beginning of year 168,281 180,344
Net deficit (7,007) (2,342)
Donations
- Paid from capital (5,538) (9,721)
- Change in accounting policy (5,380) -
Total trust funds at end of year 150,356 168,281
Consolidated Statement of Financial Position as at 31 March 2003
Note 2003 2002
$000 $000
Source of funds-
Trust funds 3 150,356 168,281
Current liabilities:
Accounts payable 97 120
Taxation payable - -
Donations payable 5,380 -
155,833 168,401
Employment of funds-
Current assets:
Current account - WestpacTrust 174 330
Short term bank deposits 31 621
Debtors 111 4
Stock on hand 9 12
325 967
Non current assets:
Managed funds 5 154,031 165,880
Fixed assets 6 1,227 1,304
Advance to Dunedin Community House Trust 11 250 250
155,508 167,434
155,833 168,401
Approved on behalf of the board:
JOHN FARRY RUSSELL HENDRY
Chairperson. Trustee.
20 June 2003 20 June 2003
Consolidated Statement of Cashflows for the Year Ended 31 March 2003
2003 2002
$000 $000
Cashflows from operating activities-
Cash was provided from:
Interest received on investments 34 76
Other 136 136
170 212
Cash was disbursed on:
Payment to suppliers and staff 945 983
Fund managers' fees 374 721
1,319 1,704
Net cash inflow/(outflow) from operating activities (1,149) (1,492)
Cashflow from investing activities-
Receipts from fund managers for:
Donations 5,567 11,000
Management fees 374 758
5,941 11,758
Cash was distributed on:
Purchase of fixed assets - (26)
Net cash inflow/(outflow) from funding activities 5,941 11,732
Cashflow from funding activities-
Cash was distributed on:
Donations to charitable organisations (5,538) (9,721)
Net cash inflow/(outflow) from funding activities (5,538) (9,721)
Net increase/(decrease) in cash held (746) 519
Add opening cash brought forward 951 432
Ending cash carried forward 205 951
Cash comprises:
Cash at bank 174 330
Term deposits 31 621
205 921
Notes to the Consolidated Financial Statements for the Year Ended 31 March 2003
Basis of Preparation
These are the consolidated financial statements of The Community Trust of Otago, Otago Community Trust Charities Limited, The Community Trust Amateur Sports Co Limited, The Community Trust District Improvement Co Limited and Fillmor House Limited. The Community Trust of Otago was incorporated as a charitable trust in accordance with the provisions of the Community Trusts Act 1999.
The financial statements have been prepared to comply with the Financial Reporting Act 1993 and comprise consolidated statements of the following: Financial performance, movement in trust funds, financial position, cashflows, as well as notes to these financial statements.
The financial statements are prepared on the basis of historical cost, except for the revaluation of managed funds.
Specific Accounting Policies
Income
Income from managed funds includes both realised and unrealised income and is recorded gross of fund management expenses.
Interest is recognised on an accrual basis.
Donations
Donations are accounted for once they have been approved by the trustees.
Foreign Currencies
All amounts denominated in foreign currencies are converted to New Zealand dollars at balance date. All realised and unrealised gains and losses are recognised in the statement of financial performance.
Taxation
Income tax is recognised on the surplus after distribution, adjusting for differences between taxable and accounting income.
Future tax benefits are not recognised unless realisation of the asset is virtually certain.
Fixed Assets
Fixed assets are recorded at cost less accumulated depreciation.
Depreciation
Depreciation has been charged to the financial statement using rates which will write off the cost of assets less their estimated residual value over their estimated economic lives. The depreciation rates used are:
Buildings 4%
Office furniture and equipment 12-48%
G.S.T.
Subsidiaries of The Community Trust of Otago, being Fillmor House Limited and The Community Trust District Improvement Company Limited, are registered for G.S.T.
Accordingly, their financial performance and financial position have been consolidated within the accounts on a G.S.T. exclusive basis.
Subject to the above, the trust is not registered for G.S.T. purposes and, therefore, the financial statements have been prepared on a G.S.T. inclusive basis.
Basis of Consolidation
The Community Trust of Otago, Otago Community Trust Charities Limited, Fillmor House Limited, The District Improvement Company Limited and The Community Trust Amateur Sports Company Limited have been consolidated using the purchase method of consolidation.
