Statement of Income and Expenditure for the Year Ended 31 March 2003
Note 2003 2002
$000 $000
Income:
Investments 2 (35,818) 7,621
Direct expenditure:
Fund management, custodian and advisory fees 734 739
(36,552) 6,882
Other expenditure 7 788 815
(Loss)/surplus before tax (37,340) 6,067
Taxation 4 - -
Net surplus (37,340) 6,067
Statement of Movement in Trust Funds for the Year Ended 31 March 2003
Total trust funds at beginning of year 466,674 487,536
Net (loss)/surplus (37,340) 6,067
Committed donations 5 (43,844) (26,929)
Total trust funds at end of year 396,490 466,674
The notes to these financial statements form part of and should be read in conjunction with this statement of income and expenditure and statement of movement in trust funds.
Balance Sheet as at 31 March 2003
Note 2003 2002
$000 $000
Source of funds-
Trust funds:
Capital 7 327,320 327,320
Capital maintenance reserve 6 16,719 8,254
General reserve 6 50,000 100,000
Retained surplus 2,451 31,100
396,490 466,674
Liabilities:
ASB Charitable Trust 78 82
Creditors 193 211
Committed donations 5 25,204 20,897
25,475 21,190
421,965 487,864
Employment of funds-
Investments:
Managed funds 3 421,269 485,813
Other investments 3 692 1,875
421,961 487,688
Current assets:
Cash 4 35
Debtors - 141
4 176
421,965 487,864
Approved on behalf of the board:
R. J. FINLAYSON S. K. PRIME
Chairman. Deputy Chairman.
Date: 26 May 2003. Date: 26 May 2003.
The notes to these financial statements form part of and should be read in conjunction with this balance sheet.
Statement of Cash Flows for the Year Ended 31 March 2003
Note 2003 2002
$000 $000
Cash flows from operating activities-
Cash was provided from:
Interest received on other investments 778 934
Cash was disbursed on:
Payment to suppliers, trustees and staff (54) (154)
Refunds to ASB Charitable Trust for the services of suppliers, trustees and staff (745) (711)
Fund management and advisory fees (746) (622)
(1,545) (1,487)
Net cash outflow from operating activities 11 (767) (553)
Cash flows from investing activities-
Cash was provided from:
Receipts from fund managers 53,750 9,500
Bond maturity - 832
53,750 10,332
Cash was disbursed on:
Transfers to fund managers (25,660) (25,139)
(25,660) (25,139)
Net cash inflow/(outflow) from investing activities 28,090 (14,807)
Cash flows from funding activities-
Cash was disbursed on:
Donations to community organisations (28,537) (13,548)
Net cash outflow from funding activities (28,537) (13,548)
Net cash outflow from activities (1,214) (28,908)
Add opening cash brought forward 1,398 30,306
Ending cash carried forward 184 1,398
Cash comprises:
Cash at bank 4 35
Call deposits 180 1,363
184 1,398
The notes to these financial statements form part of and should be read in conjunction with this statement of cash flows.
Notes to the Financial Statements for the Year Ended 31 March 2003
1. Statement of Accounting Policies
The ASB Bank Community Trust ("the trust") is the reporting entity. The trust was formed on 30 May 1988 through the creation of a trust deed in compliance with the Trustee Banks Restructuring Act 1988. Under the terms of the trust deed,
the trust was settled with 60 million $1 fully paid ordinary shares in ASB Bank Limited representing 100% of the issued capital. As at 31 March 1988, the net tangible asset backing of those 60 million shares was $147,655,000. In 1989, 45 million shares were sold to the Commonwealth Bank of Australia for $252,000,000 which was then donated to the ASB Charitable Trust. In October 2000, the remaining 15 million shares were sold to the Commonwealth Bank of Australia for $545,000,000.
The measurement basis adopted is that of historical cost adjusted for the revaluation of certain assets. Reliance is placed on the fact that the trust is a going concern. The financial statements have been prepared in accordance with the requirements of
the Financial Reporting Act 1993.
Consolidated Financial Statements
Consolidated financial statements have not been prepared as the subsidiary companies have not traded since incorporation.
Bank
Bank is stated as the balance in the bank account rather than the balance as per the cash book.
Statement of Cash Flows
Cash comprises cash at bank and call deposits but does not include cash or deposits held by the fund managers. Therefore, the statement of cash flows does not reflect the cash flows within the fund managers' portfolios.
Dividends
Dividends are recognised as income when they are received by the trust. They are recorded net of any imputation tax credits.
Donations
Donations are accounted for as they are committed to be distributed to eligible organisations as approved by the trustees.
