Canterbury Mortgage Trust Group Investment Fund
Audited Financial Statements For The Year Ended 31 March 2011
Annual Report 2011
1Canterbury Mortgage Trust Group Investment Fund
Directory 2
Chairman’sReport 3
ApprovalbyDirectors 5
StatementofComprehensiveIncome 6
StatementofChangesinUnitholders’Funds 7
BalanceSheet 7
StatementofCashFlows 8
NotestotheFinancialStatements 9-22
AuditReport 23-24Co
nten
ts
2 Canterbury Mortgage Trust 3Group Investment Fund
The Manager:FundManagersCanterburyLimited
Unit4,212AntiguaStreet
Christchurch
Phone(03)3775201
Fax(03)3775207
POBox13229
Directors of the Manager:AlanWilliamPrescottLLBAlexanderDonaldMcBeathLLB (Chairman)GeoffreyReadThomasLLBPaulErnestMcEwan
The Trustee:TrusteesExecutorsLimited
Level5
10CustomhouseQuay
Wellington
Tax Advisor:PricewaterhouseCoopers
Christchurch
Auditor:Deloitte
Christchurch
Bank:ANZNationalBankLimited
Christchurch
Chai
rman
s Re
port
Directory
Chairman’s Review
TheCanterburyMortgageTrustFundwindupisprogressing,butmoreslowlynowthemajorityoftheperformingloanshavebeenrepaid.
Fromthedateofwinding-upuntil31March2011, investors intheFundhavebeenrepaid78.5%oftheircapitalinvestment.Afurthercapital repaymentof2%proposedforearlyAugustwillbringthetotalrepaidto80.5%.Thiscalculationdoesnotincludeanytaxbenefitreceivedbyunitholdersasaresultofthelossesallocatedinthe2009financialyear.
WearecontinuingtoworkwiththeTrusteeandanexperiencedloansrecoveryspecialistandeachloancontinuestobeindividuallyassessedtoensuretherightactionistakentohaveitrepaid.
Animportantissuefacingborrowersisthedifficultyrefinancingin the current financial climate. When loans are overdue butnototherwiseindefaultwehavebeenprepared,inappropriatecircumstances, to work with borrowers to achieve the bestoutcomefortheFund.
When recovery action is taken as the result of a loan default,we continue to carefully weigh up whether greater benefits toinvestors will occur through an early sale or through deferringsaleuntilthepropertymarketimproves.
Insomecases,whereinvestigationshaverevealedgoodgroundsforlegalactionagainstotherparties,afirmapproachhasresultedinsatisfactorysettlementsbeingmadeonbehalfofinvestors.
Financial Statements
The financial statements now essentially show how the trust,whichisnolongeragoingconcern,isprogressivelyrealisingitsassets.Inaddition,astheassetsarerealised,thevariousfinancialratios that formerly governed the operation of the Fund as agoingconcernareunabletobeachieved.
Over the last2years theTrusthasadded$7.45million (beforetax) to unitholders account balances, representing a partialrecoveryonthewrite-downsappliedtounitholdersaccounts intheyearto31March2009.
4 Canterbury Mortgage Trust 5Group Investment Fund
The financial statements show the Fund being significantlyreducedinsize,withnetassetsnowbeing$25.24milliondownfrom$61.57millionat31March2010.
Outlook for 2012
Whilewestill expect to continuemakingpayments, the timingandamountofthosepaymentsisdifficulttoforecastaswearedealing with the most difficult of the recoveries. Unfortunatelythe recent earthquakes, occurring when the property marketwas already slow, have made the disposal process much morecomplexandtimeconsumingregardlessoflocation.
The directors remain hopeful of an improvement in the fund’sposition,withthetrusteeandthemanagercommittedtodoingeverythingpossibletoachievethebestresultforunitholders,inthecircumstances.
ADMcBeathChairman
Chairmans Report
Approval by DirectorsFor the Year Ended 31 March 2011
Authorisation for IssueTheDirectorsofFundManagersCanterburyLimited(asmanager)andtheDirectorsofTrusteesExecutorsLimited(astrustee)authorisedtheissueofthesefinancialstatementson20July2011.Approval by Trustee and ManagerTheDirectorsofFundManagersCanterburyLimitedandtheDirectorsofTrusteesExecutorsLimitedarepleasedtopresentthefinancialstatementsofCanterburyMortgageTrustGroupInvestmentFundfortheyearended31March2011.
