AMP CAPITAL AUSTRALIAN SMALL COMPANIES FUND ANNUAL REPORT

Transcription

1 AMP CAPITAL AUSTRALIAN SMALL COMPANIES FUND ANNUAL REPORT DIRECTORS REPORT AND FINANCIAL REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2016 ARSN

2 ARSN DIRECTORS' REPORT AND FINANCIAL REPORT FOR THE HALF YEAR ENDED 30 JUNE 2016 AMP Capital Funds Management Limited 33 Alfred Street, Sydney, NSW 2000 ACN

3 TABLE OF CONTENTS Page Direcrs' Report 1 Audir's Independence Declaration 2 Financial Report Statement of Comprehensive Income 3 Statement of Financial Position 4 Statement of Changes in Net Assets Attributable Unitholders 5 Statement of Cash Flows 6 Notes the Financial Statements 7-11 Direcrs' Declaration 12 Independent Review Report 13

4 DIRECTORS' REPORT The Direcrs of AMP Capital Funds Management Limited (ABN ), the "Responsible Entity" of the AMP Capital Australian Small Companies Fund (the "Scheme"), present their report gether with the Financial Report of the Scheme for the half year ended 30 June Direcrs The Direcrs of the Responsible Entity during the half year and up the date of this report are shown below. Direcrs were in office for this entire period except where stated otherwise: Adam M. Tindall P. Margaret Payn Douglas P. Talbot Sharon B. Davis Resigned 28 April 2016 Edwina Maloney Appointed 28 April 2016 Scheme Information AMP Capital Australian Small Companies Fund is an Australian Registered Scheme. Responsible Entity of the Scheme, is incorporated and domiciled in Australia. AMP Capital Funds Management Limited, the The registered office of the Responsible Entity is located at 33 Alfred Street, Sydney, NSW Principal Activity The principal activity of the Scheme is the investment of unitholders' funds in accordance with the Scheme mandate. There has been no significant change in the nature of this activity during the half year. Review of Results and Operations The Scheme derived a net profit attributable unitholders after tax expense and before finance costs of $5,121,708 for the half year ended 30 June 2016 (30 June 2015: net profit of $13,255,926). Distributions Distributions unitholders by the Scheme for the half year ended 30 June 2016 were $216,788 (30 June 2015: $919,194). Returns of capital unitholders by the Scheme for the half year ended 30 June 2016 were nil (30 June 2015: $111,969). Significant Changes in the State of Affairs There have been no significant changes in the state of affairs of the Scheme during the half year ended 30 June Significant Events After the Balance Date As at the date of this report, the Direcrs are not aware of any matter or circumstance that has arisen since the end of the half year that has significantly affected or may significantly affect the operations of the Scheme, the results of its operations or its state of affairs, which is not already reflected in this Financial Report. Audir's Independence Declaration We have obtained an independence declaration from our audirs, Ernst & Young, a copy of which is attached this report and forms part of the Direcrs Report for the half year ended 30 June Signed in accordance with a resolution of the Direcrs: Direcr 8 September 2016, Sydney - 1 -

5 Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: Fax: ey.com/au Audir s Independence Declaration the Direcrs of AMP Capital Funds Management Limited As lead audir for the review of AMP Capital Australian Small Companies Fund for the half year ended 30 June 2016, I declare the best of my knowledge and belief, there have been: a) no contraventions of the audir independence requirements of the Corporations Act 2001 in relation the review; and b) no contraventions of any applicable code of professional conduct in relation the review. Ernst & Young Darren Handley-Greaves Partner 8 September 2016 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

6 STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE January January June June 2015 $ $ INVESTMENT INCOME Dividends 1,485,748 1,923,472 Distributions 201, ,077 Interest income 142, ,179 Net foreign exchange gain/(loss) on cash and cash equivalents Net changes in the fair value of financial instruments measured at fair value through profit or loss 5,030,547 12,472,262 Other income 2,704 4,972 Total investment income/(loss) 6,863,435 14,692,962 EXPENSES Interest expense (165) - Responsible entity fees (665,013) (675,808) Performance fees (1,042,660) (741,553) Other expenses - (1,505) Total expenses (1,707,838) (1,418,866) NET PROFIT/(LOSS) ATTRIBUTABLE TO UNITHOLDERS BEFORE TAX EXPENSE AND FINANCE COSTS 5,155,597 13,274,096 Withholding tax expense (33,889) (18,170) NET PROFIT/(LOSS) ATTRIBUTABLE TO UNITHOLDERS AFTER TAX EXPENSE AND BEFORE FINANCE COSTS 5,121,708 13,255,926 Finance costs attributable unitholders Distributions unitholders (216,788) (919,194) (Increase)/decrease in net assets attributable unitholders (4,904,920) (12,336,732) NET PROFIT/(LOSS) ATTRIBUTABLE TO UNITHOLDERS AFTER TAX EXPENSE AND FINANCE COSTS - - Other comprehensive income - - TOTAL COMPREHENSIVE INCOME FOR THE HALF YEAR

