Macquarie SIV Notes Fund. Special purpose financial report - For the period 14 December 2016 to 30 June 2017

Transcription

1 Special purpose financial report - to 30 June 2017

2 Special purpose financial report - Contents Page Statement of Comprehensive Income 1 Statement of Financial Position 2 Statement of Changes in Equity 3 Statement of Cash Flows 4 Notes to the Financial Statements 5 Directors' Declaration 15 Independent Auditor's Report 16 This financial report covers as an individual entity. The Trustee of is Macquarie Financial Products Management Limited (ABN ). The Trustee's registered office is No. 50 Martin Place, Sydney, NSW 2000.

3 Statement of Comprehensive Income Notes Investment income Net losses on financial instruments held at fair value through profit or loss 4 (148) Total investment loss (148) Expenses Trustee fees (5) Total operating expenses (5) Operating loss (153) Finance costs attributable to unitholders Decrease in net assets attributable to unitholders Profit/(loss) for the period - Other comprehensive income for the period - Total comprehensive income for the period - The above statement of comprehensive income should be read in conjunction with the accompanying notes. 1

4 Statement of Financial Position As at 30 June 2017 Notes 2017 Assets Financial assets held at fair value through profit or loss 6 14,852 Total assets 14,852 Liabilities Trustee fees payable 5 Total liabilities (excluding net assets attributable to unitholders) 5 Net assets attributable to unitholders - liability 5 14,847 The above statement of financial position should be read in conjunction with the accompanying notes. 2

5 Statement of Changes in Equity Total equity at the beginning of the period - Total comprehensive income for the period - Transactions with owners in their capacity as owners - Total equity at the end of the period - Under Australian Accounting Standards, net assets attributable to unitholders are classified as a liability rather than equity. As a result there was no equity at the start or end of the period. The above statement of changes in equity should be read in conjunction with the accompanying notes. 3

6 Statement of Cash Flows Notes Cash flows from operating activities: Purchase of financial instruments held at fair value through profit or loss (15,000) Net cash outflow from operating activities 7(a) (15,000) Cash flows from financing activities: Proceeds from applications by unitholders 15,000 Net cash inflow from financing activities 15,000 Net increase/(decrease) in cash and cash equivalents - Cash and cash equivalents at the beginning of the period - Cash and cash equivalents at the end of the period - Non-cash financing activities 7(b) - The above statement of cash flows should be read in conjunction with the accompanying notes. 4

7 Notes to the Financial Statements 1 General information This financial report covers (the "Trust") as an individual entity. The Trust was constituted on 5 August The Trust is an unregistered managed investment scheme domiciled in Australia. The financial report is presented in Australian dollars. The Trust is presenting its first financial statements for the period. The Trust commenced trading on. The Trustee of the Trust is Macquarie Financial Products Management Limited (the "Trustee''). The Trustee s registered office is No. 50 Martin Place, Sydney, NSW The Investment Manager of the Trust is Macquarie Financial Products Management Limited (the "Investment Manager"). The Trust invests in Macquarie SIV Notes issued by Macquarie Group Limited in accordance with the Trust Constitution. The Trust will continue to be managed in accordance with the investment objective and strategy set out in the Trust Constitution. The financial statements were authorised for issue by the directors on 25 September The directors of the Trustee have the power to amend and reissue the financial report. 2 Summary of significant accounting policies This is a special purpose financial report that has been prepared for the sole purpose of fulfilling the Trustee's responsibilities to prepare and distribute a financial report to members and must not be used for any other purpose. The Trustee has agreed that the accounting policies adopted are appropriate to meet the needs of the unitholders. As the Trust is not a reporting entity it is not required to prepare financial reports in accordance with Accounting Standards. However, the financial report has been prepared in accordance with accounting policies as set out below. These policies have been consistently applied, unless otherwise stated in the following text. (a) Basis of preparation This special purpose financial report has been prepared in accordance with the recognition and measurement aspects of all applicable Australian Accounting Standards. The following accounting standards were applied in full:! AASB 101 Presentation of Financial Statements! AASB 107 Statement of Cash Flows! AASB 108 Accounting Policies, Changes in Accounting Estimates and Errors! AASB 1031 Materiality! AASB 1048 Interpretation of Standards The financial report is prepared on the basis of fair value measurement of assets and liabilities except where otherwise stated. 5

