EAST KIMBERLEY SANDALWOOD PROJECT NO.1 ARSN FINANCIAL REPORT FOR THE PERIOD ENDED 3 MAY 2017

Transcription

1 EAST KIMBERLEY SANDALWOOD PROJECT NO.1 ARSN FINANCIAL REPORT FOR THE PERIOD ENDED 3 MAY 2017

2 CONTENTS PAGE RESPONSIBLE ENTITY S REPORT 1 INDEPENDENT AUDITOR S REVIEW REPORT 3 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 6 STATEMENT OF FINANCIAL POSITION 7 STATEMENT OF CHANGES IN GROWERS FUNDS 8 STATEMENT OF CASH FLOWS 9 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS 10 DIRECTORS DECLARATION 14 AUDITOR S INDEPENDENCE DECLARATION 15

3 RESPONSIBLE ENTITY S REPORT The Directors of Sandalwood Properties Ltd (previously named TFS Properties Ltd) (ACN ) as responsible entity of East Kimberley Sandalwood Project No.1 ( the project ), submit their report for the period ended 3 May Directors The names of the Directors of Sandalwood Properties Ltd during the period and until the date of this report are set out below. Directors were in office for this entire period unless otherwise stated. Mr Greg Gaunt (Chairman) Mr Dalton Gooding Mr John Groppoli Mr Rob Scott Mr Ross Kestel Principal Activities The project is a Managed Investment Scheme for the purposes of the Corporations Act 2001 and is regulated by the project s Constitution and the Corporations Act The project represents the growers interests in the sandalwood lots issued under the project and managed by the responsible entity as a single commercial plantation for the benefit of the growers. Change of State of Affairs The project did not engage in any activities during the period as the plantation was harvested and sold during the 2015 financial year. On 22 March 2017, the immediate and ultimate holding company of the responsible entity changed its name to Quintis Ltd. As a result of the change, the responsible entity, formerly known as TFS Properties Ltd, is now known as Sandalwood Properties Ltd. On 3 May 2017, the final settlement of liabilities owing to the responsible entity of $11,473 was made. At the date of this financial report, there were no further outstanding liabilities owing to the responsible entity. Results of Operations and Likely Developments The project made no profit for the period ended 3 May 2017 (30 June 2016: profit of $nil). All of the project s trees were harvested and sold during the 2015 financial year. The completion of the wind up of the Scheme is expected to be on the date the financial report is authorised for issue by the Directors of the responsible entity and prior to the next year end. The investment strategy of the scheme will be maintained in accordance with the scheme constitution and investment objectives as detailed in the Product Disclosure Statement. Since all the funds from the distributions have cleared the bank account, the project will be wound-up in accordance with the trust deed/constitution. Project Property and Scope of Transactions The scope of transactions recognised in the project financial statements only include that of the project property and do not include the Lease and Management agreement or specific alternative funding arrangements made between the grower and the responsible entity. All grower funds in relation to 413 units (1/6 th ha) held by external investors in the project were distributed in the 2015 financial year. The responsible entity or its associates held no units in the project. The net assets of the project at 3 May 2017 were $nil as the plantation was harvested and sold during the 2015 financial year. Events after the Reporting Period There have been no significant events occurring after the period end which may affect either the project s operations or results of those operations or the project s state of affairs. Auditor s Independence Declaration The auditor s independence declaration for the period ended 3 May 2017 has been received and can be found on page 11 of the financial report. East Kimberley Sandalwood Project No.1 1

4 For and on behalf of the Directors of Sandalwood Properties Ltd: Greg Gaunt Chairman Dated at Perth this 15 th day of June 2017 EAST KIMBERLEY SANDALWOOD PROJECT NO.1 2

