2016 utof annual report by Webmedia Fiji

UNIT TRUST OF FIJI

Unit Trust of Fiji Annual Report 2016

OUR VISION 'The Leading Investment Fund for Your Financial Goals'

OUR MISSION Creating and growing investorsâ&#x20AC;&#x2122; wealth by providing sustainable and competitive returns from a balanced investment portfolio

OUR VALUES I - Integrity N - Nobility V - Visionary E - Excellence S - Simplicity T - Transparency

Unit Trust of Fiji Annual Report 2016

CONTENTS

.......................................................................................... Chairperson’s Statement 4 .......................................................................................... Chief Executive Officer’s Report 5-7 ..........................................................................................

FINANCIAL STATEMENTS 31 DECEMBER 2016

.......................................................................................... Directors’ Report 10 - 11 .......................................................................................... Declaration by Directors 12 .......................................................................................... Auditor’s Independent Declaration to the Directors 13 .......................................................................................... Independent Auditor’s Report 14 - 16 .......................................................................................... Statement of Comprehensive Income 17 .......................................................................................... Statement of Financial Position 18 .......................................................................................... Statement of Changes in Equity 19 .......................................................................................... Statement of Cash Flows 20 .......................................................................................... Notes to and forming Part of the Financial Statements 21 - 33 ..........................................................................................

Unit Trust of Fiji Annual Report 2016

Chairperson's Statement 2016 was another successful year whereby UTOF recorded a better growth and return compared to previous years. In consultation with key stakeholders the Board embarked on a journey of excellence from 2009, which has enabled the Fund to deploy specific strategies for growth and development. As a result, the Fund recorded an investment portfolio growth of 8.73%, valued at $137.96 million. With the continuous re-balancing of asset classes, we distributed a record dividend to unit holders of 6.10 cents per unit under Income & Growth Fund. This resulted in a dividend yield of 4.02% and a positive capital growth of 7.01%. The total return to unit holders under this Fund was 11.03%. A strong performance was also recorded for Income Fund providing unit holders with an annualized dividend rate of 3.54%. Hence, the total tax-free dividend for both Funds amounting to $5 million was paid out to 17,309 unit holders. The Employee Investment Scheme (EIS) concept and Children Investment Plan (CIP) have significantly contributed to the growth and performance of the Fund. Under EIS, we have registered 21 employers, thus providing investment opportunities to more than 5,000 employees. For CIP, we registered an additional 432 children investors, a testament to the growing interests being generated from our student investors under the MOU with the Ministry of Education. We believe the children investment

facility will nurture and inculcate savings and investment for our young investors. We strongly encourage parents and schools to capitalize from the incentives being offered under this facility. The UTOF Team will continue to deliver unit holder expectations in terms of the return on investment and enhancement of our services. We are indeed looking forward to the next financial year, to roll out various strategies for the overall development of UTOF. The Board would like to commend the UTOF Team for their hard work and dedication throughout the year. We would also like to express our sincerest gratitude to our Trustee Directors, Reserve Bank of Fiji and our shareholders, Ministry of Public Enterprises and the Ministry of Economy, for their support and guidance. Importantly, to our unit holders, we are indeed grateful for your confidence and support throughout the year. We look forward to another fruitful year of investment! Vinaka vakalevu,

............................................ Mrs. Shaenaz Voss

Unit Trust of Fiji Annual Report 2016

Chief Executive Officer's Report It gives me great pleasure to report on UTOF’s financial performance and its key achievement for the year ended 31 December 2016. Fund’s asset and sectorial allocation is provided at the end of this report whilst, the performance of respective funds is detailed below. Income & Growth Fund The positive movement in the value of investments attributed to an increase of 14.9%, which is equivalent to $16.2 million (refer to Chart 3).

17,309

16,111

15,512

12,616 2011

14,361

12,488 2010

13,516

12,391

8,000

2009

10,000

12,186

12,000

2008

14,000

6,000 4,000

2016

2015

2014

2013

2012

2,000

YEAR

CHART 2: FUNDS UNDER MANAGEMENT $140,000,000 $120,000,000 $100,000,000 $80,000,000

$20,000,000 $0

2012

2013

$137,961,243

$40,000,000

$126,885,333

$60,000,000 $111,314,993

FUNDS UNDER MANAGEMENT The Funds under Management grew by 8.7% from $126.9 million in 2015 to $137.9 million, as reflected in Chart 2. The growth has been driven further by the increase in unit sales and value of investments.

