Maple-Brown Abbott. Pooled Superannuation Trust. RSE No. R RSE Licence No. L ABN

Transcription

1 Maple-Brwn Abbtt Pled Superannuatin Trust RSE N. R RSE Licence N. L ABN Annual Financial Reprt 30 June 2017

2 Maple-Brwn Abbtt Pled Superannuatin Trust Annual Financial Reprt Cntents Statement f Financial Psitin 1 Statement f Cmprehensive Incme 2 Statement f Changes in Equity 3 Statement f Cash Flws 4 Ntes t and frming part f the financial statements 5 1 Summary f significant accunting plicies 5 2 Investment in uncnslidated subsidiaries 10 3 Interests in uncnslidated structured entities 10 4 Interest incme 11 5 Other expenses 11 6 Incme tax 11 7 Related parties 13 8 Ntes t the Statement f Cash Flws 15 9 Financial instruments Events subsequent t balance date 26 Statement by Trustee t the unithlders 27 Independent reprt by apprved auditr t the Trustee and unithlders 28

3 Statement f Financial Psitin As at 30 June 2017 Nte 2017 Assets Cash and cash equivalents 8(a) 42,320 75,560 Financial assets at fair value thrugh prfit r lss: 9(a) Fixed interest securities 41,591 70,618 Overseas equities held via unlisted unit trust 3, 7(b) 44,371 91,630 Alternative assets held via unlisted unit trust 3, 7(b) 11,480 20,836 Australian-listed equities 76, ,216 Australian-listed equities held via unlisted unit trust 3, 7(b) 3,190 6,090 Australian-listed prperty trusts 14,382 16,791 Receivables: Applicatins receivable Balances due frm brkers - 6,035 Interest receivable Dividends and distributins receivable 7,842 6,408 Other receivables Reduced input tax receivable Ttal assets 241, ,543 Liabilities Balances due t brkers Redemptins payable Sundry creditrs and accruals Current tax liability 6(b) 4,329 1,028 Deferred tax liability 6(c) 6,906 9,360 Ttal liabilities 11,930 10,822 Net assets 230, ,721 Equity Unithlders funds* 230, ,721 *Redemptin value at redemptin price, based n 13,648,966 units (30 June : 27,277,454) The abve Statement f Financial Psitin are t be read in cnjunctin with the accmpanying ntes. 1

4 Statement f Cmprehensive Incme Revenue Nte 2017 Dividends and distributins 16,176 14,840 Interest 4 4,517 5,303 Net change in the fair value f financial instruments held at fair value thrugh prfit and lss 32,563 (20,164) Other incme ,320 - Expenses Trustee fees 7(b) 2,162 2,339 Transactin csts Other expenses ,459 2,558 Prfit/(lss) frm perating activities befre incme tax expense 50,861 (2,558) Incme tax benefit/(expense) attributable t perating activities 6(a) (3,017) 2,061 Change in net assets attributable t unithlders/ttal Cmprehensive Incme 47,844 (497) The abve Statement f Cmprehensive Incme are t be read in cnjunctin with the accmpanying ntes. 2

5 Statement f Changes in Equity 2017 units units Opening balance 413,721 27, ,723 30,464 Change in net assets attributable t unithlders/ttal Cmprehensive Incme 47,844 (497) Transactins with unithlders: Applicatins 16,821 1, ,950 8,617 Redemptins (248,357) (14,670) (177,455) (11,804) Unithlders funds 230,029 13, ,721 27,277 The abve Statement f Changes in Equity are t be read in cnjunctin with the accmpanying ntes. 3

6 Statement f Cash Flws Operating activities Nte 2017 Interest received 4,643 5,297 Dividends and distributins received 8(c) 7,209 8,156 Other incme received Transactin csts paid (247) (174) Incme tax (paid)/received (2,170) (3,263) Trustee fees and ther expenses paid 8(c) (2,112) (2,256) Cash flws frm perating activities 8(b) 7,387 7,781 Investing activities Prceeds frm sale f investments 231,086 98,049 Purchase f investments 8(c) (39,870) (55,438) Cash flws frm investing activities 191,216 42,611 Financing activities Prceeds frm issue f units 8(c) 14,194 15,970 Payments n redemptin f units (246,037) (63,448) Cash flws used in financing activities (231,843) (47,478) Change in cash and cash equivalents (33,240) 2,914 Cash and cash equivalents at beginning f year 75,560 72,646 Cash and cash equivalents at 30 June 8(a) 42,320 75,560 The abve Statement f Cash Flws are t be read in cnjunctin with the accmpanying ntes. 4