Expenses
Some expenses are shared jointly with the ASB Charitable Trust. Whilst each trust bears its own specific costs, the joint expenses are allocated between each trust on the basis of the number of applications processed by each.
Joint expense allocations were:
2003 2002
This trust 50% 50%
ASB Charitable Trust 50% 50%
Foreign Currencies
All amounts denominated in foreign currencies are converted to New Zealand dollars at balance date and all realised and unrealised gains and losses are recognised in income and expenditure for the period.
Investments
Investment in managed funds and other investments are stated at market value. Any gains or losses are recognised in income and expenditure for the period. Investment transactions are recorded by the fund managers on a settlement date basis.
Financial Instruments
All assets and liabilities of the trust are financial instruments and are recognised in the balance sheet. All financial instruments are recorded at market value or fair value or are not materially different from market value or fair value.
The trust uses financial instruments with off balance sheet risk to reduce exposure to fluctuations in foreign currency exchange rates. Forward exchange contracts are entered into to hedge foreign currency transactions. These are converted to the
New Zealand dollar rate at balance date with all realised and unrealised gains and losses being recognised in the income and expenditure statement.
The quantitative disclosures required by FRS 31 Disclosure of Information about Financial Instruments have been included throughout the financial statements where material.
Reserves
Transfers to the capital maintenance reserve are based on the annual movement in the consumer price index. Transfers to all other reserves from the unallocated surplus are made at the discretion of the trustees.
Taxation
Taxation includes both current and deferred tax. Deferred tax is calculated using the comprehensive liability method. Deferred tax assets are recognised when future taxable income is certain.
Changes in accounting policies
There have been no material changes in accounting policies during the period.

2003 2002
$000 $000
2. Income
Managed funds (36,454) 6,716
Other income received 636 935
Investment loss - (30)
(35,818) 7,621
3. Investments
Managed by external managers:
Balance as at 1 April 485,813 463,458
Transfers (from)/to managers (28,090) 15,639
Movement in market value (36,454) 6,716
421,269 485,813
Investments managed by external managers comprise:
Cast, deposits and miscellaneous 55,587 56,533
Bonds 201,016 209,646
Equities 164,666 219,634
Portfolio total 421,269 485,813
Other investments-
These consist of securities and deposits managed in-house
Investments comprise
Call deposits 180 1,363
Bonds 512 512
692 1,875
4. Taxation
(Loss)/surplus before taxation (37,340) 6,067
Net dividend and imputation credit adjustment (953) (734)
Investment revaluations for tax purposes (123) 4,278
Non-deductible expenditure 587 590
Distribution to tax exempt beneficiaries (14,205) (4,730)
Prior year tax adjustment (8,674) (5,996)
Taxable loss brought forward (15,529) (15,004)
Taxable loss carried forward (76,237) (15,529)
Taxation charge @ 33% - -
5. Donations
For this year:
Committed and disbursed 11,615 8,168
Committed but not yet disbursed 21,469 19,182
Total donations approved 33,084 27,350
Donations written back (240) (421)
32,844 26,929
Committed but not yet disbursed:
Committed in previous years 3,735 1,828
Committed this year 21,469 19,069
25,204 20,897
6. Reserves
Capital maintenance reserve:
Balance as at 1 April 8,254 -
Allocation from surplus 8,465 8,254
Balance as at 31 March 16,719 8,254
General reserve:
Balance as at 1 April 100,000 100,000
Transfer to surplus (50,000) -
Balance as at 31 March 50,000 100,000
7. Other Expenditure
Audit fees 17 17
Facilities rental 48 58
Legal fees 6 26
Occupancy costs 29 24
Other operating costs 110 163
Public and statutory reporting 76 72
Staff expenses 387 342
Trustees' fees 79 82
Trustees' expenses 36 31
788 815
8. Subsidiaries
Name Interest Held Balance Date Principal Activity
ASB Trusts Amateur Public Sports Promotion Limited 100% 31 March Donations to amateur sport bodies
ASB Trusts Public Amenities Development Limited 100% 31 March Donations to public beautification bodies
These subsidiaries were incorporated on 29 March 2001. They have not traded since incorporation.
9. Financial Instruments
Currency Risk
The trust invests in securities that are denominated in foreign currencies and therefore, result in a currency risk. In order to minimise the currency risk, foreign currency assets are hedged.
2003 2002
$000 $000
Foreign currency denominated assets 238,296 296,926
Less foreign currency contracts 166,540 201,860
Unhedged exposure 71,756 95,066
Interest Rate Risk
The trust, through its fund managers, invests in securities that are subject to interest rate risk. The trust actively monitors this risk and changes asset allocations and maturity profiles accordingly.