16,000

$93,013,267

There has also been a growing interest from our student investors under the Children Investment Plan (CIP). This plan was successfully rolled out to schools in 2013 in consultation with the Ministry of Education for the Invest Smart Program.

18,000

$80,123,674

INVESTOR CONFIDENCE UTOF’s success is predominantly driven by investor confidence and competitive tax-free return which has led to an increase in total number of unit holders (investors). As illustrated in Chart 1, the investor base has increased from 16,111 to 17,309, an increase of 7.4%.

The dividend payout of 6.10 cents per unit, provided a dividend yield of 4.02%. The value growth in the investment portfolio enabled the Fund to realise a capital growth of 7.01%

CHART 1: NUMBER OF UNIT HOLDERS

11,681

The Employee Investment Scheme (EIS) has gained prominence since its launch in 2015 and has continued to provide investment opportunities to the Fijian workforce for their financial wellbeing.

A total of $4.6 million was paid out to unit holders, equivalent to 6.10 cents per unit in tax-free dividends. The dividends to unit holders increased by 3.4% from 5.90 cents per unit to 6.10 cents per unit. The 5-year dividend payout is shown in Table 1. Over the last 5 years, UTOF paid out a total tax-free dividend of $19.1 million, an average of $3.8 million per annum.

20,000

2007

Our operating environment during the year continued to create unique challenges and opportunities for the fund. The refining of our strategic intent and goals provided a stronger platform for sustainable growth to optimize our return and value to the unit holders.

Contributing to the significant growth in the IGF portfolio was from the performance of investee companies, such as South Sea Towage Limited, HFC Bank, Amalgamation Telecommunication Holding Limited and the newly South Pacific Stock Exchange listed company, Vision Investments Limited (VIL). UTOF

during the year invested $7 million in VIL and an additional $6.25 million in HFC Bank.

2014

2015

2016

YEAR

Unit Trust of Fiji Annual Report 2016

CHART 3: INCOME & GROWTH FUND INVESTMENT PORTFOLIO $140,000,000 $120,000,000 $100,000,000 $80,000,000

$125,656,828

2013

$20,000,000

$109,408,312

$85,546,303

2012

$40,000,000

$95,426,265

$78,579,279

$60,000,000

2014

2015

2016

YEAR

TABLE 1: INCOME & GROWTH FUND DIVIDEND PAYOUT Indicators

2012

2013

2014

2015

2016

Interim Dividend (cents per unit)

2.30

2.35

2.40

Final Dividend (cents per unit)

3.50

3.55

3.70

Total Dividend (cents per unit)

5.80

5.90

6.10

Dividend distributed per annum (million)

$3.29

$3.50

$3.72

$4.06

$4.56

Dividend Yield

4.49%

4.28%

4.26%

4.16%

4.02%

Capital Growth

3.85%

1.18%

4.63%

6.84%

7.01%

Total Return

8.34%

5.46%

8.89%

11.00%

11.03%

CHART 4: INCOME FUND INVESTMENT PORTFOLIO

2012

2013

$12,304,415

$17,477,021

$5,000,000

$15,888,727

$10,000,000

$1,544,395

$15,000,000

$7,466,964

$20,000,000

2014

2015

2016

YEAR

TABLE 2: INCOME FUND DIVIDEND PAYOUT Year

Dividend Distributed Final

Total

Dividend Rate

2012

$4,329

$20,643

$24,972

3.35%

2013

$25,947

$53,339

$79,286

3.16%

2014

$166,551

$237,766

$404,317

3.17%

2015

$197,254

$260,141

$457,395

3.28%

2016

$235,341

$201,439

$436,780

3.54%

Income Fund The decline in the value of the Income Fund investment portfolio was due to withdrawal of units during the year, as illustrated in Chart 4. Despite the decline in the portfolio, we achieved an annualized dividend rate of 3.54% from the investment portfolio. The 2016 payout is IF’s highest payout since inception (refer to Table 2). IF investment portfolio mostly comprises of fixed income instruments. OUTLOOK In the year ahead, we will continue to strive for better performance and return to unit holders. The unit holders’ loyalty and confidence are immensely acknowledged and appreciated. The continuing support and stewardship from key stakeholders, our Board of Directors, Trustee Directors, Ministry of Public Enterprises, Ministry of Economy and Reserve Bank of Fiji are profoundly valued for the overall growth and development of UTOF. Vinaka vakalevu,

……………… Vilash Chand

Annualized

Interim

EIS Signing with FEA.

for its unit holders, thus providing a total return of 11.03%. The notable achievement was that the Fund exceeded its expected return to the unit holders.