7 Ntes t and frming part f the financial statements 1 Summary f significant accunting plicies The Maple-Brwn Abbtt Pled Superannuatin Trust (the Trust) is a trust dmiciled in Australia and is a fr prfit entity. The Trust was cnstituted n 7 April 1986 and will cntinue until such time as Superannuatin law prvides r the Trustee determines. Maple-Brwn Abbtt Limited is the Trustee f the Trust. The registered ffice and principal place f business f the Trustee is Level 31, 259 Gerge Street, Sydney, NSW This annual financial reprt cvers the Trust as an individual entity. The Annual Financial Reprt was authrised fr issue by the directrs n 7 September The directrs f the Trustee have the pwer t amend and reissue the financial reprt. (a) Statement f cmpliance The Annual Financial Reprt is a general purpse financial reprt which has been prepared in accrdance with the requirements f the Trust Deed (as amended), Australian Accunting Standards and the requirements f the Superannuatin Industry (Supervisin) Act 1993 and Regulatins. The Annual Financial Reprt f the Trust als cmplies with Internatinal Financial Reprting Standards (IFRS) and interpretatins adpted by the Internatinal Accunting Standards Bard. (b) Basis f preparatin The financial reprt is presented in Australian dllars. The financial reprt is prepared n the basis f fair value measurement f assets and liabilities, except where therwise stated. Changes in accunting plicies The fllwing standards were available fr early adptin but have nt been applied in the financial statements: AASB 9 Financial Instruments and applicable amendments (effective frm 1 January 2018) was available fr early adptin but has nt been applied in the financial statements. AASB 9 replaces existing guidance n classificatin and measurement f financial assets and intrduces additins relating t the classificatin and measurement f financial liabilities (as part f the prject t replace AASB 139 Financial Instruments: Recgnitin and Measurement). It has als intrduced new hedge accunting requirements and revised certain requirements fr impairment f financial assets. AASB 9 becmes mandatry fr the Trust s 30 June 2019 financial statements. Retrspective applicatin is required. The Trustee des nt expect this standard t have a significant impact n the recgnitin and measure f the Trust s financial instruments as they are carried at fair value thrugh prfit and lss. The de-recgnitin rules have nt been changed frm previus requirements and the Trust des nt apply hedge accunting. 5

8 Ntes t and frming part f the financial statements 1 Summary f significant accunting plicies (cntinued) (b) Basis f preparatin (cntinued) AASB 15 Revenue frm Cntracts with Custmers, (effective frm 1 January 2018) the AASB has issued a new standard fr the recgnitin f revenue. This will replace AASB 118 which cvers cntracts fr gds and services and AASB 111 which cvers cnstructin cntracts. The new standard is based n the principle that revenue is recgnised when cntrl f a gd r service transfers t a custmer s the ntin f cntrl replaces the existing ntin f risks and rewards. The Trust s main surces f incme are interest, dividends and gains n financial instruments held at fair value. All f these are utside the scpe f the new revenue standard. As a cnsequence, the Trustee des nt expect the adptin f the new revenue recgnitin rules t have a significant impact n the Trust's accunting plicies r the amunts recgnised in the financial statements. The accunting plicies set ut belw have been cnsistently applied t all perids presented in the Annual Financial Reprt. (c) Financial instruments Specific instruments: Cash and cash equivalents Cash and cash equivalents include cash at bank, shrt term depsits held at call with banks and bank bills f exchange and are valued at cst. Derivatives Derivative financial instruments are held fr trading and accunted fr n a fair value basis using the mst recent verifiable surce f market prices. Fair values are btained using quted market prices r determined thrugh the use f valuatin techniques. All derivatives are carried as assets when the fair value is psitive and as liabilities when fair value is negative. The Trust des nt designate any derivatives as hedges in a hedging relatinship. Other Financial instruments Financial assets Financial assets f the Trust are classified either at fair value thrugh prfit r lss r receivables. Fair value thrugh prfit r lss Financial assets which are classified as fair value thrugh prfit r lss are recgnised r derecgnised by the Trustee as such at trade date. They are initially recgnised at fair value, excluding transactin csts, which are expensed as incurred. Thereafter they are re-measured at fair value, with any resultant gain r lss recgnised immediately as revenue in the Statement f Cmprehensive Incme. 6

9 Ntes t and frming part f the financial statements 1 Summary f significant accunting plicies (cntinued) (c) Financial instruments (cntinued) Financial assets fair values are determined as fllws: Fixed interest securities Fixed interest securities are valued at bid price plus any interest accrued at reprting date. Overseas equities held via unlisted unit trusts Overseas-listed equities may be held via units in unlisted unit trusts which are valued at redemptin price as reprted by the manager at clse f business n the day the trusts are being valued. Alternative assets held via unlisted unit trusts Alternative assets may be held via units in unlisted unit trusts which are valued at redemptin price as reprted by the manager at clse f business n the day the trusts are being valued. Australian-listed equities, Australian-listed prperty trusts (REITs) These securities are valued at their quted bid price n the Australian Securities Exchange as f the clse f business n the day the securities are being valued. Where dual-listed securities are thinly traded n the Australian Securities Exchange, they are valued at the Australian dllar equivalent f the quted bid price n the relevant freign stck exchange. Australian-listed equities held via unlisted unit trusts Listed equities may be held via units in unlisted unit trusts which are valued at redemptin price as reprted by the manager at clse f business n the day the trusts are being valued. Receivables Financial assets classified as receivables include balances due frm brkers, dividends and distributins receivable and ther incme receivable. These financial assets are carried at amrtised cst using the effective interest methd less impairment lsses if any. Receivables are f a shrt term nature and hence their carrying value apprximates fair value. Financial liabilities Financial liabilities f the Trust are either measured at fair value thrugh prfit r lss r at amrtised cst using the effective interest methd. Financial liabilities ther than thse at fair value thrugh prfit r lss include distributins payable, balances due t brkers, redemptins payable and sundry creditrs and accruals which are carried at amrtised cst using the effective interest rate methd. These financial liabilities are f a shrt term nature and hence their carrying value apprximates fair value. 7