7 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE June December 2015 $ $ ASSETS Cash and cash equivalents 15,264,387 14,851,462 Broker deposits 9 77,600 Receivables 949, ,833 Financial assets measured at fair value through profit or loss Listed securities 170,255, ,300,934 TOTAL ASSETS 186,469, ,489,829 LIABILITIES Payables 5,209, ,113 Distributions payable 206, ,691 Return of capital payable - 799,488 Provisions 988,293 1,527,551 TOTAL LIABILITIES EXCLUDING NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 6,404,821 3,521,843 NET ASSETS ATTRIBUTABLE TO UNITHOLDERS 180,065, ,967,

8 STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS FOR THE HALF YEAR ENDED 30 JUNE January June January June 2015 $ $ Balance at the beginning of the half year 194,967, ,725,972 Applications 763,977 12,415,930 Distributions reinvested 686,239 1,341,761 Return of capital reinvested 799,488 - Redemptions (22,057,599) (10,744,324) Return of capital - (111,969) 175,160, ,627,370 Increase/(decrease) in net assets attributable unitholders 4,904,920 12,336,732 Balance at the end of the half year 180,065, ,964,

9 STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 30 JUNE January January June June 2015 $ $ CASH FLOWS FROM OPERATING ACTIVITIES Proceeds from sales of financial instruments measured at fair value through profit or loss 80,062,455 50,475,985 Payments for purchases of financial instruments measured at fair value through profit or loss (57,748,449) (46,190,810) Broker deposits received/(advanced) 77,591 (138,561) Dividends received 1,400,101 1,515,063 Distributions received 180, ,804 Interest income received 142, ,179 GST received/(paid) (48) (118,490) Other income received 2,704 4,972 Responsible entity fees paid (668,985) (666,905) Performance fees paid (1,581,918) (1,604,471) Withholding tax paid (33,889) (18,170) Other expenses paid - (1,505) Net cash inflow/(outflow) from operating activities 21,832,416 3,571,091 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from applications by unitholders 763,950 12,398,767 Payments for redemptions by unitholders (22,074,771) (10,727,267) Distributions paid (109,257) (110,931) Net cash inflow/(outflow) from financing activities (21,420,078) 1,560,569 Net increase/(decrease) in cash and cash equivalents held 412,338 5,131,660 Cash and cash equivalents at the beginning of the half year 14,851,462 6,546,867 Net foreign exchange gain/(loss) on cash and cash equivalents CASH AND CASH EQUIVALENTS AT THE END OF THE HALF YEAR 15,264,387 11,678,