EIS Signing with the Judicial Department.

Unit Trust of Fiji Annual Report 2016

Fund's Asset & Sectorial Allocation

EQUITY PORTFOLIO BY SECTOR

ASSET ALLOCATION

Property 1%

Media 0.08%

Fixed Income 17%

Construction 2.56%

Cash & Cash Equivalents 15%

Export 0.09%

Private Equity 31%

Insurance 4.11%

Public Equity 36%

Shipping 4.19%

Telecommunication 26.40% Consumer Goods 29.55% Financial 33.01%

UTOFâ&#x20AC;&#x2122;s investment portfolio continues to be driven largely by equity investment, which is 67% of the portfolio.

Income & Growth Fund (IGF), equity investments are spread across several sectors of the economy, with major sectors being Financial, Telecommunications & Consumer Goods.

TOP 10 EQUITY INVESTMENTS No.

Equity Investment

Sector

% of Investment Portfolio

HFC Bank

Financial

20.11%

Amalgamated Telecom Holdings Ltd

Telecommunication

18.03%

Vision Investments Ltd

Consumer Goods

6.59%

Fiji Gas Ltd

Consumer Goods

5.05%

South Sea Towage Ltd

Shipping

3.10%

FMF Foods Ltd

Consumer Goods

3.01%

R B Patel Group Ltd

Consumer Goods

2.58%

Marsh Limited

Insurance

2.57%

Rice Company of Fiji Ltd

Consumer Goods

1.36%

Communications Fiji Ltd

Media

1.23%

Table above lists the top 10 equity investment under Income & Growth Fund in UTOF's investment portfolio. The Fund invested $7 million in Vision Investment Ltd and an additional $6.25 million in HFC Bank.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2016

Directors’ Report................................................................................ 10 - 11 Declaration by Directors..................................................................... 12 Auditor’s Independent Declaration to the Directors........................... 13 Independent Auditor’s Report............................................................ 14 - 16 Statement of Comprehensive Income................................................ 17 Statement of Financial Position.......................................................... 18 Statement of Changes in Equity......................................................... 19 Statement of Cash Flows.................................................................... 20 Notes to and forming Part of the Financial Statements...................... 21 - 33

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI DIRECTORS' REPORT FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2016 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 (â&#x20AC;&#x153;Trustâ&#x20AC;?) as at 31st December 2016, 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 The Trustee and Manager at the date of this report are: Unit Trust of Fiji (Management) Limited Unit Trust of Fiji (Trustee Company) Limited

- Manager - Trustee

Date of formation The Trust was established on 25th April 1978. State of affairs In the opinion of the directors, the accompanying statement of financial position gives a true and fair view of the state of affairs of the company as at 31 December 2016, 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 activity The 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 $7,699,693 (2015: $4,458,009). Dividends The Trust declared the following dividend during the year: Interim Dividend Income & Growth Fund - $1,746,626 (2015: $1,596,812) Income Fund - $235,341 (2015: $197,254) Final Dividend Income & Growth Fund - $2,813,722 (2015: $2,465,920) Income Fund - $201,439 (2015: $260,144) Assets The 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 Reserve The 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 The directors believe the basis of the preparation of financial statements is appropriate and the Trust will be able to continue in operation for at least 12 months from the date of this statement. Accordingly, the directors believe the classification and carrying amounts of assets and liabilities as stated in these financial statements to be appropriate.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI DIRECTORS' REPORT - continued FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2016 Related Party Transactions In 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 Circumstances At 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 Trustâ&#x20AC;&#x2122;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 other than those disclosed in the financial statements. Event Subsequent to Balance Date There has not arisen in the interval between the end of the year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the directors, to affect significantly the operations of the Trust, the results of those operations or the state of affairs of the Trust in subsequent financial years. Directors Interest No directors 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 statements The financial statements for the year ended 31 December 2016 together with the accompanying notes set out on pages 19 to 35 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 Unit Trust of Fiji (Trust) show a true and fair view of the state of affairs as at 31 December 2016, and results, changes in equity and cash flows for the year ended on that date. Signed in accordance with resolutions of the directors of the Unit Trust Fiji (Management) Limited and Unit Trust of Fiji (Trustee Company) Limited.