10 Ntes t and frming part f the financial statements 1 Summary f significant accunting plicies (cntinued) (c) Financial instruments (cntinued) Offsetting financial instruments Financial assets and liabilities are ffset and the net amunt reprted in the Statement f Financial Psitin when there is a legally enfrceable right t ffset the recgnised amunts and there is an intentin t settle n a net basis, r realise the asset and settle the liability simultaneusly. (d) Revenue and expenses Dividends are recgnised as revenue n the date the shares are quted ex-dividend. Distributins frm unlisted unit trusts are recgnised as at the date the unit value is quted ex-distributin. Where a present entitlement t a distributin exists at year end, it is derived fr tax purpses. Interest n cash depsits, bank bills f exchange and fixed interest securities is calculated using the effective interest methd and is recgnised as revenue in the Statement f Cmprehensive Incme n an accruals basis. Net change in the fair value f financial instruments held at fair value thrugh prfit and lss is determined as the difference between the fair value at year end r cnsideratin received (if sld during the year) and the fair value as at the prir year end r acquisitin (if the investment was acquired during the year). Other incme is recgnised in the Statement f Cmprehensive Incme n an accruals basis. Transactin csts incurred in the acquisitin and dispsal f assets are expensed in the Statement f Cmprehensive Incme n an accruals basis. Expenses, including Trustee fees, are recgnised in the Statement f Cmprehensive Incme n an accruals basis. (e) Taxatin The Trust is taxed as a Pled Superannuatin Trust in accrdance with Part IX f the Incme Tax Assessment Act 1936 (as amended). The Trust is liable fr tax n investment incme and realised capital gains directly and the unithlders are exempt frm incme tax n any gains n dispsal f their units in the Trust. Incme tax n the prfit fr the year cmprises current and deferred tax. Incme tax is recgnised in the Statement f Cmprehensive Incme. Current tax is the expected tax payable n the taxable incme fr the year, using tax rates enacted r substantively enacted at the Statement f Financial Psitin date, and any adjustment t tax payable in respect f previus years. Deferred tax is prvided using the Balance Sheet liability methd, prviding fr temprary differences between the carrying amunts f assets and liabilities fr financial reprting purpses and the amunts used fr taxatin purpses. The amunt f deferred tax prvided is based n the expected manner f realisatin r settlement f the carrying amunt f assets and liabilities, using tax rates enacted r substantively enacted at the Statement f Financial Psitin date. 8

11 Ntes t and frming part f the financial statements 1 Summary f significant accunting plicies (cntinued) (e) Taxatin (cntinued) A deferred tax asset is recgnised nly t the extent that it is prbable that future taxable prfits will be available against which the asset can be utilised. Deferred tax assets are reduced t the extent that it is n lnger prbable that the related tax benefit will be realised. Incme tax has been prvided in the current year at the rate f 15% as it is the expectatin f the Trustee that the Trust will be treated as a cmplying superannuatin fund. If the Trust is subsequently deemed t be a nn-cmplying fund fr the current year, the incme tax will be levied at 47% n the Trust s taxable incme. (f) (g) (h) Determinatin f redemptin price fr units in the Trust The redemptin price is determined in accrdance with the Trust Deed and is calculated as the value f the assets f the Trust less its liabilities (including current and deferred tax liabilities), divided by the number f units n issue. Gds and services tax (GST) The Trustee fees and ther expenses are recgnised net f the amunt f GST recverable as a reduced input tax credit (RITC). Receivables and payables are stated inclusive f GST. Cash flws are included in the Statement f Cash Flws n a grss basis. Unithlders funds In accrdance with AASB 132, the Trust units are classified as equity n the basis that the units are a puttable instrument. The key features f a puttable instrument include: it entitles the hlder t a pr rata share f the entity s net assets in the event f the entity s liquidatin; the instrument is in the class f instruments that is subrdinate t all ther classes f instruments; all financial instruments within the class have identical features; the instrument cntains n ther cntractual bligatins ther than the redemptin bligatin; the ttal expected cash flws attributable t the instrument ver the life f the instrument are based substantially n the prfit r lss, the change in the recgnised net assets r the change in the fair value f the recgnised and unrecgnised net assets f the trust ver the life f the instrument; and the issuer have n ther financial instrument r cntract that has: ttal cash flws based substantially n the prfit r lss, the change in the recgnised net assets r the change in the fair value f the recgnised and unrecgnised net assets f the trust; and the effect f substantially restricting r fixing the residual return t the puttable instrument hlders. 9

