Fusion Fund - Eley Griffiths Group Small Companies Fund ARSN 121 390903 Annual report -
Fusion Fund - Eley Griffiths Group Small Companies Fund ARSN 121 390903 Annual report - Directors' Contents report 2 Auditor's independence of comprehensive declaration income 65 Statement of financial position 7 Statement of changes of cash in flows equity 98 Notes to the financial statements 10 Directors' declaration 22 Independent auditor's report to the unitholders of Fusion Fund - Eley Griffths Group Small Companies Fund 23 Page This financial report covers Fusion Fund - Eley Griffths Group Small Companies Fund as an individual entity. The Responsible Entity of Fusion Fund - Eley Griffths Group Small Companies Fund is Macquarie Financial Products Management Limited (ABN 38 095 135694). The Responsible Entity's registered offce is No.1 Martin Place, Sydney, NSW 2000. -1-
Directors' report Directors' report The directors of Macquarie Financial Products Management Limited, a wholly owned subsidiary of Macquarie Group Limited, the Responsible Entity of Fusion Fund - Eley Griffths Group Small Companies Fund, present their report together with the financial report of Fusion Fund - Eley Griffths Group Small Companies Fund (the "Fund") for the year ended. Principal activities The Fund product delivers investment returns from investments in managed funds, whilst also protecting against losses by employing a capital management technique referred to as Threshold Management. The Fund did not have any employees during the year. There were no significant changes in the nature of the Fund's activities during the year, until it ceased trading on 28 June. Directors The following persons held offce as directors of Macquarie Financial Products Management Limited during the year or since the end of the year and up to the date of this report: Peter Lucas William Fox Jason King Antony Clubb Anthony Abraham Review and results of operations During the year, the Fund continued to be managed in accordance with the investment objective and strategy set out in the Fund's offer document until it ceased trading on 28 June and in accordance with the Fund Constitution. Results The performance of the Fund, as represented by the results of its operations, was as follows: Year ended 2012 Operating profiu(loss) before finance costs attributable to unitholders () Distributions - to redeeming unitholders Distribution paid () 2,029 (16,404) 66 3,028 Significant changes in state of affairs The Fund ceased trading on 28 June and the directors intend to wind up the Fund within the next 12 months. In the opinion of the directors, there were no other significant changes in the state of affairs of the Fund that occurred during the financial year under review. Matters subsequent to the end of the financial year No matter or circumstance has arisen since that has significantly affected, or may significantly affect: (i) the operations of the Fund in future financial years, or (ii) the results of those operations in future financial years, or (iii) the state of affairs of the Fund in future financial years. -2-
Directors' report Directors' report Likely developments and expected results of operations The Fund ceased trading on 28 June and the directors intend to wind up the Fund within the next 12 months. The Fund will continue to be managed in accordance with the Fund Constitution until that time. Indemnification and insurance of officers and auditors No insurance premiums are paid for out of the assets of the Fund in regards to insurance cover provided to either the offcers of Macquarie Financial Products Management Limited or the auditors of the Fund. Under the Fund Constitution, Macquarie Financial Products Management Limited as Responsible Entity of the Fund is entitled to be indemnified out of the assets of the Fund for any liability incurred by it in properly performing or exercising any of its powers or duties in relation to the Fund. Fees paid to and interests held in the Fund by the Responsible Entity or its associates Fees paid to the Responsible Entity and its associates out of Fund property during the year are disclosed in note 8 of the financial statements. No fees were paid out of Fund property to the directors of the Responsible Entity during the year. The number of interests in the Fund held by the Responsible Entity or its associates as at the end of the financial year are disclosed in note 8 of the financial statements. Interests in the Fund The movement in units on issue in the Fund during the year is disclosed in note 5 of the financial statements. The value of the Fund's assets and liabilities is disclosed on the statement of financial position and derived using the basis set out in note 2 of the financial statements. Environmental regulation The operations of the Fund are not subject to any particular or significant environmental regulations under a Commonwealth, State or Territory law. Rounding of amounts to the nearest dollar Amounts in the directors' report and financial report have been rounded off to the nearest dollar, unless otherwise indicated. -3-
