2016 CONCISE ANNUAL REPORT

Transcription

1 2016 CONCISE ANNUAL REPORT MAYNE INVESTMENTS LIMITED Responsible Entity for Northern Investment Trust Fund

2 MAYNE INVESTMENTS LIMITED ABN AS RESPONSIBLE ENTITY FOR NORTHERN INVESTMENT TRUST FUND ARSN Corporate Data Auditors Crowe Howarth, Lismore Solicitors Walters, Lismore Hosie and Partners, Ballina McCartney Young, Ballina McCullough Robertson, Brisbane Bankers ANZ Banking Group Limited Registered Office 29 Molesworth Street PO Box 1198 Lismore NSW 2480 Ph Fax Contents Chairman s Report 4 Chief Executive Officer s Report 6 Directors Report 7 Discussions and Analysis of the Financial Statements 13 Auditor s Independence Declaration 14 Statement of Profit or Loss and Other Comprehensive Income 15 Statement of Financial Position 16 Statement of Changes In Equity 17 Statement of Cash Flows 18 Notes to the Financial Statements 19 Directors Declaration 20 Independent Audit Report 21 2 Mayne Investments Limited 2016 Concise Annual Report Mayne Investments Limited 2016 Concise Annual Report 3

3 CHAIRMAN S REPORT CHAIRMAN S REPORT cont. Since the decision was made by the Board of Directors on 12 June 2012 to wind down the Fund, we have been working through the issues involved in ensuring this process takes place in a well organised, structured and as timely a manner as possible. The 2016 year has seen a lot of progress made in achieving that aim. The value of the units in the Fund as at 31 May 2016 is $0.95 per unit. The results for the year disclosed a profit for the year of $231,274. This result was affected primarily by the recovery of bad debts previously written off and a decrease in the provision for impairment of loan receivables as a result of increased prices being received for asset sales. Conversely, interest income reduced by $2,229,534 as a result of loans being repaid and funds being returned to investors. Significant progress has been made in selling assets where the Fund has taken over the management of properties as mortgagee in possession after the borrower has defaulted in its commitments under the loan agreement. The proceeds from the sales of these properties are returned to investors as part of the capital returns on a quarterly basis. currently in the process of being sold by the receiver, and whilst the agreed sale price is known, the associated costs, including legal and receiver s costs, remain unknown at this stage. Estimates of these costs have been allowed for in the provision for impairment as at 31 May We are continually monitoring our loan portfolio and are taking recovery action where deemed appropriate on loans in default, including legal action through the courts on guarantors where the security property sales values have been insufficient to repay the loan. There have been 4 quarterly returns of capital to investors as loans are repaid either from asset sales or refinancing of loans with other organisations. During the year an amount of $22,731,530 has been returned to investors in cash. This is in addition to the $161,582,157 returned since May Investors want to know how long it will take to wind down the Fund and return all funds to investors. Currently there are three (3) loans outstanding and these are in the process of being finalised. Directors believe the wind down process should be completed within the next year. The Board and management are endeavouring to complete the process as expeditiously as possible. investment being frozen and inaccessible. We will continue to return capital to investors on a quarterly basis within the constraints of our liquidity position at that time. However, we remain committed to protecting the unit value at $1.00, or close to it, so that investors have no, or little loss of capital in the wind down process. Investors can be assured that the Board s main priority is, and has been, the protection of their investment and achieving the best possible result in the wind down process. I thank you for the personal support expressed by many during the year and I have every confidence we will successfully manage the Fund through the remaining period ahead. Kevin McGregor Chairman Currently there are two (2) loans outstanding being managed by Mayne Investments Limited as mortgagee in possession. Official Receivers have been appointed over a property held as security for another loan in default. The property is I acknowledge the effort put in by staff, management and my fellow Directors over the past year. I also wish to thank you, the investors, for your patience, support and understanding during the year. We recognise the difficulties faced by all investors in having your 4 Mayne Investments Limited 2016 Concise Annual Report Mayne Investments Limited 2016 Concise Annual Report 5