5 Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: Fax: ey.com/au Independent auditor's report to the growers of East Kimberley Sandalwood Project No.1 Opinion We have audited the financial report of East Kimberley Sandalwood Project No.1 (the Registered Scheme ), which comprises the statement of financial position as at 3 May 2017, the statement of profit or loss and other comprehensive income, statement of changes in growers funds and statement of cash flows for the financial period from 1 July 2016 to 3 May 2017, notes to the financial statements, including a summary of significant accounting policies, and the declaration of the directors of Sandalwood Properties Ltd, the Responsible Entity of the Registered Scheme. In our opinion, the accompanying financial report of the Registered Scheme is in accordance with the Corporations Act 2001, including: a) giving a true and fair view of the Registered Scheme s financial position as at 3 May 2017 and of its financial performance for the financial period from 1 July 2016 to 3 May 2017; and b) complying with Australian Accounting Standards and the Corporations Regulations Basis for opinion We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor s Responsibilities for the Audit of the Financial Report section of our report. We are independent of the Registered Scheme and the Responsible Entity in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Emphasis of matter - basis of accounting We draw attention to Note 1 of the financial report, which describes the basis of accounting. It is the Directors intention to wind up the Registered Scheme prior to the next year end. As a result, the financial report has been prepared on a liquidation basis. Our opinion is not modified in respect of this matter. Information other than the financial report and auditor s report thereon The Directors are responsible for the other information. The other information is the Directors Report accompanying the financial report. Our opinion on the financial report does not cover the other information and accordingly we do not express any form of assurance conclusion thereon. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation DSL:JT:QUINTIS:055

6 In connection with our audit of the financial report, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. Responsibilities of the Directors for the financial report The Directors are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the Directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error. In preparing the financial report, the Directors are responsible for assessing the Registered Scheme s ability to continue as a going concern, disclosing, as applicable, matters relating to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Registered Scheme or to cease operations, or have no realistic alternative but to do so. Auditor's responsibilities for the audit of the financial report Our objectives are to obtain reasonable assurance about whether the financial report as a whole is free from material misstatement, whether due to fraud or error, and to issue an auditor s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of this financial report. As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgment and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit 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 Registered Scheme s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the directors. Evaluate the overall presentation, structure and content of the financial report, including the disclosures, and whether the financial report represents the underlying transactions and events in a manner that achieves fair presentation. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

7 We communicate with the Directors regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. Ernst & Young D S Lewsen Partner Perth 15 June 2017 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

8 EAST KIMBERLEY SANDALWOOD PROJECT NO.1 STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE PERIOD ENDED 3 MAY May 2017 $ 30 June 2016 $ Revenue - - Other income - - Cost of sales - - Sales and marketing fees - - Bank charges - - Expenses claimed by manager - - Operating profit - - Income tax - - Net profit for the period - - Other comprehensive income for the period - - Total comprehensive income for the period - - The Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the accompanying notes East Kimberley Sandalwood Project No.1 6

9 EAST KIMBERLEY SANDALWOOD PROJECT NO.1 STATEMENT OF FINANCIAL POSITION AS AT 3 MAY May 2017 $ 30 June 2016 $ Current Assets Cash and cash equivalents - 11,473 Total Assets - 11,473 Current Liabilities Trade and other payables - 11,473 Total Liabilities - 11,473 Net Assets - - Growers Funds Undistributed income reserve - - Total Growers Funds - - The Statement of Financial Position should be read in conjunction with the accompanying notes East Kimberley Sandalwood Project No.1 7

10 EAST KIMBERLEY SANDALWOOD PROJECT NO.1 STATEMENT OF CHANGES IN GROWERS FUNDS FOR THE PERIOD ENDED 3 MAY 2017 Undistributed Income Reserve $ Total $ Balance at 1 July Total comprehensive income for the period - - Balance at 3 May Balance at 1 July Total comprehensive income for the period - - Balance at 30 June The Statement of Changes in Growers Funds should be read in conjunction with the accompanying notes East Kimberley Sandalwood Project No.1 8

11 EAST KIMBERLEY SANDALWOOD PROJECT NO.1 STATEMENT OF CASH FLOWS FOR THE PERIOD ENDED 3 MAY May 2017 $ 30 June 2016 $ Cash flows from operating activities Receipt from growers - - Receipt from sales - - Interest received - - Payments to suppliers Cash flows from financing activities Distributions paid to the responsible entity (11,473) Net increase in cash held (11,473) - Cash at the beginning of the period 11,473 11,473 Cash at the end of the period - 11,473 The Statement of Cash Flows should be read in conjunction with the accompanying notes East Kimberley Sandalwood Project No.1 9

