SENIOR TRUST RETIREMENT VILLAGE LISTED FUND

Transcription

1 HALF YEAR REPORT SEPTEMBER

2 UNAUDITED FINANCIAL STATEMENTS Contents Page Business Directory 03 Statement of Comprehensive Income 04 Statement of Changes in Equity 05 Statement of Financial Position 06 Statement of Cash Flows 07 Notes to the Financial Statements 08 Investor Information 21 2

3 BUSINESS DIRECTORY As at 30 September 2015 IRD Number: Nature of Business: Directors (Manager): Investment Joseph van Wijk Scott Daniel Lester Raymond Clive Jimmieson Address: Trustee: Manager: Bankers: Auditors: c/ Sargent & Franicevic, Level 10, Tower Centre, 45 Queen St, Auckland The New Zealand Guardian Trust Company Limited Senior Trust Management Limited Bank of New Zealand, Newmarket, Auckland William Buck Christmas Gouwland Level 4, 21 Queen Street Auckland CBD These financial statements have been authorised on behalf of the Manager s Board of Directors on 22 December Scott Daniel Lester, Director.. Joseph van Wijk, Director.. Raymond Clive Jimmieson, Director 3

4 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME Note Revenue Revenue 4 Total Revenue Less Expenses Accountancy Fees Audit Fees 20 Administration, Consultancy & Management costs Brokerage fees & other selling costs Depreciation expense Impairment of non current assets Legal fees Marketing & advertising costs Other expenses Registry & Communication costs Portfolio D issue costs Portfolio E issue costs Occupation costs Total expenses Operating profit (loss) Finance Income Finance Expense 5 Net finance (expenses)/income Net profit/(loss) before taxation 222 Taxation (expenses)/benefit 6 Other comprehensive income Net profit after tax attributable to Unit Holders 222 This statement is to be read in conjunction with the notes to the Financial Statements. 4

5 STATEMENT OF CHANGES IN EQUITY September 2015 Share Capital Retained Earnings Total Equity Equity at beginning of the period Total Comprehensive Income Less Tax paid on behalf of investors Equity at the end of the period This statement is to be read in conjunction with the notes to the Financial Statements 5

6 STATEMENT OF FINANCIAL POSITION Note Equity Retained Earnings 222 Current Liabilities Shareholders Advances Unallotted Units 210,000 Trade and other payables 12 Related party borrowings 13 Income tax payable 7 210,000 Non current liabilities Related party borrowings 13 Fund Deposits Allotted Total equity and liabilities 210,222 Current Assets Cash & cash equivalents ,000 Interest Receivable ,222 Non Current Assets Property, plant & equipment Deferred Tax asset 8 Total Assets 210,222 For and on behalf of the Board: Scott Daniel Lester, Director Joseph van Wijk, Director Raymond Clive Jimmieson, Director 6

7 STATEMENT OF CASH FLOWS Note September 2015 Cash flows from/(used in) operating activities Receipts from customers Payments to suppliers, employees and other Interest Paid Income Tax paid 7 Goods & Services Tax Net cash generated from/(used in) operating activities Cash flows from/(used in) investing activities Net advances to related party loans Interest received Net cash used in investing activities Cash Flows from/(used in) financing activities Proceeds from Investor Deposits 210,000 Return of Capital to Investors Net cash from financing activities 210,000 Net increase/(decrease) in cash and cash equivalents held Cash & cash equivalents 210,000 Cash & cash equivalents at the end of the year ,000 This statement is to be read in conjunction with the Notes to the Financial Statements 7

8 1 Reporting Entity The 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). The unit trust is registered under the Unit Trust Act The address of the registered office is c/ Sargent & Franicevic, Level 10, Tower Centre, 45 Queen Street, Auckland. The Fund s principal business activity is to undertake authorised investments defined as loans secured by mortgages of retirement villages, deposits with any registered bank or in any other debt security selected by the Manager and approved by the Trustee. The Fund is profit orientated. The financial statements have been prepared in accordance with the NZX Main Board Listing Rules. 2 Significant accounting policies The principal accounting policies applied in preparation of these financial statements are set out below. These policies have been consistently applied to all periods presented, unless otherwise stated. 2.1 Basis of Preparation Statement of compliance The financial statements of the Fund have been prepared in accordance with New Zealand Generally Accepted Accounting Practice ( NZ GAAP ). They comply with New Zealand equivalents to International Financial Reporting Standards ( NZ IFRS ), and other applicable Financial Reporting Standards, as appropriate for profitoriented entities. These financial statements also comply with International Financial Reporting Standards ( IFRS ). The financial statements presented have been prepared under the historical cost convention. The financial statements are presented in New Zealand dollars, which is the Fund s functional and presentational currency. There is no comparative period as the Fund commenced on 19 September Statutory Base The financial statements were authorised for issue by the directors on 22 December Changes in accounting policies There are no changes in accounting policies. 8

