cort coMMUNItY hoUsINg (COMMUNITY OF REFUGE TRUST)

ANNUAL REPORT 2013

CORT units in Freemans Park, Freemans Bay, Auckland

INTROdUCTION 2

ChaIRpERSON’S REvIEw 4

CEO’S REpORT 6

TREaSURER’S REpORT 19

OUR FINaNCES

Trust directory 16

auditor’s report 17

Statement of financial performance 18

Statement of financial position 19

Notes to the financial statements 21

CORTcommunity housing

AchPN – Auckland Community Housing Provider Network (group representing Auckland’s 10 largest community housing organisations)chA – Community Housing Aotearoa (NZ’s community housing sector’s representative body)chP – Community Housing Provider (e.g. CORT Community Housing) cho – Community Housing OrganisationhNZ – Housing New Zealand (NZ Government)

Irrs – Income related rent subsidy (Government subsidy currently paid to HNZ and proposed to be extended to community housing providers).NZhF – NZ Housing Foundation (community housing provider)shU – Social Housing Unit (NZ Government funding agency for community housing sector) tMchL – Tamaki Makaurau Community Housing Limited (Consortium of organisations partnering in the Weymouth development)

KEY TO SECTOR-RELaTEd ORGaNISaTIONaL aCRONYMS

Front cover – CORT’s recently completed development at Princes Street, Otahuhu, Auckland

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INtrodUctIoN

CORT Community Housing (Community of Refuge Trust) is a not-for-profit organisation that provides low-cost rental accommodation for vulnerable people with high housing need. The philosophy underpinning CORT’s service delivery is that provision of community housing is at the heart of social justice and personal wellbeing.

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CORT’s first Ponsonby property

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The Community of Refuge Trust was founded in 1987 following the financial crash, with the initial goal of preventing the ejection of financially vulnerable people from Ponsonby as property prices increased. With the support of Auckland’s Ponsonby Baptist Church, the organisation began its mission. Heavily dependent on volunteers and fundraising and with few staff to carry out its work, such was the passion and enthusiasm of the fledgling organisation that it survived and flourished to grow into its present form as a leader in the field of third-sector housing.

The years between 1992 and 1999 reflected radical changes in society. There were tougher times, Ruthonomics and a government pushing a market model, all of which forced the fledgling trust to adopt a more professional model of service provision. This included enhanced reporting, accountability to stakeholders, specialist staff training, policy development and quality and financial audits.

By 2000 CORT had become a more robust organisation with a more tactical focus. With support from the Auckland

City Council, CORT made the significant purchase of 15 Freemans Bay council flats between 2000 and 2011. Partnering with Housing New Zealand through its Housing Innovation Fund facilitated purchase of other new housing stock. CORT also received a staff funding contract from the Auckland district Health Board (AdHB) to assist with the housing of people with mental health disabilities.

CORT played a pivotal role in the formation of the Auckland Community Housing Provider Network (ACHPN) to bring the Auckland community housing sector together as one voice. Receiving the Government’s new Special Housing Unit (SHU) ‘Growth’ fund in recent years to build an additional 31 one and two-bedroom units further accelerated CORT’s maturing and coming of age.

The Government continues the process of social housing reform in New Zealand. New challenges and opportunities are presented as the Government, Auckland Council and society look to the community housing sector to respond to the growing housing affordability crisis facing the city.

CORT Sandringham flatsConstruction of Princes St, Otahuhu development, 2013

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chAIrPersoN’s revIew

As I review the past year I’m pleased to report that despite the extremely challenging Auckland housing market, CORT Community Housing has continued to steadily expand its development projects and to make a strong contribution to the wider community housing sector. We have remained staunch in our attempts to achieve our objective to increase the stock of quality, affordable community housing, to the best of our capability.

FAST FACTSOver the past year CORT has increased its number of managed tenancies.

● CORT currently provides housing for just over 212 tenants, an increase from 200.

● CORT-owned units increased from 86 to 94 with the addition of eight brand-new one-bedroom units in Princes St, Otahuhu.

● CORT-rented properties from private owners increased from 87 to 91.

AimS And STRATegiC PRiORiTieS FOR THe COming yeAR

● We plan to continue to challenge Government about the level of resources required by the community housing sector if it is to grow and respond to the urgent need for affordable community housing.