12 Ntes t and frming part f the financial statements 2 Investment in uncnslidated subsidiaries The Trust has applied the AASB 10 investment entity exemptin and accrdingly has valued these financial assets at fair value (redemptin price) thrugh prfit r lss. Cuntry f incrpratin Ownership interest Ownership interest Subsidiaries 2017 % % Maple-Brwn Abbtt Internatinal Equity Trust Australia Maple-Brwn Abbtt Asian Investment Trust* Australia * At 30 June 2017, The Maple-Brwn Abbtt Internatinal Equity Trust held 58.3% (: 69.0%) f the units. The Trust des nt have current cmmitments r intentins and cntractual bligatins t prvide financial r ther supprt t its uncnslidated subsidiaries. There are n lans r advances currently made t the uncnslidated subsidiaries. There are n significant restrictins n the ability f an uncnslidated subsidiary t transfer funds t the Trust in the frm f cash distributins. 3 Interests in uncnslidated structured entities The table belw sets ut the uncnslidated structured entities held by the Trust at 30 June: Asset class Statement f Financial Psitin reference Expsure Fair value 2017 % Overseas equities Overseas equity funds held via unlisted unit trust ,371 Alternative assets Alternative assets held via unlisted unit trust ,480 Australian equities Australian-listed equities held via unlisted unit trust 5.4 3, ,041 Overseas equities Overseas equity funds held via unlisted unit trust ,630 Alternative assets Alternative assets held via unlisted unit trust ,836 Australian equities Australian-listed equities held via unlisted unit trust 5.1 6, ,556 The fair value represents the maximum expsure t lss fr each uncnslidated structured entity. The fair value f the expsure will change daily and in subsequent perids will cease nce the investments are dispsed f. The investment manager f each uncnslidated structured entity is respnsible fr implementing and mnitring the entity s investment bjective and strategy. The investment decisins are based n the analysis cnducted by the underlying investment manager. The return f the Trust is expsed t the variability f the perfrmance f the underlying structured entity. 10

13 Ntes t and frming part f the financial statements 4 Interest incme 2017 Cash and cash equivalents 1,396 1,690 Fixed interest securities 3,121 3,613 Ttal interest incme 4,517 5,303 5 Other expenses Audit services KPMG*: 2017 Audit f the Annual Financial Reprt APRA Levy 14 5 Ttal ther expenses * Regulatry audit fees (SIS and APRA return) are paid by the Trustee. 6 Incme tax (a) Incme tax benefit/(expense) Recgnised in the Statement f Cmprehensive Incme Current tax benefit/(expense): 2017 Current year (5,477) (2,287) Adjustments fr prir years (5,471) (2,175) Deferred tax benefit/(expense): Originatin and reversal f temprary differences 2,454 4,236 Ttal incme tax benefit/(expense) in Statements f Cmprehensive Incme (3,017) 2,061 11

14 Ntes t and frming part f the financial statements 6 Incme tax (cntinued) (a) Incme tax benefit/(expense) (cntinued) Recnciliatin between pre-tax net prfit and tax benefit 2017 Prfit/(lss) frm perating activities befre incme tax benefit/(expense) 50,861 (2,558) Incme tax benefit/(expense) at the cmplying superannuatin fund tax rate f 15% (7,629) 384 (Increase)/decrease in incme tax expense due t: Assessability f imputatin credits n franked dividends (354) (420) Assessability f freign incme tax ffset (38) (39) Nn-taxable capital gain/(lsses) 1,948 (666) 1,556 (1,125) (Increase)/decrease in incme tax expense due t: Imputatin credits available 2,361 2,801 Freign incme tax ffset available Other 436 (311) Over prvisin in prir year ,056 2,802 Incme tax benefit/(expense) attributable t perating activities (3,017) 2,061 (b) Current tax asset/(liability) Mvements during the year were as fllws: 2017 Balance at the beginning f the year (1,028) (2,116) Incme tax paid n accunt f the prir year 1,022 2,004 Incme tax paid n accunt f the current year 1,148 1,259 Current incme tax expense (5,477) (2,287) Over/(under) prvisin in prir year Balance at the end f the year (4,329) (1,028) (c) Deferred tax liabilities Deferred tax liabilities are attributed t the fllwing: 2017 Incme nt yet assessable fr incme tax purpses Tax credits assciated with incme nt yet assessable fr incme tax purpses (300) (486) Unrealised gains n investments nt yet assessable fr incme tax purpses 7,051 9,585 Ttal deferred tax liability 6,906 9,360 12

15 Ntes t and frming part f the financial statements 7 Related parties (a) Trustee and Key Management Persnnel Maple-Brwn Abbtt Limited (ABN ) is the Trustee. Maple-Brwn Abbtt Limited is als the investment manager f the Trust. As Trustee, Maple-Brwn Abbtt Limited is regarded as fulfilling the rle and bligatins f key management persnnel f the Trust. The directrs f Maple-Brwn Abbtt Limited are regarded as key management persnnel f that cmpany and nt f the Trust. (b) Trustee The names f the persns wh were directrs f the Trustee during r since the end f the year are as fllws: Name Perid f directrship J K Kightley Appinted 11/02/1994 G M Rssler Appinted 19/07/1999 M J Wilkins Appinted 19/07/2007, Retired 08/09/ R A Grundy Appinted 01/07/2008 G R Bazzan Appinted 01/07/2008 D L Maple-Brwn Appinted 01/07/2009 T T Rbinsn Appinted 07/03/2013 R A R Lee Appinted 22/10/2015 J A Ellitt Appinted 04/01/2017 Lans t key management persnnel f Maple-Brwn Abbtt Limited The Trust has nt made, guaranteed r secured, directly r indirectly, any lans t the key management persnnel f Maple-Brwn Abbtt Limited, r their persnally related entities at any time during the reprting perid. Other transactins with key management persnnel f Maple-Brwn Abbtt Limited Apart frm thse details disclsed in this nte, n key management persnnel f Maple-Brwn Abbtt Limited have entered int a cntract fr services with the Trust since the end f the previus financial year. Remuneratin The Trustee s fee is 0.58% per annum (exclusive f GST, refer nte 1(g)), accrued daily based n the market value f the Trust. The ttal fee f $2,161,555 (: $2,339,178) is disclsed as an item f expense in the Statement f Cmprehensive Incme and the fee paid during the year is disclsed separately in the Statement f Cash Flws. 13

