2017 half year report. Senior Trust Retirement Village Listed Fund.

Transcription

1 2017 half year report Senior Trust Retirement Village Listed Fund.

2 01 Contents Half year report September 2017 Overview First half highlights 04 Condensed financial statements 06 Investor information 18 This 2017 Half Year Report is a concise summary of our activities and financial position. All figures are expressed in New Zealand currency unless otherwise stated. Revenues and expenses are recognised exclusive of Goods and Services Tax HALF YEAR REPORT

3 02 03 Overview Dear Unitholder, Welcome to the 2017 Half Year Report. I am pleased to announce that the Senior Trust Retirement Village Listed Fund ( Fund ) continues its track record of strong financial performance. The results reflect our intensive efforts to identify strong lending opportunities which are both in accordance with our offer documents and are commercially structured to enable the Fund, to at a minimum, achieve the targeted distribution rate. The Fund s policy is a targeted distribution rate of 6% pre-tax per annum subject to maintaining the capital of the Fund. Therefore our half year targeted distribution rate is 3% pre-tax per unit. For the half year, the Fund has delivered in excess of target, reporting 3.4% pre-tax earnings per unit. During the six month period, the Fund increased its loan facility to Quail Ridge Country Club. A retirement village development, located in Kerikeri, Bay of Islands, which has been designed to meet the expectations of buyers at the top end of the market. The Fund also provided a first mortgage advance to Hauraki Village. The Fund now has six mortgage advances to soundly run, well located retirement village developments throughout New Zealand. It is well publicised that the retirement village industry is experiencing a period of strong growth. As the specialist lender to the sector, the Fund is well positioned to explore and secure other high quality lending opportunities that will enable us to deliver our financial objectives. Which is to provide our unitholders with a steady, attractive income return. The Directors are committed to providing strong corporate governance. Risk management is a significant focus for the Board as we ensure that risks are forecast and evaluated and our procedures are robust to mitigate their impact. Operating within the regulations of both the Financial Markets Conduct Act and the NZX Main Board Listing rules, we see as highly beneficial to our unitholders. For the half year, the Fund has delivered in excess of target, reporting 3.4% pre-tax earnings per unit. Should you wish to look at further opportunities to invest, the offer of units in the Fund remains open until March 2020, or the date on which a maximum of 45 million units have been issued, whichever is earliest. We would once again like to thank you for your support and investment. Yours faithfully, Scott Lester 2017 HALF YEAR REPORT

4 First Half highlights First Half highlights The Fund has maintained its momentum during the first half of the financial year. The loans have been carefully structured to deliver the financial objectives of the Fund. It is pleasing to report that the Fund has, once again, exceeded its commercial targets. - Scott Lester EXCEEDED TARGET ACHIEVED TARGET EXCEEDED TARGET 3.4 % For the six month period ACHIEVED TARGET $ 20.7m of funds under management $ 97k of retained profits Six loans The Fund has grown its lending portfolio, to soundly run, well located retirement village developments the Fund s pre-tax earnings per unit was in excess of the pre-tax targeted distribution rate of 3% pre-tax after accounting for all distribution and operating expenses 2017 HALF YEAR REPORT

5 06 Condensed financial statements 07 Condensed financial statements Senior Trust Retirement Village Listed Fund Financial statements for the 6 months ended 30 September 2017 Financial statements contents Condensed statement of comprehensive income Condensed statement of financial position Condensed statement of changes in net assets attributable to unitholders Condensed statement of cash flows Notes to the condensed financial statements HALF YEAR REPORT FINANCIAL STATEMENTS