8 Notes to the Financial Statements 2 Summary of significant accounting policies (continued) (a) Basis of preparation (continued) The statement of financial position is presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity and do not distinguish between current and non-current. All balances are expected to be recovered or settled within twelve months, except for investments in financial assets and net assets attributable to unitholders. The amount expected to be recovered or settled within twelve months after the end of the reporting period cannot be reliably determined. (b) Financial instruments (i) Classification The Trust's investments are categorised as at fair value through profit or loss as below:! Financial instruments designated at fair value through profit or loss upon initial recognition These include financial assets that are not held for trading purposes and which may be sold. These include investments in Macquarie SIV Notes. Financial assets and financial liabilities designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Trust s documented investment strategy. The Trust s policy is for the Trustee to evaluate the information about these financial assets on a fair value basis together with other related financial information. Loans and receivables comprise amounts due to the Trust. (ii) Recognition/derecognition The Trust recognises financial assets and financial liabilities on the date it becomes party to the contractual agreement (trade date) and recognises changes in fair value of the financial assets or financial liabilities from this date. Financial assets are derecognised when the right to receive cash flows from the investments has expired or the Trust has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognised when the obligation under the liabilities are discharged. (iii) Measurement (a) Financial assets and financial liabilities held at fair value through profit or loss Financial assets and financial liabilities held at fair value through profit or loss are measured initially at fair value excluding any transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction costs on financial assets and financial liabilities at fair value through profit or loss are expensed immediately. Subsequent to initial recognition, all financial instruments held at fair value through profit or loss are measured at fair value with changes in their fair value recognised in the statement of comprehensive income. 6

9 Notes to the Financial Statements 2 Summary of significant accounting policies (continued) (b) Financial instruments (continued) (iii) Measurement (continued) (a) Financial assets and financial liabilities held at fair value through profit or loss (continued)! Fair value in an active market The fair value of financial assets and financial liabilities traded in active markets is based on their quoted market prices at the statement of financial position date without any deduction for estimated future selling costs. Financial assets are priced at current bid prices, while financial liabilities are priced at current asking prices.! Fair value in an inactive or unquoted market The fair value of financial assets and financial liabilities that are not traded in an active market is determined using valuation techniques. These include the use of recent arm s length market transactions, reference to the current fair value of a substantially similar other instrument, discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliable estimate of prices obtained in actual market transactions. Where discounted cash flow techniques are used, estimated future cash flows are based on management s best estimates and the discount rate used in a market rate at the statement of financial position date applicable for an instrument with similar terms and conditions. For other pricing models, inputs are based on market data at the statement of financial position date. Fair values for unquoted equity investments are estimated, if possible, using applicable pricing/earnings ratios for similar listed companies adjusted to reflect the specific circumstances of the issuer. (b) Loans and receivables Loans and receivables are measured initially at fair value plus transaction costs and subsequently amortised using the effective interest method, less impairment losses if any. Such assets are reviewed at each statement of financial position date to determine whether there is objective evidence of impairment. If any such indication of impairment exists, an impairment calculation is undertaken and any impairment loss is recognised in the statement of comprehensive income as the difference between the asset s carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate. If in a subsequent period the amount of an impairment loss recognised on a financial asset carried at amortised cost decreases and the decrease can be linked objectively to an event occurring after the write-down, the write-down is reversed through the statement of comprehensive income. (iv) Offsetting financial instruments Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position if, and only if, there is a legally enforceable right to offset the recognised amounts at all times and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously. 7

