Treviso Vineyard Trust

Transcription

1 Treviso Vineyard Trust Annual Report For the year ended 30 June 2011

2 Treviso Vineyard Trust Seven Fields Management Limited Responsible Entity Report The Directors of the Responsible Entity present their report on the Treviso Vineyard Trust (the Trust) for the period ended 30 June Directors The names of the Directors of the Responsible Entity in office at any time during or since the end of the period are: Greg McMahon Grant Ross (resigned 24 August 2010) Richard Byllaardt Peter Aubort (appointed 24 August 2010) The Directors have been in office since the start of the financial year to the date of this report unless otherwise stated. 2. Principal Activities The Trust commenced on execution of the Trust Deed dated 20 May The principle activity of the Trust is the owner and lessor of vineyards. The Trust owns four land titles and associated assets in buildings and pumps. 3. Operating Results Information on the operations and financial position of the Trust and its business strategies and prospects for future financial years is set out on pages 6 to 29 of this annual report. The net profit for the Trust for the year ended 30 June 2011 was $65,997 (2010: $2,838,707 loss). 4. Distributions Declared No distributions were declared for the year ending 30 June 2011 (2010: $nil). 5. Review of Operations and Outlook The Trust s sole tenant, Fresh Produce Group (FPG) was given the option to purchase the vineyards for $3.3m if exercised prior to 30 June However this option was not exercised and therefore the Trust continues to receive rent of $240,000 per annum plus all outgoings. The lease includes a further option for the vineyards to be purchased for $3.6m if exercised after 30 June 2011 but before 28 February At present this option has not been exercised. FPG advised that the 2011 season was extremely difficult and substantial losses were incurred, however at all times the vineyard has been managed professionally and to a standard which preserves its value. In the event FPG does not exercise its option to acquire the vineyard, an alternative buyer or operator will need to be found before preparations for the 2013 season are due to begin. Preliminary plans are being made in case these alternatives need to be pursued. Page 2

3 Treviso Vineyard Trust Seven Fields Management Limited Responsible Entity Report 6. Significant Changes in State of Affairs There have been no significant changes in the state of affairs of the Trust during the reporting period that are not discussed elsewhere in this report. 7. After Balance Date Events There have been no after balance date events. 8. Future Developments There are no future events to report. 9. Environmental Issues The Trust complied with all environmental regulations during the course of the financial year. 10. Options No options over issued units on interests in the Trust were granted during or since the end of the financial year and there were no options outstanding at the date of this report. The Directors and executives of the Responsible Entity hold no options over interests in the Trust. 11. Indemnifying Officers or Auditor During or since the end of the financial year, the Responsible Entity has paid insurance premiums to insure each of the aforementioned directors as well as officers of the Responsible Entity and members of the external Compliance Committee of the Trust against liabilities for costs and expenses incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of the Responsible Entity, other than conduct involving a wilful breach of duty in relation to the Responsible Entity. The Responsible Entity has also indemnified each external member of the Compliance Committee against any liability incurred in carrying out the member s duties (other than a liability to the members of the schemes or the Responsible Entity) unless the liability arises out of conduct involving a lack of good faith on the part of the Committee Member. The contract of insurance prohibits disclosure of the nature of the liability and the amount of the premium. The Responsible Entity has not otherwise, during or since the end of the financial year indemnified or agreed to indemnify an officer or auditor of the Responsible Entity or of any related body corporate against a liability incurred as such an officer or auditor. 12. Proceedings on Behalf of Trust No person has applied for leave of court to bring proceedings on behalf of the Trust or intervene in any proceedings to which the Trust is a party for the purpose of taking responsibility on behalf of the Trust for all or any part of those proceedings. The Trust was not a party to any such proceedings during the year. 13. Fees, Commissions or other charges by the Responsible Entity or Related Parties of the Responsible Entity All fees have been detailed in Note 15 Related Party Transactions. Page 3

4 Treviso Vineyard Trust Seven Fields Management Limited Responsible Entity Report 14. Interests held by the Responsible Entity or Related Parties of the Responsible Entity At 30th June 2011, the Responsible Entity and its related parties held the following units in the Trust: 14,100 ordinary units (16 allotments) out of a total 3,219,500 ordinary units; 1,052,000 $1 convertible notes; 1,465,000 $1 preference units. There have been no changes in these holdings during the financial year. Further details are included in Note 15 of the financial report. 15. Buy Back Arrangements As detailed in the Trust Constitution dated 20 May 2002, the Responsible Entity is not under any obligation to buy back, purchase or redeem prescribed units in the Trust from Unitholders. Consequently, no interests were redeemed by the Responsible Entity during the reporting period. 16. Value of Scheme Assets The value of the Trust s assets at the end of the reporting period is $3,526,265 (2010: $3,690,892). These include agricultural assets and property, plant & equipment. 17. Number of Interests on Issue Details of interests on issue have been detailed in Note Auditors Independence Declaration A copy of the auditors independence declaration as required by section 307C of the Corporations Act 2001 is set out in the following report. Signed in accordance with a resolution of the Board of Directors. Greg McMahon Director 29 September 2011 Page 4