16 Ntes t and frming part f the financial statements 7 Related parties (cntinued) (b) Trustee (cntinued) Related Party Transactins Investing activities (in ther Maple-Brwn Abbtt trusts) The Trust may purchase and sell units in ther registered managed investment schemes managed by the Trustee in the rdinary curse f business at applicatin and redemptin prices calculated in accrdance with the Cnstitutins f thse trusts. Where the Trust invests in ther such schemes, n additinal investment management r respnsible entity fees are charged in respect f these inter-fund investments. Details f the Trust s investments are set ut belw: Number f Fair Interest Units Units sld Distributins units held value held in purchased during the received/ the Trust during the year receivable year during the year 2017 $ % $ Maple-Brwn Abbtt Small Cmpanies Trust 3,986,962 3,189, ,620 3,529, ,581 Maple-Brwn Abbtt Internatinal Equity Trust 37,563,851 44,371, ,005,336 45,808,932 8,620,557 Maple-Brwn Abbtt Glbal Listed Infrastructure Fund 6,671,684 11,480, ,207 6,420, ,387 Maple-Brwn Abbtt Small Cmpanies Trust 7,214,146 6,090, , ,319 Maple-Brwn Abbtt Internatinal Equity Trust 78,367,447 91,630, ,231,244 12,920,206 5,218,188 Maple-Brwn Abbtt Glbal Listed Infrastructure Fund 12,383,156 20,835, ,513 1,649,204 1,219,772 The transactins with thse entities are carried ut n the same terms and cnditins as fr ther unithlders in the trusts. 14

17 Ntes t and frming part f the financial statements 7 Related parties (cntinued) (b) Trustee (cntinued) Transactins with ther parties Superannuatin funds invested in the Trust which directrs f the Trustee and their related parties have an interest in. Details f the transactins with related parties are as fllws: Unithlder Units held at 1 July Units purchased during the year Units sld during the year Units held at 30 June Fair Value 2017 $ G R Bazzan 11, , ,715 R A Grundy 26, , ,606 R A R Lee 69, ,070 1,164,867 G R Bazzan 11, , ,245 R A Grundy 26, , ,865 R A R Lee - 69,070-69,070 1,048,388 Other entities assciated with the Trustee may hld units in the Trust frm time t time in varius capacities. The transactins with thse entities are carried ut n the same terms and cnditins as fr ther unithlders in the Trust. 8 Ntes t the Statement f Cash Flws (a) Cmpnents f cash and cash equivalents 2017 Cash at bank - 1 Shrt term depsits at call with banks 10,320 2,771 Term depsits 32,000 33,000 Bank accepted bills f exchange - 39,788 Cash at the end f financial year 42,320 75,560 15

18 Ntes t and frming part f the financial statements 8 Ntes t the Statement f Cash Flws (cntinued) (b) Recnciliatin f change in net assets attributable t unithlders t cash flws frm perating activities 2017 Change in net assets attributable t unithlders 47,844 (497) Adjustments fr: Dividend and distributin incme reinvestment (7,534) (4,801) Rebates reinvested Net change in the fair value f financial instruments held at fair value thrugh prfit and lss (32,563) 20,164 Changes in perating assets and liabilities during the year: Interest, dividends and distributin receivables (1,308) (1,889) RITC receivables 6 7 Sundry creditrs and accruals (82) (39) Current tax liabilities 3,301 (1,088) Deferred tax liabilities (2,454) (4,236) Cash flws frm perating activities 7,387 7,781 (c) Nn-cash perating, financing and investing activities The fllwing amunts are nt included in the Statement f Cash Flws: Operating activities Dividend and distributin incme reinvestment During the year the Trust received dividends and distributins in the frm f shares r units via a dividend r distributin reinvestment plan (DRP). The value f the shares r units received is based n the market value as determined by the DRP rules and is detailed belw: 2017 Dividends and distributins received in the frm f shares r units 7,534 4,801 16

19 Ntes t and frming part f the financial statements 8 Ntes t the Statement f Cash Flws (cntinued) (c) Nn-cash perating, financing and investing activities (cntinued) Financing activities Unithlder rebates reinvested and in-specie transfer f assets The Trust issues new units in cnsideratin fr the reinvestment f rebates payable t unithlders Units 000 Units 000 Unithlder rebates reinvested Investing activities The abve dividend and distributin incme reinvestments are nt included in the Statement f Cash Flws relating t the purchase f investments. 9 Financial instruments Risks and capital management bjectives The Trust activities expse it t a variety f risks: market risk (including price risk, interest rate risk and currency risk), liquidity risk, credit risk and peratinal risk. The Trustee seeks t minimise the Trust s financial risks thrugh a variety f activities, including diversificatin f the investment prtfli and the selectin f liquid investments in accrdance with the specific investment plicies and restrictins set ut in the Prduct Disclsure Statement. The key element in the Trust s investment philsphy is t seek t buy investments that ffer relatively gd lng term value. The investment philsphy can als be described as cntrarian and cnservative, which helps t minimise the Trust s financial risks. The nature and extent f the financial instruments utstanding at the balance date and the risk management plicies emplyed by the Trustee are discussed belw tgether with the specific investment bjectives and plicies applicable t the Trust. (a) Market risk Market risk is the risk that the value f a financial instrument will change as a result f expsure t market price changes, interest rate changes and currency mvements. Price risk The Trust s market price risk is managed n a daily basis in accrdance with the fllwing specific investment plicies and restrictins: 17