SignedforandonbehalfoftheManager,Fund Managers Canterbury Limited
Director DirectorFund Managers Canterbury Limited Fund Managers Canterbury Limited
SignedforandonbehalfoftheTrustee,Trustees Executors Limited
Director DirectorTrustees Executors Limited Trustees Executors Limited
Appr
oval
by
Dir
ecto
rs
6 Canterbury Mortgage Trust 7Group Investment Fund
Statement of Com
prehensive Income
Statement of ChangeS in UnitholderS fUndS For the Year Ended 31 March 2011
Notes 31March 31March 2011 2010
Unitholders’ Funds at Start of Period 61,575,214 221,083,144
NetProfitandTotalComprehensiveIncomefortheYear 2,531,983 4,924,778
Total Recognised Income andExpenses for the Period 2,531,983 4,924,778
NetRepaymentstoUnitholders 5 (38,366,740) (163,420,542)PIEtaxeffect 7 (496,821) (1,012,166)
Unitholders’ Funds at End of Period 4 $25,243,636 $61,575,214
BalanCe SheetAs At 31 March 2011
Notes 31March 31March 2011 2010
Trust Equity 4 $25,243,636 $61,575,214
Representedby:
AssetsCashandCashEquivalents 1,387,471 10,733,230
Advances 2 26,528,313 50,583,120Provisionforimpairment 6 (2,000,000) (4,000,000)
NetAdvances 24,528,313 46,583,120
GST 1,491 53,983DeferredTaxation 3 - 152,113PIETaxationRefundable - 4,413,247
Total Assets 25,917,275 61,935,693
LiabilitiesRedemptionspayable 101,405 113,529Tradeandotherpayables 9 227,527 246,950PIETaxationpayable 344,707 -
Total Liabilities 673,639 360,479
Net Assets $25,243,636 $61,575,214
These statements are to be read in conjunction with the accounting policies and notes on pages 9-22
Stat
emen
t of C
hang
es in
Uni
thol
ders
Fun
ds |
Bal
ance
She
et
Statement of ComprehenSive inComeFor the Year Ended 31 March 2011
Notes 31March 31March 2011 2010RevenueMortgageinterestincome 1,966,219 6,792,283Interestincomefrombankaccounts 129,674 636,008Otherincome 2,201 -
Total Revenue from financial assets at amortised cost 2,098,094 7,428,291
Expenses
Managementfees 9 381,590 1,051,288Trusteesfees 9 118,527 152,351CreditConsultancy 273,566 -Accountancy 27,474 65,605Administration 72,691 45,502Auditfees 58,075 146,171Bankcharges 6,332 6,848
938,255 1,467,765
ReductioninProvisionforImpairment 6 (2,000,000) (32,443,529)ProvisionforImpairmentRecovered - (407,745)BadDebtwriteoff 1,535,158 33,887,022BadDebtsRecovered (907,302) -
NextMovementinImpairmentandBadDebts (1,372,144) 1,035,748
Total Expenses (433,889) 2,503,513
Net Profit Before Taxation 2,531,983 4,924,778
Taxation 3 - -
Net Profit and Total Comprehensive Income for the Year $2,531,983 $4,924,778
These statements are to be read in conjunction with the accounting policies and notes on pages 9-22
8 Canterbury Mortgage Trust 9Group Investment Fund
Statement of CaSh flowSFor the Year Ended 31 March 2011
Notes 31March 31March 2011 2010
Cashflows from Operating Activities Cashwasprovidedfrom:Interestreceived 4,194,761 10,676,421Otherincome 2,201 315
4,196,962 10,676,736
Cashwasappliedto:Interestpaid - -Paymentstosuppliers (905,189) (2,336,893)TaxationPaid - -
(905,189) (2,336,893)
Net Cash Inflow from Operating Activities before changes in operating assets 3,291,773 8,339,843
Cashwasprovidedfrom:Repaymentofmortgages 23,397,452 50,170,227
23,397,452 50,170,227
Cashwasappliedto:Mortgageadvancesmade (2,069,366) (2,513,553)
(2,069,366) (2,513,553)
Net Cash Inflow from Operating Activities 8 24,619,859 55,996,517
Cash Flows from Investing Activities - -
Cash Flows from Financing ActivitiesCashwasprovidedfrom:ReceiptsfromReturnofRedemptions (12,124) 113,529
(12,124) 113,529
Cashwasappliedto:PaymentsforRedemptionsofUnits (33,953,494) (163,419,620)
(33,953,494) (163,419,620)
Net Cash (Outflow) from Financing Activities (33,965,618) (163,306,091)