Capital Maintenance Reserve
The capital maintenance reserve represents the additional amount necessary to preserve the real value of the capital allowing for inflation as measured by the Consumers' Price Index (C.P.I.).
Investments
Investments are valued at year end market value. All realised and unrealised gains and losses are recognised in the statement of financial performance.
Hedging Instruments
The trust, through its investment managers, enters into hedging instruments such as futures, options and forward exchange contracts. These are converted to the New Zealand dollar rate at balance date with all realised and unrealised gains and losses being recognised in the statement of financial performance as income from managed funds.
Statement of Cashflows
Cash comprises cash at bank and call deposits but does not include cash or deposits held by the fund managers.
Financial Instruments
Financial instruments all relate to cash, accounts receivable and accounts payable, and all revenues and expenses relating to these are recognised in the statement of financial performance in the period that any gain or loss becomes certain.
Cash and investments are stated at cost. Receivables are stated at net realisable value.
Payables are stated at amounts owed to those entities at balance date.
The maximum exposure to credit risk is represented by the carrying value of each of the financial assets and liabilities in the statement of financial position.
Income Tax
Income tax expense is recognised on the surplus available for distribution before taxation, adjusting for differences between taxable and accounting income.
Changes in Accounting Policies
During the year there was a change in the way the trust accounted for donations approved and not paid. All donations once approved are now included as donations payable. This has the effect of reducing equity by $5,380,000 in this financial year. Last year, commited donations were $5,188,000. There have been no other material changes in accounting policies during this accounting period.
1. Revenue
2003 2002
$000 $000
Interest 34 41
Managed funds (5,908) (764)
Other 242 135
(5,632) (588)
2. Expenditure
Depreciation 77 79
Fund managers' fees 374 721
Occupancy 52 49
Other operating 169 123
Professional fees 157 232
Promotion 39 72
Public and statutory reporting 66 66
Staff 248 229
Trustee fees 165 157
Trustee expenses 28 26
1,375 1,754
Professional fees-
Payments to auditors:
Audit fees 8 8
Accounting and other support 10 9
Computer support 15 6
Legal advisers 5 5
Professional investment advisers 87 124
Tax advice 22 29
Other professional advice 10 51
157 232
3. Trust Funds
Trust Capital
The trust capital represents the realised value of its original asset, being shares in Trust Bank. They were sold, partly in 1994 when Trust Bank listed on the NZ Stock Exchange and the balance in 1996 when Westpac took over Trust Bank.
2003 2002
$000 $000
Opening balance 131,467 131,467
Closing balance 131,467 131,467
Capital maintenance reserve:
Opening balance 19,613 15,603
Transfers 3,810 4,010
Closing balance 23,423 19,613
Uncommitted surplus:
Opening balance 17,201 33,274
Donations - paid from capital (5,538) (9,721)
- change in accounting policy (5,380) -
Trustee (deficit)/surplus (7,007) (2,342)
Transfer to capital maintenance reserve (3,810) (4,010)
Closing balance (4,534) 17,201
Total trust funds at 31 March 2003 150,356 168,281
4. Donations
2003 2002
$000 $000
Paid from capital 5,538 9,721
Change in accounting policy 5,380 -
10,918 9,721
During the year, the trust changed its policy to include donations approved but unpaid as a current liability in the statement of financial position. Previously, they were recognised as a contingent liability in the notes to financial statements.
5. Managed Funds
2003 2002
$000 $000
Managed by external managers:
Opening balance 165,880 178,402
Gross income (5,908) (764)
Fund managers' fees - deducted (374) (758)
Withdrawals to fund donations (5,567) (11,000)
Closing balance 154,031 165,880

Investments comprise:
Cash, deposits and miscellaneous 17,091 15,237
Bonds 92,473 84,422
Equities 44,467 66,221
Total managed funds 154,031 165,880
Held in: New Zealand 70,034 72,316
Offshore 83,997 93,564
154,031 165,880

6. Fixed Assets
2003 2002
$000 $000
Land:
At cost 432 432
Buildings:
At cost 1,026 1,026
Accumulated depreciation 285 241
741 785
Office furniture and equipment
At cost 226 210
Accumulated depreciation 172 123
54 87
Total net carrying value 1,227 1,304
7. Financial Instruments
(a) The financial instruments are subject to an interest rate risk.