● Our goal is for the Weymouth project to become an outstanding example of cooperation among community providers working in collaboration with Government and the private sector.

gOveRnAnCeOur trustees bear important responsibilities. They give generously of their time and receive no reimbursement for their hard work. Trustees for the year have included

Bill Alexander, Graham davison (‘honorary wise one’), jody Kilpatrick, Royston Noel, Wilf Malcolm, Sue Parsons, Zheyne Tahana (tenant representative) and jeff Tallon. The tenant representative provides an important connection between tenants and the board, bringing a ‘coal-face’ perspective that ensures the views of tenants are represented.

Retiring trustees include Wilf Malcolm, Sue Parsons and jeff Tallon, who will leave big gaps to fill. Their contributions have been significant and hugely appreciated.

Activities of the board covered: ● Monthly board meetings. ● Sub-committee assignments.

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Royston noel – CORT Chairperson

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● A planning day. ● Hosting Campbell Roberts from the

Salvation Army to share their insights and experiences.

● Hosting trustees from Bays Community Housing Trust to likewise share their insights and experiences.

OF COnCeRn TO THe BOARdThe short, medium and long-term effects of the over-heated Auckland property market will continue to have a strong impact on the demand for CORT’s services. do we have the capability to deliver the services required to meet this increased demand? The challenge will be finding the resources.

We believe that one of the main contributors to the housing crisis is the slowness of the Auckland Council and Central Government in taking on board that change is needed now, and that the proposed Unitary Plan needs to be implemented quickly. The Government is asking the community housing sector to grow substantially in response to the growing social and affordable housing demand in the community. The sector is poised to act, but is yet to be convinced that Government is serious and willing to unreservedly support its request to the sector.

There is a struggle to maintain our existing level of private stock due to increasing market rents. The average market rent for a one-bedroom flat or apartment across Auckland is now $345 per week. When compared to average market rents for one-bedroom flats and apartments in the areas which we provide accommodation, CORT is subsidising the rent it charges tenants by around $600,000 per annum. We are striving to overcome this situation

by building more of our own units (42 over the next 12 months), as well as lobbying Government for an extension to the income-related rents programme (currently before Parliament for introduction in April 2014) to include existing CORT tenancies.

CORT’S FinAnCiAl POSiTiOn ● CORT’s accounts are very healthy and

managed in a fiscally conservative manner. ● Our assets increased by 13.25 % to

$27,236,984. ● CORT’s equity position increased by

30%. This was largely due to the early ‘forgiveness’ of conditional grants by Housing New Zealand and the sale of two one-bedroom units which required substantial exterior renovation.

mAnAgemenT And STAFF The board reiterates its full confidence in CORT’s management and staff. The successes of our day-to-day operations can be attributed to our excellent staff. It is my privilege to convey the board’s sincere gratitude for the individual and collective efforts by staff in working to achieve CORT’s goals. Their strenuous efforts make the day-to-day operations of CORT the effective and warmly recognised organisation that it is in the wider community. Special thanks are due from the board to CEO Peter jeffries for his visionary leadership. CORT’s growth in recent years has required adaptations in systems and management and the employment of an additional staff member. Peter spearheads CORT through an ever-changing environment of opportunities and challenges with confidence and determination. He capably confronts our challenges with ideas and solutions.

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The government’s proposed income-related rents

programme should be available to our existing tenants, as well

as to new tenants

COnCluSiOnCharged with the governance of the trust, I believe that the board has robustly demonstrated a duty of care to uphold the spirit of the deed of trust (providing secure and quality housing to help contribute to the wellbeing of our tenants). The outgoing board has given conscientiously and generously with clear intent to achieve the best possible outcomes for all CORT clients.

CORT is well positioned to be a key player in Auckland’s social housing sector. This has not happened by chance, but is the result of years of accumulated diligence and passion. I am very proud of its current operations and confident that CORT will continue to deliver and to fulfill a significant social service in years to come.

Royston noelChairperson, CORT Community Housing 22 August 2013

POnSOnBy BAPTiST CHuRCH (PBC) – OuR key STAkeHOldeRThe support and commitment of PBC is an integral and historic feature to be cherished by CORT. Trustees place high value on this core connection. We believe that it is this long-term association and support that that makes the focus of CORT’s operations so special.

To members of PBC, thanks are also due for again supporting and hosting the annual CORT mid-winter tenants’ dinner and for your generous provisions of time and food at monthly tenant social events throughout the year – a big thank you! your participation creates community and memorable times. Further to this, our thanks are extended to jim Pearson in his role as PBC’s Community Worker. He ably facilitates comfortable linkages into the PBC community with his formal and informal interactions with our tenants.