Directors' report Directors' report Auditor's independence declaration A copy of the Auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 5. This report is made in accordance with a resolution of the directors. r Director Sydney 27 September -4-
'j':l/; Auditor's Independence Declaration to the Directors of Macquarie Financial Products Management Limited In relation to our audit of the financial report of Fusion Fund - Eley Griffiths Group Small Companies Fund for the Year ended, to the best of my knowledge and belief, there have been no contraventions of the auditor independence requirements of the Corporations Act 2001 or any applicable code of professional conduct. ~:~./~i s! (. 1/ 'l'ít/ f.. /,"'-"~' '''7/ / '",./ Ernst & Young V~--7 Darren Handley-Greaves Partner Sydney 27 September
Statement of comprehensive income For the year ended Statement of comprehensive income Notes 2012 Investment income Interest income Distribution income Net gains/(iosses) on financial instruments held at fair value through profit or loss Other operating income Total net investment income/(loss) 213 2,646 657 2,130 (17,528) 14 2,343 (14,211) Expenses Responsible Entity fees Administration expenses Other operating expenses Total operating expenses Operating profit/(ioss) 8 267 1,860 8 40 279 7 54 314 2,193 2,029 (16,404) Finance costs attributable to unitholders Distributions to unitholders (Increase)/decrease in net assets attributable Profit/(Ioss) for the year to unitholders 5 (66) (1,963) (3,028) 19,432 Other comprehensive income for the year Total comprehensive income for the year The above statement of comprehensive income should be read in conjunction with the accompanying notes. -6-
Statement of financial position As at Statement of financial position Assets Cash and cash equivalents Receivables Financial assets held at fair value through profit or loss Total assets Notes 6 316 19 7 335 2012 11,751 815 23,029 35,595 Liabilities Redemptions payable Responsible Entity fees payable Total liabilties (excluding net assets attributable to unitholders) 8 335 335 7,334 2,350 9,684 Net assets attributable to unitholders - liability 5 25,911 The above statement of financial position should be read in conjunction with the accompanying notes. -7-
Statement of changes in equity For the year ended Statement of changes in equity Total equity at the beginning of the year Total comprehensive income for the year Transactions with owners in their capacity as owners Total equity at the end of the year 2012 Under Australian Accounting Standards, net assets attributable to unitholders are classified as a liability rather than equity. As a result there was no equity at the start or end of the year. The above statement of changes in equity should be read in conjunction with the accompanying notes. -8-
Statement of cash flows For the year ended Statement of cash flows Notes 2012 Cash flows from operating activities Proceeds from sale of financial instruments held at fair value through profi or loss Interest received GST refund received Other income received Responsible Entity fees paid Payment of other expenses Net cash inflow from operating activities 9(a) Cash flows from financing activities Payments for redemptions by unitholders Net cash outflow from financing activities 25,816 177,010 213 2,646 160 226 14 (2,350) (3,304) (10) 23,839 176,582 (35,274) (165,576) (35,274) (165,576) Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year Non-cash financing activities 6,9(b) 9(c) (11,435) 11,006 11,751 745 316 11,751 The above statement of cash flows should be read in conjunction with the accompanying notes. -9-
Notes to the financial statements 1 General information This financial report covers Fusion Fund - Eley Griffths Group Small Companies Fund (the "Fund") as an individual entity. The Fund was constituted on 4 September 2006 and ceased trading on 28 June. The Fund is a registered managed investment scheme domiciled in Australia. The Responsible Entity of the Fund is Macquarie Financial Products Management Limited (the "Responsible Entity"). The Responsible Entity's registered offce is NO.1 Martin Place, Sydney, NSW 2000. The financial report is presented in Australian dollars. During the year, the Fund continued to be managed in accordance with the investment objective and strategy set out in the Fund's offer document until it ceased trading on 28 June and in accordance with the Fund Constitution. The financial statements were authorised for issue by the directors on 27 September. The directors of the Responsible Entity have the power to amend and reissue the financial report. 