Credit Risk
The trust, in the normal course of business, enters into arrangements with other parties. These arrangements give rise to credit risk for the trust and hence policies and procedures are maintained so that this risk is minimised. No collateral is required in respect of financial assets.
For all classes of financial assets held by the trust, the maximum credit risk exposure to the trust is the carrying value as disclosed in the financial statements at balance date.
Due to the diversification of the investment portfolio and the policies and procedures in place, there is no significant concentrations of credit risk.
Fair Values
All financial instruments are carried at market value.
10. Foreign Currency Monetary Assets
As at 31 March, the trust had the following foreign currency monetary assets that were not hedged.
Foreign currency exposure-
Receivables stated in NZ$ equivalents: 2003 2002
$000 $000
U.S.A. & Canada 44,704 57,867
U.K. & Continental Europe 20,809 29,081
Japan & Far East 6,243 8,118
71,756 95,066
11. Reconciliation of Reported (Loss)/Surplus to Net Cash Flow From Operating Activities
Reported (loss)/surplus (37,340) 6,067
Add non cash items:
Unrealised movement in bonds - 30
Movements in working capital items:
(Decrease)/increase in creditors (18) 61
Decrease/(increase) in debtors 141 (1)
(Decrease)/increase in ASB Charitable Trust (4) 6
119 66
Fund managers' losses/(income reinvested) 36,454 (6,716)
Net cash outflow from operating activities (767) (553)
Audit Report
To the Trustees of the ASB Bank Community Trust:
We have audited the financial statements comprising the statement of income and expenditure, the statement of movements in trust funds, the balance sheet, the statement of cash flows and the notes to these financial statements. The financial statements provide information about the past financial performance of the trust and its financial position as at 31 March 2003. This information is stated in accordance with the accounting policies in the notes to these financial statements.
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 2003 and the results of its 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 trustees and report our opinion.
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 trustees in the preparation of the financial statements;
? 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 financial statements.
Our firm carries out other assignments for the company in the area of taxation advice. The firm has no other 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 New Zealand generally accepted accounting practice;
? give a true and fair view of the 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 26 May 2003 and our unqualified opinion is expressed as at that date.
KPMG, Auckland.
-------
ASB Charitable Trust
Statement of Income and Expenditure for the Year Ended 31 March 2003
Note 2003 2002
$000 $000
Income:
Investments 3 (32,827) 2,456
Rent 8 8
(32,819) 2,464
Direct expenditure:
Fund management, custodian and advisory fees 1,525 1,604
(34,344) 860
Other expenditure 7 757 739
Net (loss)/surplus (35,101) 121
Statement of Movement in Trust Funds for the Year Ended 31 March 2003
Total trust funds at beginning of year 448,512 478,795
Net (loss)/surplus (35,101) 121
Committed donations 5 (23,189) (30,404)
Total trust funds at end of year 390,222 448,512
The notes to these financial statements form part of and should be read in conjunction with this statement of income and expenditure and statement of movement in trust funds.
Balance Sheet as at 31 March 2003
Note 2003 2002
$000 $000
Source of funds-
Trust funds:
Capital 251,786 251,786
Capital maintenance reserve 4 97,056 88,473
General reserve 4 50,000 100,000
Retained (loss)/surplus (8,620) 8,253
390,222 448,512
Liabilities:
Creditors 451 586
Committed donations 5 18,208 23,401
18,659 23,987
408,881 472,499
Employment of funds-
Investments:
Managed funds 2 406,541 469,050
Other investments 2 140 1,023
406,681 470,073
Current assets:
ASB Bank Community Trust 78 82
Cash 36 28
Debtors 46 203
160 313
Fixed assets 6 2,040 2,113
408,881 472,499
Approved on behalf of the board:
R. J. FINLAYSON S. K. PRIME
Chairman. Deputy Chairman.
Date: 26 May 2003. Date: 26 May 2003.
The notes to these financial statements form part of and should be read in conjunction with this balance sheet.