6 08 Condensed financial statements Condensed financial statements 09 Condensed statement of comprehensive income Condensed statement of financial position For the 6 months ended 30 September 2017 For the 6 months ended 30 September months 6 months 31 Mar months Note $ $ $ Revenue and other income Interest income 1,017, ,504 1,228,394 Other income 52,506-52,838 1,070, ,504 1,281, Mar 2017 Note $ $ $ Current assets Cash and cash equivalents 4 404,633 1,137,856 1,692,531 Receivables 183,876 91, ,623 Less: expenses Finance receivables 5 104, , ,195 Finance costs - - (419) Other assets 21,606 34,291 7,188 Administration and compliance expense (461,068) (212,768) (577,076) Total current assets 714,310 1,402,170 1,943,537 (461,068) (212,768) (577,495) Non-current assets Profit before income tax expense 608, , ,737 Finance receivables 5 20,597,056 10,212,234 14,332,605 Income tax expense (167,874) (68,806) (197,046) Deferred tax assets 5,460 4,114 6,830 Net profit from continuing operations 441, , ,691 Total non-current assets 20,602,516 10,216,348 14,339,435 Other comprehensive income for the year Total assets 21,316,826 11,618,518 16,282,972 Total comprehensive income 441, , ,691 Current liabilities Earnings per unit Payables 475,567 1,142, ,914 Basic earnings per unit after tax (cents) Current tax liabilities 11,841 5,030 52,858 Diluted earnings per unit after tax (cents) Total current liabilities 487,408 1,147, ,772 Total liabilities 487,408 1,147, ,772 Net assets attributable to unitholders 20,829,418 10,470,984 15,857,200 The attached notes form part of and are to be read in conjunction with these condensed financial statements. Units 6 20,732,133 10,455,750 15,808,555 Retained earnings 97,285 15,234 48,645 Net assets attributable to unitholders 20,829,418 10,470,984 15,857,200 For and on behalf of the board, dated 10 November 2017 Director: Scott Lester Director: Joseph van Wijk Director: Clive Jimmieson The attached notes form part of and are to be read in conjunction with these condensed financial statements HALF YEAR REPORT FINANCIAL STATEMENTS

7 10 Condensed financial statements Condensed financial statements 11 Condensed statement of changes in net assets attributable to unitholders Condensed statement of cash flows For the 6 months ended 30 September 2017 For the 6 months ended 30 September 2017 Note Units Retained earnings Total equity Note 30-Sep-17 6 months 30-Sep-16 6 months 31-Mar months $ $ $ $ $ $ Balance as at 1 April ,808,555 48,645 15,857,200 Cash flow from operating activities Total comprehensive income for the period - 441, ,122 Interest received from borrowers 973, ,624 1,435,497 Receipts from customers - registry income 52,506 52,838 Transactions with unitholders: Allotted investor units 6 4,923,578-4,923,578 Distribution to unitholders - (392,482) (392,482) Total transactions with unitholders 4,923,578 (392,482) 4,531,096 Payments to suppliers (428,100) (237,358) (523,217) Finance costs - (419) Income tax paid (207,522) (94,099) (177,227) Net cash provided by operating activities 390,189 42, ,472 Balance as at () 20,732,133 97,285 20,829,418 Cash flow from investing activities Loans advanced to retirement villages (6,333,914) (5,699,817) (9,889,651) Balance as at 1 April ,530,950 6,735 5,537,685 Total comprehensive income for the year - 176, ,930 Transactions with unitholders: Allotted investor units 6 4,924,800-4,924,800 Distribution to unitholders - (168,431) (168,431) Total transactions with unitholders 4,924,800 (168,431) 4,756,369 Proceeds from Manager 69,463 69, ,659 Net cash (used in) investing activities (6,264,451) (5,630,353) (9,715,992) Cash flow from financing activities Proceeds from units allotted 4,873,278 5,252,582 10,207,605 Proceeds from units un-allotted 55, ,500 50,300 Unitholder distributions paid (341,914) (140,959) (376,772) Net cash provided by financing activities 4,586,364 5,986,123 9,881,133 Balance as at () 10,455,750 15,234 10,470,984 Balance as at 1 April ,530,950 6,735 5,537,685 Total comprehensive income for the year - 506, ,691 Transactions with unitholders: Allotted investor units 6 10,277,605-10,277,605 Distribution to unitholders - (464,781) (464,781) Total transactions with unitholders 10,277,605 (464,781) 9,812,824 Balance as at 31 Mar 2017 () 15,808,555 48,645 15,857,200 The attached notes form part of and are to be read in conjunction with these condensed financial statements. Reconciliation of cash and cash equivalents Cash at beginning of the financial year 1,692, , ,918 Net increase/ (decrease) in cash held (1,287,898) 397, ,613 Cash and cash equivalents at end of period 4 404,633 1,137,856 1,692,531 The attached notes form part of and are to be read in conjunction with these condensed financial statements HALF YEAR REPORT FINANCIAL STATEMENTS