Dated at Suva this

day of

2017.

___________________________ ___________________________ Director Director Unit Trust of Fiji (Management) Limited Unit Trust of Fiji (Trustee Company) Limited Manager of the Unit Trust of Fiji Trustee of the Unit Trust of Fiji

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI DECLARATION BY DIRECTORS YEAR ENDED 31 DECEMBER 2016 In accordance with resolutions of the directors of the Unit Trust Fiji (Management) Limited and Unit Trust of Fiji (Trustee Company) Limited: (a)

the accompanying statement of comprehensive income is drawn up so as to give a true and fair view of the results of the Trust for the year ended 31 December 2016;

(b)

the accompanying statement of financial position is drawn up so as to give a true and fair view of the state of the affairs of the Trust as at 31 December 2016;

(c)

the accompanying statement of changes in equity for the year ended 31 December 2016 is drawn up so as to give a true and fair view of the movement in changes in equity of the Trust;

(d)

the accompanying statement of cash flows is drawn up so as to give a true and fair view of the cash flows of the Trust for the year ended 31 December 2016;

(e)

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;

(f)

all related party transactions have been adequately recorded in the books of the Trust;

(g)

the financial statements comply with International Financial Reporting Standards and have been prepared in accordance with the Companies Act, 2015 and with the provisions of the Trust Deedâ&#x20AC;&#x2122; and

(h)

the directors have obtained an independence declaration by auditors as required by Section 395 of the Companies Act, 2015.

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

Dated at Suva this

day of

2017.

Unit Trust of Fiji Annual Report 2016

BDO, Chartered Accountants, a Fiji Partnership, is a member firm of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI STATEMENT OF COMPREHENSIVE INCOME YEAR ENDED 31 DECEMBER 2016

2016 $

2015 $

Interest Income

1,849,216

2,103,836

Dividend Income

5,125,988

3,728,416

2,919,453

7,321,764

2,240,388

Investment income:

Net gains on financial instruments held at fair value through profit or loss

Realized Gains on Disposal of Investments Net Equalization

225,700

81,053

Rental

134,970

12,495,715

13,370,039

Investment expenses

39,676

38,288

Expense on disposal of investment

46,621

1,790,272

1,551,978

1,876,569

1,590,266

10,619,146

11,779,773

10,619,146

11,779,773

Less Expenses:

Managerâ&#x20AC;&#x2122;s Remuneration

Profit for the year attributable to unit holders Other comprehensive income 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 23 to 35.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2016

Notes

2016 $

2015 $

84,368,629

74,089,943

12,102,966

17,216,861

EQUITY Unit holders’ equity – Income & Growth Fund 75,931,528 Class A units (2015: 69,350,289)

496,076 Class B units (2015: 496,076)

Unit holders’ equity – Income Fund 12,102,966 (2015: 17,216,861) Income reserve

20,271

Other reserve

35,544,342

32,624,889

132,036,208

123,951,964

ASSETS Cash and cash equivalents

7,382,907

4,861,933

Financial assets at amortized cost

13,775,061

21,498,697

Financial assets held at fair value through profit or loss

115,027,376

98,730,144

Investment Property

Total assets

1,957,000

138,142,344

127,047,774

LIABILITIES Sundry creditors and accruals

Declared for distribution Proposed final distribution Total liabilities Net Assets attributable to unit holders

181,099

162,441

2,909,876

207,305

3,015,161

2,726,064

6,106,136

3,095,810

132,036,208

123,951,964

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

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 35.