2 Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated in the following text. (a) Basis of preparation This general purpose financial report has been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001 in Australia. The financial report is prepared on a liquidation basis as the Fund ceased trading on 28 June. The statement of financial position is presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity and do not distinguish between current and non-current. All balances are expected to be recovered or settled within twelve months, except for investments in financial assets and net assets attributable to unitholders. The amount expected to be recovered or settled within twelve months after the end of each reporting period cannot be reliably determined. Compliance with Intemational Financial Reporting Standards The financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. (b) New accounting standards and interpretations Certain new accounting standards and interpretations have been published that are not mandatory for the reporting periods. The Responsible Entity's assessment of the impact of these new standards (to the extent relevant to the Fund) and interpretations is set out below: (i) AASB 9 Financial Instruments and related amendment AASB 2009-11 AASB 9 applies to annual reporting periods beginning on or after 1 January 2015 and will therefore apply to the Fund from 1 July 2015. The Fund does not intend to early adopt AASB 9 as permitted by the standard, and the actual impact on initial application will depend on certain elections as disclosed below. AASB 9 requires all financial instruments to be measured at fair value unless the criteria for amortised cost are met. The application of the standard is not expected to change the measurement basis of any of the Fund's current financial instruments, however, AASB 9 allows the Fund to elect to present gains and losses on equity securities through other comprehensive income, which may impact the presentation of these gains and losses. The impact of the standard may also change if the nature of the Fund's activities or investments changes prior to initial application. -10-
Notes to the financial statements 2 Summary of significant accounting policies (b) New accounting standards and interpretations (ii) AASB 10 Consolidated Financial Statements and related standards AASB 11, AASB 12 AASB 10 establishes a new control model that applies to all entities. It replaces parts of AASB 127 Consolidated and Separate Financial Statements dealing with the accounting for consolidated financial statements and UIG Interpretation 112 Consolidation - Special Purpose Entities. The standard is not applicable until 1 January, but is available for early adoption. The Fund does not intend to early adopt AASB 10. Management does not expect the adoption of AASB 10 to lead to any change to the presentation of consolidated financial statements based on the Fund's current investment strategy. (iii) AASB 13 Fair Value Measurement AASB 13 establishes a single source of guidance under IFRS for determining the fair value of assets and liabilties. AASB 13 does not change when an entity is required to use fair value, but rather, provides guidance on how to determine fair value when fair value is required or permitted. Application of this definition may result in different fair values being determined for the relevant assets. AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. This includes information about the assumptions made and the qualitative impact of those assumptions on the fair value determined. The standard is not applicable until 1 January, but is available for early adoption. The Fund does not intend to early adopt AASB 13. Management does not expect this will have a significant effect on the Fund's financial statements. Standards and interpretations that are not expected to have material impact on the Fund have not been included. (c) Financial instruments (i) Classification The Fund's investments are categorised as at fair value through profit or loss. They comprise:. Financial instruments designated at fair value through profi or loss upon initial recognition These include financial assets that are not held for trading purposes and which may be sold. These include investments in unlisted unit trusts. Financial assets and financial liabilities designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the Fund's documented investment strategy. The Fund's policy is for the Responsible Entity to evaluate the information about these financial assets on a fair value basis together with other related financial information. Loans and receivables comprise amounts due to the Fund. (ii) Recognition/Derecognition The Fund recognises financial assets and financial agreement (trade date) and recognises changes in fair value of the financial assets or financial date. liabilities on the date it becomes party to the contractual liabilities from this Investments are derecognised when the right to receive cash flows from the investments has expired or the Fund has transferred substantially all risks and rewards of ownership. -11-