4 CHIEF EXECUTIVE OFFICER S REPORT DIRECTORS REPORT The Directors of Mayne Investments Limited (the Responsible Entity), the Responsible Entity of Northern Investment Trust Fund (the Scheme) present their report together with the financial report of the Scheme, for the year ended 31 May 2016 and the auditor s report thereon. The past twelve months could be characterised as being a year of steady progress as we continue to sell distressed assets and repatriate as much investor capital as possible. During the last financial year, the Fund made four capital returns, the last being 25% of unit holders funds together with returns of capital under Hardship provisions, totalling $22,731,530. As at 31 May 2016, Funds under management totalled $11,985,043 ( $34,485,299) from a pre-gfc high of $333 million and included: Cash and cash equivalents $2,994,898 (2015 -$7,036,293) Loans & receivables $9,119,707 ( $27,604,489) There was another return of 20% of capital for the quarter ending 31 August 2016, reducing the number of units under management to just 10,099,891. There are three remaining properties to dispose of, all of which are considered to be high quality assets. Two of these properties have just been listed for sale whilst an offer for the third, and largest of these, has been accepted and is currently the subject of an extensive due diligence process. The Board remains hopeful of returning 100% of all investor capital. However, the value of the remaining units in the Fund will continue to fluctuate as any change to a sale price, no matter how small, will have an effect on the small balance of funds still under management. The audited value as at 31 May 2016, was $0.95. Given that 96.5% of capital has already been returned, if the remaining funds were returned at the current unit value, the final payment to investors would represent the return of 99.82% of their investment at the time the Fund was frozen. It is acknowledged that it has taken a long time to wind the fund up and we thank our investors for their continued patience. However, investors will be aware that part of Mayne s investment strategy for more than 40 years, as detailed in our Product Disclosure Statement, included development loans, all of which were unduly affected by the collapse of the property market post GFC. The Board has always held the view that it would be in the best interest of investors to bring these developments to market in a completed state, rather than fire sale them half finished. We firmly believe that the majority of investors have endorsed this policy rather than experience certain and substantial capital loss as a result of fire sales some years ago, when the market was particularly weak. It is apparent that the complete wind up of the Fund is not far away. Mayne will continue to work hard to ensure that the balance of outstanding capital is returned as soon as possible. Greg Andersen CEO Responsible Entity The registered office and principal place of business of the Responsible Entity and the Scheme is 29 Molesworth Street, Lismore, NSW. Directors The Directors of Mayne Investments Limited during or since the end of the financial year are: Kevin Joseph McGregor Stephen John Connelly Patrick Joseph Rummery Michael Gerard Shay Principal Activities The Scheme is a registered managed investment scheme domiciled in Australia. The principal activities of the Scheme during the year were to offer individual investors the opportunity to combine their funds with the funds of other investors to collectively, within the trust, invest in bank securities, and loans secured primarily by mortgages over real estate. There was no significant change in the nature of the principal activities during this period. Review of Operations Operating Results The Scheme s net profit / (loss) from operations after income tax and before finance costs for the current year was $231,274 ( ($950,341)). The Scheme s Constitution contains a clause that permits the Responsible Entity to provide for the anticipated losses, expenses or obligations of the Scheme in a Reserve under Clause 8.2 (b) of the Constitution. The Responsible Entity has determined that the Scheme has no known losses, expenses or obligations at 31 May 2016, other than the provision for impairment of loan receivables, that require an amount to be provided out of the distributable income of the Scheme for the year ended 31 May 2016, for the purposes of Clause 8.2 (b). The Directors of the Responsible Entity have reviewed the loan receivables as at 31 May 2016 and have declared, there were two loans requiring impairment and a provision for impairment has been made in the amount of $276,800. Distribution to Unit Holders There were no distributions to unit holders for the year ended 31 May Distributions to Unit Holders for the previous year ended 31 May 2015, were also nil. 6 Mayne Investments Limited 2016 Concise Annual Report Mayne Investments Limited 2016 Concise Annual Report 7