20 Ntes t and frming part f the financial statements 9 Financial instruments (cntinued) (a) Market risk (cntinued) Investment plicies The Trust s mdel asset allcatin (the current target) is reviewed at regular asset allcatin meetings having regard t the neutral, maximum and minimum asset allcatins set ut belw: Neutral % Maximum % Minimum % Fixed Interest Overseas Equities Alternative Assets Australian Equities REITs Liquidity Ttal 100 There is als a neutral, maximum and minimum range fr ttal grwth assets (Australian equities, verseas equities and REITs) and defensive assets as fllws: Neutral % Maximum % Minimum % Grwth assets Defensive assets Ttal 100 At the asset allcatin meetings relevant macr-ecnmic infrmatin is reviewed. T assess the relative value f each asset class we utilise in-huse mdels t generate ur ttal rate f return frecasts. When assessing the relative merits f the asset classes a fur year utlk is undertaken. The Trustee adheres clsely t the mdel weightings (subject t tlerances) determined at the asset allcatin meetings. Hence the mdel acts as a buy-sell discipline. Fr example, if the Australian stck market rises, and there are n ther changes t the ther asset classes, the Australian equity weighting crrespndingly rises and it then becmes necessary t sell Australian stcks t bring the asset classes int line with the mdel. 18

21 Ntes t and frming part f the financial statements 9 Financial instruments (cntinued) (a) Market risk (cntinued) Investment restrictins The main guideline in relatin t prtfli cmpsitin is as fllws: Expsure t a single entity shuld nt be greater than 5% abve its weighting in the Trustee s custmised Australian equities ex-a-reits index. Expsure t the Maple-Brwn Abbtt Small Cmpanies Trust shuld nt be greater than 5% f the Trust s Australian equity prtfli; and The ttal market value held in any ne REIT shuld nt exceed by mre than 10% the weighting f that REIT in the S&P/ASX 300 A-REIT Index (Ttal Returns). Alternative asset expsure is rdinarily achieved thrugh the Maple-Brwn Abbtt Glbal Listed Infrastructure Fund. Up t 10% f the Trust s market value may be invested in alternative assets. Market expsures As at 30 June the market expsures were: 2017 Financial assets at fair value thrugh prfit r lss: - Overseas equities held via unlisted unit trust 44,371 91,630 - Alternative assets held via unlisted unit trust 11,480 20,836 - Australian-listed equities 76, ,216 - Australian-listed equities held via unlisted unit trust 3,190 6,090 - Australian-listed REITs 14,382 16,791 Ttal 149, ,563 Carrying amunts versus fair values The fair values f financial assets and financial liabilities apprximates their carrying amunts in the Statement f Financial Psitin. Sensitivity analysis The table belw details the apprximate change in net assets attributable t unithlders and unithlders funds if there is a percentage change in the abve asset classes benchmarks (as utlined in the investment restrictins abve) assuming all ther variables are cnstant: 2017 % change % change Increase in benchmarks 10 14, ,694 Decrease in benchmarks 10 (14,846) 10 (26,694) 19

22 Ntes t and frming part f the financial statements 9 Financial instruments (cntinued) (a) Market risk (cntinued) Fair value measurement recgnised in the Statement f Financial Psitin The fair value measurement disclsures use a three-tier value hierarchy that reflects the significance f the inputs used in measuring fair values. The fair value hierarchy is cmprised f the fllwing levels: Level 1 fair values measured using quted prices (unadjusted) in active markets fr identical instruments; Level 2 fair values measured using directly (i.e. as prices) r indirectly (i.e. derived frm prices) bservable inputs, ther than quted prices included in Level 1; and Level 3 fair values measured using inputs that are nt based n bservable market data (unbservable inputs). At 30 June the financial instruments carried at fair value split by valuatin methd is summarised belw: Level 1 Level 2 Level 3 Ttal 2017 Financial assets at fair value thrugh prfit r lss: Fixed interest securities 28,828 12,763-41,591 Overseas equities held via unlisted unit trust - 44,371-44,371 Alternative assets held via unlisted unit trust 11, ,480 Australian-listed equities 76, ,486 Australian-listed equities held via unlisted unit trust 3, ,190 Australian-listed REITs 14, ,382 Ttal 134,366 57, ,500 Financial assets at fair value thrugh prfit r lss: Fixed interest securities 54,700 15,918-70,618 Overseas equities held via unlisted unit trust - 91,630-91,630 Alternative assets held via unlisted unit trust 20, ,836 Australian-listed equities 130, ,216 Australian-listed equities held via unlisted unit trust 6, ,090 Australian-listed REITs 16, ,791 Ttal 228, , ,181 Transfers between levels The Trust s plicy is t recgnise transfers int and transfers ut f fair value hierarchy levels as at the end f the reprting perid. There were n transfers between levels in the fair value hierarchy at the end f 30 June As at 30 June, the transfers frm level 1 t level 2 related t an investment in an unlisted unit trust that invests mstly in internatinal equities and prvides daily unit prices. This unlisted unit trust did nt have sufficiently frequent applicatins and redemptins t be cnsidered traded in an active market during the reprting perid. There were als n changes made t any f the valuatin techniques applied as f 30 June