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6 STATEMENT OF COMPREHENSIVE INCOME Notes Revenue and other income Farming revenue - 1,917,581 Water sales - 258,804 Rental income 240,000 - Total revenue and other income 240,000 2,176,385 Expenses Farm operating expenses 78,202 (2,382,500) Direct property expenses 3 - (30,111) Loss on sale of intangible assets - (480,177) Net changes in fair value of agricultural assets (4,200) (1,625,063) Administration expenses - Responsible entity's fees: Management fees - (78,125) Exit fee (9,479) 10,689 - Custodian fees (17,853) (17,316) - Other administation expenses (25,633) (72,153) (52,965) (156,905) Finance costs 3 (195,040) (340,336) Profit/(loss) before income tax attributable to unitholders 65,997 (2,838,707) Income tax expense Profit/(loss) attributable to unitholders for the year 65,997 (2,838,707) Other comprehensive income/(expense) - - Total comprehensive income/(loss) attributable unitholders for the year 65,997 (2,838,707) The accompanying notes form part of these financial statements. 6

7 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2011 Notes CURRENT ASSETS Cash and cash equivalents 7 159, ,766 Trade and other receivables 8 66,268 10,126 TOTAL CURRENT ASSETS 226, ,892 NON-CURRENT ASSETS Agricultural assets 9 337, ,488 Property, plant and equipment 10-2,962,512 Investment properties 11 2,962,512 - TOTAL NON-CURRENT ASSETS 3,300,000 3,300,000 TOTAL ASSETS 3,526,265 3,690,892 CURRENT LIABILITIES Trade and other payables , ,631 Borrowings 13 2,517,000 2,517,000 TOTAL CURRENT LIABILITIES 3,098,528 3,338,631 NON-CURRENT LIABILITIES Provisions 14 37,932 28,453 TOTAL NON-CURRENT LIABILITIES 37,932 28,453 TOTAL LIABILITIES 3,136,460 3,367,084 NET ASSETS 389, ,808 EQUITY Unitholders funds , ,808 TOTAL EQUITY 389, ,808 The accompanying notes form part of these financial statements. 7

8 STATEMENT OF CHANGES IN EQUITY Total funds attributable to unitholders at the 323,808 3,162,515 beginning of the year Total comprehensive income/(loss) for the year Profit/(loss) attributable to unit holders 65,997 (2,838,707) Total other comprehensive income/(expense) for the year , ,808 Distributions to unitholders - - Total funds attributable to unitholders at the end of the year 389, ,808 The accompanying notes form part of these financial statements. 8

9 STATEMENT OF CASH FLOWS Notes CASH FLOWS FROM OPERATING ACTIVITIES Customer receipts 207,858 2,901,477 Payments to suppliers (229,387) (2,403,294) Finance costs paid (excluding distributions to unitholders) (195,040) (340,336) Net cash (used in)/provided by operating activities 17(b) (216,569) 157,847 CASH FLOW FROM INVESTING ACTIVITIES Proceeds from sale of intangibles - 2,971,623 Payment for property plant & equipment (4,200) (351,864) Net cash (used in)/provided by investing activities (4,200) 2,619,759 CASH FLOW FROM FINANCING ACTIVITIES Proceeds from borrowings - 5,000 Repayment of borrowings - (2,416,000) Net cash used in financing activities - (2,411,000) Net increase in cash and cash equivalents (220,769) 366,606 Cash and cash equivalents at the beginning 380,766 14,160 of the financial year Cash and cash equivalents at end of year 17(a) 159, ,766 The accompanying notes form part of these financial statements. 9

10 NOTE 1: SIGNIFICANT ACCOUNTING POLICIES Reporting Entity TREVISO VINEYARD TRUST The financial statements are for the entity Treviso Vineyard Trust (the Trust) as an individual entity. The Trust is an unlisted unit trust established and domiciled in Australia. The Trust is a registered scheme under the Corporations Act. The Responsible Entity of the Trust is Seven Fields Management Limited, a wholly owned subsidiary of Seven Fields Pty Ltd. Basis of Preparation The financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards (including the Australian Interpretations) and the Corporations Act The financial report has been prepared on a going concern basis. The financial statements have been prepared on an accruals basis and on the historical cost basis except for land and buildings, plant and equipment, intangible assets and agricultural assets which are measured at fair value. Cost is based on the fair values of the consideration given in exchange for assets. The functional and presentation currency of the Trust is Australian dollars. These financial statements were authorised for issue on 29 September 2011 by the Board of Directors. Compliance with IFRSs Australian Accounting Standards include Australian Equivalents to International Financial Reporting Standards ( AIFRS ). Compliance with AIFRS ensures that the financial statements and notes of the Trust comply with International Financial Reporting Standards ( IFRS ). Significant Accounting Policies The accounting policies set out below have been applied consistently to all periods presented in these financial statements. (a) Property, plant and equipment Property, plant and equipment includes land and buildings which are measured at fair value. Any accumulated depreciation at revaluation date is eliminated against the gross carrying amount of the asset and the net amount is restated as the revalued amount of the asset. A revaluation deficit is recognised in the statement of comprehensive income unless it directly offsets a previous revaluation surplus on the same asset in the asset revaluation reserve. An annual transfer is made from the asset revaluation reserve to retained earnings for the depreciation charge recognised in the statement of comprehensive income (net of tax) relating to the revaluation surplus. On disposal, any revaluation reserve relating to sold assets is transferred to retained earnings. Independent valuations are performed regularly to ensure that the carrying amounts of land and buildings does not differ materially from that of the fair value at the statement of financial position date. Gains and losses on disposals are calculated as the difference between the net disposal proceeds and the asset's carrying amount and are included in profit or loss in the year that the item is derecognised. 10

11 NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (b) Revenue Rental income is recognised when the right to receive the revenue has been established. Farming revenue comprises Income from the sale of grapes and is recognised upon invoicing to customers. All income is stated net of the amount of goods and services tax (GST). (c) Impairment of assets Assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount exceeds the recoverable amount. The recoverable amount is assessed as the higher of the fair value less cost to sell and value in use. In assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Non-financial assets that suffered impairment are reviewed for possible reversal of the impairment at each reporting date. (d) Financial instruments Financial assets and financial liabilities are recognised on the Trust s statement of financial position when the Trust becomes a party to the contractual provisions of the instrument. Financial assets are recognised on trade-date the date on which the Trust commits to sell or purchase the asset. Financial assets are derecognised when the right to receive cash flows from the financial asset have expired or have been transferred and the Trust has transferred substantially the risks and rewards of ownership. Cash and cash equivalents Cash and cash equivalents comprise cash on hand and demand deposits and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value. Trade and other Receivables Trade and other receivables are recognised initially at fair value and subsequently at amortised cost. They are classified as current assets except where the maturity is greater than 12 months after the reporting date, in which case they are classified as non-current. Amounts not recoverable are assessed at each reporting date. Indicators that an amount is not recoverable include where there is objective evidence of significant financial difficulties, debtor bankruptcy, financial reorganisation or default in payment (generally over 30 days). Any allowances for non-recoverable receivables are recognised in a separate allowance account. Any bad debts which have previously been provided for are eliminated against the allowance account. In all other cases bad debts are written off directly to profit or loss. 11

12 NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (d) Financial instruments (Continued) Trade and other Payables These represent liabilities for goods and services provided to the Trust prior to the end of the financial year which are unpaid. Trade and other payables are recognised initially at fair value and subsequently at amortised cost using the effective interest method. Financial liabilities and equity Financial liabilities and equity instruments issued by the Trust are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability and an equity instrument. The accounting policies adopted for specific financial liabilities and equity instruments are set out below. Borrowings Interest-bearing loans and overdrafts are initially measured at fair value, net of transaction costs incurred, and are subsequently measured at amortised cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recognised in the statement of comprehensive income over the period of the interest bearing liability using the effective interest rate method. Interest bearing liabilities are classified as current liabilities unless the Trust has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date. Preference units Preference units are initially measured at cost and classified as current liabilities. (e) Finance costs Finance costs are recognised using the effective interest rate applicable to the financial liability. (f) Goods and services tax (GST) Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of expense. Receivables and payables in the statement of financial position are shown inclusive of GST. (g) Provisions A provision is recognised when the Trust has a legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. Provisions are measured at the present value of the Responsible Entity s best estimate of the expenditure required to settle the present obligation at the statement of financial position date. The discount rate used to determine the present value reflects current market assessments of the time value of money and the risks specific to the liability (refer Note 14). Provisions include exit fees payable to the Responsible Entity upon the sale of the aggregate assets of property, plant and equipment, intangible assets and agricultural assets produce vines. 12

13 NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (h) Income tax Under current tax legislation the Trust falls within the categories of a public trading trust as the beneficial interests in the Trust are widely held by investors. Consequently as the Trust is a public trading trust the Trust is liable for income tax. Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss. Deferred income tax is determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting date and are expected to apply when the related deferred income tax asset is realised or the deferred income tax liability is settled. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses. Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. (i) Critical judgements and significant accounting estimates The preparation of financial statements requires the Directors of the Responsible Entity to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. (i) Fair value estimation The Directors valuation has been separated into relevant accounting classifications as follows: Non Current Asset Australian Accounting Standard Per the accounts $ Investment property AASB 140 Investment property 2,962,512 Agricultural assets AASB 141 Agriculture 337,488 Total 3,300,000 Fair values have been assessed as the aggregate value of each individual farm by reference to the relative planted areas of each farm and each individual component of investment property and agricultural assets vines and assigning their appropriate fair value. Further information on the assumptions and estimates made in arriving at these valuations is included in Note 9 (Agricultural assets) and Note 11 (Investment Property). 13

14 NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (i) Critical judgements and significant accounting estimates (continued) Independent valuations are sourced by the Directors at least every 2 years or when it is believed there has been a considerable movement in the market. These valuations are reviewed by the Directors at each reporting date and taken into consideration with other relevant recent market information in order to determine the Director s valuation. (ii) Agricultural assets vine valuations In respect to agricultural assets, unharvested produce is measured at fair value less estimated picking costs and point-of-sale costs. Harvested produce is initially measured at fair value less estimated pointof-sale costs at the time of picking. Gains or losses arising from changes in fair value less estimated point-of-sale costs of vines and unharvested produce are included in the statement of comprehensive income. Gains on the initial recognition of harvested produce at fair value less estimated point-of-sale costs are included in the statement of comprehensive income. Costs incurred in maintaining and enhancing vines are recognised as expenses when incurred. (j) Accounting standards applicable but not yet adopted The following new accounting standards and interpretations, amendments to standards and interpretations have been issued, but are not mandatory as at 30 June They may impact the Trust in the period of initial application. These standards and interpretations have not been adopted in the financial report for the year ended 30 June 2011: AASB : Further amendments to Australian Accounting Standards arising from the Annual Improvements Process (effective for accounting periods commencing on or after 1 January 2011), AASB : Amendments to Australian Accounting Standards (effective for accounting periods commencing on or after 1 January 2011). These accounting standards are not expected to have a significant impact of the financial statements. (k) Jointly controlled assets and operations The Trust had certain contractual arrangements with other participants to engage in joint activities that do not give rise to a jointly controlled entity. These arrangements involve the joint ownership of assets dedicated to the purposes of each venture but do not create a jointly controlled entity as the venturers directly derive the benefits of operation of their own assets, rather than deriving returns from an interest in a separate entity. The financial statements of the Trust includes its share of the assets in such joint ventures, together with the liabilities, revenues and expenses arising jointly or otherwise from those operations. All such amounts are measured in accordance with the terms of each arrangement, which is the proportion of the Trust s interest in the jointly venture. At 30 June 2011 the net amount payable in relation to joint venture activities was $7,

15 NOTE 1: SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) (l) Investment properties Investment property is property which is held to earn rental income, or for capital appreciation, or for both. Investment properties are carried at fair value determined either by the Directors or independent valuers. Changes to fair value are recorded in the statement of comprehensive income as income. Investment properties are not depreciated. (m) Agricultural assets Agricultural assets comprise grape vines and are valued at fair value determined either by the Directors or independent valuers. Changes to fair value are recorded in the statement of comprehensive income as income. (n) Net working capital deficiency As at 30 June 2011 the Trusts current liabilities exceeded its current assets by $2,872,263. On 2 July 2010 a lease over farms 5 and 18 was signed and the Trust now receives rental income of $240,000 per annum plus outgoings. As a result, the Trust has sufficient working capital to be able to continue in the short term. The lease also included an option for the tenant to purchase the vineyards for $3.3m if exercised prior to 30 June 2011, however this option was not exercised and the Trust will therefore continue to receive rent of $240,000 per annum plus outgoings. The lease includes a further option for the vineyards to be purchased for $3.6m if exercised after 30 June 2011 but before 28 February At present this option has not been exercised and in the event that the option is not exercised, an alternative buyer or operator will need to be found before preparations for the 2013 season are due to begin. Preliminary plans are being made in case these plans need to be pursued. 15

16 NOTE 2: FINANCIAL RISK MANAGEMENT TREVISO VINEYARD TRUST The Trust s investing activities expose it to various types of risk that are associated with the financial instruments and markets in which it invests. The most important types of financial risk to which the Trust is exposed to are market risk, credit risk and liquidity risk. The exposure to each of these risks, as well as the Trust s policies and processes for managing these risks are described below. Net assets attributable to unitholders are classified as a financial liability under AASB 132 Financial Instruments: Disclosure and Presentation. As this balance is the net amount owing to unitholders after all other transactions, it has been excluded from the AASB 7 disclosures as it is directly affected by all risks. (a) Market risk Market risk embodies the potential for both loss and gains and would normally include currency risk, interest rate risk and other price risk. The Trust s market risk is managed on a daily basis in accordance with the investment guidelines as outlined in the Trust s product disclosure statement. Currency risk is the risk of financial loss relating to financial instruments arising from changes in foreign currencies. Until 2 July 2010, most of the table grapes sold by the Trust were exported and the prices received were therefore exposed to fluctuations in the Australian dollar, where a strong dollar exchange rate has a negative effect on revenue. From 2 July 2010 the Trust s exposure to this risk has been eliminated since it now receives rental income at rates set out in a formal lease agreement. The Trust has limited exposure in relation to other price risk. (i) Interest rate risk The Trust s cash and cash equivalents expose it to a risk of change in their fair value or future cash flows due to changes in interest rates. The specific interest rate exposures are disclosed in the relevant notes to the financial statements. The Trust s exposure to interest rate risk at reporting date, including its sensitivity to changes in market interest rates that were reasonably possible, is as follows: Instruments with cashflow risk: Cash and cash equivalents 159, ,766 Sensitivity of profit or loss to movements in market interest rates: Market interest rates increased by 200 basis points 3,200 7,615 Market interest rates decreased by 200 basis points (3,200) (7,615) 16

17 NOTE 2: FINANCIAL RISK MANAGEMENT (CONTINUED) (b) Credit risk Credit risk is the risk that a party to the financial instrument will cause a financial loss to the Trust by failing to discharge an obligation. The Trust is exposed to credit risk through the financial assets listed below. This also details the maximum exposure to credit risk for each class of financial instrument. The Responsible Entity manages credit risk and the losses which could arise from default by ensuring that parties to contractual arrangements are of an appropriate rating. Cash at bank of $159,997 (2010: $380,766) is held with reputable organisations and receivables of $66,268 (2010: $10,126) pertain to amounts due from trade receivables. All receivables are monitored by the Responsible Entity. If any amounts owing are overdue these are followed up and if necessary, allowances are made for debts that are doubtful. At reporting date, there are no issues with the credit quality of financial assets that are neither past due or impaired, and all amounts are expected to be received in full. (c) Liquidity risk The Responsible Entity monitors exposure to liquidity risk by ensuring that on a daily basis there is sufficient cash on hand for the Trust to meet the contractual obligations of financial liabilities as they fall due. The Responsible Entity sets budgets to monitor cash flows. The maturity of financial liabilities at reporting date are shown below, based on the contractual terms of each liability in place at reporting date. The amounts disclosed are based on undiscounted cash flows. Less than years Over 5 Total Carrying months months years contractual Amount cash flows liabilities 2011 Liabilities Non-interest bearing 30, ,031 30,031 Exit fees , ,000 37,932 Interest bearing Fixed Interest rate 98,134 96, ,880 2,517,000 3,491,692 2,517,000 Total 128,165 96, ,880 2,517,000 3,653,723 2,584, Liabilities Non-interest bearing 270, , ,134 Exit fees , ,000 28,453 Interest bearing Fixed interest rate 98,134 96, ,248 2,517,000 3,491,060 2,517,000 Total 368,268 96, ,248 2,517,000 3,893,194 2,815,586 17

18 NOTE 2: FINANCIAL RISK MANAGEMENT (CONTINUED) (c) Liquidity risk (Continued) The maturity of unitholders funds at reporting date has been excluded from the above due to the inability to accurately determine the redemption to be exercised by unitholders during any given period. The distribution to unitholders has been excluded above as there is no pre-determined date in which the repayment will occur. Fair value estimation The fair values of financial assets and financial liabilities are presented in the following table and can be compared to the carrying values as presented in the statement of financial position. Fair values are those amounts at which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm s length transaction. Fair values derived may be based on information that is estimated or subject to judgment, where changes in assumptions may have a material impact on the amounts estimated. Areas of judgment and the assumptions have been detailed below. Where possible, valuation information used to calculate fair value is extracted from the market, with more reliable information available from markets that are actively traded. In this regard, fair values for listed securities are obtained from quoted market bid prices. Where securities are unlisted and no market quotes are available, fair value is obtained using discounted cash flow analysis and other valuation techniques commonly used by market participants. Net carrying Net fair Net carrying Net fair value value value value Financial assets Cash and cash equivalents 159, , , ,766 Trade & other receivables 66,268 66,268 10,126 10, , , , ,892 Financial liabilities Trade and other payables 581, , , ,631 Interest-bearing liabilities 2,517,000 2,517,000 2,517,000 2,517,000 3,098,528 3,098,528 3,338,631 3,338,631 Cash and cash equivalents, trade and other receivables and trade and other payables are short term instruments in nature whose carrying value is equivalent to fair value. 18

19 NOTE 3: EXPENSES Profit/(loss) before distributions to unitholders includes the following expenses: Payments made under operating lease - 30,111 Finance costs (excluding distributions to unitholders): Interest paid or payable to related parties 194, ,813 Interest paid or payable to other persons , , ,336 NOTE 4: FINANCE COSTS DISTRIBUTION TO UNITHOLDERS Total amounts paid to unitholders are comprised as follows: Finance costs - distributions to unitholders - - NOTE 5: INCOME TAX EXPENSE (a) Numerical reconciliation of income tax expense to prima face tax payable Profit/(loss) before income tax and distribution to unitholders 65,997 (2,838,707) Prima facie tax on profit/(loss) at 30% 19,799 (851,612) 19,799 (851,612) Non deductible expenses - 349,616 (Under)/over provision 6,717 - Deferred tax asset not recognised on current year (profit)/loss 9,395 54,757 Current year temporary differences not brought to account (35,911) 447,239 Income tax expense

20 NOTE 5: INCOME TAX EXPENSE (CONTINUED) TREVISO VINEYARD TRUST (b) Deferred tax assets and tax liabilities not brought to account Unused tax losses for which no deferred tax asset has been recognised 1,504,845 1,402,897 Deductible temporary differences for which no deferred tax has been recognised (408,702) (200,027) Assessable temporary differences for which no deferred tax liabilities has been recognised (612,924) (549,804) 483, ,066 Potential tax 30% 144, ,920 As disclosed in Note 1(h) the Trust falls within the categories of a public trading trust, resulting from the conversion of the Trust into an operating trust on 19 February NOTE 6: CONVERTIBLE NOTES The convertible notes are convertible into units of the Trust, at the option of the holder or repayable on the ninth anniversary of the issue date, the earliest being, 19 December The convertible notes were structured to allow conversion to equity to better ensure the Trust s solvency. No convertible note has been converted to equity. The convertible notes have been presented as an interest-bearing liability in these financial statements (see Note 12). NOTE 7: CASH AND CASH EQUIVALENTS Cash at bank 159, ,766 Cash carries a weighted average effective interest rate of Nil% (2010: Nil%). 20

21 NOTE 8: TRADE AND OTHER RECEIVABLES TREVISO VINEYARD TRUST CURRENT Trade receivables 66, , Other receivables - 10,035 Closing balance 66,268 10,126 Trade and other receivables are non-interest bearing. NOTE 9: AGRICULTURAL ASSETS Note NON-CURRENT Produce vines 9(a) 337, ,448 The Trust owns vines from two vineyards. Carrying amount at the beginning of the year 337, ,488 Carrying amount at the end of the year 337, ,488 (a) Valuation basis: The valuation of the Trust s farm properties is $3.3m, which comprises agricultural assets together with property, plant and equipment as per Note 10 and investment property as per Note 11. The $3.3m is the option price in the lease to FPG had it purchased the properties prior to 30 June Although the option price is increased to $3.6m if exercised after 30 June 2011 but before 28 February 2012, to be conservative the $3.3m has been retained at 30 June

22 NOTE 10: PROPERTY, PLANT AND EQUIPMENT TREVISO VINEYARD TRUST Note Land and Total buildings Year ended 30 June 2011 Opening net book amount 2,962,512 2,962,512 Revaluation increments 10(b) (4,200) (4,200) Additions during the year 4,200 4,200 Transferred to investment property (2,962,512) (2,962,512) Closing net book value - - At 30 June 2011 Fair value - - Accumulated depreciation - - Net book amount - - (a) Valuation basis: Refer to Note 9(a) above. (b) Revaluation increments/(decrements) The decrease in the carrying amount arising on revaluation of property, plant and equipment has been shown as an expense in the statement of comprehensive income. NOTE 11: INVESTMENT PROPERTY Note Investment Total Property Year ended 30 June 2011 Opening net book amount - - Transferred from property, plant & equipment 10 2,962,512 2,962,512 Closing balance 2,962,512 2,962,512 At 30 June 2011 Fair value 2,962,512 2,962,512 Changes in fair value of investment property - - Closing balance 2,962,512 2,962,512 (a) Valuation basis: Refer to Note 9(a) above. 22

23 NOTE 12: TRADE AND OTHER PAYABLES TREVISO VINEYARD TRUST CURRENT Unsecured liabilities: Trade creditors 93 1,099 Amounts payable to related parties 1,265 95,025 Sundry creditors and accruals 28, ,010 Distribution payable to unitholders 551, ,497 Trade and other payables are non-interest bearing. 581, ,631 There are no financial liabilities where the fair value would be materially different from amortised cost. NOTE 13: BORROWINGS Unsecured liabilities: Loans from related parties - convertible notes issued 1,052,000 1,052,000 Loans from related parties - Other (preference units) 1,465,000 1,465,000 2,517,000 2,517,000 There are no set terms of repayment for the unsecured current liabilities other than disclosed in Note 6 for the convertible notes. The redeemable preference units carry an interest rate of 9.0% (2010: 9.0%). The convertible notes carry an interest rate of 6.0% (2010: 6.0%) 23

24 NOTE 14: PROVISIONS Exit fees 37,932 28,453 The provision for exit fees relates to amounts payable to the Responsible Entity upon the sale of the property comprising property, plant and equipment, and agricultural assets produce vines. The amount payable is based on a percentage of the property sale price. Movements during the financial year: Opening balance 1 July 28,453 39,143 (Credited)/charged to the statement of comprehensive income - Provision made during the period 9,479 (10,690) Carrying amount at the end of the year 37,932 28,453 NOTE 15: UNITHOLDERS FUNDS Note Funds attributable to unitholders consists of: Net contributions by unitholders (a) 3,219,500 3,219,500 Cumulative deficit funds after distributions to unitholders (b) (2,829,695) (2,895,692) (a) Net contributions by unitholders 389, ,808 3,219,500 ordinary units fully paid (2010: 3,219,500) 3,219,500 3,219,500 There was no movement in ordinary units during the financial year. As stipulated in the Trust's constitution, each ordinary unit represents a right to an individual unit in the Trust and does not extend to a right to the underlying assets of the Trust. There are no separate classes and each ordinary unit has the same rights attaching to it as all other units of the Trust. As mentioned in Note 12, there is also preference units issued, however these are classified as current liabilities. 24

25 NOTE 15: UNITHOLDERS FUNDS (CONTINUED) (b) Cumulative retained funds/(deficit) after distributions to unitholders Movements during the financial year: Opening balance (2,895,692) (56,985) Increase/(decrease) 65,997 (2,838,707) Closing balance (2,829,695) (2,895,692) (c) Capital management The Trust regards net assets attributable to unitholders as its capital. NOTE 16: RELATED PARTY TRANSACTIONS Responsible Entity The Responsible Entity of the Trust is Seven Fields Management Ltd, a wholly owned subsidiary of Seven Fields Pty Ltd. Responsible Entity's fees and other transactions Under the terms of the constitution, the Responsible Entity is entitled to receive fees in accordance with the product disclosure statement. Fees for the year paid/payable by the Trust: Management of the Trust - 78,125 Amounts Payable: Provision for exit fees 37,932 28,453 Aggregate amounts payable to the Responsible Entity at reporting date 1,265 62,441 25

