2014 - amazon s3annual+… · entity held 3 walnut lots in the project at year end. the following...

Annual Financial Report 2014 AGW Walnut Project No. 2

ARSN 125 191 531

AGW Funds Management LtdACN 149 301 299

2014

1AGW Walnut Project No. 2

AGW Walnut Project No. 2 Directors’ ReportThe directors of AGW Funds Management Ltd (“the Responsible Entity”), the Responsible Entity of AGW Walnut Project No.2 (“the Project”), present their report together with the financial report of the Project, for the year ended 30 June 2014 and the auditor’s report thereon.

AGW Funds Management Ltd was appointed Responsible Entity of the Project on 3 June 2011. The registered office and principal place of business of the Responsible Entity and the Project is 349 Forth Road, Forth, in Tasmania.

The directors and officers the Responsible Entity at any time during or since the end of the financial year are:

Yvonne J Rundle – Chairman Roderick J Roberts Simon J L Stone (resigned 31 December 2013) Bruce W Kemp (appointed 27 December 2013)

The Project is a registered managed investment scheme domiciled in Australia. The principal activities of the Project are the supervision and management of walnut lots in New South Wales for harvesting. There have been no significant changes in the nature of the Project’s activities during the year of which the Responsible Entity is aware. The Project did not have any employees during the year.

The Project’s operations are subject to environmental regulations under Commonwealth, State and Local government regulations. Compliance with environmental regulations is monitored by management through internal control systems. The directors of the Responsible Entity are not aware of any significant breaches during the period covered by this report.

No matters or circumstances have arisen since 30 June 2014 that have significantly affected, or may significantly affect the operations or the results of the operations of the Project in future financial years.

There are no likely developments in the operations of the Project other than the maintenance and tending of orchards until harvest.

In the opinion of the Responsible Entity, and to the best of the Responsible Entity’s knowledge and understanding, other than discussed in this report there were no further significant changes in the state of affairs of the Project that occurred during the financial period under review.

There were no distributions paid or payable at period end. (2013: $nil)

Operations undertaken during the year ended 30 June 2014 encompassed orchard rental and walnut lot maintenance. The net profit for the period was $nil. (2013: $nil).

Responsible Entity

Principal activities

Environmental regulation

Events subsequent to balance date

Likely developments

State of affairs

Distributions

Review and results of operations

2014

2 AGW Walnut Project No. 2

The number of interests in the Project held at the end of the financial year was 2,789 walnut lots. There were no withdrawals.

The Responsible Entity held no walnut lots in the Project at year end. Associates of the Responsible Entity held 3 walnut lots in the Project at year end.

The following monies were paid or payable to the Responsible Entity as Project manager out of Project property during the financial year:

30 June 2014 $

30 June 2013 $

Operating & Orchard Right Fees 6,394,356 5,960,431

6,394,356 5,960,431

The following monies were received or receivable by the Responsible Entity as Project manager out of Project property during the financial year:

30 June 2014 $

30 June 2013 $

Harvest Proceeds 5,971,773 4,711,222

5,971,773 4,711,222

Indemnification

The Responsible Entity’s Constitution provides that the Responsible Entity will indemnify any director or executive officer of the Responsible Entity to the extent permitted by Law against a liability that may arise from their position as director or officer of the Responsible Entity except where that liability arises out of conduct involving a lack of good faith.

Insurance premiums

During the financial period AGW Funds Management Ltd has paid premiums under insurance contracts in respect of the directors and executive officers of the Responsible Entity for liability and legal expenses insurance contracts for the period ended 30 June 2014. AGW Funds Management Ltd has also paid or agreed to pay premiums in respect of such insurance contracts for the year ending 30 June 2015. The officers of AGW Funds Management Ltd covered by the insurance policy include the directors (as named earlier in this report) the company secretary, the responsible manager, the compliance officer and the compliance committee. The directors have not included details of the nature of the liabilities covered or the amount of premium paid in respect of the directors’ and officers’ liability and legal expenses insurance contracts, as such disclosure is prohibited under the terms of the contract.

The lead auditor’s independence declaration is set out on page 3 and forms part of the directors’ report for the year ended 30 June 2014.

Dated at Devonport this 26th day of September 2014.

