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 and purposes situated in Victoria.


The governing rules of HMSTrust consist of Helen’s Will executed in 1936 (and varied by the Supreme Court of Victoria in 1992 and 2015) and the 2009 Administrative Scheme.

HMSTrust is regulated by the Australian Charities and Not-for-profits Commission (ACNC) and is governed by a Board of Trustees which meets regularly throughout the year to consider the three core activities of HMSTrust: investment management, grant making and finance and compliance.

HMSTrust has implemented a risk management plan (which is reviewed by the Board of Trustees on an annual basis) and maintains comprehensive insurance policies.  The assets of HMSTrust are held in the name of the custodian trustee, HMS Nominees Ltd.

In accordance with the terms of Helen’s Will, HMSTrust maintains both a Capital Account (representing HMSTrust’s corpus) and an Income Account (representing the unapplied income 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.

HMSTrust undertakes a comprehensive annual budget process with approval by the Board of Trustees in May each year.  Quarterly actual results are reported against budget and revised forecasts for the year are prepared regularly.

Since HMSTrust is not a reporting entity, special purpose annual financial statements are prepared to satisfy its reporting obligations under its governing rules and the ACNC Act.  These annual financial statements are audited by an external auditor (BDO).  The key financial summary presented here is an extract of the audited annual financial statements which are available for download from the ACNC website.

Operating results for the year

Revenue (excluding realised and unrealised gains on investments) of $5.9m was earned on the corpus during the 2016 financial year. This was 26% lower than the $8.0m earned in the previous financial year which included $2.0m (only $0.2m in the 2016 financial year) revenue from off-market share buy-backs and capital distributions which are taken to the Capital Account.

Operating expenses of $1.3m were incurred during the year in administering HMSTrust to achieve its objectives. Operating expenses were 7% lower than the previous financial year due to a reduction in legal expenses following the successful outcome of the Cy‐Près application in October 2015.

The operating surplus on the Income Account of $4.5m allowed for a total of $3.6m in grants to be approved during the 2016 financial year.  This resulted in a $0.9m surplus on the Income Account from which $0.6m was transferred to the Capital Account through the Trustees’ exercise of the power of accumulation.  Unapplied income in the Income Account increased from $3.9m at 30 June 2015 to $4.2m at 30 June 2016.  This unapplied income will be used to maintain HMSTrust’s granting capacity during this period of low income returns.

The value of the Capital Account reduced by 4.7% from $104.5m to $99.6m due to the poor performance of the markets (the corpus is invested predominantly in the ASX200 and MSCI World-ex Australia which were down 4.1% over the year).

Glen Thomson
Finance Executive