5 DIRECTORS REPORT cont. DIRECTORS REPORT cont. Review of Operations (continued) $ $ Revenue Interest Income 503,560 2,733,094 Bad Debts Recovered 415,000 - Total Revenue 918,560 2,733,094 Expenses Responsible Entity Fees 18, ,299 Employees Benefits Expenses 346, ,165 Custodian Fees 15,407 15,416 Bad Debts Written Off 3,869 1,424,244 Provision for Impairment of Loan Receivables (138,200) 881,000 Receivers Fees and Property Expenses 176, ,458 Other Expenses 264, ,853 Total Expenses 687,286 3,683,435 Profit / (Loss) Before Income Tax 231,274 (950,341) Interests of the Responsible Entity The Responsible Entity held 131,289 units in the Scheme as at 31 May 2016 ( ,122 units). Fees paid to the Responsible Entity The Responsible Entity was entitled to claim fees totalling $239,954 (exclusive of GST) for the year ended 31 May 2016 ( $486,410 excluding GST), in accordance with the Constitution of the Scheme. The Responsible Entity will be paid fees of $18,000 (exclusive of GST) for the year ended 31 May 2016 ( $486,410 excluding GST). There is also an unrecoverable GST cost of $810 ( $21,889) resulting in the Responsible Entity fees expense of $18,810 for the year ended 31 May 2016 ( $508,299). The balance of Responsible Entity fees not claimed by the Responsible Entity was $221,954 for the year ended 31 May 2016 ( nil) exclusive of GST. Significant Changes in the State of Affairs of the Scheme Since freezing all redemption requests on 21 October 2008, the Board has made ten partial redemption offers to investors up to 31 May Since 31 May 2011 partial redemption offers were discontinued and a policy of compulsory capital returns was adopted. Four compulsory capital returns and returns of capital under the Hardship provisions were made during the year to 31 May 2015 totalling $21,924,657. Four compulsory capital returns and returns of capital under the Hardship provisions were made during the year to 31 May 2016 totalling $22,731,530. On 19 May 2011 the Responsible Entity suspended the taking of new investments in the Scheme until further notice. The Scheme continues to follow that policy. Since 31 May 2011 when the policy of paying periodic compulsory capital returns to investors was adopted and the decision on 15 June 2012 to wind down the Scheme, borrowers were actively encouraged to either refinance their loans or sell properties to repay their loans. Since 31 May 2014 loan receivables have reduced by $37,412,704 with capital returned to investors amounting to $44,656,187. This reduction in loan receivables and cash equivalents has substantially affected the asset position and interest income of the Scheme. The results for the year were also affected by a recovery of bad debts previously written off of $415,000, bad debts written off of $3,869 and a decrease in the provision for impairment of loan receivables of $138,200. In the opinion of the Responsible Entity there were no other significant changes in the state of affairs of the Scheme that occurred during the current year. Events Subsequent to Balance Date It is likely income distributions to unit holders will be adversely affected in the next financial year due to the ongoing policy of reducing assets and returning the capital to unitholders. Likely Developments The Board of Mayne Investments Limited expects that the Scheme will be affected by the following issues in the future: On 19 May 2011, the Responsible Entity suspended the taking of new investments in the Scheme until further notice; The scheme has suspended periodic redemption offers and adopted a policy of periodic compulsory returns of capital as determined by the liquidity position at the time. On 15 June 2012 the Board announced its intention to wind down the Scheme with the eventual aim of returning capital to unit holders. This policy continues to be followed. It is expected this process could take some time to achieve as loans are repaid, either through refinancing of the debt by the borrower or the sale of security property. Future income of the Scheme will be substantially affected as income producing assets are reduced as the Scheme winds down its operations. Environmental Regulation The Scheme s operations are not subject to any significant environmental regulation under either Commonwealth, State or Territory legislation. 8 Mayne Investments Limited 2016 Concise Annual Report Mayne Investments Limited 2016 Concise Annual Report 9

