Finance Review

Finance Review

The Helen Macpherson Smith Trust is a perpetual charitable trust whose principal activity is to hold Helen’s residuary estate (corpus) in trust, to invest the corpus to maintain and grow its real value, to earn income from the corpus and to distribute that income to charitable institutions situated in Victoria.

 

Background

In accordance with the terms of the will, HMSTrust maintains both a Capital Account (representing HMSTrust’s corpus) and an Income Account (representing the amount available for granting). The Trustees have the power to accumulate and retain up to 15% of the operating surplus of HMSTrust each financial year in the Capital Account. The assets of HMSTrust are held in the name of the custodian trustee, HMS Nominees Ltd.

Internal control

A comprehensive annual budget is approved by the Board of Trustees in May every year.  Quarterly actual results are reported against budget and revised forecasts for the year are prepared regularly.

Special purpose annual financial statements are prepared for HMSTrust and these are audited by BDO. The financial summary presented here is an extract of the audited annual financial statements which are available for download off the ACNC website.

HMSTrust has implemented a risk management plan which is reviewed by the Board of Trustees on an annual basis, and maintains comprehensive insurance policies.

Operating results for the year

HMSTrust continued to perform strongly in the 2015 financial year and reported total comprehensive income of $3.5m with a corresponding increase in total accumulated funds from $104.9m to $108.4m.

Revenue (excluding realised and unrealised gains on investments) of $8.0m was earned on the corpus during the 2015 financial year. Whilst this was 30% higher than the $6.1m earned in the previous financial year, included in the current financial year is $2.0m revenue from off-market share buy-backs and capital distributions which are taken to the Capital Account (nil for 2014 financial year).

Total expenses of $1.4m were incurred during the year in operating HMSTrust to achieve its objectives.  Expenses relate to the three core activities of HMSTrust: internal investment management, grantmaking activities, and finance and compliance. Employee and Trustee benefits were at a similar level to those incurred in the 2013 financial year with the 2014 financial year being temporarily lower due to staffing changes which meant some positions were vacant for part of the year.

The operating surplus on the income account of $4.8m allowed for a total of $4.9m (after grants withdrawn) in grants to be approved during the 2015 financial year. This resulted in a $0.1m deficit on the Income Account which together with a $0.7m transfer from the Income Account to the Capital Account (due to the exercise of the power of accumulation), resulted in the Income Account reducing from $4.7m at 30 June 2014 to $3.9m at 30 June 2015.

Glen Thomson
Finance Executive