annual report - unittrustfiji.com.fjunittrustfiji.com.fj/wp-content/uploads/2014/06/... · 2 unit...

2019 ANNUAL REPORT 1

FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2019

Annual Report2019

$272.3 MInvestmentPortfolio

UNIT TRUST OF FIJI2


PerformanceSnapshot

0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

180.0

220.0

200.0

240.0

280.0

260.0

300.0

Mill

ions

2013 2014 2015 2016 2017 2018 2019

$111.3M

$176.6M

$243.5M

$272.3M

$93.0M

$126.9M$138.0M

` Cash & Short Term Instruments

18% ` Fixed Income

9% ` Public Equity

50% ` Private Equity

22% ` Property

1%

ShippingConsumer Goods

InsuranceTelecommunications Media ExportFinancial

4.92%35.80% 2.41%32.97% 1.23% 0.04%22.63%

FUNDS UNDER MANAGEMENT

PORTFOLIO REVIEW AND ASSET ALLOCATION/MIX

INCOME & GROWTH FUND INDUSTRY CONCENTRATION



2013 2014 2015 2016 2017 2018 2019

# Equity Investment Sector % of 2019 Portfolio

1 Amalgamated Telecom Holdings Ltd Telecommunication 23.8%

2 Home Finance Co. Pte Ltd Financial 15.4%

3 Vision Investment Limited Consumer Goods 8.0%

4 R B Patel Group Ltd Consumer Goods 7.7%

5 FMF Foods Limited Consumer Goods 4.0%

6 Fiji Gas Pte Limited Consumer Goods 4.0%

7 Port Denarau Marina Limited Shipping 1.8%

8 South Sea Towage Pte Limited Shipping 1.7%

9 The Rice Company of Fiji Limited Consumer Goods 1.5%

10 Marsh Pte Ltd Insurance 1.3%

6.3%8.0%

3.9%7.4%

8.0%7.0%

9.0%

Uni

t Hol

ders

12,000

18,000

14,000

0

20,000

22,000

16,000

10,000

14,36115,512

16,11117,309

18,69420,001

21,801

INVESTORS (UNIT HOLDERS)

RETURN TO INVESTORS (UNIT HOLDERS)

2013 20132014 20142015 20152016 20162017 20172018 20182019 2019

3.16% 3.17% 3.28%3.54%

3.70%4.00%

4.23%

5.80 5.80 5.90 6.106.50

7.00

8.00

1.00

0

2.00

7.00

3.00

4.00

6.00

5.00

8.00

0.5%

3.00%

2.00%

1.00%

3.50%

4.50%

0

2.50%

1.50%

4.00%

5.00%

INCOME FUND (IF)Annualized Dividend Rate

INCOME & GROWTH FUND (IGF)Dividend Distribution (Cents per Unit)

UNIT TRUST OF FIJI4


4.28 1.18

4.26

4.63

4.16

6.84

4.02

7.01

3.93

15.4

6

8.8911.00 11.03

19.39

28.92

13.88

5.46

Dividend Yield Capital Growth Total Return

Perc

enta

ge

0

5

10

15

20

25

30

1.43

1.37

1.49

1.42

1.59

1.52

1.70

1.62

2.00

2.48

2.75

1.91

2.38

2.63

($)

0

0.50

1.00

1.50

2.00

2.50

3.00

Exit PriceEntry Price

3.69

25.2

3

3.36

10.5

2

2013

2013

2014

2014

2015

2015

2016

2016

2017

2017

2018

2018

2019

2019

TOTAL RETURN TO UNIT HOLDERS (%) IGF

UNIT PRICES



Chairperson’s Report CEO’s Report Directors’ Report Declaration by Directors Auditor’s Independence Declaration to the Directors of Unit Trust of Fiji (Management) Limited and Unit Trust of Fiji (Trustee Company) Limited Independent Auditor’s Report Statement of Comprehensive Income Statement of Financial Position Statement of Changes in Equity Statement of Cash Flows Notes to and forming Part of the Financial Statements

6 8 10 14 15

16 18 19 20 22 23

UNIT TRUST OF FIJI


I have the pleasure of presenting herewith UTOF’s 2019 Annual Report for the year ended 31 December 2019.

UTOF has recorded a $30 million movement in its multi-asset Investment Portfolio closing at $272.3 million as compared to $243.5 million in 2018.

The overall growth has been predominantly driven by investor confidence due to competitive and sustainable returns to our investors. UTOF’s cornerstone investments such as HFC Bank, ATH, South Seas Towage Limited, Fiji Gas, RB Patel, Vision Investments Limited, Marsh Fiji and Communications Fiji Limited have contributed to UTOF’s returns (dividend and growth) to its investors.

Our investments are well diversified in key economic industries and strategically weighted in respective asset classes to optimize returns in line with risk tolerance and appetite.

Chairperson’sReport

6

2019 ANNUAL REPORT


During the year, the Board has established Board sub-committees and specific project steering committee to provide guidance and oversight to management. This has enabled the Board to effectively govern and enhance the decision-making process and business fundamentals.

The Board continued to strengthen its internal audit functions, business process, accountabilities and compliance.

UTOF continued to work with its mandate by providing flexible and affordable investments to Fijians. Interestingly, the unit holder growth rate trend has been dominated by individual and groups/association investors. Our Employee Investment Scheme has onboarded new partners with our investment facilities now accessible to more than 40 Employers and its employees. We are proud that such scheme is valued and considered to be the best investment vehicle for long term savings and investments.

Regionally, we continued to work with our partners to explore further multilateral opportunities in the region including knowledge sharing and investments.

UTOF will continue to modernize its business processes, introduce digital platform to boost its virtual presence and unit holder accessibility and services. Such platform will be aligned to the Fijian government’s digital reform incentives allowing every Fijian to directly access financial services.

On behalf of the Board, I wish to thank our fellow directors, loyal investors, shareholders, regulators, trustees and management team for their continuous trust, guidance, and counsel in leading UTOF’s journey of growth and development.

Vinaka vakalevu.

Ms. Shaenaz Voss............................................

7

UNIT TRUST OF FIJI


The consistent increase is driven by our new unit sales and positive movement in the value of “growth stocks”, both public and private equities. We have strategically diversified our investment portfolio in respective asset classes and growing industries, aligned to our internal investment policies and guidelines. The Fund’s prudent investment practices and approaches ensures that the risks are mitigated, and returns are optimized.

Our investee companies operating within a multi-sector industry have performed well as expected, however UTOF will remain steadfast ensuring that our decisions are reflective of our unit holder’s needs and the industry’s best practices.

During the year, we have further diversified our investment portfolio by investing into the newly South Pacific Stock Exchange (SPX) listed company, Port Denarau Marina Limited. This is an emerging market in a lucrative industry anticipated to contribute to our unit holders’ future returns and dividend earnings. In our private equity portfolio, we have injected additional capital into HFC Bank which assisted the bank in its market share and profitability. UTOF, as a 25% shareholder, is committed

CEO’sReport

Unit Trust of Fiji (UTOF) recorded a growth of 12% in its investment portfolio for the year ended 31 December 2019 which now underscores UTOF’s compelling average growth rate of 20 percent per annum for the last 5 years.

8

2019 ANNUAL REPORT


to support our local bank to provide Fijians with the best and competitive banking products and services.