Net (Decrease) / Increase in Cash held (9,345,759) (107,309,574)AddOpeningcashbroughtforward 10,733,230 118,042,804
Ending cash carried forward $1,387,471 $10,733,230
Representedby:CashandcashEquivalents 1,387,471 10,733,230
$1,387,471 $10,733,230
These statements are to be read in conjunction with the accounting policies and notes on pages 9-22
Statement of Cash Flow
s
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
1. STATEMENT OF ACCOUNTING POLICIES
Statement of ComplianceThesefinancialstatementshavebeenpreparedforCanterburyMortgageTrustGroupInvestmentFund(theFund)byFundManagersCanterburyLimited(theManager),onbehalfofTrusteesExecutorsLimited(theTrustee),inaccordancewiththeTrusteeCompaniesAct1967,theFinancialReportingAct1993andtheprovisionsoftheTrustDeed.The Fund is domiciled in New Zealand and was established as a GroupInvestmentFundinaccordancewiththeprovisionsofitsTrustDeeddated26June2001(assubsequentlyamended).Thesefinancialstatementshavebeenprepared inaccordancewithgenerallyaccepted accounting practice in New Zealand. They comply with the NewZealandequivalents to InternationalFinancialReportingStandards (NZ IFRS)as appropriate for profit-oriented entities. For this purpose the Fund hasdesignateditselfasprofit-orientated.The financial statements comply with International Financial ReportingStandards(IFRS).
Principal ActivitiesTheFund’sprincipalactivitieswere:-Receivingdepositsforinvestmentsfromunitholders;and-Making advances generally on first mortgage security, general security agreementsorspecificsecurityagreements.On11February2009theManagerresolvedthattheFundshouldbewound-upandtheassetsrealisedtopermitthepro-ratarepaymentofcapitaltounitholders.SincethatdatetheactivitiesoftheFundhavebeenlimitedtothemanagementandrealisationofloansandtherepaymentofunitholders.
Basis of PreparationAsnotedabove,on11February2009theManageroftheFundresolvedtowind-up theFundand realise theassetsof theFund. Accordingly, thegoing concernassumptionisnolongerappropriate.Thesefinancialstatementshavebeenpreparedon an other than going concern basis. Performing loans continue to be held atamortisedcostwhichapproximatesrealisationvalue.Non-performingloansareheldatrecoverablevalueafterconsiderationofbaddebts,impairmentlossesandcostsofdebtrecoveryasdetailedintheloanlossprovisioningpolicybelow.ThereportingcurrencyisNewZealanddollars.Theaccountingpoliciesusedinthesefinancialstatementsarethesameasadoptedfortheyearended31March2010.Accountingpoliciesareselectedandappliedinamannerwhichensuresthattheresultingfinancialinformationsatisfiestheconceptsofrelevanceandreliability,therebyensuringthesubstanceoftheunderlyingtransactionsorothereventsisreported.
Use of Estimates and JudgementThe preparation of financial statements requires management to makejudgements,estimatesandassumptionsthataffecttheapplicationofaccountingpoliciesandthereportedamountsofassets,liabilities,incomeandexpenses.Estimates and underlying assumptions are reviewed on an ongoing basis.Revisions to accounting estimates are recognised in the period in which theestimateisrevisedandinanyfutureperiodsaffected.Information about significant areas of estimation uncertainty and criticaljudgements in applying accounting policies that have the most significanteffectontheamountrecognisedinthefinancialstatementsaredescribedinthefollowingnotes:Note6-ProvisionforImpairmentNote10-FinancialInstrumentsNote12-AssetQualityEstimatesandjudgementshavebeenappliedwhereadvancesareoutstandingbeyondnormalcontractualterms.ThelikelihoodoftherecoveryoftheseadvancesisassessedbytheManager.Anyimpairmentlossisestimatedwithreferencetotheprobabilityandtimingofrecovery,thecostofpossibleenforcementthroughsecurityandrelatedcostsandsaleproceeds.