Signed in accordance with a resolution of the directors of AGW Funds Management Ltd:

Yvonne Rundle Director

Interests of the Responsible Entity in the Project

Indemnities and insurance premiums for officers

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

Walnut Project No. 2 Directors’ Report (continued)


Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

Walnut Project No. 2Walnut Project No. 2 Directors’ Report (continued)


Statement of Comprehensive IncomeFor the year ended 30 June 2014

30 June 2014 $

30 June 2013 $

Revenue

Retentions from Gross Proceeds Entitlement 5,971,773 4,711,222

Shortfall invoices in respect to Operating & Orchard Right fees 422,583 1,249,209

6,394,356 5,960,431

Expenses

Project manager

Maintenance fees 6,394,356 5,960,431

6,394,356 5,960,431

Profit from operating activities - -

Finance Costs

Growers

Distribution to Growers - -

Change in net assets attributable to growers/ - -

Total Comprehensive Income - -

The statement of comprehensive income is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 8 to 14.

Walnut Project No. 2


Statement of Financial Position As at 30 June 2014

NOTE30 June 2014

$30 June 2013

$

Assets

Cash and cash equivalents 4 - -

Loans and receivables 5 209,014 848,264

Total assets 209,014 848,264

Liabilities

Amounts due to the Project manager 6 209,014 848,264

Total liabilities (excluding net assets attributable to growers) 209,014 848,264

Net assets attributable to growers - -

Growers’ equity - -

The statement of financial position is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 8 to 14.

Walnut Project No. 2Walnut Project No. 2


Statement of Changes in Equity For the year ended 30 June 2014

The Project’s net assets attributable to Growers are classified as a liability under AASB 132 Financial Instruments: Presentation. As such the Project has no equity, and no items of changes in equity have been presented for the current or comparative year.

The statement of changes in equity is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 8 to 14.



Statement of Cash FlowsFor the year ended 30 June 2014

NOTE30 June 2014

$30 June 2013

$

Cash flows from operating activities

Receipts from growers & nut proceeds 4,047,720 4,599,099

Payments to Project manager & growers (4,047,720) (4,599,099)

Net cash flows from operating activities 4 - -

Net cash flows from investing activities - -

Net cash flows from financing activities - -

Net (decrease)/increase in cash and cash equivalents - -

Cash and cash equivalents at 1 July - -

Cash and cash equivalents at 30 June 4 - -

The statement of cash flows is to be read in conjunction with the notes to and forming part of the financial statements set out on pages 8 to 14.



Notes to the financial statementsAGW Walnut Project No. 2 (“the Project”) is a registered for profit managed investment scheme under the Corporations Act 2001. The financial report of the Project is for the year ended 30 June 2014.

The Project was constituted on 26 April 2007 (amended 25 May 2011) and will terminate on 26 April 2087 unless terminated earlier in accordance with the provisions of the Constitution.

(a) Statement of Compliance

The financial report is a general purpose financial report which has been prepared in accordance with Australian Accounting Standards (AASBs) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001.

The financial report of the Project complies with International Financial Reporting Standards (IFRSs) and interpretations adopted by the International Accounting Standards Board.

The financial statements were approved by the Board of Directors of the Responsible Entity on 26 September 2014.

(b) Obligations of the Responsible Entity

The Responsible Entity, AGW Funds Management Ltd, has obligations to operate this Managed Investment Scheme and perform functions conferred on it by the Scheme’s Constitution. In addition, AGW Funds Management Ltd has separately entered into individual contractual arrangements with members of the Scheme under which it has other obligations directly with the individual members of the Scheme.

This financial report relates only to the Scheme and therefore only considers the obligations of the Scheme pursuant to the Scheme’s Constitution. Other than as noted below, this financial report does not consider obligations of the Responsible Entity in respect of obligations to members of the Scheme pursuant to the separate contractual relationships between the Responsible Entity and those members.

(c) Recognition of assets and liabilities

The recognition of assets and liabilities on the balance sheet of a Managed Investment Scheme (such as this Scheme) is an area of continuing interpretation and will be reassessed in future accounting periods. In this respect, the Directors of the Responsible Entity have considered the rights and obligations of the parties associated with the Scheme and, in particular, which of these bears the risks and rewards of the associated activities. Based on these deliberations, the Directors of the Responsible Entity have resolved to prepare the financial statements of the Scheme using the “Agency” principle and as such the assets and liabilities attributable to the growers, together with the associated revenue and expenses are not recorded in the financial statements of the Scheme.