6 DIRECTORS DIRECTORS REPORT cont. REPORT cont. Indemnities and Insurance Premiums for Officers or Auditors Indemnification Under the Scheme s Constitution, the Responsible Entity, including its officers and employees, is indemnified out of the assets of the scheme for any loss, damage, expense or other liability incurred by it in properly performing or exercising any of its powers, duties or rights in relation to the Scheme. The Scheme has not indemnified any auditor of the scheme. Insurance Premiums No insurance premiums are paid out of the Scheme s assets in relation to insurance cover for the Responsible Entity, its officers and employees, the Compliance Committee or the Auditors of the Scheme. Proceedings on behalf of the Scheme Mayne Investments Limited as Responsible Entity for the Scheme commenced legal proceedings for the recovery of monies outstanding from the Guarantors of three loans in default. As at the date of this report legal proceedings for recovery from the Guarantors are ongoing. Valuation of the Scheme Assets The value of the Scheme assets at 31 May 2016 was $12,169,439 ( : $34,719,248). The basis for valuation of the Schemes assets is discussed in Note 3 to the financial statements. Information on Directors of Responsible Entity Kevin Joseph McGregor Non Executive Chairman of Directors/Compliance Officer Age 66 Mr McGregor is a qualified Chartered Accountant and is a former senior partner in the firm of WCA Chartered Accountants formerly, Wappetts Chartered Accountants of Lismore. He practiced as a Chartered Accountant in public practice from 1971 to up until his retirement on 1 July 2010 and has considerable experience in audit, taxation, commercial and financial accounting. He has been a Director of Mayne Investments Limited since 1994 and is a member of the Audit and Compliance Committees. He was elected Chairman of Directors on 27 June Patrick Joseph Rummery Non Executive Director Age 77 Mr Rummery is a Foundation Manager and Director of Mayne Investments Limited serving in those roles since formation on 3 June 1968 and occupied the position of Chairman from 13 March 1995 to 17 November He is a retired solicitor and was involved in legal practice from 1963 to 1998, specialising in the fields of Property, Commercial Law, Liquor Law and Probate. He has recently retired as Executive Director of a wholesaling business involving importing goods for distribution to the retail market throughout Australia. He is a member of the Audit Committee. Michael Gerard Shay Non Executive Director Age 64 Mr Shay is a licensed Real Estate Agent, Business Agent and Stock and Station Agent and has been in that business for 43 years. He is a partner in the firms LJ Hooker Ballina and Lennox Head. He has been involved in marketing and management and development of subdivisions, shopping centres, industrial and residential projects and general advice regarding property development. He has been a Director of Mayne Investments Limited since 1988 and occupied the position of Deputy Chairman of Directors between 1995 and November He has also been involved in other Funds management since He is a member of the Audit Committee. Stephen John Connelly Non Executive Director Age 60 Mr Connelly is a Certified Practising Planner and Fellow of the Planning Institute of Australia. He has over 35 years experience in town planning. He also holds a Masters Degree in Environmental and Business Management. His specialist skills are in the fields of statutory, concept and ESD planning. Mr Connelly is also extensively involved in regional planning in the NSW Northern Rivers and is a former President of the Northern NSW Branch of the Planning Institute of Australia. Mr Connelly is regularly called upon to give expert town planning testimony to various courts and tribunals. He has been a Director of Mayne Investments Limited since August 2002 and became Chairman of the Compliance Committee on 1 December He is a member of the Audit Committee. Meetings of Directors of the Responsible Entity During the year 24 meetings of Directors were held. The number of meetings attended by each Director during the year were: Attended Eligible Kevin Joseph McGregor Stephen John Connelly Patrick Joseph Rummery Michael Gerard Shay During the year there were 2 meetings of the Audit Committee. The meeting attendance by each Director on this committee was: Attended Eligible Kevin Joseph McGregor 2 2 Stephen John Connelly 2 2 Patrick Joseph Rummery 2 2 Michael Gerard Shay 2 2 During the year there were 4 meetings of the Compliance Committee. The meeting attendance by each Director on this committee was: Attended Eligible Stephen John Connelly 4 4 Kevin Joseph McGregor Mayne Investments Limited 2016 Concise Annual Report Mayne Investments Limited 2016 Concise Annual Report 11