Notes to the financial statements 2 Summary of significant accounting policies (c) Financial instruments (iii) Measurement. Financial assets and financial liabilities held at fair value through profi or loss Investments in unlisted unit trusts are initially recorded at fair value and revalued at the recording date. Gains and losses (realised and unrealised) are included within total investment income in the statement of comprehensive income. Investments in unlisted unit trusts are valued by reference to the prevailing redemption value as reported by the managers of such funds at the reporting date. Details on how the fair value of financial instruments is determined are disclosed in note 3(e). (d) Net assets attributable to unitholders There is no right to redeem from the Fund until maturity. However, subject to the approval of the Responsible Entity, units can be redeemed before maturity as stipulated in the Product Disclosure Statement. The fair value of units redeemed is measured at the redemption amount that is payable based on the redemption unit price. (e) Cash and cash equivalents For the purposes of the statement of cash flows, cash includes deposits at call which are readily convertible to known amounts of cash and are subject to an insignificant risk of changes in value. Payments and receipts relating to the purchase and sale of financial assets are classified as cash flows from operating activities, as movements in the fair value of these securities represent the Fund's main income generating activity. (f) Investment income Distribution income is recognised when the Fund's right to receive payment is established. Changes in the fair value of financial assets and financial liabilities designated in the fair value through profit or loss category are recognised as income or expenses in the statement of comprehensive income in the year in which the changes occur. Interest income is recognised in the statement of comprehensive income using the effective interest method. (9) Expenses All expenses, including Responsible Entity fees, are recognised in the statement of comprehensive income on an accruals basis. (h) Income tax Under current Australian legislation, the Fund is not subject to income tax provided the unitholders are presently entitled to the income of the Fund and the Fund fully distributes its net taxable income. Financial instruments held at fair value may include unrealised capital gains. Should such a gain be realised, that portion of the gain that is subject to capital gains tax will be distributed so that the Fund is not subject to capital gains tax. Realised capital losses are not distributed to unitholders but are retained in the Fund to be offset against any realised capital gains. If realised capital gains exceed realised capital losses, the excess is distributed to unitholders. The benefits of imputation credits are passed on to unitholders. -12-
Notes to the financial statements 2 Summary of significant accounting policies (i) Distributions In accordance with the Fund Constitution, the Fund fully distributes its distributable (taxable) income to unitholders by cash, reinvestment or by redemption distribution. The distributions are payable at the end of June each year and are recognised in the statement of comprehensive income as finance costs attributable to unitholders. ü) Increase/decrease in net assets attributable to unitholders Income not distributed is included in net assets attributable to unitholders. Movements in net assets attributable to unitholders are recognised in statement of comprehensive income as finance costs. (k) Redemption distributions In accordance with the Fund Constitution, the Fund may distribute a "redemption distribution" when a unit is redeemed and the redemption price of that unit is greater than the application price of that unit. The redemption distribution is included in the redemption price of the unit and is accounted for as a distribution paid in the financial statements. (I) Receivables Receivables may include amounts for interest and distribution income. Distribution income is accrued when the right to receive payment is established. Interest is accrued at the end of each reporting period from the time of last payment in accordance with the policy set out in note 2(f) above. Amounts are generally received within 30 days of being recorded as receivables. Receivables may include such items as Reduced Input Tax Credits (RITC). (m) Payables Payables includes liabilities and accrued expenses owing by the Fund which are unpaid as at the year end. The redemption amount payable to unitholders as at year end is recognised separately on the statement of financial position. (n) Applications and redemptions Applications received for units in the Fund are recorded net of any entry fees payable prior to the issue of units in the Fund. Redemptions from the Fund are recorded gross of any exit fees payable after the cancellation of units redeemed. Unit redemption prices are determined by reference to the net assets of the Fund divided by the number of units on issue less any redemption costs. (0) Goods and Services Tax (GST) The GST incurred on the costs of various services provided to the Fund by third parties such as Responsible Entity fees, have been passed onto the Fund. The Fund qualifies for RITC hence Responsible Entity fees and other expenses have been recognised in the statement of comprehensive income net of the amount of GST recoverable from the Australian Taxation Offce (ATO). Accounts payable are inclusive of GST. The net amount of GST recoverable from the ATO is included in receivables in the statement of financial position. Cash flows relating to GST are included in the statement of cash flows on a gross basis. -13-