In 2019, UTOF’s unprecedented dividend payout was F$8.6 million, an increase of 24% compared to 2018. This enabled the Fund to provide a total return of 13.88% and an annualized dividend rate of 4.23% for its Income & Growth Fund and Income Fund, respectively. Comparatively, the last 5 years, UTOF paid out to its unit holders a total tax-free dividend of $30.8 million that is equivalent to an annual dividend growth rate of 13.7%.

The 5-year average total return in terms of dividend yield and capital growth for Income & Growth Fund was 16.8%. Income Fund annualized dividend rate for the same period was 3.7%. This is a testament of our commitment to unit holders and serving our mandate to build and provide competitive return on your personal wealth management funds.

The year has been challenging and yet rewarding as we had set in motion several key strategies to ensure the sustainability of our return on investment, risk management, governance and prudent investment

practices. In the years ahead, under the guidance of the Board, Trustees and Shareholders we will embark on furthering our interests in exploring equitable returns in key economic sectors. The managed fund industry continues to evolve with the changing socio-economic landscape.

The UTOF Team extends our profound appreciation and stewardship to our Board of Directors, Trustees, Shareholders and Regulators for their support, counsel, and assistance during the year.

Lastly, I wish to thank my team for their hard work and dedication during the year.

Thank you and we look forward to another great year of investments and achievements.

Vinaka vakalevu!

Mr. Vilash Chand............................................

9

UNIT TRUST OF FIJI10 D I R E CTo R S’ R E P o RT


In accordance with resolution of the directors of the Unit Trust Fiji (Management) Limited and Unit Trust of Fiji (Trustee Company) Limited, the directors herewith submit the statement of financial position of Unit Trust of Fiji (“Trust”) as at 31st December 2019, the related statement of comprehensive income, the statement of changes in equity and the statement of cash flow for the year ended on the date and report as follows:

TRUSTEE AND MANAGER

ManagerThe Manager of the Trust at the date of this report is Unit Trust of Fiji (Management) Limited. The directors of the management company at the date of this report are: Shaenaz Voss - Chairperson Maciusela N Lumelume - Director Fazrul Rahman - Director Shiri Gounder – Director

TrusteeThe Trustee of the Trust at the date of this report is Unit Trust of Fiji (Trustee Company) Ltd. The directors of the Trustee Company at the date of this report are:

Iowane Naiveli Anil Kumar Tikaram

DATE OF FORMATIONThe Trust was established on 25th April 1978.

STATE OF AFFAIRSIn the opinion of the directors, the accompanying statement of financial position gives a true and fair view of the state of affairs of the Trust as at 31 December 2019, and the accompanying statement of comprehensive income, statement of changes in equity and statement of cash flows give a true and fair view of the result of the Trust, its changes in equity and its cash flows for the year then ended.

PRINCIPAL ACTIVITYThe principal activity of the Trust during the financial year was to provide an investment vehicle that allowed investors to pool their funds and have them invested by the Trust Manager across a range of investments in accordance with the investment guidelines contained in the prospectus and the investment policy statement.

OPERATING RESULTS The result recorded a net income available for distribution of $6,690,563 (2018: $8,660,839).

DIVIDENDSThe Trust declared the following dividend during the year:

Interim DividendIncome & Growth Fund - $3,466,428 (2018: $2,612,754) Income Fund - $300,603 (2018: $285,613)

2019 ANNUAL REPORT 11D I R E CTo R S’ R E P o RT


DIVIDENDS - CONTINUED

Final DividendIncome & Growth Fund - $4,498,364 (2018: $3,764,782) Income Fund - $334,400 (2018: $285,996)

ASSETSThe directors took reasonable steps to ascertain whether any assets of the Trust were shown in the accounting records at a value equal to or below the value that would be expected to be realized in the ordinary course of business.

At the date of this report, the directors are not aware of any circumstances, which would render the values attributable to the assets in the financial statements misleading.

FAIR VALUE RESERVEThe fair value reserve comprises the cumulative net changes in the fair value for financial assets held at fair value through profit or loss until the investments are derecognized, disposed or impaired.

BASIS OF ACCOUNTING – GOING CONCERNNotwithstanding recent novel coronavirus (COVID-19) global outbreak and significant economic uncertainties resulting there from, the financial statements of the Trust have been prepared on a going concern basis. The directors consider the application of the going concern principle to be appropriate in the preparation of these financial statements as they believe with the plans and strategies put in place by the Trust, the Trust will generate and maintain required funding to meet its liabilities and commitments as and when they fall due over the next twelve months. Accordingly, directors believe that the classification and carrying amounts of the assets and liabilities as stated in the financial statements to be appropriate.

RELATED PARTY TRANSACTIONSIn the opinion of the directors, all related party transactions have been adequately recorded in the books of the Trust and reflected in the financial statements.

OTHER CIRCUMSTANCESAt the date of this report, the directors are not aware of any circumstances not otherwise dealt with in this report or financial statements which render any amounts stated in the financial statements misleading.

UNUSUAL TRANSACTION The results of the Trust’s operations during the financial year have not in the opinion of the directors been substantially affected by any item, transaction or event of a material and unusual nature, nor has there arisen between the end of the financial year and the date of this report any item, transaction or event of a material unusual nature likely, in the opinion of the directors, to affect substantially the results of the operations of the Trust in the current financial year other than as detailed in the below paragraph.

UNIT TRUST OF FIJI12 D I R E CTo R S’ R E P o RT


EVENT SUBSEQUENT TO BALANCE DATEThe novel coronavirus (COVID-19) global outbreak developed subsequent to year end has been declared by WHO as a global pandemic affecting economies across the world. Fiji is not immune and the Trust is anticipating its socio-economic impact across its major business sectors including its liquidity and cash flows for the 2020 financial year. While this is expected to have a negative impact on the financial performance of the Trust in 2020, the Trust cannot quantify the magnitude and duration as it is premature to gauge the extent of implications at the date of this report. The Trust continues to monitor and assess its business operations daily, and will undertake actions as appropriate. Trust has taken necessary steps to ensure that there is minimal business disruptions by putting in place business strategies with the intention to ensure sustainability of the Fund and importantly its commitment to the unit holders remain paramount.

In the event the situation becomes worse and have a prolonged negative impact to day to day operations of the businesses in Fiji and global economy, the Trust may not be able to realize the carrying values of its assets and liabilities recorded in books as at 31 December 2019 at its recorded values, and adjustments may be required in the 2020 financial year in relation to these added risks and material uncertainties. At this stage, the financial statements do not reflect uncertain financial implications, if any, arising in future from this situation.

Apart from the above, no other matters or circumstance have arisen since the end of the financial year which would require adjustment to, or disclosure in, the financial statements of the Trust.

DIRECTORS INTERESTNo director has, since the end of the previous financial year, received or become entitled to receive a benefit (other than a benefit included in the total amount of emoluments received or due and receivable by directors shown in the Trusts accounts) by reason of a contract made with the Trust or by a related corporation with the director or with a firm of which he / she is a member, or in a firm in which he / she has a substantial financial interest.

APPROVAL OF FINANCIAL STATEMENTSThe financial statements for the year ended 31 December 2019 together with the accompanying notes set out on pages 23 to 43 are approved as being in accordance with the books and records of the Unit Trust of Fiji (Trust). The statement of financial position, statement of comprehensive income, statement of changes in equity and statement of cash flows of the Trust show a true and fair view of the state of affairs as at 31 December 2019, and results, changes in equity and cash flows for the year ended on that date.