20,271

35,544,342

Other reserve $ 25,303,125 7,321,764 7,321,764 32,624,889 32,624,889 2,919,453 2,919,453

Income $ 20,271 20,271 20,271

- 5,164,791 96,471,595

(7,900) 15,584,422 (298,857) (10,186,031) 73,157 -

Unit Holders Equity $ 83,210,410 (7,750) 18,239,572 (127,152) (10,054,376) 46,099 8,096,393 91,306,804 91,306,804

(2,909,876)

7,699,693 207,305 (1,981,966) (3,015,156)

Dividend $ 4,458,009 269,426 (1,794,066) (2,726,064) (207,305) -

- (7,699,693) -

(7,699,693) -

7,699,693 7,699,693

Income available For distribution $ 4,458,009 4,458,009 (4,458,009) (4,458,009) -

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 35.

Total contributions by and distributions to unit holders Balance at 31 December 2016

Declared for distribution – 2016

Balance as at 01 January 2015 Total comprehensive income for the year Profit for the year Total comprehensive income for the year Transactions with unit holders, recorded directly in equity Contributions by and distributions to unit holders Income available for distribution Expenditure on prospectus Creations during the year Equalization on creations Repurchase of units Equalization on repurchases Declared for distribution – 2014 Interim distribution paid Proposed final distribution Declared for distribution – 2015 Total contributions by and distributions to unit holders Balance at 31 December 2015 Balance as at 01 January 2016 Total comprehensive income for the year Profit for the year Total comprehensive income for the year Transactions with unit holders, recorded directly in equity Contributions by and distributions to unit holders Income available for distribution Expenditure on prospectus Creations during the year Equalization on creations Repurchase of units Equalization on repurchases Declared for distribution – 2015 Interim distribution paid Proposed final distribution

(2,909,876)

(2,534,902) 132,036,208

(7,900) 15,584,422 (298,857) (10,186,031) 73,157 207,305 (1,981,966) (3,015,156)

10,619,146 10,619,146

Total $ 108,533,807 11,779,773 11,779,773 (7,750) 18,239,572 (127,152) (10,054,376) 46,099 269,426 (1,794,066) (2,726,064) (207,305) 3,638,384 123,951,964 123,951,964

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI STATEMENT OF CHANGES IN EQUITY YEAR ENDED 31 DECEMBER 2016

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI STATEMENT OF CASH FLOWS YEAR ENDED 31 DECEMBER 2016

2016 $

2015 $

- Interest received

1,973,054

2,003,079

- Dividends received

4,070,014

3,728,416

134,970

247,445

(1,385,171)

(2,284,634)

Cash flows from operating activities

Cash receipts in course of operations

- Rental received

Cash payments to Manager and suppliers

Proceeds from sale of investments

Purchase of investments

Net cash from (used in) operating activities

12,969,227

3,275,470

(15,931,485)

(15,566,624)

1,830,609

(8,596,848)

Cash flows from financing activities

Payments on repurchase of units

(10,186,031)

(10,054,376)

Proceeds from issue of units

15,584,422

18,242,958

Distributions paid to unit holders

(4,708,026)

(4,305,825)

Net cash from financing activities

690,365

3,882,757

Net (decrease)/increase in cash and cash equivalents

2,520,974

(4,714,091)

Cash and cash equivalents at the beginning of the year

4,861,933

9,576,024

Cash and cash equivalents at the end of the year

7,382,907

4,861,933

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 35.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS YEAR ENDED 31 DECEMBER 2016 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 Activity The 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 13 April 2017. (a)

Statement of compliance The financial statements have been drawn up in accordance with the Trust Deed, Companies Act 2015 and International Financial Reporting Standards (“IFRS”), as issued by the International Accounting Standards Board.

(b)

Basis of preparation The 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)

New standards and interpretations not adopted A number of new standards, amendments to standards and interpretations that are effective for annual periods beginning after 1 January 2016 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.