Tenants and CORT supporters at a monthly BBQ night

The Chapel – CORT offices, Jervois Road, Herne Bay, Auckland

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development includes communal areas outside each block that could be used for a communal meeting or barbeque area or communal gardens. CORT successfully negotiated with council for a reduced carparking area provision, on the basis that less than 25% of CORT’s tenants own cars. This resulted in extra space for a green communal area.

hIGhLIGhTS aNd

aChIEvEMENTS OvER ThE

paST YEaRThe vision and values of CORT Community Housing underpin all of its activities. Our vision of ‘Good homes for all’ reflects our concern that everyone is entitled to a decent place in which to live, a place they can afford, a place they feel secure in and a place they can call home. Our ability to meet this basic human need represents a benchmark for the success of our society.

In a very challenging housing environment we managed to complete and progress several impressive community developments over the past year.

In june this year CORT completed a new two-block eight one-bedroom (50m2) unit development in Princes Street, Otahuhu, in South Auckland. Eight tenants have now moved into their new units. This is our largest development to date. It is also our first to be funded by the Government’s Social Housing Unit (SHU), which provided 45% of the development cost. CORT raised funding for the remainder of the development.

We are very proud of the quality reflected in the Princes St development. The upper units have north-facing decks and the lower units feature generous outdoor areas. The

ceo’s rePort

‘We have gained a sense of real progress and developing momentum in the community housing sector over the past year.’ Peter jeffries, CORT CEO

Peter Jeffries – CORT CeO

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Construction on the units began in january 2013 using the innovative new e-Homes customisable modular, transportable and automated house-building system. All of the fully lined walls and roof were constructed off site and then transported in containers to be assembled quickly and efficiently on site. Princes Street was e-Home’s first multi-unit medium-density development. The company has since been awarded similar contracts on a bigger scale with Housing NZ in Christchurch.

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SK-001

Mt Wellington, Auckland

227 Mt Wellington Highway09 November 2012 | Concept Development

LANDSCAPE CONCEPT

1:250 at A3

Hedge along driveway

Hedge along boundary with mass native planting in front punctuated by cabbage trees

Mass native planting in front punctuated by cabbage trees

Large feature tree at entrance

Lawn areas

Hedge along wall

Hedge along fence

Landscape avenue with palm trees underplanted with shrubs

Gardens next to apartment entrances

Gardens next to apartment entrances

Fruit trees along boundary with lawn beneath

Citrus trees at end of carpark

Communal garden with gravel path

Gravel access path

BBQ area

Bin area

Hedge with medium height planting contained within

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landscape plans for mt Wellington development

KEY FOCUS FOR ThE YEaR

ahEad aNd OppORTUNITIES

FOR GROwTh

PROgReSS uPdATe On uniTS Being develOPedCORT Community Housing is planning to build an additional 42 one and two-bedroom units over four sites during the next 12 months. These include:

mt Wellington Resource consent has been secured for this 19-unit development. Tenders are currently being sought for the construction of the

project. development has been scheduled to start in November 2013.

maria and yates Streets in Onehunga CORT is delighted to be part of this new mixed-housing initiative. CORT is working closely with Housing NZ and and private developer Saltburn on this mixed development on a Housing NZ site. It is one of the first of Housing NZ’s new planned mixed-housing developments which will include social (Housing NZ), community (CORT) and private sales. The development consists of 21 one and two-bedroom units. CORT will be taking ownership of eight of the one-bedroom units.

There is inevitably a degree of apprehension in neighbourhoods when new higher-density housing is proposed. A considerable amount of care has therefore been invested into ensuring that the development fits in with its neighbouring environment.

Weymouth development The Weymouth land is vacant surplus Crown land originally earmarked for education and housing. CORT is one of four key partners in this unique development south of Clendon. In early 2013 the partners formed a company – Tamaki Makaurau Community Housing Limited (TMCHL). The consortium is made up of the Tamaki Collective, NZ Housing Foundation (NZHF), CORT and the Auckland and Onehunga Hostel Endowment Trust. (The Tamaki Collective negotiates Treaty rights for Auckland Maori, which includes first right of refusal on the purchase of surplus Crown land.)

The original development proposal was divided into two stages, the first being design and the second development. Housing Minister dr Nick Smith agreed to the funding of stage one. The decision about the funding of stage two will require Cabinet approval. A Heads of Agreement between the Crown and TMCHL for the design stage was signed in March 2013.

Archictect’s concept for maria Street development

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unemployment. In the 2000s, the area experienced some of the fastest rates of population growth in the Auckland region, but there has been little new housing stock available to match this growth. Overcrowding is a problem, with 44% of Weymouth households comprised of four or more people and 28% with more than five people. yet 55% of the housing stock in this market consists of three-bedroom properties.