Not
es
10 Canterbury Mortgage Trust 11Group Investment Fund
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
1. STATEMENT OF ACCOUNTING POLICIES (continued)
SPECIFIC ACCOUNTING POLICIESThe following specific accounting policies which materially affect themeasurement of financial performance and the financial position have beenapplied.
Revenue RecognitionInterestrevenueisrecognisedusingtheeffectiveinterestmethod.Thismethodallocatesinterestovertherelevantperiodbyapplyingtheeffectiveinterestratetothecarryingamountofthefinancialasset.
DistributionsIn accordance with the Fund’s Trust Deed, the Fund fully distributes itsdistributableincometounitholders.Sincethedecisiontowindup,thishasbeenbywayofaprorataallocationofdistributableincometounitholdersindividualaccounts. Distributable income equals all income after deduction of fees,expenses,taxesandanyamounttheManagerconsidersprudenttowithholdtomeetpossibleloanlosses.
The distributions are recognised in the Statement of Changes in UnitholdersFundsandNote5.
Applications and RedemptionsApplicationsandredemptionshavebeensuspendedsince22July2008andsincethedecisiontowinduptheFundinFebruary2009,theFundhasmadeproratarepaymentsofcapitaltounitholdersasfundshavebeenrealised.
Financial AssetsFinancialassetsareclassifiedintothefollowingspecifiedcategories:“fairvaluethroughprofit&loss”,“availableforsale”,“heldtomaturity”and“loansandreceivables”. The classification depends on the nature and purpose of thefinancialassetsasdeterminedatthetimeofinitialrecognition.
Financialassetscarriedonthebalancesheetincludecashandcashequivalents,tradeandotherreceivablesandadvances.Financialassetsareinitiallyrecognisedattheirfairvalueplustransactioncosts. Fairvalueisdeterminedbyamarketvaluationbasedonmarketinterestrates.
Advances,tradeandotherreceivablesandotherfinancialassetsareclassifiedas“loansandreceivables”.
Advancesarerecordedatamortisedcostusingtheeffectiveinterestratemethodless any impairment except where the advance is no longer being operatedwithintheloanterms.Non-performingadvancesarerecordedattheirestimatedrealisation value after consideration of impairment losses and costs of debtrecoveryasdetailedintheimpairmentofassetspolicybelow.
Tradeandotherreceivablesandotherfinancialassetsarerecordedatamortisedcostusingtheeffectiveinterestratemethodlessanyimpairment.
Financial LiabilitiesFinancialliabilitiescarriedonthebalancesheetincludetradeandotherpayables,andaremeasuredatamortisedcostusingtheeffectiveinterestratemethod.
Trust EquityIn accordance with the February 2008 Amendments to NZ IAS 32 and NZIAS 1 Puttable Financial Instruments and Obligations Arising on Liquidation,unitholdersfundsaredefinedas“puttableinstruments”andclassifiedasEquity.Theseamendmentsapplytoannualperiodsbeginningonorafter1January2009.However,theFundearlyadoptedtheseamendmentsduringtheperiodended31March2008.
Derivative Financial InstrumentsTheFundhasnotenteredintoanyderivativefinancialinstruments.
Not
es
Impairment of AssetsAteachreportingdate,theManagerreviewsthecarryingamountsoftheFund’sassets to determine whether there is any indication that those assets havesufferedanimpairmentloss.Ifanysuchindicationexists,therecoverableamountoftheassetisestimatedinordertodeterminetheextentoftheimpairmentloss(ifany).ImpairmentlossesdirectlyreducethecarryingamountofassetsandarerecognisedintheNetProfitbeforetaxation.
Financialassetsareimpairedwherethereisobjectiveevidencethatasaresultofoneormoreeventsthatoccurredaftertheinitialrecognitionofthefinancialassettheestimatedfuturecashflowsoftheassethavebeenimpacted.Forfinancialassetscarriedatamortisedcost,theamountoftheimpairmentisthedifferencebetweentheasset’scarryingamountandthepresentvalueofestimatedfuturecashflows,discountedatthecurrentinterestrateasalladvancesareatfloatingrates.