(d) New standards, interpretations and amendments that have been issued but are not mandatorily effective There are certain new standards, interpretations and amendments, which are not yet mandatorily effective and have not been adopted early in these financial statements, will or may have an effect on the Trust’s future financial statements. The company intends to adopt these standards, interpretations and amendments, if applicable, when they become effective. - IFRS 9 Financial Instruments In July 2014, the IASB issued the final version of IFRS 9 Financial Instruments which reflects all phases of the financial instruments project and replaces IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of IFRS 9. The standard introduces new requirements for classification and measurement, impairment, and hedge accounting. IFRS 9 is effective for annual periods beginning on or after 1 January 2018, with early application permitted. Retrospective application is required, but comparative information is not compulsory. Early application of previous versions of IFRS 9 (2009, 2010 and 2013) is permitted if the date of initial application is before 1 February 2015. The adoption of IFRS 9 will have an effect on the classification and measurement of the Trust’s financial assets, but no impact on the classification and measurement of the Trust’s financial liabilities. - IFRS 15 Revenue from Contracts with Customers IFRS 15 was issued in May 2014 and establishes a new five-step model that will apply to revenue arising from contracts with customers. Under IFRS 15 revenue is recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer. The principles in IFRS 15 provide a more structured approach to measuring and recognizing revenue. (e)

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.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(e)

Use of estimates and judgments - continued 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 2016 is included in Note (f) (iv).

(f)

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. (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.

Financial liabilities at amortised cost

•

Other liabilities –sundry payables and distributions payable

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. 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.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(f)

Financial assets and financial liabilities - continued (iv) Fair value measurement - continued 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 â&#x20AC;&#x153;activeâ&#x20AC;? 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. Future Maintainable Earnings 2. Realization of Assets 3. Future Maintainable Dividends 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 assetâ&#x20AC;&#x2122;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 The 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. (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.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

(g)

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

(h)

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 accruals basis.

(i) 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. (j)

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.

(k)

Cash and cash equivalents For cash flow statement presentation purposes, cash and cash equivalents includes 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.

(l)

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.

(m)

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.

(n)

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.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 1.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued (o)

Leased Assets Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Lessor Rental income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Initial indirect costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognized on a straight-line basis over the lease term. (p)

Change in Dividend Payout Dates During the year dividend payout dates have been changed to July 15 and January 15 for interim and final dividend distributions respectively.

(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 AMORTIZED COST 2016 $

2015 $

Term deposits: Income & Growth Fund

1,320,000

4,520,000

10,758,000

15,738,000

Other receivables

224,151

701,045

Interest receivable

416,936

539,652

1,055,974

13,775,061

21,498,697

2016 $

2015 $

49,325,062

41,738,195

42,609,063

33,468,853

23,093,251

23,523,096

115,027,376

98,730,144

Income Fund Loans and receivables:

Dividends receivable

FINANCIAL ASSETS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS Designated at fair value through profit or loss:

Listed equities: Shares quoted on stock exchanges: South Pacific Stock Exchange Unlisted equities Shares in Fiji Companies Fiji Government Bonds

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 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 date and the unobservable inputs have a significant effect on the instrumentâ&#x20AC;&#x2122;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. 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 $

49,325,062

Unlisted equities

34,699,140

7,909,923

42,609,063

Government bonds

23,093,251

49,325,062

57,792,391

7,909,923

115,027,376

Level 1 $

Level 2 $

Level 3 $

Total $

Local listed equities

Balance as at 31 December 2016

Local listed equities Unlisted equities Government bonds Balance as at 31 December 2015

41,738,195

25,883,678

7,585,175

33,468,853

23,523,096

41,738,195

49,406,774

7,585,175

98,730,144

During the financial year ended 31 December 2016, no transfers between levels 1 to 3 were made.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 4.

FINANCIAL ASSETS HELD AT FAIR VALUE THROUGH PROFIT OR LOSS - continued

Determining fair values - continued 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 2016

7,585,175

Total gains or losses recognized in profit or loss

324,748

Purchases

Transfers into Level 3

Transfer out of Level 3

Balance as at 31 December 2016

7,909,923

Total gains or losses for the period included in profit or loss relating to assets and liabilities held at the end of the reporting period:

324,748

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 2016 $

2015 $

Balance at 1 January

1,957,000

Balance at 31 December

1,957,000

The value of Trustâ&#x20AC;&#x2122;s investment property was made on the basis of recent market transactions on armâ&#x20AC;&#x2122;s length terms and is categorized as Level 3. No independent valuation was undertaken in 2016 as the Trust does not expect the value of the investment property to materially differ from prior year. 6.

Sundry Creditors and Accruals Other sundry payables

181,099

162,441

2016 $

2015 $

Final distribution for Income & Growth Fund - 3.70 cent (2015: 3.50 cent) per unit for all unit holders as at 31 December 2016. Interim Dividend Paid: $1,746,626 or 2.40 cent per unit (2015: $1,596,812 2.30 cent per unit).