7 DIRECTORS REPORT cont. DISCUSSIONS AND ANALYSIS of the FINANCIAL STATEMENTS Information on Northern Investment Trust Fund Concise Financial Report. Lead Auditors Independence Declaration The lead auditors independence declaration is set out on page 9 and forms part of the Directors report for the year ended 31 May This report is made with a resolution of the Directors of the Responsible Entity. Kevin J McGregor Stephen J Connelly Dated at Lismore this 26th day of August 2016 The Concise Financial Report is an extract from the Full Financial Report for the year ended 31 May The Financial Statements and disclosures in the Concise Financial Report have been derived from the 2016 Financial Report of Northern Investment Trust Fund. A copy of the full Financial Report and auditors report will be sent to any unit holder, free of charge, upon request. The discussion and analysis is provided to assist unit holders in understanding the Concise Financial Report. The discussion and analysis is based on Northern Investment Trust Fund s financial statements and the information contained in the Concise Financial Report has been derived from the full 2016 Financial Report of Northern Investment Trust Fund. Statement of Profit or Loss and Other Comprehensive Income For the year ending 31 May 2016, the Scheme s net profit / (loss) from operations after income tax and before finance costs was $231,274 ( ($950,341)). This result was after a decrease in the provision for impairment of loan receivables of $138,200 ( increase of $881,000), a recovery of bad debts previously written off of $415,000 ( Nil) and bad debts written off of $3,869 ( $1,424,244). There were no distributions to Unit Holders for the year ended 31 May 2016 ( Nil). There was no income tax expense for the year ended 31 May 2016 ( Nil). Statement of Financial Position Net assets decreased by $22,500,256 or 65.25% to $11,985,043 during the year. The decrease in the Scheme was mainly attributable to the following: Cash and cash equivalents decreased by $4,041,395. Loans and receivables reduced $18,619,113 from loan repayments during the year. There was a decrease in the provision for impairment of loan receivables of $138,200. Bad debts written off totalled $3,869 and there was a recovery of bad debts previously written off of $415,000. The cash generated by the items above were applied as compulsory capital returns and returns of capital under the Hardship provisions to unit holders. Cash returned to unit holders amounted to $22,731,530. Statement of Cash Flows The Scheme reported net cash flows from operating activities of $71,022 for the year ended 31 May 2016 (2015: $1,496,390). The reduction in loans over this period, as a result of Borrowers refinancing and paying down their loans, resulted in net cash flows from investing activities of $18,619,113 (2015: $16,865,478). There was a net outflow of funds of $22,731,530 by periodic compulsory capital returns and returns of capital under the Hardship provisions during the year. Cash and cash equivalents amounting to $4,041,395 were reduced to fund the net outflows of funds. Statement of Changes in Equity Unit holders equity reduced by $22,500,256 during the year. Redemption of units by way of compulsory capital returns and returns of capital under the Hardship provisions to unit holders, amounted to $22,731,530. The profit in the Statement of Comprehensive Income amounting to $231,274 increased unit holders equity as at the end of the year. 12 Mayne Investments Limited 2016 Concise Annual Report Mayne Investments Limited 2016 Concise Annual Report 13

8 AUDITOR S INDEPENDENCE DECLARATION STATEMENT OF PROFIT OR LOSS Under Section 307C Of The Corporations Act 2001 To The Directors Of Mayne Investments Limited ABN (As Responsible Entity For The Northern Investment Trust Fund ARSN ) I declare that, to the best of my knowledge and belief, during the year ended 31 May 2016 there have been: i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the audit; and ii. no contraventions of any applicable code of professional conduct in relation to the audit. Crowe Horwath Central North Bradley D Bohun Registered Company Auditor (ASIC RAN ) 53 Carrington Street LISMORE NSW 2480 Dated: 29 August Revenue $ $ Interest Income 503,560 2,733,094 Bad Debts Recovered 415,000 - Total Revenue 918,560 2,733,094 Expenses Auditors Remuneration 53,034 53,034 Provision for Impairment of Loan receivables (138,200) 881,000 Responsible Entity Fees 18, ,299 Employee Benefits expense 346, ,165 Custodian Fees 15,407 15,416 Bad Debts Written Off 3,869 1,424,244 Receivers Fees & Property Expenses 176, ,458 Other expenses 211, ,819 Operating Expenses before Finance Costs 687,286 3,683,435 Profit / (Loss) before Income Tax 231,274 (950,341) Income Tax (Expense) / Revenue - - Profit / Loss after Income Tax 231,274 (950,341) Finance Costs Distribution expense to Unit holders - - Total Comprehensive Income 231,274 (950,341) To be read in conjunction with the attached notes 14 Mayne Investments Limited 2016 Concise Annual Report Mayne Investments Limited 2016 Concise Annual Report 15

9 STATEMENT OF FINANCIAL POSITION STATEMENT OF CHANGES IN EQUITY $ $ Assets Cash and cash equivalents 2,994,898 7,036,293 Loans and receivables 9,119,707 27,604,489 Other receivables 54,834 78,466 Total Assets 12,169,439 34,719,248 Liabilities Accounts payable 135, ,491 Provisions 49,396 53,458 Total Liabilities 184, ,949 Net Assets 11,985,043 34,485,299 Equity Unit holders Equity 11,985,043 34,485,299 Total Equity 11,985,043 34,485,299 The unit holders contributions were reclassified from financial liabilities to equity at 31 May 2012 as a result of changes in acceptance, redemption, and distribution of funds to unit holders by the Scheme that characterises the relationship between unit holders and the Scheme as equity. Units on Issue $ Balance of Units issued at 1 June ,285,623 57,350,968 Issue of units - - Redemption of units (21,925,784) (21,925,784) Redeemed Units Valuation Adjustment - 1,127 Comprehensive Loss - (950,341) Balance of Units issued 31 May ,359,839 34,475,970 Undistributed Income - 9,329 Unit Holders Equity at 31 May ,359,839 34,485,299 Balance of Units issued at 1 June ,359,839 34,475,970 Issue of units - - Redemption of units (22,734,975) (22,734,975) Redeemed Units Valuation Adjustment - 3,445 Comprehensive Income - 231,274 Balance of Units issued 31 May ,624,864 11,975,714 Undistributed Income - 9,329 Unit Holders Equity at 31 May ,624,864 11,985,043 To be read in conjunction with the attached notes To be read in conjunction with the attached notes 16 Mayne Investments Limited 2016 Concise Annual Report Mayne Investments Limited 2016 Concise Annual Report 17