Impairment losses on an individual basis are determined by an evaluation oftheexposuresonanadvancebyadvancebasis.Aspecificprovisionforimpairedadvancesiscreatedwhenrecoveryofprincipaland/orinterestisnotconsideredfullycollectableinaccordancewiththetermsoftheloancontract.ThecollectiveimpairmentprovisionhasbeendeterminedbytheManagerafterassessingtheremainingadvancesaccordingtotheircreditriskcharacteristicsandconsideringobjectiveevidenceof impairment events. Theprovision isused to reduce thecarryingamountofadvanceswhentheactuallossisrealised.Inundertakingthisassessmentadvancesareassessedasfollows:
a. Past Due AssetsAdvanceswhereinterestand/orprincipalareinarrearsandtheyhavenotbeenoperatedbytheborrowerwithintheirkeyterms,whicharenotimpairedassets.
b. Impaired assetsImpaired assets are any assets where there is significant doubt about thecollectabilityoftheamountsowing.
c. Restructured assetsRestructuredassetsarethosewheretheoriginaltermshavebeenchangedduetotheborrowers’difficultyincomplying.The loans are tobe repaidover a longer periodof time than specified in theoriginalagreement.
Income TaxFrom 1 October 2007 the Fund elected to be taxed as a Portfolio InvestmentEntity(PIE).AsaPIE,theFundallocatesincomeorlossesonadailybasistoeachinvestoranddeductstaxfromthatallocatedincomeattheprescribedinvestorrateforeachinvestor.ThetaxthatispaidtotheInlandRevenueisnotshownasincometaxintheStatementofComprehensiveIncome,ratheritisshownasthePIETaxeffectintheStatementofChangesinUnitholdersFunds.
Current TaxTheFundqualifiesasaPortfolioInvestmentEntity(PIE)fortaxpurposes.UnderthePIEregimeincomeiseffectivelytaxedinthehandsoftheUnitholdersandtherefore the Fund has no income tax expense. Accordingly, no income taxexpenseisrecognisedintheStatementofComprehensiveIncome.UnderthePIEregime,theManagerattributesthetaxableincomeoftheFundtoUnitholders inaccordancewiththeproportionoftheir interest intheFund.TheincomeisattributedtoeachUnitholderquarterlyandtaxedattheUnitholder’s“prescribedinvestorrate”whichiscappedat28%(30%priorto1October2010).
Deferred TaxDeferred tax is accounted for using the comprehensive balance sheet liabilitymethod in respect of temporary differences arising from differences betweenthecarryingamountofassetsandliabilitiesinthefinancialstatementsandthecorrespondingtaxbaseofthoseitems.
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
1. STATEMENT OF ACCOUNTING POLICIES (continued)
Notes
12 Canterbury Mortgage Trust 13Group Investment Fund
Goods and Services TaxTheFund is registered forGST for thepurposeof returningGST in relation toincomereceivedwhileinpossessionofpropertiesorwhereapropertyissoldbywayofamortgageesaleonbehalfofGSTregisteredmortgagors.
AllothertransactionshavebeenrecordedinclusiveofGST.
Statement of Cash FlowsTheStatementofCashFlowshasbeenpreparedusingthedirectmethod.
Operatingactivities:are theprincipal revenueproducingactivitiesof theFundandotheractivitiesthatarenotinvestingorfinancingactivities.
Investingactivities:aretheacquisitionanddisposaloflongtermassets.
Financing activities: are activities that result in changes in the size andcompositionofthecontributedequityoftheFund.
Cashandcashequivalentscomprisecashonhand,cashinbanksandinvestmentsinmoneymarketinstrumentsorothershorttermhighlyliquidinvestments,netofoutstandingbankoverdrafts.
STANDARDS AND INTERPRETATIONS ON ISSUE NOT YET ADOPTEDAtthedateofauthorisationofthefinancialstatements,anumberofStandardsand Interpretations were on issue but not yet effective.We are not aware ofanystandardsonissuebutnotyeteffectivewhichwouldmateriallyimpacttheamountsrecognisedordisclosedinthesefinancialstatements.