9 2.4 Adoption of new and revised Standards and Interpretations The Fund adopted all mandatory new and amended standards and interpretations. None of the new and amended standards and interpretations had a material impact on the Fund s assets and liabilities. 2.5 Revenue Recognition Revenue is recognised and measured at the fair value of the consideration received or receivable to the extent it is probable that the economic benefits will flow to the Fund and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised. Interest Revenue Revenue is recognised as interest accrues using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Contributions from Manager Contributions to the Fund by the Manager are recognised as income when the contributions are nonreciprocal i.e. The Fund is not obliged to repay the Manager 2.6 Finance Income and Expenses Finance income comprises interest income. Interest income is recognised as it accrues in profit or loss, using the effective interest method. Finance expenses comprise interest expense on Fund deposits and impairment losses recognised on financial assets. Interest expense is recognised in profit or loss using the effective interest method 2.7 Income tax Income tax expense The Fund will be applying to become a portfolio tax rate entity (PTRE) under the portfolio investment entity (PIE) regime. Under the PIE regime, income of PTRE is effectively taxed in the hands of shareholders and therefore the Fund has no tax expense or deferred tax assets or liabilities. Under the PIE regime, the Fund attributes the taxable income of a PTRE to investors in accordance with their proportional interest in the Fund. Investors derive portfolio investor allocated income which is the investor s share of the Fund s income and is taxed at the investor s prescribed investor rate (PIR), which is capped at 28%. The PIE taxation paid on behalf of investors is recognised as a distribution to unit holders in the Statement of Changes in Equity attributable to unit holders. Other taxes The Fund is not registered for Goods and Services Tax (GST) and consequently all components of the financial statements are stated inclusive of GST where appropriate. 9

10 2.8 Cash and cash equivalents Cash and cash equivalents in the Statement of Financial Position comprise cash at bank and on hand and shortterm deposits with an original maturity date of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value. For the purposes of the statement of cash flows, cash and cash equivalents consist of cash and cash equivalents as defined above. 2.9 Loans and Receivables Loans and receivables are nonderivative financial assets with fixed or determinable payments that are not quoted in an active market. Such assets are initially recognised at fair value plus directly attributable transaction costs and then subsequently carried at amortised cost using the effective interest method less impairment losses. There are no loans and receivables for this period Fund Deposits Fund deposits are initially recognised at the fair value of the consideration received plus directly attributable transaction costs. After initial recognition Fund deposits are measured at amortised cost using the effective interest method. After the first issue date, the issue price is determined by adding the market value of the Fund s investments (excluding any income earned but not distributed) on the most recent Valuation day, deducting all liabilities for the Fund and dividing the net amount by the number of Units on issue that day (Net Assets Value per unit) Trade and other payables Trade and other payables are carried at amortised cost and due to their short term nature they are not discounted. They represent liabilities for goods and services provided to the Fund prior to the end of the financial year that are unpaid and arise when the Fund becomes obliged to make future payment sin respect of the purchase of these goods and services. The amounts are unsecured and are usually paid within 30 days of recognition Accounting Estimates The preparation of financial statements requires the use of management judgements, estimates and assumptions that affect reported amounts and the application of policies. In particular, significant management judgements and estimates have been exercised when reporting on the credit risks and quality of loans, the Fund s forecast liquidity and the Fund s ability to continue operating as a going concern. The estimates and associated assumptions are based on the historical experiences of the Manager and various other factors that are believed to be reasonable. However, as with most account balances, their value is subject to variation with market fluctuations New Accounting Standards and interpretations issued but not yet adopted. At the date of authorisation of these Financial Statements, certain new standards, amendments and interpretations to existing standards have been issued which were not yet effective at Balance Sheet date, and which the Fund has not early adopted. The Fund has assessed the relevance of all such new standards, interpretations and amendments and has determined that there would be no material impacts to the amounts recognised or disclosed in the financial statements. 10

