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 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 six-member Board of Trustees which meets regularly throughout the year to consider the three core activities of HMSTrust: internal investment management, grant making and finance / compliance.

HMSTrust has implemented a risk management plan (reviewed annually by the Board of Trustees) and maintains comprehensive insurance policies. The assets of HMSTrust are held in the name of the custodian trustee, HMS Nominees Ltd. HMS Nominees Ltd is a company limited by guarantee and all HMSTrust Trustees are directors and members of 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 income earned on HMSTrust’s corpus and out of which grants and expenses are paid). The Trustees have the power to transfer up to 15% of the Income Account’s operating surplus each financial year to 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.

HMSTrust is not a reporting entity. Accordingly, 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. HMSTrust successfully transitioned the external audit to Pitcher Partners during 2017. 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 $6.7m was earned on the corpus during FY17 and was 12% higher than the $5.9m earned in FY16. Revenue from off-market share buy-backs and capital distributions (which remain in the Capital Account) increased from $0.2m in FY16 to $1.1m in FY17. The land and buildings at 27 Windsor Place were independently valued during FY17 at $3.6m resulting in a $0.3m reversal of a prior year building impairment expense. These increases in revenue were offset by a $0.4m reduction in investment income due to the continued pressure on income yields.

Operating expenses of $1.3m were incurred during FY17 in administering HMSTrust to achieve its objectives and were in line with FY16.

An operating surplus of $5.4m was generated in FY17, a 16% increase over the $4.6m generated in FY16. $1.3m of the operating surplus was capital in nature and remains in the Capital Account. The operating surplus on the Income Account of $4.1m allowed for a total of $4.0m net grants to be approved during FY17. This resulted in a small $0.1m surplus on the Income Account from which $0.6m was transferred to the Capital Account through the Trustees’ exercise of the power of accumulation. Consequently, the balance on the Income Account decreased from $4.2m at 30 June 2016 to $3.8m at 30 June 2017. This balance on the Income Account will be used to maintain HMSTrust’s granting capacity during this continued period of low income returns.

The value of the Capital Account (including land and buildings at market value) is at an all-time high of $109.6m having increased by 10% from $99.6m in FY16 due to stronger financial markets.

Glen Thomson
Finance Executive