2. ADVANCES 31March 31March 2011 2010Mortgageadvancesbyloantype:-Commercial 7,354,224 13,453,802-Home-owneroccupied 654,762 3,876,315-ResidentialInvestmentProperties 12,766,649 27,350,924-Rural 5,752,678 5,902,079
Closingbalance $26,528,313 $50,583,120
Mortgageadvancesbygeographicalregion: CanterburyRegion 5,763,482 17,659,859OtherSouthIslandRegions 13,354,341 17,452,391NorthIslandRegions 7,410,490 15,470,870
Closingbalance $26,528,313 $50,583,120
Mortgageadvancesbynatureofunderlyingsecurity:COMMERCIAL BareLand 1,048,084 1,388,615 Development 1,981,741 575,963 Investment 4,324,399 7,804,120 OwnerOccupied - 3,685,104RURAL Crop/Horticulture - 274,230 Sheep 1,706,670 1,465,588 Viticulture 4,046,007 4,121,845 BareLand - 40,416HOUSING-OwnerOccupiedCrossLease - 36,085 StandardHomes 654,762 3,840,230RESIDENTIAL Apartments 5,224,112 12,387,471 BareLand 396,168 4,475,382 Development 6,209,487 9,467,908 StandardHomes 936,883 1,020,163
$26,528,313 $50,583,120
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
1. STATEMENT OF ACCOUNTING POLICIES (continued)
Not
esN
otes
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
3. TAXATION
a) TAXATION EXPENSE 31March 31March
2011 2010ProfitBeforeIncomeTaxation 2,531,983 4,924,778
DistributabletoUnitholders (2,531,983) (4,924,778)
Taxation Expense $- $-
Taxation Expenses comprises:
CurrentTaxationExpense - -DeferredTaxationbenefitofimpairmentprovision - -
$- $-
b) DEFERRED TAX 31March 31March 2011 2010
Openingbalance 152,113 170,842DeferredTaxationMovements (152,113) (18,729)
Closingbalance $- $152,113
DeferredTaxrelatedsolelytothetaxbenefitoftheFormationLossesoftheFund.ThisrepresentedaPIEtaxcreditreceivablebytheunitholdersuponrealisationofthoseFormationLossesandwasfullyrealisedin2011.TheFormationLossesrelatedto theProvision for Impairmentat thedateof transition toaPortfolioInvestmentEntity.Thedateoftransitionwas1October2007andtheProvisionforImpairmentatthatdateamountedto$880,248.ThebalanceoftheDeferredTaxbenefitat31March2011afterutilisationoflossesduringtheyearis$Nil(31March2010$152,113).
4. TRUST EQUITY 31March 31March
2011 2010
UnitholdersFunds(Note5) 25,243,482 61,575,347
Accumulated(Overdistributed)/UndistributedIncome(Note7) 154 (133)
$25,243,636 $61,575,214
5. UNITHOLDERS FUNDS 31March 31March
2011 2010
RepaymentstoUnitholders (38,366,740) (163,420,542)
Profitsappliedtoinvestors(NetofPIETax) 2,034,875 3,912,692
OpeningBalance 61,575,347 221,083,197
Closingbalance $25,243,482 $61,575,347
Units were issued at $1 per unit. Unitholders funds were invested for no fixedterm.AsdescribedinNote1redemptionsweresuspendedfrom22July2008.TheManagerresolvedon11February2009towinduptheFund.Allunitshaveequalrightsinanysurplusonwindingup.Tobalancedate,31March2011,theFundhadrepaidUnitholders78.5centsofeachdollarheldatthetimethedecisiontowindupwasmade(31March201065cents).
14 Canterbury Mortgage Trust 15Group Investment Fund
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
Not
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otes
7. ACCUMULATED UNDISTRIBUTED/(OVER DISTRIBUTED) INCOME 31March 31March
2011 2010
ProfitAttributabletoUnitholders 2,531,983 4,924,778PIE(Profit)/lossappliedtoUnitholders (2,531,696) (4,924,858)
Increase/(Decrease)inUndistributedIncome 287 (80)
Openingbalance (133) (53)
Total Accumulated (Over Distributed) / Undistributed Income $154 $(133)
PIEtaxeffectallocatedonProfits $496,821 $1,012,166
The PIE tax effect has been calculated at the individual unitholder’s PIR(PrescribedInvestorRate).