Tamaki Makaurau Community Housing Limited entered into a contract with the Social Housing Unit to provide a comprehensive design for the development of the site. This involved consultation with council, neighbours and members of the Auckland Community Housing Provider Network (ACHPN). A professional project management group was engaged that

A governance group was established to oversee the design project. It includes representatives from each of the consortium partners plus two Government/SHU representatives.

The project will involve the creation of 260+ houses, which will provide a mix of community, rental and home ownership opportunities (including rent-to-save, rent-to-buy and shared equity) and affordable private sales. It will provide a means of getting people on low incomes and with low equity into home ownership. The design brief was to maximise the use of this five-hectare section of Crown land to address the need for housing in South Auckland, taking into account the urban Pacific and Maori populations within Weymouth.

Weymouth is an area of high deprivation in which benefit income is the sole income source for 27% of households. Maori make up 33% of the population and Pasifika people 28%. There is a high level of unemployment (approximately 9%) including in particular high youth

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Jasmax Architects’ concept for the new Weymouth development

The development responds to the urgent need for affordable housing in South Auckland

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included architects, engineers, planners and various consultants. Its objective was to generate the best design to reflect the needs of the stakeholders.

The design stage has just been completed by jasmax Architects and the design recommendations were finalised by mid-August. The SHU is also preparing the business case to accompany the design plan. These will be presented to dr Nick Smith, who will take it to Cabinet for their approval of stage two of the project development.

lynton Street A conditional sales agreement has been signed to purchase two properties at 10 & 12 Lynton Street from Housing NZ. The project is for the development of six one-bedroom and four two-bedroom units. The site is located within 200m of the large Sylvia Park shopping and entertainment mall. An Auckland public train station is situated at the back of the site.

At the beginning of the year CORT employed Property development Manager james Goodhue to manage its expanded development programme.

dEvELOpMENT OF

COMMUNITY hOUSING

aCCREdITaTION SYSTEM

CORT was the first CHP (Community Housing Provider) to successful apply for and achieve accreditation under the CHA (Community Housing Aotearoa – New Zealand’s community housing sector representative body) independent accreditation system. Accreditation

was based on a demonstration of the organisation’s adherence to the sector’s agreed best-practice standards. CORT has worked with CHA to refine and improve the sector’s standards system and encourages other community housing providers to follow in its footsteps.

aUCKLaNd COMMUNITY

hOUSING pROvIdERS

NETwORK (aChpN)

The Network was established three years ago and was fundamental in bringing together the 10 largest organisations in the Auckland community housing sector. The diversity of products and services covered by our members covers the full spectrum of housing for those in greatest need, ranging from emergency housing, supported care and affordable rental, through to first-home buyers’ rent-to-buy and shared equity products. The organisational knowledge within the Network is significant and potentially represents the most skilled collection of community and affordable housing practitioners in New Zealand.

I have been Chairperson of the Network since its inception and CORT continues to play an important role in the development of the Auckland community housing sector, following the employment of the Auckland Community Housing Providers Network coordinator Charles McCulloch, who is based at CORT’s offices. We are very appreciative of the funding we receive from the ASB Trust to support this role.

There are obvious benefits from working collaboratively with other similar

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organisations in the sector. Members meet monthly to share information, to lobby policy makers and to provide mutual support. This contributes to a greater understanding of the wider housing need continuum, such as emergency as well as private housing. We are all committed to increasing the supply of affordable housing in the Auckland region for people who cannot access them without assistance.

TENaNCY SaTISFaCTION

REpORTThere was a 40.8% response rate to the recent annual CORT tenancy satisfaction survey. We undertake these surveys to demonstrate that we take what we do seriously and to monitor the effectiveness of our role as landlords. The majority of our tenants face financial hardship and a high proportion experience mental illness. Because CORT is keen to promote the wellbeing of its tenants it has arranged for the past three years for University of Auckland students to undertake this annual survey of tenant satisfaction as part of its ongoing Quality Assurance.

In 2013, for the first time, CORT decided to measure the quality of its housing and services by benchmarking the results against Housing NZ, the largest housing organisation in New Zealand. The aim was to measure the levels of satisfaction among its tenants and to gain feedback on the quality of the service it provides. The great majority (90.47%) of participants were very satisfied/satisfied with CORT generally. Likewise, the great majority of them were very satisfied/satisfied with the house and property they lived in (84.62%). The response also showed a strong correlation between tenants’ current housing and their general wellbeing.