Statement of Cash Flows for the Year Ended 31 March 2003
Note 2003 2002
$000 $000
Cash flows from operating activities-
Cash was provided from:
Income received on other investments 822 564
Refunds of expenses by ASB Bank Community Trust 745 711
Net G.S.T. 1 -
Receipts from rentals 8 8
1,576 1,283
Cash was disbursed on:
Net G.S.T. - (21)
Payment to suppliers, trustees and staff (1,358) (1,419)
Fund management and advisory fees (1,682) (1,931)
(3,040) (3,371)
Net cash outflow from operating activities 11 (1,464) (2,088)
Cash flows from investing activities-
Cash was provided from:
Receipts from fund managers 40,000 43,000
Bond maturity - 105
40,000 43,105
Cash was disbursed on:
Purchase of fixed assets (29) (107)
Transfers to fund managers (11,000) -
(11,029) (107)
Net cash inflow from investing activities 28,971 42,998
Cash flows from funding activities-
Cash was disbursed on:
Donations to charitable organisations (28,382) (39,945)
Net cash outflow from funding activities (28,382) (39,945)
Net cash (outflow)/inflow from activities (875) 965
Add opening cash brought forward 1,051 86
Ending cash carried forward 176 1,051
Cash comprises:
Cash at bank 36 28
Call deposits 140 1,023
176 1,051
The notes to these financial statements form part of and should be read in conjunction with this statement of cash flows.
Notes to the Financial Statements for the Year Ended 31 March 2003
1. Statement of Accounting Policies
The ASB Charitable Trust ("the trust") is the reporting entity. The trust was formed on 31 May 1989 through the creation of a trust deed by the ASB Bank Community Trust and a donation of $252,000,000.
The measurement basis adopted is that of historical cost adjusted for the revaluation of certain assets. Reliance is placed on the fact that the trust is a going concern. The financial statements have been prepared in accordance with the requirements of the Financial Reporting Act 1993.
Bank
Bank is stated as the balance in the bank account rather than the balance as per the cash book.
Statement of Cash Flows
Cash comprises cash at bank and call deposits but does not include cash or deposits held by the fund managers. Therefore, the statement of cash flows does not reflect the cash flows within the fund managers' portfolios.
Depreciation
Depreciation is provided over the useful life of the assets. Buildings are depreciated on a straight line basis. Vehicle, office equipment and furniture are depreciated on a diminishing value basis. The rates used are those recommended by the Inland Revenue Department.
Dividends
Dividends are recognised as income when they are received by the trust and exclude imputation tax credits.
Donations
Donations are accounted for as they are committed to be distributed to eligible organisations as approved by the trustees.
Expenses
Some expenses are shared jointly with the ASB Bank Community Trust. Whilst each trust bears its own specific costs, the joint expenses are allocated between the trusts on the basis of the number of applications processed by each.
Joint expense allocations were:
2003 2002
This trust 50% 50%
ASB Bank Community Trust 50% 50%
Fixed Assets
Fixed assets are valued at cost less accumulated depreciation.
Foreign Currencies
All amounts denominated in foreign currencies are converted to New Zealand dollars at balance date and all realised and unrealised gains and losses are recognised in income and expenditure for the period.
Investments
Investments are stated at market value. Any gains or losses are recognised in income and expenditure for the period.
Investment transactions are recorded by the fund managers on a settlement date basis.
Financial Instruments
All assets and liabilities of the trust with the exception of fixed assets are financial instruments and are recognised in the balance sheet. All financial instruments are recorded at market value or fair value or are not materially different from market value or fair value.
The trust uses financial instruments with off balance sheet risk to reduce exposure to fluctuations in foreign currency exchange rates. Forward exchange contracts are entered into to hedge foreign currency transactions. These are converted to the
New Zealand dollar rate at balance date with all realised and unrealised gains and losses being recognised in the income and expenditure statement.
The quantitative disclosures required by FRS 31 Disclosure of Information about Financial Instruments have been included throughout the financial statements where material.
Reserves
Transfers to the capital maintenance reserve are based on the annual movement in the consumer price index.
Transfers to all other reserves from the unallocated surplus are made at the discretion of the trustees.
Taxation
The trust has been accorded tax exempt status in New Zealand and Australia but is liable to taxation on investment income in some other overseas countries. Tax on overseas income is accounted for as a reduction of that income.
Changes in accounting policies
There have been no material changes in accounting policies during the period.