The investment portfolios are treated as lump sum investments. The fund managers or custodians manage both the credit risk and foreign exchange risk.
No comparison is provided between the carrying value and estimated fair value of financial instruments, due to the carrying value reflecting market price.
2003 2002
$000 $000
New Zealand:
Bonds and deposits 61,750 62,627
Equities 8,284 9,689
70,034 72,316
Overseas:
Bonds and deposits 47,815 37,032
Equities 36,182 56,532
83,997 93,564
Total:
Bonds and deposits 109,564 99,659
Equities 44,467 66,221
154,031 165,880
(b) Credit Risk
At balance date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying value of each financial asset in the statement of financial position.
(c) There are no off balance sheet financial instruments.
8. Taxation
2003 2002
$000 $000
Net surplus/(deficit) before donations as per statement of financial performance (7,007) (2,342)
Less: Charitable business exemption and donations 5,673 253
5,673 253
(12,680) (2,595)
Plus: Unrealised equity losses 15,677 5,552
Non deductible expenditure 525 276
Imputation and withholding tax credits received 125 199
16,327 6,027
Total taxable income 3,647 3,432
Less: Distribution of income to beneficiaries 3,300 2,500
Total trustees taxable income 347 932
Less: Losses brought forward 354 683
Assessable income/(loss) for tax purposes (7) 249
Taxation @ 33% - 82
Less: Overseas withholding tax credits claimed - 49
- 33
Taxation payable before imputation credits - 33
Less: Imputation credits - 33
Taxation payable - -
Excess imputation credits 122 117
Losses brought forward 354 683
Plus: Conversion of excess imputation credits to losses 369 354
Current year loss 7 -
Less: Losses claimed this year 354 683
Total losses to be carried forward 376 354
9. Reconciliation of Reported Surplus to Net Cashflow From Operating Activities
2003 2002
$000 $000
Deficit for the period (7,007) (2,342)
Add:
Non-cash items:
Depreciation 77 79
Fund revaluation 5,908 764
Management fees - -
(1,022) (1,499)
Movements in working capital items:
Increase/(decrease) in creditors (23) (29)
(Increase)/decrease in debtors (107) 40
Increase/(decrease) in stock 3 (4)
(127) 7
Net cashflow from operating activities (1,149) (1,492)
10. Contingent Liabilities
Contingent liabilities at 31 March 2003 (Nil). Last year they consisted of donations approved but not disbursed of $5,188,003.
11. Loan to Dunedin Community House Trust (Inc.)
The loan was advanced interest free in December 1999. It has a 10-year term. Trustees have agreed that the commencement date for principal repayments can be extended from December 2002 to December 2003.
12. Trustees Fees
Rates of trustees' remuneration are set by the Minister of Finance. Remuneration includes the honorarium together with meeting fees. The trust has insured its trustees against liability to other parties that may arise from their position as trustees. The insurance does not cover liabilities arising from gross negligence or criminal actions.
Audit Report
To the Trustees of The Community Trust of Otago Consolidated
We have audited the consolidated financial statements. The consolidated financial statements provide information about
the past consolidated financial performance of The Community Trust of Otago and its consolidated financial position as at
31 March 2003. This information is stated in accordance with the accounting policies.
Trustees' Responsibilities
The trustees are responsible for the preparation of consolidated financial statements which give a true and fair view of the consolidated financial position of the trust as at 31 March 2003, and the results of its consolidated operations and cashflows for the year ended on that date.
Auditors' Responsibilities
It is our responsibility to express an independent opinion on the consolidated financial statements presented by the 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 consolidated financial statements. It also includes assessing:
? the significant estimates and judgements made by the trustees in the preparation of the consolidated 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 issued by the Institute of Chartered Accountants of 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 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 consolidated financial statements.
Our firm carries out other assignments for the trust in the area of special consultancy projects, taxation and general accounting services. The firm has no other relationship with or interest in the trust.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion, the consolidated financial statements:
? comply with New Zealand generally accepted accounting practice; and
? give a true and fair view of the consolidated financial position of the Trust as at 31 March 2003 and the results of its operations and cash flows for the year ended on that date.
Our audit was completed on 20 June 2003 and our unqualified opinion is expressed as at that date.
TAYLOR MCLACHLAN, Dunedin.