10 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) (b) (c) The significant accounting policies adopted in the preparation of the Financial Report are set out below. These policies have been consistently applied the current half year and the comparative period, unless otherwise stated. The accounting policies of the Scheme are consistent with those of the most recent annual Financial Report. Where necessary, comparative information has been re-presented be consistent with current period disclosures. Basis of Preparation This general purpose Financial Report has been prepared in accordance with the Scheme Constitution and with the requirements of the Corporations Act and AASB 134 "Interim Financial Reporting". The Scheme is a for-profit entity for the purposes of preparing Financial Statements. The half year Financial Report does not include all the notes normally included within the annual Financial Report and therefore cannot be expected provide as full an understanding of the financial position and financial performance of the Scheme as that given by the annual Financial Report. As a result, this Financial Report should be read in conjunction with the most recent annual Financial Report of the Scheme. The assets and liabilities are measured on a fair value basis, except where otherwise stated. The Statement of Financial Position presents assets and liabilities in decreasing order of liquidity and does not distinguish between current and non-current items. All of the Scheme's assets and liabilities are held for the purpose of being traded or are expected be realised within 12 months, except for net assets attributable unitholders which may not be settled within 12 months. Given the nature of the Scheme, a reasonable estimate cannot be made of the amount of the balances, if any, that are unlikely be settled within 12 months. Changes in Australian Accounting Standards The Scheme has adopted all mandary standards and amendments for the half year beginning 1 January Adoption of these standards and amendments has not had any effect on the financial position or performance of the Scheme. Australian Accounting Standards issued but not yet effective Standards and amendments that have recently been issued or amended but are not yet effective have not been adopted for the half year ended 30 June When applied in future periods, these recently issued or amended standards are not expected have an impact on the Scheme's financial position or performance or the presentation and disclosures in the Financial Report, except where described below: AASB 9 "Financial Instruments" (effective from 1 January 2018) This standard addresses the classification, measurement, derecognition and impairment of financial assets and financial liabilities. The Scheme is currently assessing the impact of adopting this standard, which is not expected have a significant impact on the Scheme's financial position or performance; however, it may impact the presentation and disclosures in the Financial Report. AASB 15 "Revenue from Contracts with Cusmers" (effective from 1 January 2018) This standard makes significant changes revenue recognition and adds some additional disclosures. The new standard provides a five-step model be applied all contracts with cusmers when determining when recognise revenue, and at what amount. The Scheme s main sources of revenue are dividends, distributions, interest income and gains on financial instruments measured at fair value through profit or loss. As all of these are outside the scope of the new standard, it is not expected that this standard will have an impact on the Scheme s financial position or performance, or the presentation and disclosures in the Financial Report. Financial Assets Measured at Fair Value Through Profit or Loss Financial assets measured at fair value through profit or loss have been classified as held for trading as they are part of a portfolio which is managed for short-term gains. Financial assets are initially recognised at fair value determined as the purchase cost of the financial asset, exclusive of any transaction costs. Transaction costs are expensed as incurred in the Statement of Comprehensive Income. Any realised and unrealised gains and losses arising from subsequent measurement fair value are recognised in the Statement of Comprehensive Income as 'Net changes in the fair value of financial instruments measured at fair value through profit or loss' in the period in which they arise. Subsequent initial recognition, the fair value of financial assets measured at fair value through profit or loss is determined as follows: Listed securities Listed securities include investments in listed managed investment funds and shareholdings in listed companies. The fair value of listed securities is the "bid" price of those securities, as quoted on their primary exchange at the balance date. Significant Accounting Judgements, Estimates and Assumptions The making of judgements, estimates and assumptions is a necessary part of the financial reporting process and these judgements, estimates and assumptions can have a significant effect on the reported amounts in the Financial Report. Estimates and assumptions are determined based on information available at the time of preparing the Financial Report and actual results may differ from these estimates and assumptions. Had different estimates and assumptions been adopted, this may have had a significant impact on the Financial Report. Significant accounting judgements, estimates and assumptions are re-evaluated at each balance date in the light of hisrical experience and changes reasonable expectations of future events. Revisions accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. Significant accounting judgements, estimates and assumptions include but are not limited : - 7 -