ThE ChaLLENGES wE FaCE

Housing crisisAuckland’s housing crisis has placed increasing pressure on organisations such as CORT to increase the stock of affordable rentals. Auckland continues to grow by an estimated 25,0001 people per year, yet the city is building only half of the estimated 10,000 new homes required to accommodate this increased population. The shortage of housing continues to push up house prices and this in turn

Access to stable, quality, affordable rental accommodation has a major impact on a tenant’s wellbeing

Tenant gardening in front of their CORT unit

1. “Auckland’s population is projected to grow to

between 2.2 and 2.5 million over the next 30 years.”

Auckland Plan, 609/Priority One: Increase house

supply to meet demand.

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results in increased rental costs. The highest demand in the social housing sector is increasingly for one and two-bedroom units. Accordingly, the average rental of a one-bedroom unit in Auckland has increased by nearly 10% in the past six months to an average of $345 per week.

CORT is finding it increasingly difficult to continue to provide properties that it rents from the private market. Even when cross-subsidising the market-rented properties with income from the properties it owns, this is still insufficient to ensure that the rents charged are affordable for its tenants, who are reliant on Government benefits as their primary source of income.

exacerbating factorsThe situation has been made worse by the Government’s refusal to increase the

accommodation supplement over the past five years. The shortage has been further exacerbated by the Auckland Council’s current zoning restrictions with associated compliance costs that make it virtually impossible to build one and two-bedroom units anywhere other than in high-rise developments in the inner city.

This situation is likely to continue until the council’s Unitary Plan is implemented. The latest information from council indicates that it may not be implemented for another three years.

The ongoing shortage of housing stock in the one and two-bedroom market will continue to push up purchase and rental prices. This is forcing those on low incomes, especially those reliant on Government support (including pensioners and people with physical or mental

CORT’s Herne Bay flats

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of the community housing sector. It provides for the allocation and prioritisation of housing to be centralised and handled by Work and Income NZ. The sector is not adverse to regulation, but fears that too much politically motivated regulation will corrupt the ethos of community housing and replicate some of the difficulties currently being faced by the state housing provider.

GOvERNMENT CapITaL

GRaNTS FUNdING hOTLY

CONTESTEd

We are currently halfway through the Government’s three-year $105,000,000 capital grants funding for Community Housing Organisations (CHO). Over half of this fund has already been allocated. The remaining funding is hotly contested and is over-subscribed.

pROFESSIONaL pROpERTY

MaINTENaNCE aNd TENaNCY

MaNaGEMENT

Entrusted with a property portfolio of $24 million, we cannot afford to be complacent about its upkeep and maintenance. We take great pride in maintaining our properties in excellent condition to retain their commercial value, as well as to enhance the comfort and wellbeing of our tenants. Our properties are inspected at a minimum of twice yearly. Over the years we have built a team of reliable and efficient tradespeople who are on call.

We have instigated a long-term maintenance plan for all of our properties. This year we have committed to spend $100,000 on

disabilities) into substandard boarding houses and overcrowded accommodation. We remain extremely concerned about this situation.

Proposed Social Housing Reform BillThe Government is working towards introducing the Social Housing Reform (Housing Restructuring and Tenancy Matters Amendment) Bill before Parliament. If passed, this Bill will provide a framework for the future provision of social housing in New Zealand. A key aspect of the Bill is the introduction of income-related rent subsidies (IRRS) for community housing providers. This would create a level playing field for organisations such as CORT, enabling it to apply to have the rents it charges to its tenants topped up to match the market rents, as currently happens with Housing New Zealand. It would also enable community housing providers (CHP) to operate on a much more commercially viable level when making future investment and development decisions. This is good news for the sector in the long term. For CORT, it would relieve much of the financial pressure it currently faces in its efforts to offer below-market rents by cross-subsidising its own properties with those that it rents from the private market.

However, CORT’s key concern about the proposed legislation is that the new IRR subsidy will be available for only new building work and not for existing community housing tenancies. This would exclude the 185 units currently under CORT management. CORT is currently lobbying vigorously to get this aspect of the proposed Bill changed.

The new legislation also proposes the introduction of a greater degree of regulation

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Our people work in partnership with a number of other Government and not-for-profit social service agencies to ensure that our tenants are well supported in the community. In its landlord role CORT helps people who are struggling to find good, affordable accommodation. If they need further support CORT advocates on behalf of tenants to ensure that they get the support and services they need. We view this as an integral part of our community support and development role.

Many thanks to all our trustees for guiding the organisation through these challenging times. Particular thanks to the Chair, Royston Noel, and to those trustees who are standing down this year, Jeff Tallon and Sue Parson.