Notes to the financial statements 2 Summary of significant accounting policies (p) Use of estimates In preparing the financial statements no estimates were made which included a high degree of judgement. (q) Rounding of amounts Amounts in the financial report have been rounded off to the nearest dollar unless otherwise indicated. 3 Financial risk management The Fund's activities expose it to a variety of financial risks: market risk (including price risk, foreign exchange risk and interest rate risk), credit risk and liquidity risk. The Fund's overall risk management programme focuses on ensuring compliance with the Fund's Product Disclosure Statement and seeks to maximise the returns derived for the level of risk to which the Fund is exposed. Financial risk management is carried out by the Responsible Entity under policies approved by the Board of Directors of the Responsible Entity. The Fund uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rate, foreign exchange and other price risks and ratings analysis for credit risk. (a) Market risk (i) Price risk The Fund trades in financial instruments by taking positions in unlisted unit trusts. All securities investments present a risk of loss of capital. The Responsible Entity manages this risk through a careful selection of securities and other financial instruments within specified limits. The Fund's overall market positions are monitored on a daily basis by the Responsible Entity. Price risk is managed by seeking to ensure that the Fund is investing in accordance with its stated objectives. The Fund's unlisted investment is susceptible to market price risk arising from uncertainties about future prices of the underlying trust. At, the Fund is not affected by changes in market prices as the Fund did not hold any financial instruments. Note 3(b) summarises the impact of an increase/(decrease) of the underlying trust's unit price on the Fund's net assets attributable to unitholders at 2012. The analysis is based on the assumptions that the underlying trust's unit price increased/(decreased) by 10% in one day with all other variables held constant. The impact mainly arises from the possible change in the fair value of the investment in the unlisted unit trust. (ii) Foreign exchange risk The Fund is not exposed to foreign exchange risk as all assets and liabilities are denominated in Australian dollars (2012: Nil). (iii) Interest rate risk The Fund's interest bearing financial assets exposed it to risks associated with the effects of fluctuations in the prevailing levels of market interest rates on its financial position and cash flows. The risk was measured using sensitivity analysis as set out in note 3(b). -14-
Notes to the financial statements 3 Financial risk management (a) Market risk (iii) Interest rate risk The interest rate risk disclosures have been prepared on the basis of the Fund's direct investment in cash and cash equivalents and not on a look-through basis for investments held indirectly through the underlying trust. Consequently, the disclosure of interest rate risk below may not represent the true interest rate risk profile of the Fund where the Fund has a significant investment in an underlying trust which also has exposure to interest rate markets. (b) Summarised sensitivity analysis The following table summarises the sensitivity of the Fund's operating profit and net assets attributable to unitholders to interest rate risk and price risk. The reasonably possible movements in the risk variables have been determined based on Management's best estimate, having regard to a number of factors, including historical levels of changes in underlying funds investment unit price. However, actual movements in the risk variables may be greater or less than anticipated due to a number of factors, including unusually large market shocks resulting from changes in the performance of the economies, markets and securities in which the underlying fund invests. As a result, historic variations in risk variables are not a definitive indicator of future variations in the risk variables. The variables for price risk represent the impact of one day's movement in the price of the underlying equity investment before taking into account the effect of Threshold Management. The Fund uses Threshold Management as an investment technique to manage price risk. Threshold Management seeks to ensure that the value of the Fund's units is at least equal to the original investment at the Threshold Management expiry date as specified in the Product Disclosure Statement. The table below summarises the impact of an increase/(decrease) of interest rates on the Fund's operating profi and net assets attributable to unitholders through changes in fair value or changes in future cash flows. The analysis is based on the assumption that interest rates changed by +1-25 basis points (2012: 100 basis points) from the year end rates with all other variables held