(d) Functional and presentation currency

These financial statements are presented in Australian dollars, which is the Project’s functional currency and the functional currency of the Responsible Entity.

1 Reporting entity

2 Basis of preparation



3 Significant accounting policies

2 Basis of preparation (cont.)

(e) Use of estimates and judgements

The preparation of a financial report in conformity with Australian Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. These accounting policies have been consistently applied.

The estimates and underlying assumptions are reviewed on an ongoing basis.

Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The accounting policies set out below have been applied consistently to all periods presented in these financial statements.

(a) Financial instruments

The Project recognises financial assets and financial liabilities on the date it becomes party to the contractual provisions of the instrument. Financial assets classified as loans and receivables relate to amounts due from growers and are carried at amortised cost using the effective interest rate method, less impairment losses, if any. The Project derecognises a financial asset when the contractual rights to cash flows from the financial asset expire. Financial liabilities relate to amounts payable to the Project manager and are measured at amortised cost using the effective interest rate. The Project derecognises a financial liability when the obligation in the contract is discharged, cancelled or expired.

(b) Income

Income from operating and orchard right fees are recognised in the statement of comprehensive income when it is probable that the economic benefits associated with the transaction will flow to the Project manager.

In respect to the above, the Project’s entitlement to Gross Proceeds is recognised in the statement of comprehensive income when pervasive evidence exists that for the sale of harvested produce, significant risks and rewards of ownership have passed to the buyer.

(c) Expenses

Expenditure pursuant to the Project’s Constitution is brought to account on an accruals basis.

(d) Segment reporting

An operating segment is a component of the Project that engages in business activities from which it may earn revenues and incur expenses. All operating segments’ operating results are reviewed regularly by the Responsible Entity’s General Manager to make decisions about resources to be allocated to the segment and to assess its performance, and for which discrete financial information is available.

Segment results that are reported to the General Manager include items directly attributable to a segment as well as those that can be allocated on a reasonable basis.

(e) Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits.

Walnut Project No. 2Walnut Project No. 2 Notes to the financial statements (continued)


f) Net assets attributable to growers

The Project considers its capital to be Grower’s Funds. The Project manages its net assets attributable to Growers as capital, notwithstanding net assets attributable to Growers will be classified as liabilities.

The objective of the Project is to provide the Growers with returns in accordance with the Product Disclosure Statement (“PDS”). The Project aims to deliver this objective through delivering the requisite services in accordance with the limitations set by the PDS.

(g) Distribution and taxation

Under current legislation the Project is not subject to income tax as its taxable income (including assessable realised capital gains) is distributed in full to growers. The Project fully distributes its distributable income, calculated in accordance with the Project Constitution and applicable taxation legislation, to the growers who are presently entitled to the income under the Constitution.

(h) New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 July 2014, and have not been applied in preparing these financial statements. None of these is expected to have a significant effect on the financial statements of the Project, except for AASB 9 Financial Instruments, which becomes mandatory for the Project’s 2019 financial statements and could change the classification and measurement of financial assets and liabilities. This standard forms part of the comprehensive project to replace AASB139. The Project does not plan to adopt this standard early and the extent of the impact has not been determined.

(a) Cash and cash equivalents30 June 2014

$30 June 2013

$

Application monies trust account - -

- -

(b) Reconciliation of cash flows from operating activities

Net Profit for the period - -

Changes in assets and liabilities - -

Cash provided by operating activities - -

30 June 2014 $

30 June 2013 $

Amounts due or accrued from growers 209,014 848,264

209,014 848,264

30 June 2014 $

30 June 2013 $

Financial liabilities measured at amortised cost: Amounts due to the Project manager 209,014 848,264

209,014 848,264

4 Financial assets and liabilities

3 Significant accounting policies (cont.)

5 Loans and receivables

6 Payables

Walnut Project No. 2 Notes to the financial statements (continued)


7 Segment Information

8 Auditors’ remuneration

9 Distributions paid and payable

10 Related Parties

The Project operates in one business segment being the walnut investment industry and one geographical segment being New South Wales, Australia.