2019 ANNUAL REPORT 13D I R E CTo R S’ R E P o RT


Signed in accordance with resolutions of the directors of the Unit Trust of Fiji (Management) Limited and Unit Trust of Fiji (Trustee Company) Limited.

Dated at Suva this 31 day of March 2020.

_______________________________ _______________________________ Director Unit Trust of Fiji (Management) Limited

Manager of the Unit Trust of FijiDirector Unit Trust of Fiji (Trustee Company) Limited

Trustee of the Unit Trust of Fiji

UNIT TRUST OF FIJI14 D E C L A R AT I o n BY D I R E CTo R S


The declaration by directors is required by the Companies Act, 2015.

The directors of Unit Trust of Fiji (Management) Limited and Unit Trust of Fiji (Trustee Company) Limited have made a resolution that declares:

a) In the opinion of the directors, the financial statements of the Trust for the financial year ended 31 December 2019:

i. comply with the International Financial Reporting Standards and give a true and fair view of the financial position of the Trust as at 31 December 2019 and of the performance and cash flows of the Trust for the year ended 31 December 2019; and

ii. have been prepared in accordance with the Companies Act, 2015.

b) The directors have received independence declaration by auditors as required by Section 395 of the Companies Act, 2015; and

c) At the date of this declaration, in the opinion of the directors, there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become due and payable.






2019 ANNUAL REPORT 15A u D ITo R’S I n D E P E n D E n C E D E C L A R AT I o n


UNIT TRUST OF FIJI16 I n D E P E n D E nT A u D ITo R’S R E P o RT


2019 ANNUAL REPORT 17I n D E P E n D E nT A u D ITo R’S R E P o RT


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 23 to 43.

UNIT TRUST OF FIJI18 S TAT E M E nT o F C o M P R E H E n S I V E I n C o M E


2019$

2018$

Investment income:

Interest Income 3,747,589 3,096,639Dividend Income 5,995,088 6,228,915Net gains on financial instruments held at fair value through profit or loss 13,636,010 40,840,070Realized Gains on Disposal of Investments 42,620 1,711,438Net Equalization 211,135 525,580Rental income 134,970 134,970

23,767,412 52,537,612Less Expenses:

Investment expenses 76,393 71,915Manager's Remuneration 3,364,446 2,964,788

3,440,839 3,036,703

Profit for the year attributable to unit holders 20,326,573 49,500,909

Other comprehensive income - -

Total comprehensive income 20,326,573 49,500,909

2019 ANNUAL REPORT 19S TAT E M E nT o F F I n A n C I A L P o S IT I o n


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 23 to 43.

Notes2019

$2018

$EQUITY

Unit holders’ equity – Income & Growth Fund99,833,182 Class A units(2018: 94,491,717)496,076 Class B units(2018: 496,076) 134,671,285 120,613,614Unit holders’ equity – Income Fund 16,969,986 (2018: 14,699,209) 16,969,986 14,699,209Income reserve 2 20,271 20,271Other reserve 2 113,936,736 100,300,726

265,598,278 235,633,820ASSETS

Cash and cash equivalents 15,072,059 19,741,573Financial assets at amortized cost 3 34,418,241 34,733,159Financial assets held at fair value through profit or loss 4 220,564,375 186,681,559Investment Property 5 2,440,000 2,440,000Total assets 272,494,675 243,596,291

LIABILITIES

Sundry creditors and accruals 6 197,951 136,787Declared for distribution 1,865,682 3,774,906Proposed final distribution 7 4,832,764 4,050,778Total liabilities 6,896,397 7,962,471

Net Assets attributable to unit holders 265,598,278 235,633,820






UNIT TRUST OF FIJI20

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 23 to 43.

S TAT E M E nT o F C H A n G E S I n E q u IT Y

Income other reserve unit Holders Dividend Income available Total

Equity

For distribution

$ $ $ $ $ $Balance as at 01 January 2018 20,271 59,460,656 111,523,675 - - 171,004,602Total comprehensive income for the year

Profit for the year - 40,840,070 - - 8,660,839 49,500,909Total comprehensive income for the year - 40,840,070 - - 8,660,839 49,500,909Transactions with unit holders, recorded directly in equity

Contributions by and distributions to unit holders

Income available for distribution - - - 8,660,839 (8,660,839) -Expenditure on prospectus - - - - - -Creations during the year - - 37,516,568 - - 37,516,568Equalization on creations - - (683,313) - - (683,313)Repurchase of units - - (13,201,840) - - (13,201,840)Equalization on repurchases - - 157,733 - - 157,733Declared for distribution – 2017 - - - 2,063,214 - 2,063,214Interim distribution paid - - - (2,898,368) - (2,898,368)Proposed final distribution - - - (4,050,779) - (4,050,779)Declared for distribution – 2018 - - - (3,774,906) - (3,774,906)Total contributions by and distributions to unit holders - - 23,789,148 - (8,660,839) 15,128,308Balance at 31 December 2018 20,271 100,300,726 135,312,823 - - 235,633,820Balance as at 01 January 2019 20,271 100,300,726 135,312,823 - - 235,633,820Total comprehensive income for the year



Income available for distribution - - - 6,690,563 (6,690,563) -Expenditure on prospectus - - (15,900) - - (15,900)Creations during the year - - 29,425,109 - - 29,425,109Equalization on creations - - (372,599) - - (372,599)Repurchase of units - - (12,869,625) - - (12,869,625)Equalization on repurchases - - 161,464 - - 161,464Declared for distribution – 2018 - - - 3,774,906 - 3,774,906Interim distribution paid - - - (3,767,031) - (3,767,031)Proposed final distribution - - - (4,832,757) - (4,832,757)Declared for distribution – 2019 - - - (1,865,682) - (1,865,682)Total contributions by and distributions to unit holders - - 16,328,448 - (6,690,563) 9,637,885Balance at 31 December 2019 20,271 113,936,736 151,641,271 - - 265,598,278

21

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 23 to 43.

Income other reserve unit Holders Dividend Income available Total

Equity

For distribution

$ $ $ $ $ $Balance as at 01 January 2018 20,271 59,460,656 111,523,675 - - 171,004,602Total comprehensive income for the year



Income available for distribution - - - 8,660,839 (8,660,839) -Expenditure on prospectus - - - - - -Creations during the year - - 37,516,568 - - 37,516,568Equalization on creations - - (683,313) - - (683,313)Repurchase of units - - (13,201,840) - - (13,201,840)Equalization on repurchases - - 157,733 - - 157,733Declared for distribution – 2017 - - - 2,063,214 - 2,063,214Interim distribution paid - - - (2,898,368) - (2,898,368)Proposed final distribution - - - (4,050,779) - (4,050,779)Declared for distribution – 2018 - - - (3,774,906) - (3,774,906)Total contributions by and distributions to unit holders - - 23,789,148 - (8,660,839) 15,128,308Balance at 31 December 2018 20,271 100,300,726 135,312,823 - - 235,633,820Balance as at 01 January 2019 20,271 100,300,726 135,312,823 - - 235,633,820Total comprehensive income for the year



Income available for distribution - - - 6,690,563 (6,690,563) -Expenditure on prospectus - - (15,900) - - (15,900)Creations during the year - - 29,425,109 - - 29,425,109Equalization on creations - - (372,599) - - (372,599)Repurchase of units - - (12,869,625) - - (12,869,625)Equalization on repurchases - - 161,464 - - 161,464Declared for distribution – 2018 - - - 3,774,906 - 3,774,906Interim distribution paid - - - (3,767,031) - (3,767,031)Proposed final distribution - - - (4,832,757) - (4,832,757)Declared for distribution – 2019 - - - (1,865,682) - (1,865,682)Total contributions by and distributions to unit holders - - 16,328,448 - (6,690,563) 9,637,885Balance at 31 December 2019 20,271 113,936,736 151,641,271 - - 265,598,278

FInAnCIAL STATEMEnTS YEAR EnDED 31 DECEMBER 2019

UNIT TRUST OF FIJI22 S TAT E M E nT o F C A S H F Lo w S


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 23 to 43.