2,813,722

2,465,920

Final distribution for Income Fund - $1.00 per unit (2015: $1.00 per unit) for all unit holders as at 31 December 2016. Interim Dividend Paid: $235,341, $1.00 per unit (2015: $197,254, $1.00 per unit)

201,439

260,144

3,015,161

2,726,064

7. Distributions Proposed final distribution

Balance at 31 December

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 8.

Reconciliation of Units issued and fully paid

Opening balance at 1 January Issues

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 Units

2016

2015

69,846,365

17,216,861

65,357,701

15,650,936

8,311,108

2,375,672

7,013,631

8,001,884

Redemptions

(1,729,869)

(7,489,567)

(2,524,967)

(6,435,959)

Closing balance at 31 December

76,427,604

12,102,966

69,846,365

17,216,861

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 the Republic of Fiji. 9.

CONTINGENT LIABILITIES AND COMMITMENTS Operating Lease Commitments Lease rentals are receivable as follows:

Not later than one year Later than one year and not later than five years

2016 $

2015 $

89,980

134,970

33,743

89,980

168,713

The Trustee and the Manager are not aware of any contingent liabilities or capital commitments for the year ended 31 December 2016 (2015: Nil). 10.

RELATED PARTIES Manager The Manager of the Trust is Unit Trust of Fiji (Management) Limited. The directors of the management company during the year were: 1. Shaenaz Voss 2. Maciusela N. Lumelume 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 $1,790,272 (Income & Growth Fund - $1,741,786 and Income Fund - $48,486) as Manager’s Remuneration (2015: $1,551,978). Trustee The Trustee of the Trust is Unit Trust of Fiji (Trustee Company) Ltd. The directors of the Trustee Company during the year were: 1. Iowane Naiveli 2. Anil Kumar Tikaram

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 10.

RELATED PARTIES - continued Trustee’s fee The Trustee is currently entitled to receive a fee of 1/8 of 1% of the value of the deposited property capped to $50million, and 1/16 of 1% of the deposited property in excess of $50million. During the year, the Trustee was paid $113,470 VIP (2015: $102,862 VIP) for its services by the Manager of the Trust. Amounts due to/from related parties Net amount due from/ (owing to) Managers

11.

2016 $

2015 $

375

20,153

TRUST DETAILS Date of Formation Unit Trust of Fiji was established on 25th April 1978. Registered Office The 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 and Government bonds 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. At the reporting date the interest rate profile of the Company’s interest-bearing financial instruments was: Fixed rate instruments 2016 $

2015 $

Term deposits

12,078,000

20,258,000

Fiji Government Bonds

23,093,251

23,523,096

35,171,251 43,781,096 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.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 12.

RISK MANAGEMENT POLICIES - continued Market risk - continued Variable rate instruments

Cash at bank

2016 $

2015 $

7,382,907

4,861,933

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 its 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 Trustâ&#x20AC;&#x2122;s portfolio is as follows:

Cash at bank Other receivables

2016

2015

7,382,907

4,861,933

1,697,061

1,240,697

Term deposits

12,078,000

20,258,000

Bonds

23,093,251

23,523,096

44,251,219

49,883,726

The Trust monitors credit risk by sector. An analysis of concentrations of credit risk is shown below: 2016

2016

2015

Financial Institutions

19,460,907

44%

25,119,933

51%

Fiji Government

23,093,251

52%

23,523,096

47%

1,697,061

1,240,697

44,251,219

100%

49,883,726

100%

Concentration by sector

Other

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.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 12.

RISK MANAGEMENT POLICIES - continued Market risk - continued 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.

2016

2015

Net loss from exchange-traded equity investments (2,466,253) (2,086,910) 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. Liquidity risk This is the risk that the Trust will not be able to facilitate its unit holdersâ&#x20AC;&#x2122; redemptions on request. The Trust aims to maintain a buffer fund in liquid assets at all times to meet expected normal redemptions. The Trustâ&#x20AC;&#x2122;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 redemption requests. The expected cash outflow on redemption is estimated to be $3.5m (2015: $3.7m) per year for the next three years, which was based on past performance and repurchase trends.

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 12.