23 Ntes t and frming part f the financial statements 9 Financial instruments (cntinued) (a) Market risk (cntinued) Fair value measurement Fair value in an active market (level 1) The fair value f financial assets and liabilities traded in active markets (such as publicly traded derivatives and equity securities) is based n bid prices at the end f the reprting perid withut any deductin fr estimated future selling csts. Fr the majrity f financial assets and liabilities, infrmatin prvided by the quted market independent pricing services is relied upn fr valuatin. A financial instrument is regarded as quted in an active market if quted prices are readily and regularly available frm an exchange, dealer, brker, industry grup, pricing service, r regulatry agency, and thse prices represent actual and regularly ccurring market transactins n an arm's length basis. An active market is a market in which transactins fr the financial asset r liability take place with sufficient frequency and vlume t prvide pricing infrmatin n an nging basis. The investments in unlisted trusts included as level 1 in the abve table relate t investments in ther trusts managed by the Trustee. Further details f these investments are disclsed in nte 7(b). These investments are valued at their quted redemptin price at balance date in accrdance with nte 1(c). As per nte 1(c), the Trust s investments in gvernment and semi-gvernment fixed interest securities are priced n apprpriate yield curves taking int accunt factrs such as credit rating, security types, and term t maturity. Fair value in an inactive r unquted market (level 2 and 3) The fair value f financial assets and liabilities that are nt traded in an active market is determined by using valuatin techniques. Quted market prices r dealer qutes fr similar instruments are used fr debt securities held. The Trust may use a variety f valuatin methds and makes assumptins that are based n market cnditins existing at the end f each reprting perid. Valuatin techniques used fr nn-standardised financial instruments, such as ver-the-cunter derivatives, include the use f cmparable arm's length transactins, reference t the current fair value f a substantially similar ther instrument r any ther valuatin technique that is cmmnly used by market participants which maximises the use f market inputs and relies as little as pssible n entity-specific inputs. Fr ther pricing mdels, inputs are based n market data at the end f the reprting perid. The utput f a mdel is always an estimate r apprximatin f a value that cannt be determined with certainty, and valuatin techniques emplyed may nt fully reflect all factrs relevant t the psitins held. Valuatins are therefre adjusted, where apprpriate, t allw fr additinal factrs including liquidity risk and cunterparty risk. Investments in unlisted unit trusts included as level 2 are valued at their quted redemptin price at balance date. As per nte 1(c), the Trust s investments in crprate fixed interest securities are priced n apprpriate yield curves taking int accunt factrs such as credit rating, security types, and term t maturity. 21

24 Ntes t and frming part f the financial statements 9 Financial instruments (cntinued) (a) Market risk (cntinued) Fair value measurements using significant unbservable inputs (level 3) The Trust did nt hld any financial instruments with fair value measurements using significant unbservable inputs during the year ended 30 June 2017 r year ended 30 June. Financial instruments nt measured at fair value The carrying value less impairment prvisin f ther receivables and payables are assumed t apprximate their fair values due t their shrt term nature. Interest rate risk The Trust s expsure t interest rate risk largely relates t cash and cash equivalents and fixed interest securities. Interest rate risk is caused by fluctuatins in the prevailing levels f market interest rates which directly impacts n the investment values r returns. Investment plicies Fr Australian fixed interest securities the Trustee cnducts fundamental analysis f ecnmic criteria including ecnmic grwth and inflatin, in rder t estimate the fair value f shrt and lng term security yields. Relative valuatins, in additin t abslute valuatins, are mnitred and cnsidered fr the purpse f prtfli cnstructin. Investment restrictins Fixed interest securities are usually Gvernment r semi-gvernment securities, r highly rated crprate bnds, but the Trust may frm time t time buy ther paper, including listed flating rate ntes and redeemable preference shares. At 30 June the Trust s expsure t interest rate risk fr classes f financial assets is set ut belw: Flating interest Fixed interest rate rate Ttal 2017 Depsits at call with banks 10,320-10,320 Term depsits - 32,000 32,000 Fixed interest securities - 41,591 41,591 Ttal 10,320 73,591 83,911 Depsits at call with banks 2,772-2,772 Term depsits - 33,000 33,000 Bank accepted bills f exchange - 39,788 39,788 Fixed interest securities - 70,618 70,618 Ttal 2, , ,178 22

25 Ntes t and frming part f the financial statements 9 Financial instruments (cntinued) (a) Market risk (cntinued) Interest rate sensitivity (fixed interest securities) The table belw details the apprximate change in net assets attributable t unithlders and unithlder s funds at reprting date if there is a change in interest rates assuming all ther variables are cnstant: 2017 Basis pint change Basis pint change Increase in interest rates 100 (1,101) 100 (2,288) Decrease in interest rates 100 1, ,387 Currency risk Currency risk is the risk that the fair value r future cash flws f a financial instrument will fluctuate due t changes in freign exchange rates fr financial instruments denminated in currencies ther than the functinal currency (AUD) f the Trust. Investment plicies Predicting currency fluctuatins is difficult but an attempt t minimise currency risk is dne by taking currency frecasts int accunt when making investments. Overseas investment expsure is achieved thrugh the Maple-Brwn Abbtt Glbal Listed Infrastructure Fund (GLIF) and the Maple-Brwn Abbtt Internatinal Equity Trust (IET), which in turn invests part f its assets in the Maple-Brwn Abbtt Asian Investment Trust (AIT). The investment manager may frm time t time hedge the Trust s freign exchange expsure which may be undertaken in any f the GLIF, IET r AIT. Currency fluctuatins are included in the redemptin price f the unlisted unit trusts and are cnsidered part f the price risk sensitivity analysis. Investment restrictins At the asset allcatin level the Trustee adheres clsely t the mdel weightings, subject t tlerances, determined at the asset allcatin meetings, hence the mdel acts as a buy-sell discipline fr the asset classes impacted by currency expsure. (b) Liquidity risk The liquidity risk t which the Trust is expsed arises because unithlders may request redemptin f their units in the Trust frm time t time, which under nrmal circumstances are payable within perids f up t six business days. Liquidity risk is minimised by maintaining sufficient cash and selecting liquid investments traded n a recgnised reputable stck exchange and hlding investments in unlisted unit trusts which hld investments traded n a recgnised reputable stck exchange. 23