Finally, I would like to acknowledge the Ponsonby Baptist Church, which provides the premises for CORT’s offices. The church’s community worker and the congregation take an active interest in the support and wellbeing of a number of CORT’s tenants. In summer months the church hosts a monthly barbeque and in winter movie, soup and toast nights, as well as an annual mid-winter dinner for tenants.

Peter JeffriesCEO, CORT Community Housing

additional insulation and double glazing as part of CORT’s ongoing property insulation programme. This is in addition to funding utilised through the Government’s subsidised home insulation scheme.

Thanks I am very appreciative of the efforts, support and expertise of my committed team.

● Gary Corbett, Property Manager, who is responsible for ensuring the high standard of maintenance on our properties.

● James Lee, Accountant, who manages our accounts and responds to many of the tenants’ rent enquiries.

● Peter Dobson, Senior Tenancy Manager, who is retiring after six years at CORT. We are very grateful to Peter for the experience and commitment he brought to the trust’s work.

● Tenancy Managers Luminita Apostol, Jade Thorne and Keni Lesatele, who are out in the field visiting and assisting tenants on a day-to-day basis.

● James Goodhue, CORT’s new development Manager, who started this year. His experience in project management and property development is proving invaluable to the trust as it expands its property portfolio.

it is our community’s most vulnerable people who suffer most in a housing crisis

gary Corbett (CORT Property manager) and a CORT tenant

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treAsUrer’s rePort

The accompanying audited accounts of CORT show that we have had another successful financial year and all aspects of our accounts are positive.

Our operations have continued to be financially sustainable and we have managed to operate close to budget. Our incomes have adequately funded all of our property costs, including loan repayments and tenancy management activities. New property development has been supported by Government’s SHU (Social Housing Unit) grants. Our own contribution has been derived from liquidating properties that were no longer suitable for our needs. Overall this has resulted in a cash surplus of nearly $500,000.

In addition, our balance sheet has received significant boosts this year in the form of the early cancellation of conditional loans from Housing NZ and the continuing rise in Auckland property values. HNZ have endorsed our performance and recent achievements by agreeing to cancel some of our conditional grants, to the value of $1.5 million several years earlier than originally planned. Property valuation by a registered valuer records increases in the order of $1.36 million. This resulted in our total property values reaching just over $24 million and our equity reaching nearly $18.5 million.

The Trust is well positioned to continue operating as we have been and to pursue our various property development projects.

William Alexander Treasurer, CORT Community Housing

FINANcIAL stAteMeNts

diReCTORynature of BusinessTo obtain and maintain affordable accommodation for disadvantaged people with social needs within Auckland Charities Register number CC36795

Trustees Royston Noel (Chairperson) Peter jeffries (CEO) William Alexander (Treasurer) jody Kilpatrick Wilf Malcolm jeffery Tallon Sue Parsons Zheyne Tahana (appointed

on 13/12/2012) Stephanie Gouldstone (retired

on 13/09/2012) Niall Parkes (retired on

16/08/2012) jill Benge (retired on

16/08/2012) Auditors jolly duncan and Wells 127 Main Highway Ellerslie Auckland Bankers ASB Bank Auckland

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INdePeNdeNt AUdItor’s rePort

We have audited the financial statements of Community of Refuge Trust on pages 18-24, which comprise the statement of financial position as at 31 March 2013, and the statement of financial performance and statement of movements in equity for the year then ended, and a summary of significant accounting policies and other explanatory information.

Trustees’ Responsibility for the Financial StatementsThe trustees are responsible for the preparation of financial statements that give a true and fair view of the matters to which they relate and in accordance with generally accepted accounting practice in New Zealand and for such internal control as the trustees determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilitiesOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand). Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material

misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Other than in our capacity as auditor we have no relationship with, or interests in, Community of Refuge Trust.

OpinionIn our opinion, the financial statements on pages 18-24 present fairly, in all material respects, the financial position of Community of Refuge Trust as at 31 March 2013, and its financial performance for the year then ended in accordance with generally accepted accounting practice in New Zealand.