8. RECONCILIATION OF NET PROFIT WITH NET CASH FLOW FROM OPERATIONS 31March 31March
2011 2010
NetProfitaftertax 2,531,983 4,924,778
Plus
IncreasefromnetrepaymentofMortgages 23,983,318 91,619,261
Net(Decrease)/Increaseinprovisionforimpairment (2,000,000) (40,446,000)
24,515,301 56,098,039
(Decreases)/IncreasesinWorkingCapitalItems:
AccruedInterest 71,491 767,289
Trade,otherpayablesandGST 33,067 (868,811)
DeferredTaxation 152,113 18,729
NetMovementsinWorkingCapital 256,671 (82,793)DeferredTaxMovementthroughStatementofUnitholdersFunds (152,113) (18,729)
Net cash flow from operating activities $24,619,859 $55,996,517
Movement in Accrued Interest
AccruedInterestisincludedintheadvancesonthebalancesheet.
9. RELATED PARTIES AND KEY MANAGEMENT PERSONNELa. Related PartiesTherelatedpartiesareTrusteesExecutorsLimited,whoprovidetrusteeservicestotheFundandFundManagersCanterburyLimited,whoprovidemanagementservicestotheFund.TrusteeandManagementfeesarepaidinaccordancewiththeProspectusatthefollowingrates:- Trustee Fees are 0.1% (2010: 0.1%) on Investments up to $50 million and
0.08%(2010:0.08%)onInvestmentsexceeding$50million.- ManagementFeesare1.0%(2010:1.0%)ofunitholdersfunds. Thefollowingtransactionsoccurredduringtheperiodunderreviewinregard
topartiesdirectlyrelatedtotheFund. 31March 31March
2011 2010TrusteesFees-TrusteesExecutorsLimited 118,527 152,351ManagementFees-FundManagersCanterburyLtd 381,590 1,051,288
$500,117 $1,203,639
Softwareservicecharge-FundManagersCanterburyLimited $12,976 $12,500Amountspayabletorelatedpartiesatperiodend:FundManagersCanterburyLimited $78,049 $161,403TrusteesExecutorsLimited $28,103 $15,545
Amountspayableareunsecuredandrepayableatnormaltradeterms.
ThepersonalclientservicesdivisionofTrusteesExecutorsLimitedinvestedintheFundonbehalfofitsretailtrustclientsandasat31March2011held$801,417intheFund(31March2010$1,890,923).
Amountsreceivablebyrelatedpartiesatperiodend:CMTrustPropertiesLtd $549,600 $313,448
CMTrustPropertiesLtdisapropertyowningcompany,establishedinNovember2009,whosesharesareheldintrustforthebenefitoftheFund,thusenablingtheFundtoenhanceitsreturnonaloansettlement.Therearealsosharesheldintrustforthebenefitofthefund,inrelationtoTheNelsonRidgeWaterCompanyLtdanditssubsidiaryRidgesRoadLtd.ThesecompaniescontrolassetsassociatedwithasubdivisioninCentralOtago.
6. PROVISION FOR IMPAIRMENT 31 March 31 March 2011 2010 Collective Specific Total Collective Specific TotalOpeningbalance 4,000,000 - 4,000,000 5,000,000 39,446,000 44,446,000Increaseinimpairment - - - - 1,876,000 1,876,000Reductioninimpairment (2,000,000) - (2,000,000) (1,000,000) (33,319,529) (34,319,529)
Net(Reduction)/IncreaseinImpairment (2,000,000) - (2,000,000) (1,000,000) (31,443,529) (32,443,529)Provisionutilised - - - - (8,002,471) (8,002,471)
Closingbalance $2,000,000 - $2,000,000 $4,000,000 - $4,000,000
InMarch2010eachloanwasreviewedinrelationtoimpairmentwiththeManagerandtheTrusteeconcludingthateventshaddevelopedtothepointwherethespecificprovisionsshouldbeconsideredtobebaddebtsandwrittenoff.Attheendofthe2011financialyearallremainingloanswereonceagainreviewedandrecoveries/writeoffsrecognisedthroughbaddebts.TheManagerandTrusteearestillpursuingallandanyavenuesforrepaymentbutacknowledgethatcollectionbeyondthewrittendownvalueisunlikely.