constant. The impact mainly arises from changes in the fair value of cash and cash equivalents. + + Price risk I Interest rate risk Impact on operating profit 2012 (2,303) 2,303 (1 ) (118) 1 118 (c) Credit risk The Fund was exposed to credit risk, which was the risk that a counterparty will be unable to pay amounts in full when they fall due. The exposure to credit risk during the year for cash and cash equivalents was low as all counterparties have a rating of at least A- (2012: A-) as determined by Standard and Poor's rating agency. Other than the cash and cash equivalents and the investment in the underlying trust, the Fund does not have a concentration of a credit risk that arises from an exposure to a single counterparty. Furthermore, the Fund does not have a material exposure to a group of counterparties which are expected to be affected similarly by changes in economic or other conditions. There are no non-performing assets in the Fund. -15-
Notes to the financial statements 3 Financial risk management (c) Credit risk The carrying amount of the financial assets best represents the Fund's maximum credit risk exposure at the reporting date. The Fund manages its exposure to credit risk by dealing with well established financial institutions that the Responsible Entity has assessed to have a high quality credit standing. The credit standing of these counterparties is monitored on a regular basis. The Compliance Committee of the Responsible Entity reviews any identified exceptions to internal risk policies and procedures on a quarterly basis. (d) Liquidity risk Liquidity risk is the risk that the Fund will experience diffculty in either realising assets or otherwise raising suffcient funds to satisfy commitments. At the Fund is not exposed to significant amounts of liquidity risk as there were no unitholders at year end. At 2012 there is no significant direct liquidity risk in the Fund as the Responsible Entity has discretion whether to accept or reject a redemption request as stipulated in the Product Disclosure Statement. (e) Fair value estimation The carrying amounts of the Fund's financial assets and financial liabilities at the reporting date approximate their fair value. The Fund's investments can include financial assets that are not held for trading purposes and which may be sold. These are investments in unlisted unit trusts. Investments in unlisted unit trusts are valued by reference to the prevailing redemption value as reported by the managers of such trusts at the reporting date. The inputs forthe redemption value are based on market observable data. Any gains and losses (realised and un realised) are included within total net investment income in the statement of comprehensive income. Fair value hierarchy The Fund classifies fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making the measurements. The fair value hierarchy has the following levels: Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 - inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); Level 3 - inputs for the asset or liability that are not based on observable market data (unobservable inputs). The appropriate level for an instrument is determined on the basis of the lowest level input that is significant to the fair value measurement. At the Fund did not hold any financial assets or financial liabilities. The following table summarises the levels of the fair value hierarchy for financial instruments measured at fair value as at 2012: 2012 Level 1 Level 2 Level 3 Total Financial assets Unlisted unit trusts Total financial assets 23,029 23,029 23,029 23,029 - i 6-
Notes to the financial statements 3 Financial risk management (e) Fair value estimation Fair value hierarchy There have been no transfers between levels for the year ended (2012: Nil). Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within level 2. These include unlisted unit trusts valued at the redemption value per unit, as reported by the managers of such trusts. 4 Auditor's remuneration During the year the following fees were paid or payable for services provided by the auditor of the Fund: Audit services Ernst & Young Australian firm Audit of financial reports Other audit work under the Corporations Act 2001 Total remuneration for audit services 6,246 336 6,582 2012 6,270 324 6,594 Audit fees are paid out of the Responsible Entity's own resources. 5 Net assets attributable to unitholders Movements in number of units and net assets attributable to unitholders during the year were as follows: As stipulated within the Fund Constitution, each unit represents an equal undivided interest in the Fund's assets. There are 3 classes of unitholders in the Fund. The units are held in separate classes, by release, for the purpose of Threshold Management. No. 2012 No. 2012 Net assets attributable to unitholders - June 2007 release Opening balance Applications Redemptions Units issued upon reinvestment of distributions Increase/(decrease) in net assets attributable to unitholders Closing balance 513 217,254 433 (513) (216,741) (466) 513 182,111 (162,672) 33 (19,006) 433-17-