12 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 3 MAY SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial report covers the East Kimberley Sandalwood Project No.1 ( the project ). The project is a Managed Investment Scheme registered in Australia. The project represents the growers interests in the sandalwood lots in the project plantation and managed by the responsible entity as a single commercial plantation for the benefit of the growers. The financial statements include the interest of all 413 sandalwood lots. The responsible entity or its associate do not hold any interest in this project. Under the scheme, growers enter into a lease and management agreement with the responsible entity and Quintis Leasing Pty Ltd (previously named TFS Leasing Pty Ltd) (a related entity of the responsible entity). Under the lease and management agreement, the grower sub-leases their sandalwood lot(s) from Quintis Leasing Pty Ltd and appoints the responsible entity to plant, manage and harvest the trees on the lot (not applicable where the grower is an electing grower as defined below), as well as sell the grower s share of the harvest from the plantation in consideration of the grower agreeing to pay establishment fees, annual lease and management fees, a harvest fee and a sales and marketing fee (not applicable where the grower is an electing grower). A grower is a non-electing grower unless they have elected to collect their share of the plantation harvest in which case they are an electing grower. Each grower has an interest in the harvest from the plantation based on the proportion by which the number of sandalwood lots sub-leased by the grower bears to the total number of sandalwood lots sub-leased by all growers. An electing grower has the right to collect and dispose of its share of the harvest. A non-electing grower s share of the harvest is pooled with other non- electing grower s shares and is sold for the non-electing growers by a related entity of the responsible entity and the grower is entitled to a share of the net proceeds from the sale. The scope of transactions recognised in the project financial statements only include that of the project property and do not include the Lease and Management Agreement or specific alternative funding arrangements made between the grower and the responsible entity. The financial report was authorised for issue on 15 June 2017 by the Board of Directors. Basis of Preparation These general purpose financial statements for the period from 1 July 2016 to 3 May 2017 have been prepared in accordance with requirements of the Corporations Act 2001, Australian Accounting Standards applicable to for profit entities and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report also complies with International Financial Reporting Standards ( IFRS ) as issued by the International Accounting Standards Board. The financial statements have also been prepared on an accruals basis and is based on historical cost, and are prepared in Australian Dollars with all values rounded to the nearest dollar except where otherwise indicated. The financial statements have been prepared on a liquidation basis as the project is not a going concern because it is expected to be wound up prior to the next year end in accordance with the trust deed/constitution. All funds from the distributions have cleared the bank account on the 3 May Any further costs in liquidating the Scheme will be borne by the responsible entity. The adoption of the liquidation basis did not have any impact on the recognition or measurement of balances recorded in the financial statements. The project s financial statements have been prepared on the basis of accounting policies consistent with those applied in the financial statements for the year ended 30 June (a) Significant accounting judgements, estimates and assumptions The Directors of the responsible entity make estimates and judgements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data obtained both externally and within the project. Key Judgement Classification of growers funds The Growers interest in the scheme is classified as equity because in accordance with the Scheme s Constitution, the distributable income of the Scheme is fully distributed on a pro rata basis to growers only at the maturity of the project plantation when the harvest of the Sandalwood lots occur and the Scheme is liquidated. Apart from the contractual obligation for the Scheme to sell the harvested trees and distribute the proceeds, the Scheme does not have any contractual obligation to deliver cash or another East Kimberley Sandalwood Project No.1 10