10 STATEMENT OF CASH FLOWS NOTES TO THE FINANCIAL STATEMENTS For the year ended 31 May $ $ Cash Flows From Operating Activities Interest received 503,560 2,733,094 Bad Debts Recovered 415,000 - Operating Expenses paid (847,538) (1,236,704) Net cash flows from operating activities 71,022 1,496,390 Cash Flows From Investing Activities Net decrease in investment in loans 18,619,113 16,865,478 Net cash flows from investing activities 18,619,113 16,865,478 Cash Flows From Financing Activities Payments on redemption of redeemable units (22,731,530) (21,924,657) Net cash flows used in financing activities (22,731,530) (21,924,657) Net (decrease) / increase in cash & cash equivalents (4,041,395) (3,562,789) Cash & cash equivalents at 1 June ,036,293 10,599,082 Cash & cash equivalents at 31 May ,994,898 7,036,293 Note 1: Basis of Preparation of the Concise Financial Report The concise financial report is an extract from the full financial report for the year ended 31 May The concise financial report has been prepared in accordance with Accounting Standard AASB 1039: Concise Financial Reports, and the Corporations Act The financial statements, specific disclosures and other information included in the Concise Financial Report are derived from and are consistent with the full Financial Report of Northern Investment Trust Fund. The Concise Financial Report cannot be expected to provide as detailed an understanding of the financial performance, financial position and financing and investing activities of Northern Investment Trust Fund as the full Financial Report. A copy of the full Financial Report and Auditor s Report will be sent to any unit holder, free of charge, upon request. The Financial Report of Northern Investment Trust Fund complies with all Australian equivalents to International Financial Reporting Standards (AIRFS) in their entirety. The presentation currency used in this Concise Financial Report is Australian dollars. Note 2: Interest Income Interest Income from financial assets carried at amortised cost $ $ Cash and cash equivalents 152, ,923 Loans & Receivables 350,575 2,332,171 Total Interest Income 503,560 2,733,094 Note 3: Business Continuity As a consequence of economic circumstances, Directors elected, in line with industry trends and acting in the best interests of unit holders and other stakeholders, to place a moratorium on redemptions of unit holders investments. In concert with this action, Directors withdrew the PDS on 21 October 2008 and issued a new PDS on 2 March On 19 May 2011 the Board ceased taking new investments, including reinvestments, because of the uncertainty of the valuation of the security supporting a significant loan. As the credit crisis continued, other significant loans went into default. The Board continued with the policy of not taking new investments, but in all other respects continued to operate the fund as a going concern including managing the portfolio of loans and funding new borrowings. The policy of periodic redemption offers to unit holders ceased in May 2011, with the Board adopting a policy of periodic compulsory returns of capital allowing unit holders limited access to their funds. On 15 June 2012, the Board announced its intention to wind down the Scheme. No new investments will be taken and as loan receivables are collected, these funds will ultimately be returned to unit holders as returns of capital. The Board recognises this process will take some time to finalise. Whilst this process is in place the Scheme will continue to operate with the management of the current portfolio of loans, including loans in default whilst periodically returning capital to unit holders as and when the liquidity position allows. 18 Mayne Investments Limited 2016 Concise Annual Report Mayne Investments Limited 2016 Concise Annual Report 19