JOlly dunCAn & WellS09 August 2013Ellerslie, Auckland

To the Beneficiaries of Community of Refuge Trust

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FINANcIAL PerForMANceFOR THE yEAR ENdEd 31 MARCH 2013

2013 2012

Notes $ $

inCOme

property Rent 1,207,698 1,169,854

Gain on Sale of properties 984,387 234,118

Bank Interest 34,242 9,877

dividend 1,280 960

Sundry Income 50,164 35,862

Conditional Grant Forgiveness 1,500,000 -

adhB Contract 545,958 570,326

Balance at beginning

of the year

16,725

add: Received during the year 545,958 553,601

545,958 570,326

4,323,728 2,020,997

eXPenSeS

property Expenses 9 579,549 518,038

administration Expenses 9 146,392 152,413

adhB Contract 650,115 611,187

1,376,056 1,281,638

Operating Surplus before taxation 2 2,947,672 739,358

Taxation - -

Operating surplus 2,947,672 739,358

Unrealised net change in the value

of investment properties

1,365,835 646,662

neT SuRPluS FOR THe yeAR 4,313,507 1,386,020

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stAteMeNt oF MoveMeNts IN eQUItYFOR THE yEAR ENdEd 31 MARCH 2013

2013 2012

$ $

Trust

Funds

Revaluation

Reserve

Total

equity

Trust

Funds

Revaluation

Reserve

Total

Equity

Net surplus for the year 4,313,507 - 4,313,507 1,386,020 1,386,020

Total recognised revenues

and expenses for the year 4,313,507 - 4,313,507 1,386,020 - 1,386,020

OTHeR mOvemenTS

Transfer (1,365,835) 1,365,835 - (646,662) 646,662 -

Equity at beginning

of the year 5,825,246 8,337,742 14,162,988 5,085,888 7,691,080 12,776,968

eQuiTy AT end OF THe yeAR 8,772,918 9,703,577 18,476,495 5,825,246 8,337,742 14,162,988

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stAteMeNt oF FINANcIAL PosItIoN AS AT 31 MARCH 2013

2013 2012

Notes $ $

eQuiTy

Trust Funds 8,772,918 5,825,246

Revaluation Reserve 9,703,577 8,337,742

TOTAl eQuiTy $18,476,495 $14,162,988

Represented by:

CuRRenT ASSeTS

Bank accounts 305,351 127,047

Short Term deposits 300,000 320,000

Sundry debtors 94,838 45,247

GST Refundable 2,921 -

703,111 492,294

nOn-CuRRenT ASSeTS

development - wIp 2,237,860 -

Fixed assets 6 30,013 38,607

Investment properties 5 24,266,000 23,519,000

26,533,873 23,557,607

TOTAl ASSeTS 27,236,984 24,049,901

CuRRenT liABiliTieS

Sundry Creditors 193,850 7,389

GST payable - 4,436

Income received in advance 34,308 47,189

Tenant funds 12,108 11,633

Loans - Current portion 3 370,962 380,454

611,227 451,101

TeRm liABiliTieS

aSB Credit Facitily 3 629,114 -

Conditional Grants 4 1,089,786 2,379,062

Loans - Term portion 3 6,430,361 7,056,750

8,149,261 9,435,812

Total Liabilities 8,760,488 9,886,913

neT ASSeTS $18,476,495 $14,162,988

Charities Commission and is exempt from Income Tax

(e) Revenue Rental income and AdHB revenue are

generally recognised on an accrual basis as it is earned after deducting the uncollected rent.

donations are recorded as revenue at the point when their receipt is acknowledged by the Trust formally.

(f) goods and Service Tax The financial statements have been

prepared on a GST exclusive basis.(g) income Received in Advance Income received in advance related

to income received where there are unfulfilled obligations for the Trust to provide services in the future. The income are recorded as revenue as the obligations are fulfilled and the income earned.

(h) Accounts Payable and Accounts Receivable

Accounts Payable and Accounts Receivable are those amounts expected to be collected and or discharged by the Trust within12 Months from the date of these statements. Accounts receivable are stated at the estimated realisable value.

(i) differential reporting The Trust qualifies for differential

reporting as it is not publicly accountable and it is not large as defined in the framework for differential reporting. The Trust has taken advantage of all available differential reporting exemptions.

CHAngeS in ACCOunTing POliCieSThere have been no changes in accounting policies during the year. All accounting policies are consistent with those used in the previous year.

Notes to the FINANcIAL stAteMeNts FOR THE yEAR ENdEd 31 MARCH 2013

1. STaTEMENT OF

aCCOUNTING pOLICIES

RePORTing enTiTy Community of Refuge Trust, is a charitable trust incorporated under the Charitable Trusts Act 1957 and subsequently registered with the Charities Commission under the Charities Act 2005 on 14 january 2009. The financial statements have been prepared according to generally accepted accounting practice. meASuRemenT BASe The accounting policies recognised as appropriate for the measurement and reporting of earnings and financial position on a historical cost basis are followed by the Trust.