10 Notes to the Financial Statements 2 Summary of significant accounting policies (continued) (c) Net assets attributable to unitholders Units are redeemable at the unitholders' option and are therefore classified as financial liabilities. The units can be put back to the Trust at any time for cash based on the redemption price. The fair value of redeemable units is measured at the redemption amount that is payable (based on the redemption unit price) at the statement of financial position date if unitholders exercised their right to put the units back to the Trust. (d) Cash and cash equivalents For the purpose of presentation in the statement of cash flows, cash includes cash on hand and deposits held at call with financial institutions. Cash equivalents include other short-term, highly liquid investments with original maturities of three months or less from the date of acquisition that are readily convertible to known amounts of cash, which are subject to an insignificant risk of changes in value and are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes. Bank overdrafts, if any, are shown separately on the statement of financial position. Payments and receipts relating to the purchase and sale of investment securities are classified as cash flows from operating activities, as movements in the fair value of these securities represent the Trust's main income generating activity. (e) Expenses All expenses, including Trustee fees, are recognised in the statement of comprehensive income on an accruals basis. (f) Income tax Under current legislation, the Trust is not subject to income tax as unitholders are presently entitled to the income of the Trust. Financial instruments held at fair value may include unrealised capital gains. Should such a gain be realised, that portion of the gain that is subject to capital gains tax will be distributed so that the Trust is not subject to capital gains tax. Realised capital losses are not distributed to unitholders but are retained in the Trust to be offset against any realised capital gains. If realised capital gains exceed realised capital losses, the excess is distributed to unitholders. The Trust may incur withholding tax imposed by certain countries on investment income. Such income is recorded gross of withholding tax in the statement of comprehensive income. The benefits of imputation credits and tax paid are generally passed on to unitholders. (g) Distributions to unitholders In accordance with the Trust Constitution, the Trust fully distributes its distributable income, and any other amounts determined by the Trustee, to unitholders by cash or reinvestment. The distributions to unitholders are recognised in the statement of comprehensive income as finance costs attributable to unitholders. 8

11 Notes to the Financial Statements 2 Summary of significant accounting policies (continued) (h) Movement in net assets attributable to unitholders Income and expenses that are not included in distributable income and not distributed to unitholders are included in net assets attributable to unitholders. Unrealised gains and losses on financial instruments are included in net assets attributable to unitholders as they are not distributed to unitholders until realised. Capital losses are not distributed to unitholders but are retained to be offset against any future realised capital gains. Movements in net assets attributable to unitholders are recognised in the statement of comprehensive income as finance costs attributable to unitholders. (i) Receivables Receivables include assets and accrued income owing to the Trust which have not been received at statement of financial position date and may include such items as Reduced Input Tax Credits ("RITC"). (j) Payables Payables include liabilities and accrued expenses owing by the Trust which are unpaid as at statement of financial position date. (k) Applications and redemptions Applications received for units in the Trust are recorded net of any entry fees payable prior to the issue of units in the Trust. Redemptions from the Trust are recorded gross of any exit fees payable after the cancellation of units redeemed. (l) Goods and Services Tax ("GST") Income, expenses and assets are recognised net of the amount of GST to the extent that the GST is recoverable from the Australian Taxation Office ("ATO"). Where GST is not recoverable, it is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. Receivables and payables are recognised inclusive of GST. RITC recoverable by the Trust from the ATO are recognised as receivables in the statement of financial position. Cash flows are disclosed in the statement of cash flows on a gross basis and cash flows relating to GST, recoverable from, or payable to, the ATO are included as cash flows from operating activities. (m) Use of estimates The Trustee makes estimates and assumptions that affect the reported amounts of assets and liabilities within the next financial period. Estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Certain financial instruments, for example, over-the-counter derivatives and unquoted securities are fair valued using valuation techniques. Where valuation techniques (for example, pricing models) are used to determine fair values, they are validated and periodically reviewed by experienced personnel of the Trustee, independent of the area that created them. Models are calibrated by back-testing to actual transactions to ensure that outputs are reliable. 9