11 Crowe Horwath Central North ABN Member Crowe Horwath International Notes to the Financial Statements cont. DIRECTORS DECLARATION 53 Carrington Street Lismore NSW 2480 Australia PO Box 523 Lismore NSW 2480 Australia Tel Fax INDEPENDENT AUDITORS REPORT TO THE UNIT HOLDERS OF NORTHERN INVESTMENT TRUST FUND ARSN (MAYNE INVESTMENTS LIMITED AS RESPONSIBLE ENTITY ABN ) Note 4: Events subsequent to reporting date Borrowers are actively encouraged to either refinance their loans or sell properties to repay their loans. The continued repayment of loans and the subsequent return of these funds as capital returns to unit holders means that future income of the Scheme will be substantially reduced. It is likely income distributions to unit holders will be adversely affected in the next financial year due to these conditions. There has not arisen in the interval between the end of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Responsible Entity, to affect significantly the operations of the Scheme, the results of those operations, or the state of affairs of the Scheme in future financial years. Directors Declarations In accordance with a resolution of the directors of Mayne Investments Limited, the responsible entity of Northern Investment Trust Fund (the Scheme), the directors of the company declare that the concise financial report of the Scheme for the year ended 31 May 2016, set out on pages 15 to 20; (a) complies with Australian Accounting Standard 1039; Concise Financial Reports; and (b) is an extract from the Full Financial Report for the year ended 31 May 2016 and has been derived from and is consistent with the Full Financial Report of Northern Investment Trust Fund. Signed in accordance with a resolution of the directors of the Responsible Entity. KJ McGregor Report on the Concise Financial Report We have audited the accompanying concise financial report of Northern Investment Trust Fund (the Fund), which comprises the statement of financial position as at 31 May 2016, and the statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the year ended on that date and related notes derived from the audited financial report of Northern Investment Trust Fund for the year ended 31 May 2016 as well as the discussion and analysis. The concise financial report does not contain all the disclosures required by Australian Accounting Standards and accordingly reading the concise financial report is not a substitute for reading the audited financial report. Directors Responsibility for the Concise Financial Report The directors are responsible for the preparation of the concise financial report in accordance with Australian Accounting Standard AASB 1039: Concise Financial Reports and the Corporations Act 2001 and for such internal control as directors determine is necessary to enable the preparation of the concise financial report. Auditor s Responsibility Our responsibility is to express an opinion on the concise financial report based on our procedures which were conducted in accordance with Auditing Standard ASA 810: Engagements to Report on Summary Financial Statements. We have conducted an independent audit in accordance with Australian Auditing Standards of the financial report of Northern Investment Trust Fund for the year ended 31 May We expressed an unmodified audit opinion on that financial report in our audit report dated 29 August The Australian Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. SJ Connelly Dated at Lismore this 26th day of August Mayne Investments Limited 2016 Concise Annual Report Crowe Horwath Central North is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees. Mayne Investments Limited 2016 Concise Annual Report 21

12 Crowe Horwath Central North ABN Member Crowe Horwath International 53 Carrington Street Lismore NSW 2480 Australia PO Box 523 Lismore NSW 2480 Australia Tel Fax An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the concise financial report. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the concise financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Fund s preparation and fair presentation of the concise financial report 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 entity s internal control. Our procedures included testing that the information in the concise financial report is derived from, and is consistent with the financial report for the year and examination on a test basis, of audit evidence supporting the amounts, discussion and analysis, and other disclosures which were not directly derived from the financial report for the year. These procedures have been undertaken to form an opinion on whether, in all material respects the concise financial report complies with AASB 1039: Concise Financial Reports and whether the discussion and analysis complies with the requirements laid down in AASB 1039: Concise Financial Reports. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act We confirm that the independence declaration required by the Corporations Act 2001, which has been provided to the directors of Mayne Investments Limited, would be in the same terms if provided to the directors as at the date of this auditor s report. Auditor s Opinion In our opinion, the concise financial report including discussion and analysis of Northern Investment Trust Fund for the year ended 31 May 2016 complies with AASB 1039: Concise Financial Reports. Crowe Horwath Central North Bradley D Bohun Registered Company Auditor (ASIC RAN ) 53 Carrington Street LISMORE NSW 2480 Dated: 29 August 2016 Crowe Horwath Central North is a member of Crowe Horwath International, a Swiss verein. Each member of Crowe Horwath is a separate and independent legal entity. Liability limited by a scheme approved under Professional Standards Legislation other than for the acts or omissions of financial services licensees. 22 Mayne Investments Limited 2016 Concise Annual Report Mayne Investments Limited 2015 Concise Annual Report 23

13 24 Mayne Investments Limited 2015 Concise Annual Report