Notes to the financial statements 5 Net assets attributable to unitholders No. 2012 No. 2012 Net assets attributable to unitholders - November 2007 release Opening balance Applications Redemptions Units issued upon reinvestment of distributions Increase/(decrease) in net assets attributable to unitholders Closing balance 15,954 (15,954) 22,685 13,444 19,016 (6,731) (14,476) (5,291 ) 1,032 (281) 15,954 13,444 No. 2012 2012 No. Net assets attributable to unitholders - June 2008 release Opening balance Applications Redemptions Units issued upon reinvestment of distributions Increase/(decrease) in net assets attributable to unitholders Closing balance 14,281 16,818 12,034 14,098 (14,281) (2,537) (12,932) (1,919) 14,281 898 (145) 12,034 Total net assets attributable to unitholders 25,911 Capital risk management The Fund manages its net assets attributable to unitholders as capital, notwithstanding net assets attributable to unitholders are classified as a liability. The amount of net assets attributable to unitholders can change on a daily basis as the Fund is subject to a daily movement of investment in an underlying fund as part of the Threshold Management. 6 Cash and cash equivalents 2012 Cash at bank 316 11,751 Cash at the end of the financial year, as shown in the statement of cash flows, is reconciled to the related items in the statement of financial position as detailed above. These accounts are interest bearing. -18-
Notes to the financial statements 7 Financial assets held at fair value through profit or loss Fair value 2012 Fair value Designated at fair value through profit or loss Unlisted unit trusts Units in Australian equity trust Total unlisted unit trusts 23,029 23,029 8 Related party disclosures (al Responsible Entity The Responsible Entity of Fusion Fund - Eley Griffths Group Small Companies Fund is Macquarie Financial Products Management Limited (MFPML), a wholly owned subsidiary of Macquarie Group Limited. (b) Details of Key Management Personnel (i) Directors The directors of MFPML are considered to be Key Management Personnel of the Fund. The directors of MFPML in offce during the year and up to the date of the report are: Peter Lucas William Fox Jason King Antony Clubb Anthony Abraham (ii) Other Key Management Personnel There were no other persons with responsibility for planning, directing and controlling the activities of the Fund, directly or indirectly during the financial year. (iii) Compensation of Key Management Personnel No amount is paid by the Fund directly to the directors of the Responsible Entity. Consequently, no compensation as defined in MSB 124 Related Part Disclosures is paid by the Fund to the directors as Key Management PersonneL. Compensation is paid to the Responsible Entity in the form of fees and is disclosed below. -19-
Notes to the financial statements 8 Related party disclosures (c) Fees Under the terms of the Fund Constitution, the Responsible Entity is entitled to be paid from the assets of the Fund a fee of up to 3% per annum (GST exclusive) of the value of the assets calculated daily, based on the value of the assets on each day and payable from the assets on in each year. The current fee charged by the Responsible Entity is 1 % per annum (GST exclusive) (2012: 1 %). All related party transactions are conducted on normal commercial terms and conditions. The transactions during the year and amounts payable at the year end between the Fund and the Responsible Entity are as follows: 2012 Management fees paid by the Fund to the Responsible Entity Responsible Entity fees incurred and other transactions Administration expenses incurred by the Responsible Entity which are reimbursed in accordance with the Fund Constitution Aggregate amounts payable to the Responsible Entity at the reporting date 2,350 3,304 267 1,860 40 279 335 2,350 (d) Unitholdings of Key Management Personnel As at, there were no interests held in the Fund by the Responsible Entity or a related party of the Responsible Entiy during the year. As at 2012, there were no interests held in the Fund by the Responsible Entity or a related party of the Responsible Entity during the year except as disclosed below: 2012 Number of Number of Number of Number of Distri butions units held units held Interest units units paid/payable Unitholders opening closing held acquired disposed by the Fund (Units) (Units) (%) (Units) (Units) () William Fox 5 5 Antony Clubb 5 5 (e) Key Management Personnel Remuneration Key Management Personnel are paid by Macquarie Financial Products Management Limited. Payments made from the Fund to Macquarie Financial Products Management Limited do not include any amounts directly attributable to the compensation of Key Management PersonneL. (f) Key Management Personnel loan disclosures The Fund has not made, guaranteed or secured, directly or indirectly, any loans to Key Management Personnel or their personally related entities at any time during the year (2012: Nil). (g) Investments The Fund held no investments in any schemes which are also managed by MFPML or its related parties (2012: Nil). -20-