2019$

2018$

Cash flows from operating activities

Cash receipts in course of operations

• Interest received 3,475,594 2,695,519• Dividends received 2,968,482 3,667,458• Rental received 134,970 134,970

Cash payments to Manager and suppliers (3,763,447) (3,226,295)Proceeds from sale of investments 6,778,650 2,919,315Payment for investments (23,751,444) (15,259,369)Proceeds from repayment of loan to South Sea Towage Pte Limited 750,000 687,500

Net cash from / (used in) operating activities (13,407,195) (8,380,902)

Cash flows from financing activities

Payments on repurchase of units (12,869,625) (13,201,840)Proceeds from issue of units 23,626,711 33,411,633Distributions paid to unit holders (2,019,405) (2,370,274)

Net cash from financing activities 8,737,681 17,839,519

Net increase / (decrease) in cash and cash equivalents (4,669,514) 9,458,617

Cash and cash equivalents at the beginning of the year 19,741,573 10,282,956

Cash and cash equivalents at the end of the year 15,072,059 19,741,573

2019 ANNUAL REPORT 23noTES To AnD FoRMInG PART oF THE FInAnCIAL STATEMEnTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Unit Trust of Fiji (“the Trust”) is a unit trust incorporated and domiciled in Fiji. The address of its registered office and principal place of business are disclosed in note 11 to the financial statements.

Principal ActivityThe principal activity of the Trust during the financial year was to provide an investment vehicle that allowed investors to pool their funds and have them invested by the Trust Manager across a range of investments in accordance with the investment guidelines contained in the prospectus and the investment policy statement.

The significant accounting policies which have been adopted in the preparation of these financial statements are set out below. The financial statements were authorised for issue by the directors of Unit Trust of Fiji (Management) Limited and Unit Trust of Fiji (Trustee Company) Limited on 31st March 2020.

(a) Statement of complianceThe financial statements have been drawn up in accordance with the Trust Deed, Companies Act 2015 and International Financial Reporting Standards (“IFRS”).

(b) Basis of preparationThe financial statements have been presented in Fiji dollars, which is the Trust’s functional currency, rounded to the nearest dollar. The financial statements are prepared on the basis of fair value measurement of assets and measurement at amortized cost for liabilities except where otherwise stated.

(c) Basis of Accounting – Going ConcernNotwithstanding recent novel coronavirus (COVID-19) global outbreak and significant economic uncertainties resulting there from, the financial statements of the Trust have been prepared on a going concern basis. The directors consider the application of the going concern principle to be appropriate in the preparation of these financial statements as they believe with the plans and strategies put in place by the Trust, the Trust will generate and maintain required funding to meet its liabilities and commitments as and when they fall due over the next twelve months. Accordingly, directors believe that the classification and carrying amounts of the assets and liabilities as stated in the financial statements to be appropriate.

(d) Amendments to standards and annual improvements effective from 1 January 2019A number of new standards, amendments to standards and interpretations that are effective for annual periods beginning on or after 1 January 2019 have not been applied in preparing these financial statements. These are not expected to have a significant effect on the financial statements of the Trust.

The Trust applied, for the first time, certain standards and amendments, which are effective for annual periods beginning on or after 1 January 2019.

UNIT TRUST OF FIJI24 noTES To AnD FoRMInG PART oF THE FInAnCIAL STATEMEnTS


1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED

(d) Amendments to standards and annual improvements effective from 1 January 2019 - continued

The nature and the impact of each new standard and amendment is described below:

IFRS 16 – Leases

The Trust has adopted IFRS 16 Leases with a date of initial application of 1 January 2019.

i As a lessor

The Trust is not required to make any adjustments on transition to IFRS 16 for leases since it acts as a lessor and does not sub- lease.

(e) New standards, amendments, annual improvements and interpretation that have been issued but are not mandatorily effective as at 31 December 2019Certain new standards, amendments and interpretation have been issued by IASB that are effective in future accounting periods and have not been adopted early in these financial statements, will or may have an effect on the Trust's future financial statements. The Trust intends to adopt these standards, amendments and interpretation if applicable, when they become effective.

(f) Use of estimates and judgments The preparation of annual financial statements requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. These 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 judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. 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.

(a) Assumptions and estimation uncertainties

(i) Measurement of fair values

Information about assumptions and estimation uncertainties that have a significant risk of resulting in a material adjustment in the year ended 31 December 2019 is included in Note (g) (iv).




(g) Financial assets and financial liabilities

(i) Recognition and initial measurement

Financial assets at fair value through profit or loss are recognised initially on the trade date, which is the date that the Trust becomes a party to the contractual provisions of the instrument. Other financial assets and liabilities are recognised on the date they are originated. Financial assets at fair value through profit or loss are recognised initially at fair value, with the transaction costs recognised in profit or loss. Financial assets or financial liabilities not at fair value through profit or loss are recognised initially at fair value plus transaction cost that are directly attributable to their acquisition or issue.

Financial assets: Business model assessment The Trust makes an assessment of the objective of the business model in which a financial asset is held at a portfolio level because this best reflects the way the business is managed and information is provided to management. The information considered includes:• the stated policies and objectives for the portfolio and the operation of those policies in

practice. These include whether management’s strategy focuses on earning contractual interest income, maintaining a particular interest rate profile, matching the duration of the financial assets to the duration of any related liabilities or expected cash outflows or realizing cash flows through the sale of the assets;

• how the performance of the portfolio is evaluated and reported to the Trust’s management;• the risks that affect the performance of the business model (and the financial assets held

within that business model) and how those risks are managed;• how managers of the business are compensated – e.g. whether compensation is based on

the fair value of the assets managed or the contractual cash flows collected; and• the frequency, volume and timing of sales of financial assets in prior periods, the reasons

for such sales and expectations about future sales activity.

Transfers of financial assets to third parties in transactions that do not qualify for derecognition are not considered sales for this purpose, consistent with the trust’s continuing recognition of the assets.

Financial assets that are held for trading or are managed and whose performance is evaluated on a fair value basis are measured at FVTPL.




(g) Financial assets and financial liabilities - continued

Financial assets: Assessment whether contractual cash flows are solely payments of principal and interest - continued

For the purposes of this assessment, ‘principal’ is defined as the fair value of the financial asset on initial recognition. ‘Interest’ is defined as consideration for the time value of money and for the credit risk associated with the principal amount outstanding during a particular period of time and for other basic lending risks and costs (e.g. liquidity risk and administrative costs), as well as a profit margin.