11 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2016 NOTE 1: SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (c) (d) (e) (f) (g) (h) Significant Accounting Judgements, Estimates and Assumptions (continued) Fair value measurement of investments in financial instruments The majority of the Scheme's investments are financial instruments held for trading and are measured at fair value through profit or loss. Where available, quoted market prices for the same or similar instrument are used determine fair value. Where there is no market price available for an instrument, a valuation technique is used. Judgement is applied in selecting valuation techniques and setting valuation assumptions and inputs. Further details on the determination of fair value of financial assets is set out in Note 1(b). Provisions Provisions are liabilities of uncertain timing or amounts. Performance fees payable by the Scheme are recognised as a provision as the amount currently reflected in the Statement of Financial Position is a reliable estimate, based on current calculations, of the final amount payable. Net Assets Attributable Unitholders Net assets attributable unitholders comprise units on issue and undistributed reserves. Net assets attributable unitholders are classified as financial liabilities and not as equity because the Responsible Entity has a contractual obligation pay distributable income of the Scheme unitholders and units are redeemable at the unitholders' option (subject the provisions of the Scheme Constitution). As there are no equityholders, tal comprehensive income attributable unitholders and equity for the Scheme is nil. Non-distributable income is transferred directly net assets attributable unitholders and may consist of unrealised changes in the fair value of financial assets and derivative financial instruments. The fair value of redeemable units is measured at the redemption amount that is payable (based on the redemption unit price) at the balance date if unitholders exercised their right redeem their units. The Scheme's redemption unit price is based on different valuation principles that applied in financial reporting, resulting in a valuation difference which is treated as a component of net assets attributable unitholders. Unit Classes The Scheme contains multiple unit classes reflecting the different servicing requirements of various unitholders. Due the additional services required by some unitholder classes, different management fees apply different unit classes. These fees are detailed in the Product Disclosure Statement of the Scheme. Terms and Conditions of Units on Issue Issued and paid up units are initially recognised at the fair value of the consideration received by the Scheme. Each unit, within a unit class, confers upon the unitholder an equal interest in the Scheme (subject income entitlements), and is of equal value. A unit does not confer an interest in any particular asset or investment of the Scheme. Unitholders have various rights under the Scheme Constitution and the Corporations Act, which, subject certain terms and conditions, include the right : have their units redeemed receive income distributions attend and vote at meetings of unitholders participate in the termination and winding up of the Scheme. The rights, obligations and restrictions attached each unitholder class are identical in all respects other than the minimum investment requirements and/or fee structures applicable each class. Applications received for units in the Scheme are recognised net of any transaction costs arising on the issue of units in the Scheme. Redemptions from the Scheme are recognised gross of any transaction costs payable after the cancellation of units redeemed. Unit entry and exit prices are determined in accordance with the Scheme Constitution. Goods and Services Tax ("GST") All income, expenses and assets are recognised net of any GST paid, except where they relate products and services which are input taxed for GST purposes or the GST incurred is not recoverable from the relevant tax authorities. In such circumstances, the GST paid is recognised as part of the cost of acquisition of the assets or as part of the relevant expense. Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from or payable the tax authorities is included as a receivable or payable in the Statement of Financial Position. Cash flows are disclosed on a gross basis reflecting any GST paid or collected. The GST component of cash flows arising from investing or financial activities which are recoverable from, or payable, local tax authorities are classified as operating cash flows

12 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE January June 2016 Units 1 January June 2015 Units NOTE 2: NET ASSETS ATTRIBUTABLE TO UNITHOLDERS The movement in the number of units on issue during the half year was as follows: Units on Issue Opening balance 78,256,576 83,803,186 Applications 326,263 5,677,068 Distributions reinvested 583, ,665 Redemptions (9,252,456) (5,186,432) Closing balance 69,914,080 84,947,487 Represented by: Wholesale Class Opening balance 645, ,467 Redemptions (53,924) (151,389) Closing balance 591, ,078 On-Platform A Class Opening balance 3,611,660 4,461,608 Applications 97,252 24,628 Redemptions (294,863) (600,312) Closing balance 3,414,049 3,885,924 Retail Class Opening balance 25,033,029 28,415,971 Applications 153, ,822 Distributions reinvested 58,882 47,287 Redemptions (1,770,676) (2,281,475) Closing balance 23,474,597 26,483,605 No Fee Class Opening balance 47,096,779 47,698,568 Applications 57,179 5,318,427 Distributions reinvested 522, ,109 Redemptions (6,937,801) (1,898,712) Closing balance 40,738,562 51,721,392 AMPCI Retail Class Opening balance 1,139,047 1,454,361 Redemptions (161,174) (179,715) Closing balance 977,873 1,274,646 Explicit Pricing Class Opening balance 730, ,211 Applications 18,470 32,191 Distributions reinvested 2,410 3,269 Redemptions (34,018) (74,829) Closing balance 717, ,