Notes to the financial statements 8 Related party disclosures (h) Other transactions within the Fund Apart from those details disclosed in this note, no director has entered into a material contract with the Fund since the end of the previous financial year and there were no material contracts involving directors' interests existing at year end. The Fund holds cash balances with Macquarie Bank Limited, the parent entity of the Responsible Entity. These balances are held on normal commercial terms. Bond Street Custodians Limited, a wholly owned subsidiary of Macquarie Group Limited, is the custodian of the Fund. 9 Reconcilation of profit/(ioss) to net cash inflow from operating activities 2012 (a) Reconcilation of profit/(ioss) to net cash inflow from operating activities Net profitl(loss) before finance costs Net (gains)/iosses on financial instruments held at fair value through profit or loss Proceeds from sale of financial instruments at fair value through profit or loss Distribution income reinvested Net change in receivables and other assets Net change in amounts payables and other liabilities Net cash inflow from operating activities 2,029 (2,130) 25,816 (657) 796 (2,015) 23,839 (16,404) 17,528 177,010 (3,825) 3,237 (964) 176,582 (b) Components of cash and cash equivalents Cash as at the end of the financial year as shown in the statement of cash flows is reconciled to the statement of financial position as follows: Cash and cash equivalents 316 11,751 (c) Non-cash financing activities During the year, the following distribution payments were satisfied by the issue of units in the Fund 10 Events occurring after the reporting date No significant events have occurred since the reporting date which would impact on the financial position of the Fund disclosed in the statement of financial position as at or on the results and cash flows of the Fund for the year ended on that date. 11 Contingent assets, contingent liabilties and commitments There are no outstanding contingent assets, contingent liabilities or commitments as at and 2012. -21-
Directors' declaration Directors' declaration In the opinion of the directors of the Responsible Entity: (a) the financial statements and notes set out on pages 6 to 21 are in accordance with the Corporations Act 2001, including: (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and (ii) giving a true and fair view of the Fund's financial position as at and of its performance for the financial year ended on that date; and (b) there are reasonable grounds to believe that the Fund will be able to pay its debts as and when they become due and payable. The directors declare that the notes to the financial statements include an explicit and unreserved statement of compliance with the International Financial Reporting Standards (see note 2(a)). This declaration is made in accordance with a resolution of the directors. Directord Sydney 27 September -22-
Independent auditor's report to the unitholders of Fusion Fund - Eley Griffiths Group Small Companies Fund We have audited the accompanying financial report of Fusion Fund - Eley Griffiths Group Small Companies Fund (the "Fund"), which comprises the statement of financial position as at, the statement of comprehensive income, statement of changes in equity and statement of cash flows for the Year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration. The financial report has been prepared on a liquidation basis as the Fund is not expected to continue in operation as a going concern. Directors' responsibility for the financial report The directors of Macquarie Financial Products Management Limited, the responsible entity of the Fund, 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 controls as the directors determine are necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In Note 2(a), the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor's responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal controls relevant to the preparation of the financial report that gives a true and fair view 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 responsible entity's internal controls. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is suffcient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit we have complied with the independence requirements of the Corporations Act 2001. We have given to the directors of the responsible entity a written Auditor's Independence Declaration, a copy of which is included in the directors' report.
Opinion In our opinion: a. the financial report of Fusion Fund - Eley Griffiths Group Small Companies Fund, which has been prepared on a liquidation basis, is in accordance with the Corporations Act 2001, including: giving a true and fair view of the Fund's financial position as at and of its performance for the Year ended on that date; and ii complying with Australian Accounting Standards and the Corporations Regulations 2001; and b. the financial report also complies with International Financial Reporting Standards as disclosed in Note 2(a). ) 'l,;/ -/ (- C)"-v).. /., L~j / Ernst & Young f~ \ ),/L/~7 Darren Handley-Greaves Partner Sydney 27 September