In assessing whether the contractual cash flows are solely payments of principal and interest, the Trust considers the contractual terms of the instrument. This includes assessing whether the financial asset contains a contractual term that could change the timing or amount of contractual cash flows such that it would not meet this condition. In making this assessment, the Trust considers:• contingent events that would change the amount or timing of cash flows;• terms that may adjust the contractual coupon rate, including variable rate features;• prepayment and extension features; and• terms that limit the Trust’s claim to cash flows from specified assets (e.g. non-recourse

features).

A prepayment feature is consistent with the solely payments of principal and interest criterion if the prepayment amount substantially represents unpaid amounts of principal and interest on the principal amount outstanding, which may include reasonable additional compensation for early termination of the contract.Financial assets are not reclassified subsequent to their initial recognition, except in the period after the Trust changes its business model for managing financial assets.

(ii) Classifications

The Trust classifies financial assets and financial liabilities into the following categories:

Financial assets:

• Measured at fair value through profit or loss – Government bonds, listed and unlisted equity investments.

• Measured at amortised cost – cash and cash equivalents, other receivables, accrued income and term deposits.

A financial asset is subsequently measured at amortised cost, if it is held within a business model with an objective to hold assets in order to collect contractual cash flows; and the contractual terms of the financial assets give rise, on specified dates, to cash flows that are solely payments of principal and interest.





(ii) Classifications - continued

Financial assets other than those classified as financial assets measured at amortised cost are subsequently measured at fair value with all changes in fair value recognised in profit or loss.

Notes 3 to 6 provide a reconciliation of line items in the statement of financial position to the categories of financial instruments, as defined by IFRS 9.

(iii) Amortized cost

The amortized cost of a financial asset or liability is the amount at which the financial asset or liability is measured at initial recognition, minus principal repayments, plus or minus the cumulative amortization using the effective interest method of any difference between the initial amount recognized and the maturity amount, minus any reduction for impairment.

(iv) Fair value measurement

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants and the measurement date in the principal or, in its absence, the most advantageous market to which the fund has access at that date. Consistent with established practice in Fiji, listed equity investments are measured at the closing share price on the South Pacific Stock Exchange at each reporting date. Fiji Government Bonds are measured at the prices quoted by the Reserve Bank of Fiji at each reporting date as adjusted for accrued interest where this is material.

When available, the Trust measures the fair value of an instrument using the quoted price in an active market for that instrument. A market is regarded as “active” if transactions for the asset or liabilities take place with sufficient frequency and volume to provide pricing information on an on-going basis. The fair value of other unlisted equities is estimated with the assistance of independent valuers approved by the Fund Manager and Trustee as per the Trust Deed.

Where possible, the valuations use applicable price earnings ratios for similar listed companies, adjusted to reflect the specific circumstances of the issuer and may be based on following methodologies:

1. Discount Cashflow Model (DCF)2. Net Tangible Asset Approach (NTA)3. Future Maintainable Earnings Method (FME)4. Capitalization of Dividends Method (CoD)





(iv) Fair value measurement - continued

If there is no quoted price in an active market, then the Trust uses valuation techniques that maximize the use of relevant observable inputs and minimize the use of unobservable inputs.

The chosen valuation technique seeks to incorporate all of the factors that market participants would take into account in pricing a transaction. The Trust recognizes transfers between levels of the fair value hierarchy as at the end of the reporting period during which the changes have occurred.

(v) Impairment

A financial asset not classified at fair value through profit or loss is assessed at each reporting date to determine whether there is objective evidence of impairment.

A financial asset or a group of financial assets is impaired if there is objective evidence of impairment as a result of one or more events that occurred after the initial recognition of the asset(s), and that loss event(s) had an impact on the estimated future cash flows of that asset(s) that can be estimated reliably.

Objective evidence that financial assets are impaired includes significant financial difficulty of the issuer or indications that an issuer will enter bankruptcy.

An impairment loss in respect of a financial asset measured at amortized cost is calculated as the difference between its carrying amount and the present value of the estimated future cash flows discounted at the asset’s original effective interest rate. Interest on the impaired asset continues to be recognized. When an event occurring after the impairment was recognized causes the amount of impairment loss to decrease, the decrease in impairment loss is reversed through profit or loss.

(vi) Derecognition

Financial AssetsThe Trust derecognizes a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the right to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred or in which the Trust neither transfers nor retains substantially all the risks and rewards of ownership and does not retain control of the financial asset. Any interest in such transferred financial assets that is created or retained by the Trust is recognized as a separate asset or liability. On derecognition of a financial asset, the difference between the carrying amount of the asset and consideration received is recognized in profit or loss. The Trust derecognizes a financial liability when its contractual obligations are discharged, cancelled or expire.





(vi) Derecognition - continued

Financial liabilitiesThe Trust derecognizes a financial liability when its contractual obligations are discharged or cancelled or expire. The Trust also derecognizes a financial liability when its terms are modified and the cash flows of the modified liability are substantially different, in which case a new financial liability based on the modified terms is recognized at fair value.

On derecognition of a financial liability, the difference between the carrying amount extinguished and the consideration paid (including any non‑cash assets transferred or liabilities assumed) is recognized in profit or loss.

(vii) Offsetting

Financial assets and liabilities are offset and net amount presented in the statement of financial position when, and only when, the Trust has a legal right to offset the amounts and it intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis when permitted under IFRSs, e.g. for gains and losses arising from a group of similar transactions, such as gains and losses from financial instruments at fair value through profit or loss.

(viii) Modifications of financial assets

If the terms of a financial asset are modified, the Trust evaluates whether the cash flows of the modified asset are substantially different. If the cash flows are substantially different, then the contractual rights to cash flows from the original financial asset are deemed to have expired. In this case, the original financial asset is derecognized and a new financial asset is recognized at fair value.

If the cash flows of the modified asset carried at amortized cost are not substantially different, then the modification does not result in derecognition of the financial asset.

In this case, the Trust recalculates the gross carrying amount of the financial asset and recognizes the amount arising from adjusting the gross carrying amount as a modification gain or loss in profit or loss. If such a modification is carried out because of financial difficulties of the borrower, then the gain or loss is presented together with impairment losses. In other cases, it is presented as interest income.

(h) Revenue recognition

Interest income is recognised in profit or loss for all interest bearing financial assets using the effective interest method.




(h) Revenue recognition - continued

Dividend income from listed or quoted securities is recognised when the right to receive payment is established (normally the ex-dividend date). Dividends from unlisted and private equities are recognised when the Trust has received formal notification that a dividend has been declared and the right to receive the dividend is established. Other income is brought to account on an accrual basis. (i) Manager’s remuneration

Under the terms of the Trust Deed, the Manager is entitled to receive manager’s remuneration being 1.5% of the value of the deposited property for the Income & Growth Fund.

For the Income Fund, the manager is entitled to receive manager’s remuneration being 0.5% of the net asset value.

Manager’s remuneration is recognised in profit or loss on an accrual basis.

(j) Distributions

In accordance with the Trust Deed, the Trust distributes income adjusted for amounts determined by the Managers to unit holders by cash or reinvestment. The distributions are recognised in the statement of changes in equity as distributions to unit holders.