The fees for audit and other services provided by KPMG are paid directly by the Responsible Entity.

There were no distributions paid or payable at period end. (2013:$nil).

Responsible Entity

AGW Funds Management Ltd was appointed Responsible Entity of the Project on 3 June 2011. The immediate and ultimate parent entity of the Responsible Entity is Webster Limited (ACN 009 476 000).

Directors

The directors of the Responsible Entity in office during or since the end of the financial year are:

Yvonne J Rundle – Chairman Roderick J Roberts Simon J L Stone (resigned 31 December 2013) Bruce W Kemp (appointed 27 December 2013)

Related party interests in the Project

The Responsible Entity, AGW Funds Management Ltd, held no walnut lots in the Project at balance date. Associates of the Responsible Entity held 3 walnut lots in the Project at balance date.

Amounts paid or payable to the Responsible Entity

The following monies were paid or payable to the Responsible Entity as Project manager out of Project property during the financial period:

30 June 2014 $

30 June 2013 $

Operating and orchard right fees 6,394,356 5,960,431

6,394,356 5,960,431

Amounts received or receivable from the Responsible Entity

The following monies were received or receivable by the Responsible Entity as Project manager out of Project property during the financial period:

30 June 2014 $

30 June 2013 $

Gross proceeds entitlement 5,971,773 4,711,222

5,971,773 4,711,222



Key management personnel – remuneration

The Project does not employ personnel in its own right. However it is required to have an incorporated Responsible Entity to manage the activities of the Project and this is considered the key management personnel.

The directors of the Responsible Entity are key management personnel of that entity and their names are YJ Rundle, RJ Roberts and BW Kemp. In addition, the following specified executives of the Responsible Entity are key management personnel of that entity: – SG Armstrong (Company Secretary) and JC Hosken (General Manager).

Directors of the Responsible Entity do not consider that there is any discernible connection between the level of remuneration provided to the directors and specific executives of the Responsible Entity and the fees paid by the Project to the Responsible Entity in accordance with the Project Constitution and Product Disclosure Statements. In addition, no compensation is paid to the directors of the Responsible Entity directly by the Project.

Key management personnel – loans

The Project has not made, guaranteed or secured, directly or indirectly, any loans to the key management personnel or their personally-related entities at any time during the reporting period.

Other transactions within the Project

From time to time, directors and specified directors or their personally-related entities may invest in the Project. These investments are on the same terms and conditions as those entered into by other Project investors.

Apart from those details disclosed in this note, no director or specified executive has entered into a contract for services with the Project since the end of the previous financial year and there were no contracts involving directors or specific executives subsisting at year end.

No matters or circumstances have arisen since 30 June 2014 that have significantly affected, or may significantly affect the operations or the results of the operations of the Project in future financial years.

Overview

The Project’s assets principally consist of financial instruments which comprise cash, cash equivalents and loans and receivables. The directors of the Responsible Entity have overall responsibility for the establishment and oversight of the Project’s risk management framework.

Credit risk

Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Project. Management has a credit policy in place and exposure to credit risk is monitored on an on-going basis. At balance sheet date, there were no significant concentrations of credit risk. The maximum exposure to credit risk is represented by the carrying amount of each financial asset in the balance sheet.

Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates and interest rates, will affect the Project’s income or the value of its holdings of financial instruments. Market risk embodies the potential for both loss and gains.

The Project has no exposure to currency risk in that it does not enter into transactions denominated in currencies other than its functional currency.

11 Events subsequent to reporting date

12 Financial instruments

10 Related Parties (cont.)



12 Financial instruments (cont.)

13 Lease rental commitments

14 Contingencies

15 Assets under management

In addition, as the majority of the Project’s financial assets are non interest bearing, the Project does not have any significant exposure to interest rate risk. Derivative financial instruments are not used by the Project.

Liquidity risk

Liquidity risk is the risk that the Project will not be able to meet its financial obligations as they fall due. The Project’s approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, without incurring unacceptable losses or risking damage to the Project’s reputation.

The contractual maturity of financial liabilities (being amounts due to the Project manager) in both the current and prior period is within the next 12 months.