12 Notes to the Financial Statements 2 Summary of significant accounting policies (continued) (m) Use of estimates (continued) Models use observable data to the extent practicable. However, inputs such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates. Changes in assumptions about these inputs could affect the reported fair value of financial instruments. For certain other financial instruments, including accounts payable, the carrying amounts approximate fair value due to the immediate or short-term nature of these financial instruments. (n) New accounting standards and interpretations Certain new accounting standards and interpretations have been published that are not mandatory for the 30 June 2017 reporting period. The Trustee s assessment of the impact of these new standards (to the extent relevant to the Trust) and interpretations is set out below: (i) AASB 9 Financial Instruments, AASB Amendments to Australian Accounting Standards arising from AASB 9, AASB Amendments to Australian Accounting Standards - Conceptual Framework, Materiality and Financial Instruments - Part C and related amendment AASB and AASB Amendments to Accounting Standards AASB 9 Financial Instruments applies to annual reporting periods beginning on or after 1 January 2018 and will therefore apply to the Trust from 1 July AASB 9 Financial Instruments requires all financial instruments to be measured at fair value unless the criteria for amortised cost are met. The application of the standard is not expected to change the measurement basis of any of the Trust's current financial instruments, however, AASB 9 Financial Instruments allows the Trust to elect to present gains and losses on financial instruments held at fair value through other comprehensive income, which may impact the presentation of these gains and losses. The impact of the standard may also change if the nature of the Trust's activities or investments changes prior to initial application. The Trust is continuing to assess the full impact of adopting AASB 9 Financial Instruments. Standards and interpretations that are not expected to have material impact on the Trust have not been included. (o) Rounding of amounts Pursuant to ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191 issued by the Australian Securities & Investments Commission, relating to the "rounding off" of amounts in the directors' report and financial report, amounts in the directors' report and financial report have been rounded off to the nearest thousand dollars, unless otherwise indicated. 10

13 Notes to the Financial Statements 3 Auditor's remuneration During the period, the following fees were paid or payable for services provided by Ernst & Young, auditor of the Trust: $ Audit services Audit of financial reports 4,118 Total remuneration paid/payable 4,118 Audit fees are paid out of the Trustee's own resources. 4 Net losses on financial instruments held at fair value through profit or loss Net losses recognised in relation to financial instruments held at fair value through profit or loss: Net losses on financial instruments designated as at fair value through profit or loss (148) Net losses on financial instruments held at fair value through profit or loss (148) 5 Net assets attributable to unitholders As stipulated within the Trust Constitution, each unit represents a right to an individual share in the Trust and does not extend to a right to the underlying assets of the Trust. There are separate classes of units and each unit of a particular class has the same rights attaching to it as all other units of that particular class of the Trust. Movements in number of units and net assets attributable to unitholders during the period were as follows: No. '000 Class 1 Opening balance - - Applications 3,000 3,000 Decrease in net assets attributable to unitholders - (4) Closing balance 3,000 2,996 11

14 Notes to the Financial Statements 5 Net assets attributable to unitholders (continued) No. '000 Class 2 Opening balance - - Applications 3,000 3,000 Decrease in net assets attributable to unitholders - (28) Closing balance 3,000 2,972 No. '000 Class 3 Opening balance - - Applications 3,000 3,000 Decrease in net assets attributable to unitholders - (33) Closing balance 3,000 2,967 No. '000 Class 4 Opening balance - - Applications 3,000 3,000 Decrease in net assets attributable to unitholders - (43) Closing balance 3,000 2,957 No. '000 Class 6 Opening balance - - Applications 3,000 3,000 Decrease in net assets attributable to unitholders - (45) Closing balance 3,000 2,955 12