SPeCiFiC ACCOunTing POliCieSThe following specific accounting policies, which materially affect the measurement of financial performance and financial position, have been applied:(a) Fixed Assets Fixed assets are stated at cost less

aggregate depreciation. b) depreciation depreciation is provided on a straight

line basis on fixed assets, at rates calculated to allocate the cost less estimated residual value, over their estimated useful lives at the following rates: Motor vehicles, 5 years

(c) investment Properties Investment property has been valued at

market value. Unrealised gains/(loss) have been recognised in the statement of financial performance. No depreciation is charged on investment properties.

(d) Taxation The Trust is a registered charity with the

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Notes to the FINANcIAL stAteMeNts

2. OpERaTING SURpLUS BEFORE TaX2013 2012

$ $

The surplus of income over expenditure was arrived after:

CHARging

Interest - Mortgage 103,741 93,038

Office Rent 24,170 19,146

audit Fees 7,000 3,250

depreciation 8,594 9,028

Loss on disposal of assets - -

CRediTing

Interest Income 34,242 9,877

dividend Income 1,280 960

3. LOaNSNZ Baptist Savings & development Society (BSdS) 1,441,823 1,530,600

housing New Zealand Corporation (hNZC) 5,359,500 5,906,604

6,801,323 7,437,204

Current portion – payable within 12 months 370,962 380,454

Term portion – payable after 12 months 6,430,361 7,056,750

The BSdS, HNZC and ASB mortgages are secured by registered first mortgages over the Trust’s investment properties. The Loan from HNZC is interest free for 10 years and thereafter interest is payable at market rates.

The BSdS mortgages bear interest at the rate of 6.20% per annum.

aSB Credit Facitily 629,114 -

ASB Credit Facility interest rate is 6.1% per annum to $625,860. The overdraft interest rate on amount from $625,860 is 22.50% per annum.

4. CONdITIONaL GRaNTS (i) The grant from ASB Community Trust is received towards HIF Funding and if within the

period of 10 years after the grant is made, the Trust sells the properties or alters their use so that they no longer provide affordable rental accommodation to persons with social needs, then the Trust will repay the conditional grants to ASB Community Trust.

(ii) The grant from Social Housing Unit is received towards Social Housing Project Funding and if the Trust sells the properties or alters its social housing purpose in accordance with the Relationship and Grant Agreement, then the funds must be re-invested in Social Housing or the Social Housing Unit may require the funds to be repaid.

5. INvESTMENT pROpERTIES 2013 2012

$ $

Investment properties - at market value 24,266,000 23,519,000

Investment properties comprise 87 residential units located across 12 suburbs of Auckland.

The properties were valued at 31 March 2013 by M McNamara, independent registered valuer of the firm Property Sphere Consultancy. M McNamara is a member of the New Zealand Institute of Valuers Inc. The properties were valued at market value by reference to market evidence.

6. FIXEd aSSETS

7. CONTINGENT LIaBILITIESThere are no contingent liabilities as at 31 March 2013 (2012: $Nil).

8. COMMITMENTS(a) Capital Commitments The trust has entered into contract with Fordsan Construaction Limited to constract 8 unites at 29 Princes Street, Otahuhu. As at 31 March 2013, the balance of the contract to complete is $ 796,000. (Capital commitments as at 31 March 2012:$Nil) (b)There are no operating commitments as at 31 March 2013 (2012: $Nil).

Notes to the FINANcIAL stAteMeNts

2013 Cost

depreciation for

the year

accumulated

depreciation Book value

Motor vehicles 51,911 8,594 21,898 30,013

2012 Cost

depreciation for

the year

accumulated

depreciation Book value

Motor vehicles 51,911 9,028 13,304 38,607

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9. dETaILEd EXpENSES

Notes to the FINANcIAL stAteMeNts

2013 2012

PROPeRTy eXPenSeS

Interest 103,741 93,038

Body Corporate Levies 115,686 103,508

Insurance 14,202 8,153

Repairs and Maintenance 181,738 155,543

Rates 117,314 108,704

Tenant power 45,864 43,153

Legal Fees - 5,940

Other 1,004 -

579,549 518,038

Admin eXPenSeS

wages 101,086 87,370

audit 1,050 3,250

Consultancy/valuers 2,468 14,895

depreciation 8,594 9,028

Rent 4,265 3,379

Travel 5,866 3,429

people project - 5,457

Legal Fee 4,494 1,009

Other 18,568 24,596

146,392 152,413

CORTcommunity housing

The Chapel, 43 Jervois Road, ponsonby, auckland 1011, New Zealand+64 9 376 3049 ❘ +64 9 376 3019 ❘ info@cort.org.nz