2604 NEW ZEALAND GAZETTE, No. 82 20 JULY 2006

Concentration of Investments

Ninety-eight percent (98%) of the assets of the trust are represented by investments held with a range of financial institutions.
The trustees consider the risk of non-recovery of these investments to be mitigated by prudent investment strategies and an appropriately diversified portfolio.

Currency Risk

The trust incurs currency risk as a result of investment transactions entered into by fund managers. Such risks are mitigated by foreign currency hedges where appropriate. At 31 March 2006, the trust had entered into foreign exchange contracts to hedge foreign denominated investments in the amount of $50,745,975 (2005 – $36,044,881).

Interest Rate Risk

The following investments of the trust are sensitive to changes in interest rates: Bank call accounts and deposits, government and local authority and securities held by fund managers. Interest rate risk is mitigated by the use of interest rate swaps where appropriate. At as 31 March 2006, the trust had entered into interest rate swaps contracts in the amount of $98,048,914.

13. Managed Funds Investment

The trust held the following funds at balance date:

14. Taxation

The Canterbury Community Trust is exempt from income tax with effect from 1 April 2004. This means that Canterbury Trust House Limited is now the only taxable entity in the group. Canterbury Trust House Limited has a tax loss to carry forward as at 31 March 2006 of $1,689,421 (2005 – $1,298,887). The benefit of these losses is not recognised.

15. Community Loans

The trust has approved three community loans during the year ended 31 March 2006. The loans have been approved with an average term of 10 years and incur an average interest rate of 3% per annum. Where appropriate, the loans have been secured by registered instruments. The loan obligations at balance date were all current and considered collectable.

Auditors’ Report to the Trustees of The Canterbury Community Trust

We have audited the consolidated financial statements. The consolidated financial statements provide information about the past financial performance and cash flows of the trust and subsidiaries for the year ended 31 March 2006 and their financial position as at that date. This information is stated in accordance with the accounting policies set out in Note 1.

Trustees’ Responsibilities

The trustees are responsible for the preparation and presentation of the consolidated financial statements which present fairly the financial position of the trust and subsidiaries as at 31 March 2006, and their financial performance and cash flows for the year ended on that date.

Auditors’ Responsibilities

We are responsible for expressing an independent opinion on the consolidated financial statements presented by the trustees and reporting 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 circumstances of the trust and subsidiaries, 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 to provide us with sufficient evidence to give reasonable assurance that the consolidated 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.

We have no relationship with or interests in the trust and subsidiaries other than in our capacity as auditors.