RISK MANAGEMENT POLICIES - continued Liquidity risk - continued The table below analyses the Trustâ&#x20AC;&#x2122;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 2016

No specific Less than 1 Maturity year $ $

Between 1 and 2 years $

Between 3 and 5 years $

Over 5 years $

Total

5,404,235

12,886,530

Financial assets Term Deposits Listed and unlisted securities

7,482,295

91,934,125

3,140,540

15,063,000

6,104,700

10,725,904

35,034,144

91,934,125

10,622,835

20,467,235

6,104,700

10,725,904

139,854,799

Sundry creditors and accruals

181,099

Unclaimed distribution

Declared for distribution

2,909,876

Proposed final distribution

3,015,161

6,106,136

Bonds

Financial liabilities

At 31 December 2015 Financial assets Term Deposits

12,531,793

6,661,121

2,035,090

2,021

21,230,025

75,207,048

1,781,979

6,599,863

11,933,148

8,861,643

29,176,633

75,207,048

14,313,772

13,260,984

13,968,238

8,863,664

125,613,706

Sundry creditors and accruals

162,441

Unclaimed distribution

Declared for distribution

207,305

Listed and unlisted securities Bonds

Financial liabilities

Proposed final distribution

2,726,064

3,095,810

2,726,064

3,095,810

Unit Trust of Fiji Annual Report 2016

UNIT TRUST OF FIJI NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS - CONTINUED YEAR ENDED 31 DECEMBER 2016 12.

RISK MANAGEMENT POLICIES - continued 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 Trustâ&#x20AC;&#x2122;s and its related entities business functions and from the practical implementation of the Managerâ&#x20AC;&#x2122;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.

13.

EVENTS SUBSEQUENT TO YEAR END There has not arisen in the interval between the end of the year and the date of this report any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors, to affect significantly the operations of the Trust, the results of those operations or the state of affairs of the Trust in subsequent financial years.

Unit Trust of Fiji Annual Report 2016

2016 Activities

UTOF Booth – Fiji Showcase 2016.

UTOF staff celebrating Fiji's Sevens Rugby Olympic Gold medal win in Rio.

EIS Training & awareness in PACFO, Levuka.

Tropical Cyclone Assistance Program – Ratu Seru Memorial School in Levuka.

Awareness & Presentation in Dreketi, Macuata.

Tropical Cyclone Assistance Program – Loreto Primary School in Levuka.

Customer Awareness & Registration in Dreketi, Macuata.

Tropical Cyclone Assistance Program – Batiki Island.

Unit Trust of Fiji Annual Report 2016

Corporate Directory The Fund The Manager Registered Office Postal Address Customer Care Centre

Website Email Board of Directors Chief Executive Officer Auditor

The Trustee Registered Office Postal Address Board of Directors Auditor Solicitors

Unit Trust of Fiji Unit Trust of Fiji (Management) Limited Level 2, Provident Plaza 1, 33 Ellery Street, Suva, Fiji GPO Box 14451, Suva, Fiji Level 2, Provident Plaza 1, Ellery Street, Suva, Fiji Tel: (679) 3301 052, 3309 698, 3314 544 Fax: (679) 3315376 www.unittrustfiji.com.fj info@unittrustfiji.com Mrs Shaenaz Voss (Chairperson) Mr Maciusela N Lumelume Mr Vilash Chand Office of the Auditor General 8th Floor, Ratu Sukuna House, MacArthur Street, Suva, Fiji Unit Trust of Fiji (Trustee Company) Limited Level 2, Provident Plaza 1, Ellery Street, Suva, Fiji G P O Box 14451, Suva, Fiji Mr Iowane Naiveli Mr Anil K Tikaram BDO Level 10 FNPF Place, 343 Victoria Parade, Suva, Fiji Mitchell & Keil 10 Gorrie Street, Suva, Fiji R Patel & Co 360 Victoria Parade, Suva, Fiji

Bankers

HFC Bank, ANZ, WBC, BSP

your investment fund Invest Online - www.unittrustfiji.com.fj

Level 2, Provident Plaza 1, 33 Ellery Street, GPO Box 14451, Suva, Fiji T (679) 3301 052, 3309 698, 3314 544 F (679) 3315 376 E info@unittrustfiji.com W www.unittrustfiji.com.fj