15 Notes to the Financial Statements 5 Net assets attributable to unitholders (continued) No. '000 Total Opening balance - - Applications 15,000 15,000 Decrease in net assets attributable to unitholders - (153) Closing balance 15,000 14,847 Capital risk management The Trust manages its net assets attributable to unitholders as capital, notwithstanding net assets attributable to unitholders are classified as a liability. The amount of net assets attributable to unitholders can change significantly on a daily basis as the Trust is subject to daily applications at the discretion of the Trustee and redemptions at the discretion of unitholders, generally available after four years from the date investment is made by the unitholders. The Trustee monitors the impact of applications and redemptions relative to the liquid assets in the Trust. 6 Financial assets held at fair value through profit or loss 2017 Fair value Designated at fair value through profit or loss Macquarie SIV Notes 14,852 Total designated at fair value through profit or loss 14,852 Total financial assets held at fair value through profit or loss 14,852 13

16 Notes to the Financial Statements 7 Reconciliation of profit/(loss) to net cash outflow from operating activities (a) Reconciliation of profit/(loss) to net cash outflow from operating activities Profit/(loss) for the period - Decrease in net assets attributable to unitholders (153) Net losses on financial instruments held at fair value through profit or loss 148 Purchase of financial instruments held at fair value through profit or loss (15,000) Net change in payables and other liabilities 5 Net cash outflow from operating activities (15,000) (b) Non-cash financing activities Reinvestment of unitholder distributions - 8 Events occurring after the reporting date No significant events have occurred since the reporting date which would impact on the financial position of the Trust disclosed in the statement of financial position as at 30 June 2017 or on the results and cash flows of the Trust for the period ended on that date. 9 Contingent assets, contingent liabilities and commitments There are no outstanding contingent assets, contingent liabilities or commitments as at 30 June

17 Directors' Declaration In the opinion of the directors of the Trustee: (a) the financial statements and notes as set out on pages 1 to 14 are in accordance with the Trust Constitution, including: (i) (ii) complying with Australian Accounting Standards as disclosed under Note 2(a); and giving a true and fair view of the Trust's financial position as at 30 June 2017 and of its performance for the financial period ended on that date; and (b) there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become due and payable. This declaration is made in accordance with a resolution of the directors. Director... G Shneier Sydney 25 September

18 Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: Fax: ey.com/au Independent Auditor's Report to the unitholder of Macquarie SIV Notes Fund Opinion We have audited the financial report, being a special purpose financial report, of Macquarie SIV Notes Fund ( the Trust ), which comprises the statement of financial position as at 30 June 2017, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the period then ended, notes to the financial statements, including a summary of significant accounting policies, and the directors declaration. In our opinion, the accompanying financial report of the Trust is in accordance with the Trust Constitution. Basis for Opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Trust and the Responsible Entity in accordance with the ethical requirements of the Accounting Professional and Ethical Standards Board s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of Matter - Basis of Accounting We draw attention to Note 2(a) of the financial report, which describes the basis of accounting. The financial report has been prepared to assist the directors of Macquarie Financial Products Management Limited to meet the requirements of the Trust Constitution. As a result, the financial report may not be suitable for another purpose. Our report is intended solely for Macquarie Financial Products Management Limited and unitholders of the Trust and should not be distributed to parties other than Macquarie Financial Products Management Limited and unitholders of the Trust. Our opinion is not modified in respect of this matter. Information Other than the Financial Report and Auditor s Report Thereon The directors are responsible for the other information. The other information is the Directors Report accompanying the financial report. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

19 In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the Financial Report The directors of Macquarie Financial Products Management Limited ( the Responsible Entity ) are responsible for the preparation of the financial report that gives a true and fair view and have determined that the basis of preparation described in Note 2(a) to the financial statements is appropriate to meet the financial reporting requirements of the Trust Constitution and is appropriate to meet the needs of the unitholder. The directors responsibility also includes such internal control as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the directors are responsible for assessing the Trust s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Trust or to cease operations, or have no realistic alternative but to do so. Auditor's Responsibilities for the Audit of the Financial Report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

20 Conclude on the appropriateness of the directors use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Trust s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor s report to the related disclosures in the financial report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor s report. However, future events or conditions may cause the Trust to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Ernst & Young Rita Da Silva Partner Sydney 25 September 2017 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation