Praetorian Property Mutual Fund

Transcription

1 Financial Statements

2 Contents Page Independent Auditor s Report 1 Statement of Net Assets 2 Statement of Comprehensive Income 3 Statement of Changes in Net Assets 4 Statement of Cash Flows 5 Notes to the Financial Statements 6-24

3 Independent Auditor s Report To the unitholders of Praetorian Property Mutual Fund Report on the financial statements We have audited the accompanying financial statements of Praetorian Property Mutual Fund, which comprise the statement of net assets as of and the statements of comprehensive income, changes in net assets and cash flows for the year then ended and a summary of significant accounting policies and other explanatory notes. Trustees responsibility for the financial statements The Trustees are responsible for the preparation and the fair presentation of these financial statements in accordance with International Financial Reporting Standards. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor s responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the Trustees, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position of Praetorian Property Mutual Fund as of, and its financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards. PricewaterhouseCoopers Port of Spain, Trinidad, West Indies 30 December 2010 (1)

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5 Statement Of Comprehensive Income Year Ended 30 September Notes Income Interest 934,795 1,836,412 Service charges 1,254,352 1,120,809 Rental income 13,733,680 13,187,456 Net foreign exchange gains 2,077,476 1,624,445 Realised gains from sale of investment properties 272, Fair value gains on mutual funds 26, Total Income 18,299,157 17,769,122 Expenses Market value depreciation in investment properties 4 (10,549,998) (5,614,609) Fees, commissions and service charges 11 (11,708,714) (11,246,924) Other administrative expenses (276,367) (194,312) Total Expenses (22,535,079) (17,055,845) Net Investment (Expense)/Income Before Taxation (4,235,922) 713,277 Taxation 12 (44,395) (48,102) Net Investment (Expense)/Income (4,280,317) 665,175 Other Comprehensive Income Total Comprehensive (Expense)/Income For The Period (4,280,317) 665,175 The attached notes set out on pages 6 to 24 form an integral part of these financial statements. (3)

6 Statement Of Changes In Net Assets Accumulated Units Surplus Total Note Year ended 30 September 2009 Balance at beginning of year 200,000,000 54,216, ,216,162 Total comprehensive income for the year , , ,000,000 54,881, ,881,337 Transactions with unit holders - Distribution paid (14,000,000) (14,000,000) Balance at end of year 200,000,000 40,881, ,881,337 Year ended Balance at beginning of year 200,000,000 40,881, ,881,337 Total comprehensive expense for the year -- (4,280,317) (4,280,317) 200,000,000 36,601, ,601,020 Transactions with unit holders - Distribution paid (4,000,000) (4,000,000) Balance at end of year 200,000,000 32,601, ,601,020 The attached notes set out on pages 6 to 24 form an integral part of these financial statements. (4)

7 Statement Of Cash Flows Year Ended 30 September Cash Flows From Operating Activities Net investment (expense)/income before taxation (4,235,922) 713,277 Adjustments: Realised gain from sale of investments (272,500) -- Unrealised exchange gain on investment properties (1,972,389) (1,313,089) Net fair value gains on mutual funds (26,354) -- Market value depreciation in investment properties 10,549,998 5,614,609 Investment Income Before Working Capital Changes 4,042,833 5,014,797 Increase in receivables (886,854) (3,650,215) Increase in payables 426,785 5,177,616 3,582,764 6,542,198 Net taxation paid (43,654) (48,526) Net Cash Flows From Operating Activities 3,539,110 6,493,672 Cash Flows Used In Investing Activities Capitalised expenditure on investment properties (2,028,267) (1,629,490) Proceeds from sale of investments 3,172, Proceeds from sale of property development in progress -- 1,050,000 (Redemption)/subscription in mutual funds (319,526) 7,192,817 Net Cash Flows Generated From/(Used In) Investing Activities 824,707 6,613,327 Cash Flows Used In Financing Activities Distribution paid (4,000,000) (14,000,000) Net Cash Flows Used In Financing Activities (4,000,000) (14,000,000) Net Increase/(Decrease) In Cash And Cash Equivalents 363,817 (893,001) Cash And Cash Equivalents At Beginning Of Year 423,873 1,316,874 Cash And Cash Equivalents At End Of Year 787, ,873 Represented By: Cash at bank 787, ,873 The attached notes set out on pages 6 to 24 form an integral part of these financial statements. (5)

8 Notes To The Financial Statements 1 Description Of The Fund The following brief description of the Praetorian Property Mutual Fund is provided for general information purposes only. Reference should be made to the trust deed and rules of the Fund for more complete information. General The Fund is a Trinidad and Tobago based closed ended mutual fund, which provides an avenue for investment in a portfolio of real estate properties and other property-related securities, debt securities and money market investments in the Caribbean. The Fund s units are traded on the Trinidad and Tobago Stock Exchange. The Trustee of the Fund is RBTT Trust Limited, while the Portfolio Managers are RBTT Trust Limited and Guardian Asset Management Limited. The Fund is sponsored by RBTT Bank Limited and Guardian Life of the Caribbean Limited. The Fund Administrator is Guardian Asset Management Limited. The Fund began operations effective 22 November 2002 and has a finite life of 7-12 years. 2 Significant Accounting Policies Basis of preparation The financial statements are prepared in accordance with International Financial Reporting Standards. The financial statements are prepared under the historical cost convention as modified by the fair valuation of investment properties and mutual funds. The preparation of these financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Fund s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements are disclosed under critical accounting estimates and judgements in applying accounting policies (see Note 3). (a) Standards and amendments to existing standards effective 1 October 2009 The following standards, amendments and interpretations, which became effective in 2009, are of relevance to the Fund: IAS 1 (revised), Presentation of financial statements A revised version of IAS 1 was issued in September The revised standard prohibits the presentation of items of income and expenses (that is, non-owner changes in equity ) in the statement of changes in equity, requiring non-owner changes in equity to be presented separately from owner changes in equity in a statement of comprehensive income. The adoption of this revised standard had no significant impact on the Fund s financial statements as it has no other comprehensive income. Amendment: IFRS 7, Improving disclosures about financial instruments The IASB published amendments to IFRS 7 in March The amendment requires enhanced disclosures about fair value measurements and liquidity risk. In particular, the amendment requires disclosure of fair value measurements by level of a three-level fair value measurement hierarchy. The adoption of the amendment results in additional disclosures but does not have an impact on net asset value per unit. (6)

9 2 Significant Accounting Policies (continued) Basis of preparation (continued) (a) Standards and amendments to existing standards effective 1 October 2009 (continued) IFRS 8, Operating segments IFRS 8 replaces IAS 14, Segment reporting, and is effective for annual periods beginning on or after 1 January The new standard requires a management approach, under which segment information is presented on a similar basis to that used for internal reporting purposes. The effects of adoption by the Fund are disclosed in Note 20. IAS 40, Investment property, amendment (and consequential amendment to IAS 16, Property, plant and equipment ) The amendments are part of the IASB s annual improvements project published in May 2008 and are effective from 1 January Property that is under construction or development for future use as investment property is brought within the scope of IAS 40. Where the fair value model is applied, such property is measured at fair value. However, where fair value of investment property under construction is not reliably determinable, the property is measured at cost until the earlier of the date construction is completed and the date at which fair value becomes reliably measurable. There were no properties under construction or development for future use as investment property. Therefore, the adoption of these amendments has not resulted in any changes to the Fund s financial statements. IAS 32 (amendment), Financial instruments: Presentation, and IAS 1 (amendment), Presentation of financial statements Puttable financial instruments and obligations arising on liquidation (effective from 1 January 2009) (the amendment ). Previously the Fund had classified its puttable instruments as equities in accordance with IAS 32, Financial instruments: Presentation. However, the amendment requires puttable financial instruments that meet the definition of a financial liability to be classified as equity where certain strict criteria are met. Those criteria include: the puttable instruments must entitle the holder to a pro-rata share of net assets; the puttable instruments must be the most subordinated class and that class s features must be identical; there must be no contractual obligations to deliver cash or another financial asset other than the obligation on the issuer to repurchase; and the total expected cash flows from the puttable instrument over its life must be based substantially on the profit or loss of the issuer. The Fund s Class A units have met all the criteria for classification as equity instruments during the entire reporting period (2009: the same). Therefore, the adoption of these amendments has not resulted in any change in the classification of the Fund s units. (b) Interpretations effective 1 October 2009 but not relevant The application of the interpretations listed below did not result in substantial changes to the Fund s accounting policies: IFRS 1 and IAS 27- Cost of an investment in a subsidiary, jointly-controlled entity or associate; IFRS 2 Share-based payments Vesting conditions and cancellations; IFRIC 13 -Customer loyalty programmes; IFRIC 16 -Hedges of a net investment in a foreign operation. (7)

10 2 Significant Accounting Policies (continued) Basis of preparation (continued) (c) Standards and interpretations issued that are not yet effective and have not been early adopted The Fund has chosen not to early adopt the following standards and interpretations that were issued but not yet effective for accounting periods beginning on 1 October 2009: IFRS 9 Financial instruments: Classification and measurement,(effective1 January 2013) IAS 24 Related party disclosures (effective1 January 2011) The application of these new standards and interpretations are not expected to have a material impact on the Fund s financial statements in the period of initial application. Cash and cash equivalents Cash and cash equivalents are carried in the balance sheet at cost. For the purposes of the statement of cash flows, cash and cash equivalents comprise cash at bank. Investment at fair value through profit or loss Investments are classified as investments at fair value through profit and loss. The Trustee determines the classification of its investments at initial recognition. An investment is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by the Trustee. Purchases and sales of investments are recognised on the trade-date which is the date on which the Fund commits to purchase or sell the asset. Investments are initially recognised at fair value excluding transaction costs. Investments are derecognized when the rights to receive cash flows from the financial assets have expired or where the Fund has transferred substantially all risks and rewards of ownership. Investments are subsequently carried at fair value. Gains and losses arising from changes in the fair value of investments are included in the Statement of Comprehensive Income in the period in which they arise. The Fund s investments in mutual funds are subject to the terms and conditions of the respective mutual fund s offering documentation. The investments in mutual funds are primarily valued based on the latest available redemption price of such units for each mutual fund, as determined by the administrator of such mutual fund. Changes in the fair value of investments in mutual funds are recognised in the Statement of Comprehensive Income. Investment properties Investment properties refer to land or buildings held, whether by the owner or under a finance lease, to earn rentals or for capital appreciation or both. Investment properties are initially measured at cost, including transaction costs. Investment properties are treated as long-term and are carried at fair value, representing open market value determined annually by external valuers, which is based on current prices in an active market for similar properties. Changes in fair values are recorded in the Statement of Comprehensive Income. Property that is being constructed or developed for future use as investment property is classified as property development in progress and stated at cost until construction or development is complete. (8)

11 2 Significant Accounting Policies (Continued) Rental income receivable Rental income receivable arises from payments recoverable from rental customers and from property managers. A provision for impairment of rental income receivable is established when there is objective evidence that the Fund will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the rental income receivable is impaired. There are no impaired rental income receivable balances. Provisions Provisions are recognised when the Fund has a present legal or constructive obligation as a result of past events, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligations, and a reliable estimate of the amount of the obligation can be made. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. A provision is recognised even if the likelihood of an outflow with respect to any one item included in the same class of obligations may be small. Leases Assets leased out under operating leases are included in investment property in the Statement of Net Assets. They are carried at fair value. Rental income is recognised on a straight-line basis over the lease term. Interest income Interest income is recognised in the Statement of Comprehensive Income for all interest bearing instruments on an accrual basis using the effective interest method. Service charges Service charges are accounted for on the accrual basis. Expenses Expenses are accounted for on the accrual basis. (9)

12 2 Significant Accounting Policies (Continued) Foreign currency transactions Functional and presentation currency Items included in the financial statements of the Fund are measured using the currency of the primary economic environment in which the Fund operates (the functional currency ). The financial statements are presented in Trinidad and Tobago dollars which is the Fund s functional and presentational currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Statement of Comprehensive Income. Distribution of fund income Distributions of fund income are accounted for in the period in which they are declared. Taxation The Fund is not subject to corporation tax on the income or profits derived from its unit trust business in Trinidad and Tobago. Units The units are not redeemable prior to the termination date or termination of the Fund. The Fund s units with discretionary dividends are classified as equity. Comparatives Where necessary, comparative information has been adjusted to conform with changes in presentation in the current year. Reclassification of previously reported results were made in accordance with International Accounting Standard #1 Presentation of financial statements. The impact of these reclassifications are summarised in Note 21 - Reclassification. (10)

13 3 Critical Accounting Estimates And Judgements In Applying Accounting Policies Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. The Fund makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets are addressed below. Fair value of investment properties The fair value of investment properties is determined annually by using independent external property valuers in accordance with the accounting policy stated in note 2. The valuers use their judgement to select a variety of methods and make assumptions that are mainly based on current market conditions. The Fund has used external valuations based on current prices in an active market for similar properties. (11)

14 4 Investment Properties Balance at beginning of year 199,279, ,951,622 Disposals (2,900,000) -- Capitalised expenditure 2,028,267 1,629,490 Exchange differences 1,972,389 1,313,089 Market value depreciation in investment properties (10,549,998) (5,614,609) Balance at end of year 189,830, ,279,592 The investment properties consist of the following: Commercial Freehold Properties 6 & 6A Queen s Park West - Trinidad 28,000,000 30,000,000 Bermuda House - Grand Cayman 46,395,880 47,387,250 Bush Hill Barbados 36,557,400 35,144, ,953, ,531,770 Commercial Leasehold Properties Fujitsu ICL Building - Trinidad 15,000,000 17,500,000 Warner Street Car Park - Trinidad -- 2,900,000 15,000,000 20,400,000 Residential Properties La Fontaine Apartment - Trinidad 6,000,000 6,000,000 Bayside Towers Apartment - Trinidad 2,800,000 3,000,000 Regents Gardens Condominium - Trinidad 2,100,000 2,100,000 Anchor Drive, Westmoorings - Trinidad 5,000,000 5,000,000 Santa Maria, Westmoorings - Trinidad 4,600,000 4,600,000 Apes Hill Barbados 5,243,370 5,210,702 25,743,370 25,910,702 Leisure Properties Port St. Charles Condominium - Barbados 16,842,340 18,954,900 The Cliff Condominium - St. Maarten 6,037,820 5,370,555 Marigot Bay - St. Lucia 3,813,360 4,106,895 The Landings St. Lucia 11,440,080 12,004,770 38,133,600 40,437,120 Total 189,830, ,279,592 The Port St. Charles Condominium is legally owned by Stoneham Investments Inc. Stoneham Investments Inc. is incorporated in the British Virgin Islands and was registered in Barbados as an external company under the Companies Act, on 16 March Stoneham Investments Inc. is wholly owned by Praetorian Property Mutual Fund. (12)

15 4 Investment Properties (Continued) Bermuda House is legally owned by Pamberi Limited, which is wholly owned by Fonclaire Limited a subsidiary of Guardian Holdings Limited. By an agreement dated 12 February 2004, all the economic benefits of the property were assigned to Praetorian Property Mutual Fund. Bush Hill is legally owned by Yucca Limited, a company incorporated and registered in Barbados under the Companies Act, on 18 March Yucca Limited is wholly owned by RBTT Trust Limited on behalf of Praetorian Property Mutual Fund. Marigot Bay is legally owned by Parquet Limited, a company incorporated and registered in St. Lucia under the Company Act, on 20 November Parquet Limited is wholly owned by RBTT Trust Limited on behalf of Praetorian Property Mutual Fund. Apes Hill is legally owned by Bamboo Property Limited, a company incorporated and registered in Barbados under the Company Act, on 5 June Bamboo Property Limited is wholly owned by RBTT Trust Limited on behalf of Praetorian Property Mutual Fund. The Landings is legally owned by Poui Limited, a company incorporated and registered in St. Lucia under the Company Act, on 24 October Poui Limited is wholly owned by RBTT Trust Limited on behalf of Praetorian Property Mutual Fund. 5 Rental Income Receivable Due from rental customers 391, ,780 Due from property managers 8,741,864 8,027,389 9,132,864 8,358,169 6 Other Receivables Taxation recoverable 409 1,150 Interest receivable 2,734 35,322 Prepaid expenses 496, ,782 Sundry receivables 100, , , ,676 (13)

16 7 Investments At Fair Value Through Profit Or Loss Mutual Funds Money Market Fund - TT 10,964,158 13,301,519 Money Market Fund - US 23,826,484 21,143,243 34,790,642 34,444,762 8 Other Payables Rental deposit 712, ,560 Rental paid in advance 37, VAT balances 67,470 82,387 Service charges and facility management fees 579,860 85,800 Other 232, ,699 9 Units Class A 1,630,384 1,178,446 Issued and fully paid 40,000,000 units 200,000, ,000,000 Class B Issued and fully paid 20 units Pursuant to the Trust Deed, the Fund issued 40,000,000 Class A units at 5.00 each and 20 Class B units at each on 22 November Class A units are issued to the public and are classified as equity. These units are traded on the Trinidad and Tobago Stock Exchange. Class A Unitholders are entitled to receive dividends at the discretion of the Trustee on the advice of the Portfolio Managers and have rights to the Fund s assets upon termination of the Fund. Class B units are only issued to the Fund Sponsors and are classified as liability. These units are not traded on the Trinidad and Tobago Stock Exchange. Class B Unitholders are not entitled to receive dividends and have no rights to the Fund s assets upon termination of the Fund, save and except for their original investment. 10 Net Asset Value Per Unit Total net assets 232,601, ,881,337 Number of units issued 40,000,000 40,000,000 Net asset value per unit (14)

17 11 Fees, Commissions And Service Charges Management fees 2,409,012 2,484,252 Administration fees 602, ,063 Trustee fees 602, ,063 Registrar fees 28,261 41,034 Property management and advisory fees 429,105 1,369,419 Professional fees 132, ,429 Legal fees 106,786 63,543 Listing fees and other expenses 237, ,141 Service charges and facility management fees 7,161,083 5,690,980 11,708,714 11,246,924 Management fees are paid quarterly to each of the two Portfolio Managers at a rate of 0.5% per annum of total net assets of the Fund. Trustee fees and administration fees are paid quarterly to the Trustees and Fund Administrator at a rate of 0.25% each per annum of the total net assets of the Fund. Property management and advisory fees are fees paid to the various property administrators for the services rendered. Service charges and facility management fees relate to all other operational and maintenance costs that are paid to the property administrators. 12 Taxation The taxation charge represents green fund levy and business levy. 13 Operating Lease - Rentals The future minimum rental receivable under non-cancellable operating leases are as follows: Not later than 1 year 7,963,224 8,572,463 Later than 1 year and not later than 5 years 6,943,349 6,473,974 14,906,573 15,046, Capital Commitments Capital commitments contracted for at the balance sheet date but not recognised in the financial statements are as follows: Bush Hill Barbados 138,666 2,333,420 (15)

18 15 Financial Risk Management 15.1 Credit Risk a) Definition Credit risk is the risk that one party to a financial instrument will cause a financial loss for the other party by failing to discharge an obligation. b) Management of risk The Fund minimises its credit risk by limiting its counterparties to major banks, high credit quality financial institutions, recognised real estate property managers and rental customers. c) Maximum exposure to credit risk before collateral held or other credit enhancements The following table shows assets bearing credit risk for the Fund: Rental income receivable 9,132,864 8,358,169 Other receivables 103, ,744 Mutual funds 34,790,642 34,444,762 Cash at bank 787, ,873 44,814,648 43,478,548 d) Analysis of financial assets Neither Past due past due but not nor impaired impaired Total As at Rental income receivable 741,124 8,391,740 9,132,864 Other receivables 90,294 13, ,452 Mutual funds 34,790, ,790,642 Cash at bank 787, ,690 36,409,750 8,404,898 44,814,648 As at 30 September 2009 Rental income receivable 813,161 7,545,008 8,358,169 Other receivables 35, , ,744 Mutual funds 34,444, ,444,762 Cash at bank 423, ,873 35,717,118 7,761,430 43,478,548 (16)

19 15 Financial Risk Management (Continued) 15.1 Credit Risk (Continued) d) Analysis of financial assets (continued) i) Financial assets neither past due nor impaired Credit quality of financial assets The credit quality of financial assets bearing credit risk can be assessed by reference to external credit ratings if available or to ratings assigned by the Fund Administrator using an approach that is consistent with that used by the rating agency. This is analysed as follows: Above Not Average Average Rated Total Year ended Rental income receivable , ,124 Other receivables 2, ,560 90,294 Mutual funds 2,554,112 32,236, ,790,642 Cash at bank 787, ,690 3,344,536 32,236, ,684 36,409,750 As at, there were no internal or independent ratings available for these assets. ii) Financial assets that are past due but not impaired As at, rental income receivable and other receivables of 8,404,898 (2008: 7,761,430) were past due but not impaired. These relate to a number of independent customers for whom there is no recent history of default. The ageing analysis of these financial assets is as follows: Up to 3 months 800,170 1,861,740 3 to 6 months 907,098 1,948,153 Over 6 months 6,697,630 3,906,537 8,404,898 7,761,430 Balances over six months relate mainly to dividend distributions from the entities set up to acquire the Bermuda House and Port St Charles properties. Dividend distributions paid within the next financial year will be applied against these balances. (17)

20 15 Financial Risk Management (Continued) 15.1 Credit Risk (Continued) e) Concentration of risk of financial assets with credit exposure As at Financial Rental Property Institutions Customers Managers Total Rental income receivable ,000 8,741,864 9,132,864 Other receivables 2, , ,452 Mutual funds 34,790, ,790,642 Cash at bank 787, ,690 35,581, ,718 8,741,864 44,814,648 As at 30 September 2009 Rental income receivable ,780 8,027,389 8,358,169 Other receivables 35, , ,744 Mutual funds 34,444, ,444,762 Cash at bank 423, ,873 34,903, ,202 8,027,389 43,478, Market Risk Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: currency risk, interest rate risk and other price risk. a) Currency risk i) Definition Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. ii) Management of risk The strategy of dealing with currency risk is to as far as possible offset foreign currency liabilities with assets denominated in the same currency. (18)

21 15 Financial Risk Management (Continued) 15.2 Market Risk (Continued) a) Currency risk (continued) iii) Concentration of currency risk TT US BD Total As at Assets Rental income receivable 350,352 8,236, ,903 9,132,864 Other receivables 103, ,452 Mutual funds 10,964,158 23,826, ,790,642 Cash at bank 489, , ,690 Total Assets 11,907,348 32,063, ,207 44,814,648 Liabilities Fees payable 909, ,936 Other payables 519, , ,626 1,292,643 Total Liabilities 1,428, , ,626 2,202,579 Net Balance Sheet Position 10,478,362 31,835, ,581 42,612,069 As at 30 September 2009 Assets Rental income receivable 217,944 7,725, ,971 8,358,169 Other receivables 251, ,744 Mutual funds 13,301,519 21,143, ,444,762 Cash at bank 119, , ,873 Total Assets 13,890,952 28,868, ,099 43,478,548 Liabilities Fees payable 935, ,089 Other payables 212,226 65, , ,360 Total Liabilities 1,147,315 65, ,631 1,529,449 Net Balance Sheet Position 12,743,637 28,802, ,468 41,949,099 (19)

22 15 Financial Risk Management (Continued) 15.2 Market Risk (Continued) a) Currency risk (continued) iv) Sensitivity analysis As at, if the Trinidad and Tobago dollar had weakened/strengthened by 1% against the United States dollar with all other variables held constant, net investment income for the period and fund value would have been 318,351 (2009: 288,030) higher/lower, mainly as a result of foreign exchange gains/losses on translation of United States dollar denominated rental income receivable, mutual funds, investment at fair value through profit and loss and other payables. As at, if the Trinidad and Tobago dollar had weakened/strengthened by 1% against the Barbados dollar with all other variables held constant, net investment income for the period and fund value would have been 2,986 (2009: 4,025) higher/lower, mainly as a result of foreign exchange gains/losses on translation of Barbados dollar denominated rental income receivable and other payables. b) Interest rate risk i) Definition Interest rate risk is the risk that future cash flows or values of financial instruments will fluctuate based on changes in market interest rates. ii) Management of risk The Fund has significant short term investments in money market funds which are impacted by interest rate changes. The money market funds allow flexibility in accessing funds as opportunities arise and market conditions changes. iii) Concentration of interest rate risk The Fund s exposure to interest rate risk is limited to its mutual funds balances. iv) Sensitivity analysis As at, if interest rates had been 1% higher/lower with all other variables held constant, net investment income for the period and fund value would have been 344,776 (2009: 379,306) higher/lower, mainly as a result of higher/lower interest income on mutual funds. (20)

23 15 Financial Risk Management (Continued) 15.2 Market Risk (Continued) c) Price risk i) Definition 15.3 Liquidity Risk i) Definition Price risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instruments or issuer, or factors affecting all similar financial instruments traded in the market. The Fund is not exposed to price risk on financial instruments. Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities. ii) Management of risk The Fund manages its liquidity risk by ensuring that no one property value exceeds 20% of the value of the Fund. Liquidity risk is further mitigated by the highly marketable nature of the Fund s assets. iii) Maturity analysis of financial liabilities The Fund s liabilities comprise fees and other payables. All balances are due within twelve months and equal their carrying balances as the impact of discounting is not significant. 16 Capital Risk Management The capital of the Fund is represented by the net fund value due to unitholders. The Fund s objective when managing capital is to safeguard the ability to continue as a going concern in order to provide returns for unitholders and benefits of other stakeholders. The Trustee of the Fund monitors capital on the basis of the net asset value per unit. 17 Fair Value Of Financial Assets And Liabilities Financial assets and liabilities not carried at fair value include cash and cash equivalents and other current assets and liabilities. These assets and liabilities are short term in nature and the recorded values are taken as indicative of fair value. (21)

24 18 Related Party Transactions The Fund s portfolio managers are RBTT Trust Limited and Guardian Asset Management Limited. The Fund s administrator is Guardian Asset Management Limited. The Fund s trustee is RBTT Trust Limited. The following transactions were carried out with the above parties: (a) Purchase of services Management fees: - Guardian Asset Management Limited 1,204,506 1,242,126 - RBTT Trust Limited 1,204,506 1,242,126 Administration fees: - Guardian Asset Management Limited 602, ,063 Trustee fees: - RBTT Trust Limited 602, ,063 (b) Year-end balances arising from purchase of services 3,613,518 3,726,378 Mutual funds: - Guardian Asset Management Limited 32,236,531 16,412,298 - RBTT Trust Limited 892,918 16,413,747 33,129,449 32,826,045 Other receivables: - RBTT Trust Limited 75, Fees payable: - Guardian Asset Management Limited 456, ,746 - RBTT Trust Limited 453, , , ,089 These services are provided in accordance with the relevant agreements between the parties. These transactions are carried out on commercial terms and conditions and at market rates. 19 Proposed Distribution The distributions paid in 2010 and 2009 were 4,000,000 (10 per unit) and 14,000,000 (35 per unit) respectively. A distribution in respect of the year ended of 8 per unit, amounting to a total distribution of 3,200,000 has been proposed by the Trustees on the 15 December These financial statements do not reflect this distribution payable. (22)

25 20 Operating Segments The segment information provided to the Trustee for the reportable segments are as follow; Year ended Trinidad Barbados St Maarten St Lucia Commercial Residential Commercial Residential Residential Residential Cayman Islands Commercial Total Total Segment Revenue Revenue from external customers 5,234,918 1,451,370 2,281, , , ,655,244 15,260,532 Operating Profit/ (Loss) (1,241,152) 894,684 (636,682) (2,203,254) 669,464 (931,378) 2,029,177 (1,419,141) Included in Operating Profit Net loss from fair value adjustment on investment property (4,500,000) (204,075) (2,121,150) (2,207,228) 639,069 (933,169) (1,223,445) (10,549,998) Year ended 30 September 2009 Trinidad Barbados St Maarten St Lucia Commercial Residential Commercial Residential Residential Residential Cayman Islands Commercial Total Total Segment Revenue Revenue from external customers 5,458,301 1,276,488 2,011, , ,179 5,826 5,151,807 14,308,263 Operating Profit/ (Loss) 94,598 (2,744,213) (2,291,527) (1,754,835) 153,736 1,698,107 8,581,196 3,737,062 Included in Operating Profit Net loss from fair value adjustment on investment property (3,600,000) (3,593,550) (2,779,526) (1,999,867) (4,762) 1,573,731 4,789,365 (5,614,609) (23)

26 21 Reclassification Note 2009 Amount as previously 2009 reported Reclassified Adjusted Rental income receivable 6 25,153,775 (16,795,606) 8,358,169 Other payables 9 17,974,052 (16,795,606) 1,178,446 Reclassification of Amounts due to Property Managers Amounts due to property managers of 16,795,606 were reclassified out of Other Payables in the balance sheet to rental income receivable. The amounts due to property managers are settled net of rent receivable from property managers and hence have been offset. (24)