13 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 3 MAY 2017 financial asset to the growers or to exchange financial assets or financial liabilities with the growers under conditions that are potentially unfavourable to the Scheme. Key Judgement Transactions arising from the Lease and Management Agreement Under the scheme, growers enter into a lease and management agreement with the responsible entity and Quintis. Leasing Pty Ltd (a related entity of the responsible entity). Under the lease and management agreement, the grower sub-leases their Sandalwood lot(s) from Quintis Leasing Pty Ltd and appoints the responsible entity to plant the trees on the lot, manage the trees on the lot, harvest the trees on the lot (not applicable where the grower is an electing grower as defined below), sell the grower s share of the harvest from the plantation in consideration of the grower agreeing to pay establishment fees, annual lease and management fees, a harvest fee and a sales and marketing fee (not applicable where the grower is an electing grower). Transactions arising from the Lease and Management Agreement and other associated charges made between the grower and the responsible entity have been excluded from the scope of transactions recognised in the project financial statements. The Directors do not believe the annual payments made by the growers to the responsible entity become project property. Rather they are paid to and received by the responsible entity as rent and fees in discharge of a grower s individual obligation to pay such amounts and are not pooled with other amounts receivable from the growers. (b) Trade and other payables Liabilities for trade creditors and other amounts are carried at amortised cost, which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the responsible entity. Payables to related parties are carried at amortised cost. Interest is recognised as an expense using the effective interest method. Deferred cash settlements are recognised at the present value of the outstanding consideration payable on the acquisition of an asset discounted at prevailing commercial borrowing rates (c) Cash and cash equivalents Cash and cash equivalents in the Statement of Financial Position comprise cash on hand. For the purpose of the Statement of Cash Flows, cash and cash equivalents consist of cash on hand. (d) Income tax Under current legislation, the project is not subject to income tax provided the Growers are presently entitled to the income of the project. Unrealised gains and losses on investments which are regarded as income, are transferred to Growers funds and are not distributable and assessable until realised. When income is realised, tax will be paid by the growers at the marginal rates of tax that exist under the relevant tax legislation at the date of realisation. (e) Fair value measurement A number of the project s accounting policies and disclosures require the measurement of fair values, for both financial and nonfinancial assets and liabilities. The responsible entity has overall responsibility for overseeing all significant fair value measurements, including Level 3 fair values. The responsible entity regularly reviews significant unobservable inputs and valuation adjustments. If third party information, such as valuation reports is used to measure fair values, then the responsible entity assesses the evidence obtained from the third parties to support the conclusion that such valuations meet the requirements of AASB 13 Fair Value Measurement, including the level in the fair value hierarchy in which such valuations should be classified. Significant valuation issues are reported to the Board of Directors of the responsible entity. When measuring the fair value of an asset or a liability, the responsible entity uses market observable data as far as possible. Fair values of assets or liabilities are categorised into different levels in the fair value hierarchy based on the lowest input used in the valuation techniques as follows: Level 1: Quoted (unadjusted) market prices in active markets for identical assets or liabilities. Level 2: Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable. Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable. EAST KIMBERLEY SANDALWOOD PROJECT NO.1 11

14 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 3 MAY 2017 If the inputs used to measure the fair value of an asset or a liability might be categorised in different levels of the fair value hierarchy, then the fair value measurement is categorised in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. The project recognises transfers between levels of the fair value hierarchy at the end of the reporting period during which the change has occurred. The responsible entity assessed that cash, trade receivables, other current financial assets, trade payables and other current liabilities carrying amounts approximate their fair values largely due to the short-term maturities of these instruments. (f) Financial instruments Initial recognition and measurement Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the instrument. For financial assets, this is equivalent to the date that the company commits itself to either the purchase or sale of the asset (i.e. trade date accounting is adopted). Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified at fair value through profit or loss, in which case transaction costs are expensed to profit or loss immediately. Financial assets - Initial recognition and subsequent measurement Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, AFS financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. Financial liabilities - Initial recognition and subsequent measurement Financial liabilities are classified at initial recognition, as financial liabilities at fair value through profit or loss, loans and borrowings or payables as appropriate. All financial liabilities are recognised initially at fair value and in the case of loans, borrowings and payables, net of directly attributable transaction costs. (g) Revenue and other income Interest Revenue Interest Revenue is recognised using the effective interest rate method. (h) Distribution to growers In accordance with the project s Constitution, the project fully distributes its distributable income to growers. Distributions are payable upon the harvest and sale of the project property. Such distributions are determined by reference to the net taxable income of the project. (i) Contributions from growers Growers are equity participants and are issued grower lots which confer upon the Grower an equal interest in the Scheme and are of equal value. Grower contributions are accounted for as equity contributions. Each grower lot also entitles the Grower to one vote at meetings of Growers. The rights, obligations and restrictions attached to each grower lot are identical in all respects. 2. OPERATING SEGMENTS Identification of reportable segments The responsible entity has identified one reportable segment for the project, being the financial investment industry, based on the internal reports that are reviewed and used by the Board of Directors (chief operating decision makers) in assessing performance and determining the allocation of resources. The board reviews financial information on the same basis as presented in the financial statements and has therefore determined the operating segment on this basis. EAST KIMBERLEY SANDALWOOD PROJECT NO.1 12