11 2.14 Impaired Financial Assets and Past Due Financial Assets Impaired financial assets are those loans for which the Fund has evidence that it has incurred a loss, and will be unable to collect all principal and interest due according to the contractual terms of the loan. Past due financial assets are any assets, which have not been operated by the counterparty within its key terms but are not considered to be impaired by the Fund. A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicated that one or more events have had a negative effect on the estimated future cash flows of that asset. An impaired loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate. Individually significant assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in the Statement of Comprehensive Income. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost the reversal is recognised in the Statement of Comprehensive Income. There are no impaired or past due assets in this period. 3 Revenue The reported revenue has been analysed into major service categories as follows: Procurement Fees Management Fees Other Income Total rendering of services Total revenue 11

12 FOR THE YEAR ENDED 31 MARCH Finance income and expenses 5 Taxation Finance Income Accrued interest on bank deposit 222 Interest received on bank balances Total finance income 222 Finance Costs Interest paid on Bank borrowings & credit cards Interest paid on taxation Interest paid on related party borrowingsportfolio E Total finance costs Net finance income/(expenses) 222 Reconciliation of effective tax rate Profit/(Loss) before income tax Prima facie tax at 28% (2014:28%) Plus/(less) tax effect of: Items not taxable/deductible Total income tax (benefit)/expense Current income tax expense/(benefit) Current year Deferred tax (benefit)/expense Total income tax (benefit)/expense The tax rate used in the above reconciliation is the corporate tax rate applicable at 30 September 2015 of 28% payable on taxable profits in accordance with current New Zealand tax law. 6 Income tax Current year s tax expense (note 6) Tax account opening balance Less Terminal tax paid Provisional tax paid Income tax payable/(refund due) 12

13 7 Deferred Tax Asset Deferred tax assets/(liabilities) are attributable to the following: Trade and other payable Accountancy Fees Audit Fees Tax assets Net deferred tax asset All deferred tax movements are included in the statement of profit or loss and other comprehensive income. 8 Imputation credit balance The amount of imputation credits available for the subsequent year are: Balance at beginning of the period Terminal tax Provisional tax paid Resident withholding tax deducted from interest received during the period Refunds received Imputation credits applied to Dividend Balance at end of the period 9 Cash and cash equivalents Cash at bank/overdraft 210,000 Term deposits Total cash and cash equivalents 210,000 Cash and cash equivalents are short term funds held with New Zealand registered international banks. 10 Trade and other receivables Trade receivables Other receivables 13

14 FOR THE PERIOD ENDED 3 SEPTEMBER Trade and other payables Trade payables Other payables and accruals Resident withholding tax payable Goods and services tax payable 12 Borrowings Related party loans payable Total related party loans Repayable as follows: Current NonCurrent 13 Distributions Paid No distributions were paid in the period. The Company s policy is to maintain an appropriate level of capital that balances Shareholders interests in maximising the return on their investments consistent with maintaining investor and creditor confidence and sustaining future development of the business. 14 Contingent liabilities The Company has no contingent liabilities at period end. 15 Capital commitments The Fund has no commitments under noncancellable operating leases 14

15 16 Events subsequent to balance date Permission has been given by NZX Limited (NZX) to list the Senior Trust Retirement Village Listed Fund and to quote units in the fund (Units) on the NZX main board. An underwrite agreement with Senior Trust Capital Limited was exercised to require Senior Trust Capital Limited to purchase 2,165,650 units at 1.00 per unit on 27 November The Fund s trustee Corporate Trust Limited resigned on 23 November 2015 as trustee of the Fund. The New Zealand Guardian Trust Company Limited were appointed as the new Trustee on the same day. 17 Reconciliation of cash flows from operating activities Total Comprehensive Income after Tax for the period Activity classified as investing activity: Interest received Noncash items and nonoperating items: Depreciation expense Impairment of intellectual property Movement in nonoperating trade and other receivables Movement in nonoperating trade and other payables Changes in working capital (Increase)/decrease in trade and other receivables Increase/(decrease) in Provisional Tax (Increase)/decrease in deferred tax asset Increase/(decrease) in trade and other payables Increase in Deferred PIE F Costs Cash generated from/(used in) operations 15

