Pleasing signs for trust finances
Some positives, but must do better.
That was the flavour of discussions at the annual meeting of the Hutt Mana Charitable Trust on February 3.
At what is becoming a standard paltry turnout for the annual meetings – long-time followers of trust affairs John Watson ( of Titahi Bay) and Bill Clegg, and just three or four other members of the public – trustees outlined the reasons behind a deficit of $1.2 million at June 30, 2010.
Ian Hutchings, who was reelected trust chairman, noted the awkwardness that most of the trustees at the top table had not been around for the 12-month period to June 30 being reported on.
Only Mr Hutchings and John Gwilliam survived the voters’ verdict last October.
John Terris, John Burke and David Ogden were voted out and Prue Lamason, Ken Laban and Sarah Dow were the newly elected trustees.
The trust was set up after the carve-up of power board assets and a payout to local electricity consumers.
But $30m was kept to back a trust funding energy-efficiency projects and making annual grants to community groups in Hutt Valley, Porirua and north Wellington.
In 2008-09, like many investment funds, the trust’s capital took a king hit. The global financial meltdown saw the trust’s capital lose $8.24 million.
In the year to June 30, total capital value reduced by a further $ 316,323 to $ 33.8 million, although investments increased in value by $936,902.
Mr Hutchings said in the seven months since then, investments have ‘‘ slowly but steadily’’ shown improvement ( total value now stands at around $35.6m).
‘‘It’s hard to say whether we’re in the midst of a recovery, but there are some pleasing signs.’’
A positive for community groups facing lean times is that interest and dividend improvements are such that the trust intends resuming two grants rounds this year of $300,000 each. In 2009-10 it only distributed a total of $372,084 to local clubs, charities and help agencies.
( Applications for the next grants round close February 25. Go to hmct.org.nz to get details and application forms.)
In 2009-10 the trust also spent $ 497,422 working with the Energy Efficiency and Conservation Authority and others to retrofit insulation and other energy-efficiency measures in homes of those on low incomes.
The losses last year are due to the trust’s investments in Smartlinx3 and Energy Smart, a Lower Hutt-based insulation installing company.
The $825,000 the trust has put into Smartlinx3 is now valued at just $100,000. Mr Hutchings said the city councils-backed broadband company had been ‘‘overtaken’’ by changing events and the chasing of Government ultra-fast broadband ( UFB) rollout money by ‘‘multi-million dollar bigger companies’’.
Mr Hutchings said there is a possibility of recouping some of the loss as some of Smartlinx3’s assets may be absorbed by one of the successful UFB providers.
‘‘How much, and when, we just don’t know.
‘‘I wouldn’t say there’s light at the end of the tunnel . . . but a glimmer of light.’’
Mr Gwilliam said the trust has found lack of information from Smartlinx3 as ‘‘frustrating’’ as the shareholding councils and public, but said recently there has been a better flow of communication from the company.
As for the trust-owned Energy Smart, its turnover increased to a healthy $13.6m in 2009-10 – but it still made a loss of some $750,000.
Mr Hutchings told us later that the ‘‘guts’’ of the loss was the theft of stock during the year to June 30. Police investigated, but concluded there was insufficient provable evidence to successfully pursue a court case.
Various changes in staff for a variety of reasons – plus much tighter controls and practices around inventory – has given trustees confidence there won’t be a repeat of the problem.
Two new directors, Pat Waite and Vaughan Rennder, also bring a great deal of business experience.
Energy Smart has only paid two dividends since it was purchased by the trust in 2007.
Mr Hutchings agrees this is unacceptable and that the previous excuse that money is being reinvested to build the company’s capability is wearing thin.
‘‘We need to make sure we clip the ticket on it . . . that’s the purpose of owning a company.’’
Trustees voted to accept a new system of remuneration, mirroring the practice by most councils to pay a total base salary, and not a salary plus meeting fees.
During the year, prodded by former trustee John Terris, Crown Law gave advice to the trust that the basis on which it was paying some meeting fees was unclear.
The new system will see total remuneration for the five trustees capped at $105,000 – an average of the last three years’ fees. It will be shared according to how trustees view workloads.
Former trust chairman Jeff Burkett criticised the approach as ‘‘secret squirrel’’ stuff and said at least council meetings are held in the open and people can see who put in work.
Trustees’ meetings are not open to the public, but Mr Hutchings said, in what is a fairly small trust, it will be abundantly clear if someone is taking the money and not contributing at each meeting.
He added that there is a new policy that members of the public have the right to make comments on trust affairs at the start of each monthly meeting.
Sumati Govind, who asked a series of perceptive questions during the annual meeting, said she is a trustee of a large superannuation fund with investments of more than $100 million, yet she is paid only $2500 in annual fees.
Hutt Mana trustees’ remuneration ranges from $18,000 to $28,000.
Another on the ‘‘ must do better front’’ was the fact that the trust’s accounts had not been finalised and audited until more than six months after the financial year in question.
This meant there was no annual report accounts for people to read until a day or two before the annual meeting.
Mr Hutchings pledged a better performance on this, with a strict timetable set to get financial reports to the auditor.