15 NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS FOR THE PERIOD ENDED 3 MAY SUBSEQUENT EVENTS Since 3 May 2017, there has not been any matter or circumstance not otherwise dealt with in the financial report that has significantly affected or may significantly affect the project. 4. FINANCIAL INSTRUMENTS The project s financial instruments consist of cash and payables. The totals for each category of financial instruments are measured in accordance with AASB 139 Financial Instruments: Recognition and Measurement as detailed in the accounting policies to these financial statements. At balance sheet date the financial asset (cash) was exposed to Australian variable interest rates. Financial liabilities (payables) are interest free and will mature within 1 year. The carrying amount of the financial asset and liabilities approximates fair value at reporting date. 5. RELATED PARTY DISCLOSURE (a) Responsible Entity The responsible entity of East Kimberley Sandalwood Project No.1 is Sandalwood Properties Ltd (formerly named TFS Properties Ltd), whose immediate and ultimate holding company is Quintis Ltd (formerly named TFS Corporation Ltd). (b) Fees paid or payable to the Responsible Entity The responsible entity receives all establishment, lease and management fees which have been paid by the growers during the year. Refer to Note 1 for additional detail on transactions arising from the lease and management agreement. The responsible entity provides Sandalwood plantation establishment and management services for East Kimberly Sandalwood Project No.1 and carries out the custodial and administrative functions. Transactions between East Kimberly Sandalwood Project No.1 and Sandalwood Properties Ltd result from normal dealings that company as the project s responsible entity and holder of a dealer s license. 7. CONTINGENT LIABILITIES There are no contingent liabilities during the period ended 3 May PROJECT DETAILS The registered office of the project and principal place of business is Old Swan Brewery, Level 2, Mounts Bay Road, Perth WA EAST KIMBERLEY SANDALWOOD PROJECT NO.1 13

16 DIRECTORS DECLARATION In accordance with a resolution of the Directors of Sandalwood Properties Ltd, I state that: In the opinion of the Directors: (a) The financial statements and notes of East Kimberley Sandalwood Project No.1 for the period from 1 July 2016 to 3 May 2017 are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the registered scheme s financial position as at 3 May 2017 and its performance for the period ended on that date; and (ii) complying with accounting standard and the Corporations Regulations 2001 (b) The financial statements and notes also comply with International Financial Reporting Standards as disclosed in Note 1. (c) There are reasonable grounds to believe that the registered scheme will be able to pay its debts as and when they become due and payable. On behalf of the Board of Sandalwood Properties Ltd Greg Gaunt Chairman Dated at Perth this 15 th day of June 2017 East Kimberley Sandalwood Project No.1 14

17 Ernst & Young 11 Mounts Bay Road Perth WA 6000 Australia GPO Box M939 Perth WA 6843 Tel: Fax: ey.com/au Auditor s Independence Declaration to the Directors of Sandalwood Properties Ltd, as the Responsible Entity for East Kimberley Sandalwood Project No. 1 As lead auditor for the audit of East Kimberley Sandalwood Project No. 1 for the financial period from 1 July 2016 to 3 May 2017, I declare to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) no contraventions of any applicable code of professional conduct in relation to the audit. Ernst & Young D S Lewsen Partner 15 June 2017 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation DSL:JT:QUIINTIS:056