8 12 NOTES TO THE FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED 30 SEPTEMBER Notes to the financial statements for the 6 months ended 30 September 2017 Note 1: Reporting entity These condensed interim financial statements are for Senior Trust Retirement Village Listed Fund (the Fund). The Fund is a unit trust established by deed dated 11 September 2015 between Corporate Trust Limited (Trustee) and Senior Trust Management Limited (Manager). On 23 November 2015, Corporate Trust Limited retired as Trustee and The New Zealand Guardian Trust Company Limited was appointed as the new Trustee. The Unit Trust has a maturity date of 11 March The Fund is a for-profit entity for the purpose of complying with New Zealand Generally Accepted Accounting Practice. The Fund s principal business activity is to advance loans secured by mortgage to retirement villages and aged care facilities and to invest in any debt security issued by a New Zealand registered bank or any other rated institution that has a credit rating of at least BBB from Standard & Poor s (or an equivalent rating from another internationally recognised rating agency). The Fund is listed on the New Zealand Stock Exchange (NZX) and is a FMC reporting entity for the purpose of the Financial Markets Conduct Act From 11 March 2016, the Manager was licensed under the Financial Markets Conduct Act 2013 to be the Manager of the Senior Trust Retirement Village Listed Fund. Accordingly, the Fund transitioned to the Financial Markets Conduct Act 2013 on 11 March Any offers in the Fund made after that date are therefore being made under the Act. The units in the Fund will be issued in reliance on the exclusion for offers of the financial product of the same class as quoted financial products in Clause 19 of Schedule 1 of the Act. As a result of relying on that exclusion, the Manager is not required to issue a Product Disclosure Statement for the offer of Units in the Fund. The interim financial statements were authorised for issue by the Manager of the Fund on 10 November 2017 The following is a summary of the material accounting policies adopted by the Fund in the preparation and presentation of the financial statements. Note 2: Basis of preparation The condensed interim financial statements of the Fund for the six months ended 30 September 2017 have been prepared in accordance with NZ IAS 34: Interim Financial Reporting. The Fund is a for-profit entity incorporated and domiciled in New Zealand. The condensed interim financial statements of the Fund for the six months ended 30 September 2017 should be read in conjunction with the Fund s annual financial statements for the year ended 31 March 2017, which were prepared in accordance with New Zealand equivalents to International Financial Reporting Standards. The accounting policies applied in these condensed interim financial statements are consistent with those used in the Fund s annual financial statements for the year ended 31 March The same significant judgements, estimates and assumptions included in the notes to the Fund s annual financial statements for the year ended 31 March 2017 have been used in these condensed interim financial statements. The fund has no exposure to seasonality or cyclicality in its operations. Note 3: Segment reporting The fund operates in one segment - an investment fund portfolio in New Zealand. Note 4: Cash and cash equivalents 31 March 2017 $ $ $ Applications account 55, ,924 50,556 Funding account 349, ,432 1,641,973 Current account 16 27, ,633 1,137,856 1,692,531 Cash and cash equivalents are short term funds held with New Zealand registered banks. The application and funding bank accounts are held by the Supervisor, Guardian Trust, on behalf of the Fund. Both accounts bear interest at 1.5% (September 2016: 2.0%, March 2017: 1.5%) per annum. The current account is non interest bearing HALF YEAR REPORT FINANCIAL STATEMENTS