13 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE January June January June 2015 NOTE 2: NET ASSETS ATTRIBUTABLE TO UNITHOLDERS (Continued) $ $ Net assets attributable unitholders are represented by: Fair value of outstanding units based on redemption price 180,487, ,096,663 Adjustments arising from the difference between the application of the redemption unit price and IFRS valuation of net assets (422,049) (1,132,561) Net assets attributable unitholders 180,065, ,964,102 NOTE 3: FAIR VALUE MEASUREMENT Financial assets and liabilities measured at fair value are categorised under a three level hierarchy, reflecting the availability of observable market inputs when estimating the fair value. If different levels of inputs are used measure a financial asset or liability's fair value, the classification within the hierarchy is based on the lowest level input that is significant the fair value measurement. The three levels are: Level 1: Valued by reference quoted prices in active markets for identical assets or liabilities. These quoted prices represent actual and regularly occurring market transactions on an arms length basis. Level 2: Valued using inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices), including: quoted prices in active markets for similar assets or liabilities, quoted prices in markets in which there are few transactions for identical or similar assets or liabilities, and other inputs that are not quoted prices but are observable for the asset or liability. Level 3: Valued in whole or in part using valuation techniques or models that are based on unobservable inputs that are neither supported by prices from observable current market transactions in the same instrument nor are they based on available market data. Unobservable inputs are determined based on the best information available, which might include the Scheme's own data, reflecting the Scheme's own assumptions about the assumptions that market participants would use in pricing the asset or liability. Valuation techniques are used the extent that observable inputs are not available. The table below shows the Scheme's financial assets and liabilities measured at fair value on a recurring basis by each level of the fair value hierarchy. The Scheme did not measure any financial assets or liabilities at fair value on a non-recurring basis as at 30 June 2016 (31 December 2015: nil). 30 June 2016 Level 1 Level 2 Level 3 Total $ $ $ $ Listed securities 170,255, ,255,910 Total 170,255, ,255, December 2015 Listed securities 183,300, ,300,934 Total 183,300, ,300,934 The Scheme recognises transfers between levels of the fair value hierarchy as at the end of the reporting period during which the transfer has occurred. There were no transfers between Level 1 and Level 2 of the fair value hierarchy during the half year ended 30 June 2016 (financial year ended 31 December 2015: nil). Valuation techniques The valuation techniques and inputs used in measuring the fair value of financial assets and liabilities are outlined in Note 1(b). There were no material changes in valuation techniques during the half year. NOTE 4: COMMITMENTS AND CONTINGENCIES The Scheme had no commitments or contingencies at 30 June 2016 (31 December 2015: nil). NOTE 5: EVENTS OCCURRING AFTER THE BALANCE DATE Since 30 June 2016 there have been no matters or circumstances not otherwise dealt with in the Financial Report that have significantly affected or may significantly affect the Scheme

14 NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 30 JUNE 2016 NOTE 6: AUTHORISATION OF THE FINANCIAL REPORT The Financial Report of the AMP Capital Australian Small Companies Fund for the half year ended 30 June 2016 was authorised for issue in accordance with a resolution of the Direcrs of AMP Capital Funds Management Limited on 8 September

15 DIRECTORS' DECLARATION In accordance with a resolution of the Direcrs of AMP Capital Funds Management Limited, the Responsible Entity, I state that for the purpose of section 303(4) of the Corporations Act, in the opinion of the Direcrs of the Responsible Entity: (a) (b) The Financial Statements and notes are in accordance with the Corporations Act, including section 304 (compliance with accounting standards) and section 305 (true and fair view); and There are reasonable grounds believe that the Scheme will be able pay its debts as and when they become due and payable. Direcr 8 September 2016, Sydney

16 Ernst & Young 200 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 Tel: Fax: ey.com/au To the unitholders of AMP Capital Australian Small Companies Fund Report on the Half-Year Financial Report We have reviewed the accompanying half-year financial report of AMP Capital Australian Small Companies Fund (the Scheme ), which comprises the statement of financial position as at 30 June 2016, the statement of comprehensive income, statement of changes in net assets attributable unitholders and statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanary information, and the direcrs declaration. Direcrs Responsibility for the Half-Year Financial Report The direcrs of AMP Capital Funds Management Limited as the Responsible Entity of the Scheme (the Responsible Entity ) are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the direcrs determine are necessary enable the preparation of the half-year financial report that is free from material misstatement, whether due fraud or error. Audir s Responsibility Our responsibility is express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Audir of the Entity, in order state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Scheme s financial position as at 30 June 2016 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations As the audir of the Scheme, ASRE 2410 requires that we comply with the ethical requirements relevant the audit of the annual financial report. A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Independence In conducting our review, we have complied with the independence requirements of the Corporations Act We have given the direcrs of the Responsible Entity a written Audir s Independence Declaration, a copy of which is attached the direcrs report. A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

17 Page 2 Conclusion Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of AMP Capital Australian Small Companies Fund is not in accordance with the Corporations Act 2001, including: a. giving a true and fair view of the Scheme s financial position as at 30 June 2016 and of its performance for the half-year ended on that date; and b. complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations Ernst & Young Darren Handley-Greaves Partner Sydney 8 September 2016 A member firm of Ernst & Young Global Limited Liability limited by a scheme approved under Professional Standards Legislation

18 AMP Capital Funds Management Limited 33 Alfred Street, Sydney, NSW 2000 ACN ampcapital.com.au