16 18 Financial Instruments The Fund s principal financial instruments comprise loans and receivables, payables, loans and advances and cash and shortterm deposits where appropriate. Loans and Receivables Liabilities at Amortised Cost Cash & cash equivalents 210,000 Trade & other receivables Loans and advances Total Financial assets 210,000 Unallocated Units 210,000 Trade & other payables Total Financial Liabilities 210,000 The Fund s measurement methods are detailed in the accounting policies. Given the nature of the Funds financial assets and liabilities, the carrying value of financial instruments approximates the fair value of those assets and liabilities. The main risks arising from the Fund s financial instruments are interest rate risk, credit risk and liquidity risk. The Manager uses different methods to measure and manage different types of risks to which it is exposed. Ageing analyses and monitoring of specific credit allowances are undertaken to manage credit risk, liquidity risk is monitored through the development of future rolling cash flow forecasts. The Manager reviews and agrees policies for managing each of these risks as summarised below. Primary responsibility for identification and control of financial risks rests with the Directors of the Manager. The Directors of the Manager review and agree policies for managing each of the risks identified below, credit allowances and future cash flow forecast projections. Monthly financial reporting is also provided to the Fund s Trustee, Corporate Trust Limited, who review and monitor the financial position of the Fund. Credit risk Credit risk is the risk that the Fund will incur a loss because its customers failed to discharge their contractual obligations. Financial instruments that subject the Fund to credit risk consist primarily of cash, loans and trade and other receivables. The Manager manages and controls credit risk by setting limits on the amount of risk it is willing to accept for individual counterparties and for geographical concentrations, and by monitoring exposures in relation to such limits. However the Directors do not allocate asset investment to specific geographical areas but focus on the demographic demand within the catchment area for each village. The Manager performs credit evaluations on all customers requiring advances. The Manager requires collateral or other security to support loans and advances, as set out in the Fund s prospectus. The directors of the Manager review all loans and any overdue loans are assessed on a regular basis. As required by the Trust Deed, all cash and cash equivalents are held with a New Zealand registered bank. 16

17 Maximum Exposure to Credit Risk The table below shows the maximum exposure to credit risk for the components of the statement of financial position. Cash and cash equivalents 210,000 Trade and other receivables 210,000 Credit Quality per Class of Financial Assets The credit quality of financial assets is assessed by the Directors of the Manager. The table below shows the credit quality by class of financial asset. Exposures to credit risk are graded by an internal risk grade mechanism. High grade represents the strongest credit risk where a potential loss is least likely. Substandard grade represents the weakest credit risk where a potential loss is most likely. Standard grade represents the mid range credit risk where the directors believe a potential loss in unlikely. Past due loans are those that are past the due date for repayment. Individually impaired loans are those where some potential loss is likely. High Grade Standard grade Cash & cash equivalents 210,000 Trade and other receivables 210,000 Collateral and Other Credit Enhancements The amount and type of collateral required depends on an assessment of the credit risk of the counterparty. Guidelines are implemented regarding the acceptability of types of collateral and valuation parameters. The main types of collateral obtained are as follows: Charges over real estate properties. Management monitors the market value of collateral, request additional collateral in accordance with the underlying agreement, and monitors the market value of collateral obtained during its review of the adequacy of the allowance for impairment losses. An independent valuation has been sought by a registered valuer. Value of loans Estimated value of collateral Mortgages Guarantees Less: Subordinated Priority 17

18 Risk concentrations of the Maximum Exposure to Credit Risk Concentrations of credit risk exist if a number of counterparties are involved in similar activities and have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly affected by changes in economic or other conditions. The Manager manages, limits and controls concentrations of credit risk, in particular, to individual counterparties and groups, and to industries and geographic location. Such risks are monitored on an ongoing basis and subject to annual or more frequent review, when considered necessary. However the Directors do not allocate asset investment to specific geographic areas but focus on the demographic demand within the catchment area for each village. The table below shows the maximum exposure to credit risk for finance assets by geographical region: Auckland Rest of North Island South Island 100% of the Fund s loan receivables are in the retirement village industry. Liquidity Risk Liquidity risk is the risk that the Fund will encounter difficulty in raising funds to meet obligations from its financial liabilities. The Fund s intention is to maintain sufficient funds to meet its commitments based on historical and forecasted cash flow requirements. Management s intention is to actively manage the lending and borrowing portfolios to ensure the net exposure to liquidity risk is minimised. The exposure is reviewed on an ongoing basis from daily procedures to monthly reporting as part of the Fund s liquidity management process. The tables below present undiscounted cash flows payable to the Fund for financial liabilities and unrecognised loan commitments based on contractual maturity (which is the same as expected maturity. Effective Interest Rate As at 30 On Demand 012 months 1260 months 60+ months Total Financial assets % Cash & cash equivalents Trade Debtors 210, ,000 Receivable from Manager Loans & advances 210, ,000 Financial Liabilities Unallotted Units 210, , , ,000 18