9 14 NOTES TO THE FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED 30 SEPTEMBER Note 5: Finance receivables Note 6: Trust funds CURRENT 31 March 2017 Amounts receivables from: $ $ $ - Senior Trust Management Limited 104, , ,195 NON CURRENT Amounts receivables from: - Whitby Village (2009) Limited 6,255,577 5,165,492 4,870,325 - Palm Grove Partnership 3,499,374 3,500,000 3,500,000 - Quail Ridge Country Club Limited 6,093,017 1,060,499 3,037,709 - Roys Bay Estate Limited 2,471,771-1,757,791 - Arrowtown Lifestyle Retirement Village Joint Venture 1,550, ,000 - Senior Trust Management Limited 347, , ,780 - Hauraki Village Limited 380, ,597,056 10,212,234 14,332, March 2017 Issued and paid-up units units units units 20,732,133 (September 2016: 10,455,750, March 2017: 15,808,555) units 20,732,133 10,455,750 15,808,555 Units are issued at the issue price. The issue price of a unit is the net asset value per unit as at the relevant valuation date on which the units are issued. All units issued during the period were issued at the net asset value per unit which was $1.00. All units have a common maturity date on 11 March On maturity, the Fund will be wound up and net assets will be distributed to unitholders. Units are not redeemable by the holders. The manager has the right to redeem units in accordance with the offer documents. 31 March 2017 $ $ $ Opening balance 15,808,555 5,530,950 5,530,950 Units issued: 4,923,578 4,924,800 10,277,605 At reporting date 20,732,133 10,455,750 15,808,555 Note 5: Finance receivables (continued) Quail Ridge Country Club Limited On 18 April 2017 the loan agreement with Quail Ridge Country Club Limited was varied to extend the loan facility from $2,000,000 to $11,000,000. All other terms and conditions are unchanged from those disclosed in the financial statements for the year ended 31 March Hauraki Village Limited On 15 September 2017 the Fund entered into an agreement with Hauraki Village Limited to provide a loaned facility of up to $900,000. The loan expires no later than 31 January 2019 and earns interest at 11.5% per anumn HALF YEAR REPORT FINANCIAL STATEMENTS

10 16 NOTES TO THE FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED 30 SEPTEMBER 2017 NOTES TO THE FINANCIAL STATEMENTS FOR THE 6 MONTHS ENDED 30 SEPTEMBER Note 7: Earnings per unit Cents per unit cents cents 31 March 2017 cents Basic earnings per unit after tax Diluted earning per unit after tax The Fund s policy is a target distribution rate of 6% p.a. before tax subject to maintaining the capital of the Fund. Unitholders receive cash distributions net of tax however distributions during the period were fully imputed. Basic earnings per unit is calculated as profit after tax divided by the weighted number of issued units for the year. Diluted earnings per unit is calculated as profit after tax divided by the weighted number of units plus any deferred units which are expected to be issued after balance date. If basic earnings per unit and diluted earnings per unit were calculated using profit before tax then the results would be 3.4 (September 2016: 3.1, March 2017: 6.5) cents and 3.4 (September 2016: 3.1, March 2017: 6.5) cents respectively. Reconciliation of earnings used in calculating earnings per unit 31 March 2017 Profit attributable to the unitholders of the Fund used in calculating earnings per unit 441, , ,691 Weighted average number of units used as the denominator Weighted average number of units used as the denominator in calculating basic earnings per unit 18,134,630 7,886,250 10,763,507 Weighted un-allotted units issued after balance date 1,209 21,376 1,240 Weighted average number of units and potential units used as the denominator in calculating diluted earnings per unit 18,135,839 7,907,626 10,764,747 Note 8: Capital and leasing commitments There are no material capital commitments at the reporting date (September 2016: nil, March 2017: nil). Note 9: Contingent liabilities The Fund has no contingent liabilities at year end (September 2016: nil, March 2017: nil). Note 10: Events subsequent to reporting date There are no material events subsequent to reporting date HALF YEAR REPORT FINANCIAL STATEMENTS