2003 2002
$000 $000
2. Investments
Managed by external managers:
Balance as at 1 April 469,050 510,163
Movement in market value (33,509) 1,887
Net withdrawals (29,000) (43,000)
Balance as at 31 March 406,541 469,050
Investments managed by external managers comprise:
Cash, deposits and miscellaneous 56,103 49,097
Bonds 200,018 217,102
Equities 150,420 202,851
Portfolio total 406,541 469,050
Other investments comprise:
Call deposits 140 1,023
140 1,023
3. Income
Investments:
Managed funds (33,509) 1,887
Other income received 682 571
Investment loss - (2)
(32,827) 2,456
4. Reserves
Capital maintenance reserve:
Balance as at 1 April 88,473 79,440
Allocation from surplus 8,583 9,033
Balance as at 31 March 97,056 88,473
General reserve:
Balance as at 1 April 100,000 100,000
Transfer to surplus (50,000) -
Balance as at 31 March 50,000 100,000
5. Donations
For this year:
Committed and disbursed 11,955 12,802
Committed but not yet disbursed 11,555 17,726
Total donations approved 23,510 30,528
Donations written back (321) (124)
23,189 30,404
Committed but not yet disbursed:
Committed in previous years 6,665 5,687
Committed this year 11,543 17,714
18,208 23,401
6. Fixed Assets
2003 2002
Cost Accumulated Book Cost Accumulated Book
Depreciation Value Depreciation Value
$000 $000 $000 $000 $000 $000
Land and buildings 2,079 216 1,863 2,079 195 1,884
Vehicle, office equipment and furniture 676 499 177 666 437 229
2,755 715 2,040 2,745 632 2,113

2003 2002
$000 $000
7. Other Expenditure
Audit fees 17 17
Depreciation - land and buildings 10 58
Depreciation - vehicle, office equipment and furniture 38 48
Legal fees 5 16
Occupancy costs 30 24
Other operating costs 81 98
Public and statutory reporting 76 72
Staff expenses 387 343
Trustees' fees 79 82
Trustees' expenses 34 29
757 739
8. Statement of Cash Flows
The depreciation charged to the cash flow statement includes a sum of $48,182 (2002 $58,229) on charged to the ASB Bank Community Trust as facilities rental.
9. Financial Instruments
Currency Risk
The trust invests in securities that are denominated in foreign currencies and therefore, result in a currency risk. In order to minimise the currency risk, foreign currency assets are hedged.
2003 2002
$000 $000
Foreign currency denominated assets 267,476 323,198
Less foreign currency contracts 195,262 221,077
Unhedged exposure 72,214 102,121
Interest Rate Risk
The trust, through its fund managers, invests in securities that are subject to interest rate risk. The trust actively monitors this risk and changes asset allocations and maturity profiles accordingly.
Credit Risk
The trust, in the normal course of business, enters into arrangements with other parties. These arrangements give rise to credit risk for the trust and hence policies and procedures are maintained so that this risk is minimised. No collateral is required in respect of financial assets.
For all classes of financial assets held by the trust, the maximum credit risk exposure to the trust is the carrying value as disclosed in the financial statements at balance date.
Due to the diversification of the investment portfolio and the policies and procedures in place, there is no significant concentrations of credit risk.
Fair Values
All financial instruments are carried at market value.
10. Foreign Currency Monetary Assets
As at 31 March, the trust had the following foreign currency monetary assets that were not hedged.
Foreign currency exposure-
Receivables stated in NZ$ equivalents: 2003 2002
$000 $000
U.S.A. and Canada 44,989 62,161
U.K. and Continental Europe 20,942 31,249
Japan and Far East 6,283 8,711
72,214 102,121
11. Reconciliation of Reported (Loss)/Surplus to Net Cash Flow From Operating Activities
Reported (loss)/surplus (35,101) 121
Add non cash items:
Depreciation 96 116
Loss on disposal of fixed assets 6 -
Unrealised movement on bonds - 2
102 118
Movements in working capital items:
Decrease in creditors (135) (376)
Decrease/(increase) in ASB Bank Community Trust 4 (6)
Decrease/(increase) in debtors 157 (58)
26 (440)
Fund managers' losses/(income reinvested) 33,509 (1,887)
Net cash outflow from operating activities (1,464) (2,088)
Audit Report
To the Trustees of ASB Charitable Trust:
We have audited the financial statements comprising the statement of income and expenditure, the statement of movements in trust funds, the balance sheet, the statement of cash flows and the notes to these financial statements. The financial statements provide information about the past financial performance of the trust and its financial position as at 31 March 2003. This information is stated in accordance with the accounting policies in the notes to these financial statements.
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 2003 and the results of its 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 trustees and report our opinion.
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 trustees in the preparation of the financial statements;
? 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 financial statements.
Unqualified Opinion
We have obtained all the information and explanations we have required.
In our opinion, the financial statements:
? comply with New Zealand generally accepted accounting practice;
? give a true and fair view of the 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 26 May 2003 and our unqualified opinion is expressed as at that date.
KPMG, Auckland.
-------
A copy of the list of all distributions of income and capital approved by the ASB Bank Community Trust and
ASB Charitable Trust is available on request from ASB Trusts, P.O. Box 68-048, Newton, Auckland.