26 Ntes t and frming part f the financial statements 9 Financial instruments (cntinued) (b) Liquidity risk (cntinued) The table belw shws ther financial liabilities at cntractual undiscunted cashflw amunts gruped int relevant maturities based n the remaining perid at 30 June t the cntractual maturity date: Less than 1 mnth 1-3 mnths 3-12 mnths Mre than 1 year Undated Ttal* 2017 Balances due t brkers Redemptins payable Prvisin fr current incme tax expense - 4, ,329 Sundry creditrs and accruals Ttal 669 4, ,024 Balances due t brkers Redemptins payable Prvisin fr current incme tax expense - 1, ,028 Sundry creditrs and accruals Ttal 410 1, ,462 * The carrying amunts equal the cntractual cashflw amunts. (c) Credit risk Credit risk is the risk that the Trust may incur a lss if ther parties fail t perfrm their bligatins under the financial instruments which cmprise the Trust s investment prtflis. Any nn-equity investments generally incrprate credit assessments in investment valuatins and the risk f lss is implicitly prvided fr in the determinatin f the fair value f such investments. The Trust als has a credit risk expsure in relatin t its transactins with cunterparties such as brkers, banks and ther financial intermediaries. The Trust minimises cncentratins f credit risk by transacting thrugh a number f brkers all f whm perate n recgnised and reputable exchanges. All bank bill securities held by the Trust are endrsed r accepted by majr Australian trading banks. The credit risk expsure t any ne cunterparty is lw. Ttal credit risk fr the Trust arising frm recgnised financial instruments is limited t the value f the Trust s investments and receivables shwn in the Statement f Financial Psitin. 24

27 Ntes t and frming part f the financial statements 9 Financial instruments (cntinued) (c) Credit risk (cntinued) At 30 June the Standard and Pr s credit rating is set ut belw: AAA AA+ AA- A1+ A A- BBB Ttal 2017 Depsits at call with banks , ,320 Term depsits , ,000 Fixed interest securities (Australian) Gvernment 21, ,863 Semi-Gvernment 4,950 2, ,965 Crprate - - 6,593-2,027 2,963 1,180 12,763 Ttal 26,813 2,015 6,593 42,320 2,027 2,963 1,180 83,911 Depsits at call with banks , ,772 Bank accepted bills f exchange , ,788 Term depsits , ,000 Fixed interest securities (Australian) Gvernment 34, ,395 Semi-Gvernment 16,651 3, ,305 Crprate - - 8, ,255 1,193 15,918 Ttal 51,046 3,654 8,470 75,560-6,255 1, ,178 (d) Operatinal risk Operatinal risk is the risk f direct r indirect lss assciated with the Trustee s prcesses, persnnel, technlgy and infrastructure, and frm external frces (ther than credit, market and liquidity risks) such as thse arising frm changes t legal and regulatry requirements. The bjective f the Trustee in managing peratinal risk is t mitigate as much as pssible the risk f financial lsses and damage t reputatin, cmmensurate with verall cst effectiveness. 25

28 Ntes t and frming part f the financial statements 9 Financial instruments (cntinued) (d) Operatinal risk (cntinued) The Trustee is respnsible fr the develpment and implementatin f cntrls t address peratinal risk. This respnsibility is supprted by the develpment f an verall cntrl framewrk implemented t manage peratinal risk, key aspects f which include: apprpriate segregatin f duties, including the independent authrisatin f transactins; cash and securities psitins are cmpletely and accurately recrded and recnciled t third party data; mnitring the perfrmance f external service prviders, including financial infrmatin received frm them; dcumentatin f cntrls and prcedures; peridic assessment f peratinal risks faced, and the adequacy f cntrls and prcedures t address the risks identified; reprting f peratinal lsses and prpsed remedial actin, with apprpriate fllw-up; assessment and mitigatin f cyber risks and develpment f cntingency business cntinuity, including disaster recvery, plans; training and prfessinal develpment; ethical and business standards; and risk mitigatin, including insurance where this is effective. 10 Events subsequent t balance date As the investments are measured at their 30 June 2017 fair values in the financial reprt, any change in values subsequent t the end f the reprting perid is nt reflected in the Statement f Cmprehensive Incme r the Statement f Financial Psitin. Hwever the change in the value f investments is reflected in the current unit price. N significant events have ccurred since the end f the reprting perid which wuld impact n the financial psitin f the Trust disclsed in the Statement f Financial Psitin as at 30 June 2017 r n the results and cash flws f the Trust fr the year ended n that date. 26

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