11 18 Investor Information 19 Investor Information Distributions The distribution dates will be 31 March, 30 June, 30 September and 31 December in each year until the Maturity Date, with distributions being paid within 14 days of each distribution date. The table below provides details of individual distribution payments; 2017 HY 2016 HY Distribution Period 30-Jun Sep Jun Sep-16 Payment Date 14-Jul Oct Jul Oct-16 Number of units on issue at end of distribution period 18,400,196 20,732,133 7,637,750 10,455,750 Gross Distribution per unit (%) 6% 6% 6% 6% Distribution Payment 181, ,966 68, ,041 Excluded Income per security $ $ $ $ Imputation Credit per security $ $ $ $ Supplementary Distribution per security $ $ $Nil $Nil Distributions paid or payable during the six month period ending 30 September 2017 was at the targeted distribution rate of 6% per annum (pre-tax), which totalled $392K. With the distribution for the period ending 30 September 2017, being paid on the 13th October As the Fund is open, the amount paid to each unitholder issued units during the distribution period was calculated on a pro rata basis in accordance with the Trust Deed for the Fund. The distribution paid or payable for the period for the first half of 2016, was at the targeted distribution rate of 6% per annum (pre-tax), which totalled $168K. In accordance with the current Information Memorandum (28 June 2017), when unitholders subscribe for units they will pay a subscription fee to the Fund to meet fees charged by NZX and other subscription costs which are based on the value of additional Units issued. The subscription fee is 1% of the full subscription amount which will be deducted from the subscription amount and is only payable if units are allotted to the applicant. Unitholders can elect to use their Distribution payments to purchase units up to the total amount of units for which they originally subscribed. Any such election must be made in the application for those units. The units will be allotted on the next issue date, which is at least monthly. A subscription fee will not be applicable to the additional units allotted HALF YEAR REPORT

12 20 Investor Information Investor Information 21 Net tangible assets per security The table below details the net tangible assets per security; Net Tangible Assets $20.8m $10.5m Net Tangible Assets per Security $1.00 $1.00 Entities which control has been gained or lost during the period There has not been any entities where control has been gained or lost during the period. Associates or joint ventures There are not any associate or joint venture entities. Unrealised gains There were no unrealised gains resulting from the revaluation of assets. Accounting policies There were no material changes in accounting policies applied in preparation of the statements reflected in the announcement. Major changes or trends subsequent to the end of the half year reporting period There are no major changes or trends post the end of the reporting period. Waivers For the purposes of Main Board/Debt Market Listing Rule (30 October 2013) (f) this section contains the waivers that have been granted and published by the NZX in relation to the Senior Trust Retirement Village Listed Fund (STRVLF) or relied upon by STRVLF. The structure of the Fund differs from that of a listed company, the type of listed entity the NZX Main Board Listing Rules (Rules) are designed to regulate. The Fund is not similar to most other issuers listed on the NZSX Main Board and the units have features that make less relevant many of the concerns that drive the Rules, including those governing voting and control rights, management costs, potentially dilutionary issues and other so-called agency risks. These features include the greater level of supervision and regulation provided by the Trust Deed and the Supervisor, the limited circumstances in which the units carry a right to vote and the maximum size of the Fund. Accordingly, NZX has granted the Manager waivers from the following Rules: 3.1.1(a), 3.1.1(b), 3.3.3(a), to , 3.4 to 3.6, section 4, 7.3, 7.4, 7.5, and 7.6.2, 9.2, , (b), and (a). These waivers reflect the factors outlined above, the fact that Fund is undertaking an ongoing offer of Units as described in the registered prospectus dated 11 September 2015 (as amended on 27 November 2015, 10 March 2016 and as per the current Information Memorandum dated 28 June 2017) and the nature of the business undertaken by the Fund. These waivers mean that the Fund operates in accordance with the requirements of the Trust Deed and as described in the registered information memorandum and other offering documents instead of having to comply with these Rules. From 11 March 2016, the Manager was licensed under the Financial Markets Conduct Act 2013 (FMCA) to be the manager of the Senior Trust Retirement Village Listed Fund. Accordingly, the Fund transitioned to the FMCA on 11 March Any offers in the Fund made after that date are therefore being made under the FMCA. The Units in the Fund will be issued in reliance on the exclusion for offers of financial products of the same class as quoted financial products in Clause 19 of Schedule 1 of the FMCA. As a result of relying on that exclusion, the Manager is not required to issue a Product Disclosure Statement for the offer of Units in the Fund. NZX has granted approval under Rule for the inclusion in the Trust Deed of provisions that restrict the issue, acquisition or transfer of Units to allow the Fund to comply with the PIE regime. As a consequence of these waivers and this approval the Fund will bear a non-standard designation on the NZX Main Board. A copy of NZX s decision, including the conditions of the waivers granted, can be obtained from HALF YEAR REPORT

13 Senior Trust, PO Box , Newmarket, Auckland 1149, , seniortrust.co.nz