19 The figures in the above maturity table are gross figures for both assets and liabilities. They include all interest receivable on loans and advances through to maturity and all interest payable on fund deposits through to maturity. Interest Rate Risk: Interest rate risk is the risk that the fair values on future cash flows of an instrument will fluctuate due to changes in the market interest rates. The Fund is not exposed to interest rate risk in respect of Fund Deposits or Loans to borrowers because both are for fixed terms and are at fixed interest rates. The only financial instruments that expose the Fund to interest rate risk are cash and cash equivalents. Any change in the bank interest rate would appear to be minimal in the current market and would have no marked effect on profit or equity. Priority of Creditors Claims in the Event of the Company liquidating or Ceasing to Trade The Fund has not granted any person any security interest in any of its property so there would be no priority of creditors claims in the event of the Fund liquidating or ceasing to trade. All creditors would rank equally. Fair Values The estimated fair values of the Funds financial assets and liabilities are considered to be materially the same as their carrying amounts as disclosed in the Balance Sheet. 19. Going Concern The financial statements have been prepared on a going concern basis, which assumes that the Fund will continue in operational existence for the foreseeable future. The directors of the Manager, who continually review the costs of the Fund and continued collectability of interest, consider that in preparing the financial statements that they have taken into account all information that could reasonably be expected to be available. The directors of the Manager believe that the Fund will be able to meet all obligations as they fall due and have accordingly prepared the financial statements using the going concern assumption. In reaching this conclusion the directors of the Manger have considered the following: Operating and Cash Flow Forecasts The directors of the Manager have considered forecast information relating to operational profitability, cash flow requirements and Trust covenants. The directors are satisfied that there will be sufficient cash flows generated from operating activities to meet the financing cash flow requirements of the Fund. The directors have forecast a profit and positive cash flow position for the year ending 31 March The forecast information also indicates Trust covenants will be met. 19

20 Commitments/Contingencies The commitments for existing activities will be incurred in the next 6 months and will be met out of established facilities. The directors of the Manager do not consider that nay contingency will affect the appropriateness of the going concern assumption. 20. Audit Fees 2015 Fees Total 20

21 Investor Information Senior Trust Retirement Village Listed Fund (NZX: SRF) Distributions The first Distribution Date will be 31 March 2016, with the first distribution being paid to Unitholders by 14 April 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. Issue Price and Net Asset Value per Unit The issue price per Units in the Senior Trust Retirement Village Listed Fund is currently 1. The net asset value per Unit as at 30 September 2015 was Waivers 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 NZX 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 socalled agency risks. These features include the greater level of supervision and regulation provided by the Trust Deed and the Trustee, 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) 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 prospectus instead of having to comply with these Rules. NZX has also granted a waiver from the spread requirement under Rule for a period of six months, so that the Fund can be quoted so long as the Units are held by at least 150 members of the public holding at least 25% of the securities issued, with each member of the public holding at least a minimum holding, rather than the 500 members of the public that would ordinarily be required. This means there may be a reduced number of buyers of Units on the NZX Main Board. The waiver is also granted on other conditions which require, among other things, the Fund to regularly report to NZX on its spread. 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 nonstandard designation on the NZX Main Board. A copy of NZX's decision, including the conditions of the waivers granted, can be obtained from Share Registrar Link Market Services Limited Level 7, Zurich House 21 Queen Street Auckland 1010 New Zealand enquiries@linkmarketservices.co.nz Website: Media Enquiries; Alexander Communications 12a McColl Street Newmarket Auckland 1023 Attention: Kate Alexander Freephone: kate@alexandercomms.co.nz 21