Clause 19 of the Trust Deed permits the Managers in their absolute discretion to determine annually such amounts arising from the surplus on disposal of investments that year as being available for distribution. Any balance of the surplus from disposal of investments is then transferred to unit holders’ equity.

(k) Income tax

The Trust is not subject to income tax provided the distributable income is declared for distribution to unit holders either by way of cash or reinvestment.

(l) Cash and cash equivalents

For cash flow statement presentation purposes, cash and cash equivalents includes cash in banks and deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less from the date of acquisition that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.




(m) Other receivables and accrued income

Other receivables include amounts receivable from the sale of units and bank charges receivable from the “Management Company”. Interest receivable and dividends declared but unpaid on shares owned are included under accrued income.

(n) Sundry creditors

Liabilities are recognized for amounts to be paid in the future for goods and services received, whether or not invoiced to the Trust. Liabilities are stated at amortised cost as they are expected to be settled within next twelve months.

(o) Investment Property

Investment property is initially measured at cost and subsequently at fair value with any changes therein recognized in profit or loss.

Any gains or loss on disposal of investment property (calculated as the difference between the net proceeds from disposal and the carrying amount of the item) is recognized in profit or loss.

(p) Leases

Trust as Lessor

The Trust recognises lease payments received under operating leases as income on a straight-line basis over the lease term.

The accounting policies applicable to the Trust as a lessor in the comparative period were not different from IFRS 16.

(q) Comparatives Where necessary, comparative figures have been reclassified to conform with changes in presentation in the current year.

2. RESERVES

The Income reserve represents interest earned on funds advanced by the Government of Fiji prior to the establishment of the Trust.

Other reserve consists of the cumulative movements in fair value of investments classified as fair value through profit or loss that are not available for distribution to unit holders until realized.



3. FINANCIAL ASSETS AT AMORTISED COST

2019$

2018$

Term deposits:

Income & Growth Fund 18,070,000 18,070,000Income Fund 12,553,000 12,553,000Loans and receivables:

Other receivables 587,534 219,675Interest receivable 1,223,626 949,927Dividends receivable 421,581 628,057Loans to South Sea Towage Pte Limited (a) 1,562,500 2,312,500

34,418,241 34,733,159

(a) Loans & Receivables (Secured)

Loans to South Sea Towage Pte Limited 1,562,500 2,312,500

The loan to South Sea Towage Pte Limited was to purchase 3 tugs from Australia and for the repositioning of the tugs to Fiji. It is first secured against the recurring market value of the tugs and by a second registered mortgage debenture over the Borrower’s assets and undertakings subsequent to First Mortgage Debenture in favor of Westpac Banking Corporation. Repayment of principal and interest has commenced from 2018. The loan is subject to interest at a rate of 8.00% per annum.

4. FINANCIAL ASSETS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS

Designated at fair value through profit or loss:

2019$

2018$

Listed equities:

Shares quoted on stock exchanges:

South Pacific Stock Exchange 135,498,524 106,777,771Unlisted equities

Shares in Fiji Companies 60,963,725 53,038,687Fiji Government Bonds 24,102,126 26,865,101

220,564,375 186,681,559



4. FINANCIAL ASSETS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS - CONTINUED

Determining fair values

The Trust measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:

Level 1: Quoted market price (unadjusted) in active market for an identical instrument.

Level 2: Valuation technique based on observable inputs, either directly (i.e. as prices) or indirectly (i.e., derived from prices). This category includes instruments valued using quoted market prices in active market for similar instrument, quoted prices for identical or similar instrument in the market that are considered less than active; or other valuation techniques where all significant inputs are directly or indirectly observable from market data.

Level 3: Valuation techniques using significant unobservable inputs. This category includes all instruments where the valuation technique includes inputs not based on observable data and the unobservable inputs have a significant effect on the instrument’s valuation. This category includes instruments that are valued based on quoted price for similar instruments where significant unobservable adjustments or assumption are required to reflect differences between the instruments. Fair values of financial assets that are traded in active markets are based on quoted prices or dealer price quotations. For unlisted equity investments, the Trust determines fair values using valuation techniques.

Some or all of the significant inputs these valuations use may not be observable in the market and are derived from market prices or rates or are estimated based on assumptions.

Valuation models that employ significant unobservable inputs require a higher degree of management judgment and estimation in the determination of fair value. Management judgment and estimation are usually required for selection of the appropriate valuation model to be used and any key assumptions used in those valuation models such as appropriate price/earnings ratios. The Trust uses price/earnings ratios and other key assumptions based on observable inputs from Australia and then adjusts these to reflect risks specific to the underlying investment and the Fiji environment such as size risk, country risk, liquidity risk etc.



4. FINANCIAL ASSETS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS - CONTINUED

Determining fair values - continued

The table below analyses financial assets measured at fair value at the end of the reporting period, by the level in the fair value hierarchy into which the fair value measurement is categorized:

Level 1$

Level 2$

Level 3$

Total$

Local listed equities 135,498,524 - - 135,498,524Unlisted equities - 52,754,111 8,209,614 60,963,725Government bonds - 24,102,126 - 24,102,126Balance as at 31 December 2019 135,498,524 76,856,237 8,209,614 220,564,375

Level 1$

Level 2$

Level 3$

Total$

Local listed equities 106,777,771 - - 106,777,771Unlisted equities - 44,255,395 8,783,292 53,038,687Government bonds - 26,865,101 - 26,865,101Balance as at 31 December 2018 106,777,771 71,120,496 8,783,292 186,681,559

During the financial year ended 31 December 2019, no transfers between levels 1 to 3 were made.

The following table shows a reconciliation from the beginning balances to the ending balances for fair value measurements in Level 3 of the fair value hierarchy:

unlisted private equity investments$

Balance at 1 January 2019 8,783,292Total gains or losses recognized in profit or loss (573,678)Purchases -Transfers into Level 3 -Transfer out of Level 3 -Balance as at 31 December 2019 8,209,614Total gains or losses for the period included in profit or loss relating to assets and liabilities held at the end of the reporting period: (573,678)

These gains and losses are recognized in profit or loss as net gain from financial instruments at fair value through profit or loss.



5. INVESTMENT PROPERTY

2019$

2018$

Balance at 1 January 2,440,000 2,440,000Change in Fair Value - -Balance at 31 December 2,440,000 2,440,000

In December 2017, Professional Valuation Limited (PVL), an independent registered valuer carried out valuation for the Trust’s Investment Property. The Directors worked closely with the valuer to establish appropriate valuation techniques and inputs to the valuation model. PVL adopted the Sales Comparison Approach for this purpose.

The excess market value over book value of $483,000 has been recorded as an increase in fair value to investment property in the Financial Statement for the year ended 31st December 2017 based on Management’s and Directors assessment of fair values and taking into consideration the valuation by the registered valuer.

Based on independent valuation in December 2017 by registered valuers, the carrying value of investment property was reviewed by the directors as at 31 December 2019 and were assessed to be fair.