26 NOTE 16: RELATED PARTY TRANSACTIONS (CONTINUED) Transactions and balances with companies and schemes which are associated with the Responsible Entity or its affiliates Amounts Payable: Aggregate amounts payable to companies associated with the Responsible Enity 2,518,265 2,612,025 Interest paid: Interest paid to companies associated with the Responsible Entity or its affiliates during the year 194, ,813 Joint venture fees and other transactions Under the terms of the joint venture arrangement, the party to the joint venture, TCS, with the Trust is entitled to receive fees and incur expenses in accordance with the agreement. Fees for the year paid: Management of the farm - 202,117 Other transactions for the year paid: Farm Operating Expenses 56 - Water purchases 3, ,019 Other transactions for the year received: Farm income 1,917,581 Other income 81,949 - Water sales - 258,804 Amounts Receivable: Aggregate amounts receivable from the joint venturer at reporting date - 91 Transactions between related parties are on normal commercial terms and conditions are no more favourable than those to other parties, or they have otherwise been approved by unitholders. The amounts payable to companies associated with the Responsible Entity include the convertible notes and preference units issued to Seven Fields Pty Limited, the parent of the Responsible Entity (see Note 12). All other loans to/from related parties are interest free, unsecured and at call. No provision for doubtful debts has been raised during the year and no debts have been written off. 26

27 NOTE 16: RELATED PARTY TRANSACTIONS (CONTINUED) Key management personnel The Trust does not employ personnel in its own right. However, it has an incorporated Responsible Entity, Seven Fields Management Limited, to manage the activities of the Trust and this is considered the key management personnel. The Directors of the Responsible Entity are key management personnel of that entity and their names are Greg McMahon, Grant Ross (resigned 24 August 2010), Richard Byllaardt, and Peter Aubort (appointed 24 August 2010). No compensation is paid directly by the Trust to Directors or to any of the key management personnel of the Responsible Entity. Payments made by the Trust to the Responsible Entity do not specifically include any amounts attributable to the compensation of key management personnel. Unit holdings The numbers of units in the Trust held during the financial year by each Director and other key management personnel of the Responsible Entity, including their personally related parties, are set out below. There were no units granted during the reporting period as compensation. Name Balance at start Changes during Balance at the Interest held of year the year end of the year Units Units Units % 2011 Directors Greg McMahon 14,100-14, % Grant Ross 18,800 (18,800) - 0.0% Peter Aubort % Richard Byllaardt % 32,900 (18,800) 14, % 2010 Directors Greg McMahon 14,100-14, % Grant Ross 18,800-18, % Peter Scully 42,300 (42,300) - 0.0% Richard Byllaardt % 75,200 (42,300) 32, % Distributions received or receivable from the Trust by key management personnel

28 NOTE 17: CASH FLOW INFORMATION (a) Reconciliation of cash TREVISO VINEYARD TRUST Cash at the end of the financial year as shown in the Statement of Cash Flows is reconciled to the related items in the statement of financial position as follows: Cash at bank and in hand 159, ,766 (b) Reconciliation of cash flows from operating activities with profit/(loss) before distribution to unitholders Profit/(loss) before distributions to unitholders 65,997 (2,838,707) Adjustments for: Net changes in fair value of agricultural assets 4,200 1,625,063 Exit fees 9,479 (10,690) Loss on sale of intangible assets - 480,117 Changes in assets and liabilities: (Increase)/decrease in trade and other receivables (56,142) 725,092 (Decrease)/increase in trade and other payables (240,103) 176,912 Cash flows from operating activities (216,569) 157,787 NOTE 18: REMUNERATION OF AUDITORS Remuneration of the auditor, BDO Audit (Qld) Pty Ltd for: Audit or review of financial reports 4,000 9,500 Non-audit services: Auditor of the Trust: Audit of compliance plan 1,950 1,950 Related practice of auditor of the Trust: Taxation compliance in respect of distribution statements 1,500 1,500 7,450 12,950 NOTE 19: CONTINGENT LIABILITIES There are no contingent liabilities at the end of the year. 28

29 NOTE 20: EVENTS SUBSEQUENT TO REPORTING DATE There have been no after balance date events. NOTE 21: RESPONSIBLE ENTITY DETAILS The registered office and the principle place of business of the Responsible Entity is: Seven Fields Management Limited Ground Floor 62 Charlotte Street Brisbane QLD

30 DIRECTORS DECLARATION The Directors of Seven Fields Management Limited, the Responsible Entity, declare that: 1. The financial statements, comprising the statement of comprehensive income, statement of financial position, statement of cash flows, statement of changes in equity, and accompanying notes, are in accordance with the Corporations Act 2001 and: (a) comply with Australian Accounting Standards and the Corporations Regulations 2001; and (b) give a true and fair view of the Trust s financial position as at 30 June 2011 and of its performance for the year ended on that date. 2. In the Directors opinion, 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 Board of Directors and is signed for and on behalf of the Directors of Seven Fields Management Limited by: Greg McMahon Director Brisbane, 29 September

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