Estimation of fair values

At 30 June 2014, the carrying amounts of loans and receivables and financial liabilities measured at amortised cost approximated their fair values.

The growers have contractual obligations to the Project manager for future lease rentals under orchard right agreements. For the purposes of the Project, revenue raised from growers to meet these obligations will in turn meet the expenditure commitments of the Project manager detailed below. These expenditure commitments have not been adjusted for increases in the Consumer Price Index and are for an expected period of 19 years.

30 June 2014 $

30 June 2013 $

Amounts due not later than 1 year 716,410 696,014

Later than 1 year but not later than 5 years 2,865,642 2,784,058

Later than 5 years 9,936,245 10,349,378

13,518,297 13,829,451

There are no contingent liabilities or contingent assets at 30 June 2014 and 30 June 2013.

The orchard right asset (being the right to access the walnut lot for the business of growing walnuts and entitlement to the resulting revenue from the future sale of walnuts) is leased by the Growers for the duration of the Project. The Project is under management by the Responsible Entity and commenced in 2007, with duration of approximately 25 years. Accordingly, the Project has approximately 19 years to run. If recognised on balance sheet, the orchard right assets would be measured at their fair value less estimated point-of-sale costs, and have a corresponding liability to the growers of the Project and the Project manager.

The orchard covers an area of 557.8 hectares and is located in the Riverina district of New South Wales. Gross walnut tonnage harvested in 2014 was approximately 2,116.17 tonnes (2013: 1,925.33 tonnes). The orchard right asset and walnut inventory of the growers are not recognised in the financial statements of the Project. The value of harvested walnuts on hand as at 30 June 2014 was $nil (2013: $nil).



Reconciliation of amounts earned by growers

The following table reconciles the income earned, expenses incurred and distributable cash held by growers. These amounts are managed by the Project as agent for the growers.

Reconciliation of amounts earned by growers

The following table reconciles the income earned, expenses incurred and distributable cash held by growers. These amounts are managed by the Project as agent for the growers.

30 June 2014 $

30 June 2013 $

Sale proceeds (a) 5,971,773 4,711,222

Management fees payable to the Project manager (6,394,356) (5,960,431)

Distributions paid or payable to/(recoverable from) growers (422,583) (1,249,209)

Net funds attributable to growers

Cash and cash equivalents – –

Management fees payable to the Project manager 209,014) (848,264)

Net funds available/(shortfall) for distribution (209,014) (848,264)

(a) Income

Revenue from the sale of walnuts arises when the produce has been delivered to the customer, the customer has accepted the produce and collectability of the related receivable is probable.

The recognition of assets on the balance sheet of a Managed Investment Scheme such as this Project is an area of continuing interpretation and will be reassessed in future accounting periods having regard to developments in the relevant Accounting Standards.

AGW Funds Management Ltd is economically dependent on the Webster Limited Group to assist in providing funding for its continuing administrative operations.

15 Assets under management (Cont.)

16 Economic dependency



Directors’ declaration In the opinion of the directors of AGW Funds Management Ltd, the Responsible Entity of AGW Walnut Project No. 2 (“the Project”):

1. The financial statement and notes set out on pages 4 to 14, are in accordance with the Corporations Act 2001, including:

(a) giving a true and fair view of financial position of the Project as at 30 June 2014 and of its performance, for the financial year ended on that date; and

(b) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001.

2. The financial report also complies with International Financial Reporting Standards as discussed in Note 2(a).

3. There are reasonable grounds to believe that the Project will be able to pay its debts as and when they become due and payable.

4. The financial statements and notes set out in pages 4 to 14 are in accordance with the provisions of the Project’s Constitution dated 26 April 2007 (amended 25 May 2011).

Dated at Devonport this 26th day of September 2014.

Signed in accordance with a resolution of the directors of AGW Funds Management Ltd:

Yvonne Rundle



Independent auditor’s report to the growers of AGW Walnut Project No. 2



Walnut Project No. 2Walnut Project No. 2 Independent auditor’s report (continued)

AGW Funds Management LtdACN 149 301 299

Annual Financial Report 2014 | AGW Walnut Project No. 2 | ARSN 125 191 531

2014 - amazon s3annual+… · entity held 3 walnut lots in the project at year end. the following...

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