6. SUNDRY CREDITORS AND ACCRUALS

2019 $

2018 $

Other sundry payables 197,951 136,787

7. DISTRIBUTIONS

Proposed final distributionFinal distribution for Income & Growth Fund – 4.50 cents (2018: 4.00 cents) per unit for all unit holders as at 31 December 2019. Interim Dividend Paid: $3,466,428 or 3.50 cents per unit (2018: $2,612,754 or 3.00 cents per unit). 4,498,364 3,764,782Final distribution for Income Fund – 4.23% (2018: 4.00%) Annualized Dividend Rate for all unit holders as at 31 December 2019. Interim Dividend Paid: $300,603, 4.20% (2018: $285,613, 3.82% Annualized Dividend Rate). 334,400 285,996

4,832,764 4,050,778



8. RECONCILIATION OF UNITS ISSUED AND FULLY PAID

Income & Growth Fund Income Fund

Income & Growth Fund Income Fund

Total units(Class A & B

units) Total units

Total units(Class A & B

units) Total units2019 2019 2018 2018

Opening balance at 1 January 94,491,717 14,699,209 82,816,990 16,227,298Issues 10,292,433 4,478,648 15,928,637 2,787,467Redemptions (4,454,892) (2,207,871) (4,253,910) (4,315,556)Closing balance at 31 December 100,329,258 16,969,986 94,491,717 14,699,209

As stated in the Trust Deed, Class A and B units represent an undivided share in the deposited property of the Trust. Class A units are entitled to a dividend whereas for class B units, any dividend is solely at the discretion of the Manager. Class B units are held by the Government of Fiji.

9. CONTINGENT LIABILITIES AND COMMITMENTS

Operating Lease Commitments

Lease rentals are receivable as follows:2019 $

2018 $

Not later than one year 134,970 134,970Later than one year and not later than five years - 134,970

134,970 269,940

The Trustee and the Manager are not aware of any contingent liabilities or capital commitments for the year ended 31 December 2019 (2018: $ Nil).

10.RELATED PARTIES

ManagerThe Manager of the Trust is Unit Trust of Fiji (Management) Limited. The directors of the management company during the year were:

Shaenaz Voss - Chairperson Maciusela N Lumelume - Director Fazrul Rahman - Director Shiri Gounder – Director



10.RELATED PARTIES - CONTINUED

Manager - continued

Manager’s fees

Under the terms of the Trust Deed, the Manager is entitled to receive manager’s remuneration being 1.5% of the value of the deposited property, manager’s rounding being the lower of 1% of the value of each unit created or 1.25 cents per unit and preliminary charges being 2% of total funds available for transfer to capital. During the year, the Manager received $3,364,446 (Income & Growth Fund - $3,317,190 and Income Fund - $47,256) as Manager’s Remuneration (2018: $2,964,788).

Trustee

The Trustee of the Trust is Unit Trust of Fiji (Trustee Company) Ltd. The directors of the Trustee Company during the year were:

Iowane Naiveli Anil Kumar Tikaram

Trustee’s fee The Trustee fee is fixed at $14,000 per Trustee per annum. Trustees were paid $28,000 (2018: $28,000) for its services by the Manager of the Trust.

Amounts due to/from related parties2019

$ 2018

$

Net amount due from/ (owing to) Managers 439,559 (19,663)

11. TRUST DETAILS

Date of FormationUnit Trust of Fiji was established on 25th April 1978.

Registered OfficeThe Trust’s registered office is located at level 2, Provident Plaza 2, Ellery Street, Suva.



12. RISK MANAGEMENT POLICIES The Trust’s activities expose it to a variety of financial risks: market risk (including interest rate risk, credit risk, performance risk, foreign exchange risk, and price risk), liquidity risk and operational risk. The Trust’s overall risk management programme focuses on the unpredictability of financial markets and seeks to minimize potential adverse effects on the Trust’s financial performance.

The Manager has the overall responsibility for the establishment and oversight of the Trust’s risk management framework. The Trust’s risk management policies are established to identify and analyse the risks faced by the Trust, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Trust’s activities.

Market risk

(i) Political climate

The Trust operates in Fiji and changes to governments and the policies they implement may affect the overall economic situation and ultimately the returns of the Trust. To address this, the Trust reviews its pricing and investment portfolios regularly and responds to change in policies appropriately. In addition, changes to the Government’s tax policies may impact on the returns of the Trust.

(ii) Interest rate

This is the risk borne by interest bearing assets such as term deposits, Government bonds and loans due to the changes in interest rates. Through its investment policy, the Trust aims to balance its portfolio through short term deposits and medium to long term Government bonds and loans.

At the reporting date the interest rate profile of the Trust’s interest-bearing financial instruments was:

Fixed rate instruments 2019

$2018

$Term deposits 30,623,000 30,623,000Fiji Government Bonds 24,102,126 26,865,101Loans to South Sea Towage Pte Limited 1,562,500 2,312,500

56,287,626 59,800,601



12. RISK MANAGEMENT POLICIES - CONTINUED

Market risk - continued

Fixed rate instruments - continued

Value sensitivity analysis for fixed instruments As the Trust accounts for Fiji Government Bonds at fair value through profit and loss, a change in interest rates at the reporting date may impact on the fair value of the financial asset.

Variable rate instruments2019

$2018

$Cash at bank 15,072,059 19,741,573

The Trust is subject to limited exposure to cash flow interest rate risk due to minimal fluctuations in the prevailing levels of market interest rates.

(iii) Credit risk

This refers to the risk of losing investment funds due to companies, banks and financial institutions in which the Trust has deposits and provided short term loans, defaulting on their repayments of principal or interest or both.

For deposits with banks and financial institutions, only reputable parties with known sound financial standing are accepted.

The Trust minimizes credit risk by conducting thorough due diligence on any investments it makes, ensures that there are guarantees on these investments by principal directors or sister companies, limits the amount that is given as loans and implements certain conditions and obtaining securities to secure funds advanced.

The total exposure of credit risk in the Trust’s portfolio is as follows:

2019 $

2018$

Cash at bank 15,072,059 19,741,573Other receivables 2,232,741 1,797,660Term deposits 30,623,000 30,623,000Bonds 24,102,126 26,865,101Loans & Receivables (Secured) 1,562,500 2,312,500

73,592,426 81,339,834




Market risk - continued

(iii) Credit risk - continued

The Trust monitors credit risk by sector. An analysis of concentrations of credit risk is shown below:

2019$

2019%

2018$

2018%

Concentration by sector

Financial Institutions 45,695,059 62% 50,364,573 62%Fiji Government 24,102,126 33% 26,865,101 33%Other 3,795,241 5% 4,110,160 5%

73,592,426 100% 81,339,834 100%

(iv) Performance risk

This risk relates to the performance of the investments in which the Trust has invested. The return on a particular investment such as a share, is affected by the performance of the issuer of the investment, and in the case of bonds the movement in interest rates and the ability of the Trust to hold the bond to maturity in the normal course of its operations.

Different investments tend to perform differently under the same operating environment. Therefore, the Trust at all times will try to have different types of investments in its portfolio.

(v) Foreign exchange risk

The Trust does not currently have investments nor holds funds offshore and is not currently exposed to foreign exchange risk arising from currency exposures. (vi) Price risk

Price risk is the risk that the value of an investment will fluctuate as a result of changes in market prices, whether caused by factors specific to an individual investment, its issuer or all factors affecting all instruments traded in the market. Different investments (cash, shares, bonds, property) tend to perform differently under the same operating environment.

Sensitivity analysis

The table below sets out the effect on net assets attributable to unit holders and profit or loss of a reasonably possible weakening in the individual equity market prices of listed equities of 5% at 31 December. The estimates are made on an individual investment basis. The analysis assumes that all other variables, in particular interest and foreign currency rates, remain constant.




Market risk - continued(vi) Price risk - continuedSensitivity analysis - continued

2019$

2018$

Net loss from exchange-traded equity investments (6,774,926) (5,338,889)

A strengthening in the individual equity market price of 5% at 31 December would have resulted in an equal but opposite effect to the amounts shown above. Operational Risk

(i) Data risk

This is the risk of losing information including unit holder account details even though there is dual system storage of a hard copy filing system and electronic database. The Manager ensures confidentially and security of all unit holders’ information. The Trust has developed a database system to adequately store information, conducts daily backups of electronic information and has developed a Disaster Recovery Plan. (ii) Legal risk

Legal risks refer to the risk of being legally non-compliant due to changes in Government and Regulators current policies and regulations. The Manager has an independent compliance officer who reports directly to the General Manager and Board of Directors.

(iii) Operational risk

Operational risk is defined as the risk arising from the Trust’s and its related entities business functions and from the practical implementation of the Manager’s strategy for growing the Trust.

The Manager has developed a three-year strategic plan and annual key performance indicators to ensure performance of the Trust. The Manager also conducts third party due diligence on new investments before recommending any investment to Trustees.

Liquidity risk

This is the risk that the Trust will not be able to facilitate its unit holders’ redemptions on request. The Trust aims to maintain a buffer fund in liquid assets at all times to meet expected normal redemptions. The Trust’s financial assets include unlisted equity investments, which are generally illiquid. As a result, the Trust may not be able to liquidate some of its investments in these instruments in due time in order to meet its liquidity requirements. Under the Trust Deed, the manager, with the concurrence of the Trustee, may suspend the redemption of units for such time as may be necessary to realize sufficient liquid funds to meet any unusual




Liquidity risk - continued redemption requests. On average, the expected cash outflow on redemption is estimated to be $6.6m (2018: $6.6m) per year for the next three years, which was based on past performance and repurchase trends.

The table below analyses the Trust’s financial assets into relevant maturity groupings based on the remaining period at the balance date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

At 31 December 2019

No specificMaturity

$

Less than1 year

$

Between 1& 2 years

$

Between 3& 5 years

$

Over 5 years

$

Total

$

Financial assets

Term Deposits - 28,128,083 3,659,808 - - 31,787,891

Listed and unlisted securities 196,883,047 - - - - 196,883,047

Bonds - 9,365,013 4,121,013 2,680,043 18,359,357 34,525,426

Loans & Receivables - 1,026,822 990,000 - 2,016,822

196,883,047 38,519,918 8,770,821 2,680,043 18,359,357 265,213,186

Financial liabilities

Sundry creditors and accruals - 197,951 - - - 197,951

Declared for distribution - 1,865,682 - - - 1,865,682

Proposed final distribution - 4,832,764 - - - 4,832,764

- 6,896,397 - - - 6,896,397

At 31 December 2018

Financial assets

Term Deposits - 28,653,020 3,425,750 - - 32,078,770

Listed and unlisted securities 159,816,458 - - - - 159,816,458

Bonds - 9,914,160 8,180,720 5,028,830 27,548,544 50,672,254

Loans & Receivables - 990,000 2,062,500 - 3,052,500

159,816,458 39,557,180 13,668,970 5,028,830 27,548,544 245,619,982

Financial liabilities

Sundry creditors and accruals - 136,787 - - - 136,787

Declared for distribution - 3,774,906 - - - 3,774,906

Proposed final distribution - 4,050,778 - - - 4,050,778

- 7,962,471 - - - 7,962,471



13.EVENTS SUBSEQUENT TO YEAR END The novel coronavirus (COVID-19) global outbreak developed subsequent to year end has been declared by WHO as a global pandemic affecting economies across the world. Fiji is not immune and the Trust is anticipating its socio-economic impact across its major business sectors including its liquidity and cash flows for the 2020 financial year. While this is expected to have a negative impact on the financial performance of the Trust in 2020, the Trust cannot quantify the magnitude and duration as it is premature to gauge the extent of implications at the date of this report. The Trust continues to monitor and assess its business operations daily, and will undertake actions as appropriate. Trust has taken necessary steps to ensure that there is minimal business disruptions by putting in place business strategies with the intention to ensure sustainability of the Fund and importantly its commitment to the unit holders remain paramount.

In the event the situation becomes worse and have a prolonged negative impact to day to day operations of the businesses in Fiji and global economy, the Trust may not be able to realize the carrying values of its assets and liabilities recorded in books as at 31 December 2019 at its recorded values, and adjustments may be required in the 2020 financial year in relation to these added risks and material uncertainties. At this stage, the financial statements do not reflect uncertain financial implications, if any, arising in future from this situation.

Apart from the above, no other matters or circumstance have arisen since the end of the financial year which would require adjustment to, or disclosure in, the financial statements of the Trust.

Digital PlatformView our Financial Performance

3301052 ⁄ 6720335

BestTax FreeDividendsGift your loved ones with an investment plan

PRo S PE C T u S | 2019 -20 2 2 39

Corporate Directory

` THE FUND Unit Trust of Fiji

` THE MANAGER Unit Trust of Fiji (Management) Limited ` REGISTERED OFFICE Level 2, Provident Plaza 1, 33 Ellery Street, Suva, Fiji ` POSTAL ADDRESS GPO Box 14451, Suva, Fiji ` CUSTOMER CARE CENTRES Suva - Shop 15 FNPF Downtown Boulevard, Ellery Street, Suva

Nadi - 42 Namaka Lane, Namaka, Nadi

` PHONE CONTACT (679) 3301 052, 3309 698, 3314 544 ` FAX NUMBER (679) 331 5376 ` WEBSITE www.unittrustfi ji.com.fj ` EMAIL info@unittrustfi ji.com ` BOARD DIRECTORS Mrs. Shaenaz Voss (Chairperson)

Mr. Maciusela N Lumelume

Mr. Shiri Gounder

Mr. Fazrul Rahman ` CHIEF EXECUTIVE OFFICER Mr. Vilash Chand ` AUDITOR Offi ce of the Auditor General

8th Floor, Ratu Sukuna House, MacArthur Street, Suva, Fiji ` THE TRUSTEE Unit Trust of Fiji (Trustee Company) Limited ` REGISTERED OFFICE Level 2, Provident Plaza 1, 33 Ellery Street, Suva, Fiji ` POSTAL ADDRESS GPO Box 14451, Suva, Fiji ` BOARD DIRECTORS Mr. Anil K Tikaram

Mr. Iowane Naiveli ` AUDITORS External Auditor

BDO FijiLevel 10 FNPF Place, 343 Victoria Parade, Suva, Fiji

Internal Auditor

Ernst & YoungLevel 7, Pacifi c House, 1 Butt Street, Suva, Fiji

` SOLICITORS Mitchell & Keil10 Gorrie Street, Suva, Fiji

R. Patel Lawyers77 Ratu Cakobau Road, Domain, Suva, Fiji

Nands LawSuite 1A, Level 1, Narseys Building, Ellery Street, Suva

` BANKERS HFC Bank, ANZ, WBC, BSP

CorporateDirectory



Get in [email protected]

annual report - unittrustfiji.com.fjunittrustfiji.com.fj/wp-content/uploads/2014/06/... · 2 unit...

Documents