ThecollectiveimpairmentprovisionhasbeendeterminedbytheManager,withinputfromtheTrusteeandindependentexternalcreditconsultants.Afterassessingtheremainingadvances,accordingtotheircreditriskcharacteristicsandconsideringobjectiveevidenceofimpairmentevents,in2011thiswasreducedsignificantly.Thisreductionrecognisestheprogressmadeinrecoveringloans,whichwhilenotconsideredbadwerefelttoattractsomecollectionrisk.
16 Canterbury Mortgage Trust 17Group Investment Fund
b. Key Management PersonnelCompensation paid to Directors and executives, being the key managementpersonnelofFundManagersCanterburyLimitedinrespectoftheirresponsibilitiestotheFundwere: 31March 31March 2011 2010Short-termBenefits $189,798 $295,553PostEmploymentBenefits - -OtherLongTermBenefits - -TerminationBenefits - -
ThefollowingdirectorsorkeymanagementpersonnelandtheirrelatedpartiesbeneficiallyownedunitsintheFund: 31March 31March
2011 2010GCMain $11,291 $28,546GCMain&VLEilken-Main $5,621 $13,688VLEilken-Main $5,158 $12,567ThistledomeTrust $28,928 $65,046HJThomas $8,256 $20,108LatheronTrust $11,465 $25,779VFYoung $11,062 $26,922Winsome&AllenBarrowTrust $3,585 $9,077
10. FINANCIAL INSTRUMENTSa. Financial Risk Management PoliciesInterest Rate RiskItisthepolicyoftheFundtoensurethatinterestrateexposureismaintainedonafloatingratebasis.Alladvancesaremadeatfloatingrates.
Credit RiskCreditriskistheriskthatacounterpartywilldefaultonitsobligationresultinginafinanciallosstotheFund.Priortothedecisiontowindupallprospectivemortgagorsweresubjectto lendingcriteriaestablishedbytheManager.Theseincluded maximum loan security value ratios, a demonstrated debt servicingability andall advancesare securedbyfirstmortgageand/orgeneral securityagreementorspecificsecurityagreement.ApprovalswerebyManagement,orbytheBoardofDirectorsoftheManager.FortheperiodsincethecommencementofthewinduptheFundhasacreditriskonoutstandingadvances.TheFund’spolicywithregardtooutstandingadvances,isthatallexpiredloansarerequiredtoberepaidandtheremainingloans,9asat31March2011(35asat31March2010),areencouragedtoseekalternativefunding. The Fund, with the assistance of a third party credit consultant, isworking with borrowers to have the loans repaid or recover the outstandingamountsbyrealisingsecuritiesheldagainsttheloans.TheTrusteehasapprovedthisapproachandismonitoringtheprogressonanongoingbasis.
Liquidity RiskLiquidityriskistheriskthattheFundmayencounterdifficultyinraisingfundsat shortnotice tomeet itscommitmentsandarises fromthemismatchof thematurityofmonetaryassetsandliabilities,andunitholderfunds.Managementmonitorstheriskasfollows:- Thefundisinsuspension,withfundsbeingreturnedtounitholdersonlywhen
sufficientreserveshavebeenaccumulatedtomakearepaymentofcapital.- ExpensesincurredprotectingorrealisingtheFund’spositiononadvancesare
paidastheyfalldue.Aminimumlevelofreservesareheldasacontingencytocoverthesecosts.
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
9. RELATED PARTIES AND KEY MANAGEMENT PERSONNEL (continued)
a. Financial Risk Management Policies (continued)- With theexceptionof9 loans (35 in2010)allmortgageshaveexpiredand
beencalledup.Thefundisworkingwithborrowerstorealiseitsinvestmentinthemostefficientmanner.Ananalysisofthecontractualrepaymentprofileofthemortgageadvancesisoutlinedinnote11.
TheFund’sliquiditypositionissetoutinnote11.TheFundmonitorsitsliquidityposition on an ongoing basis and maintains deposits at call, which togetherwith funds received from mortgage repayments enable the Fund to meet itscommitmentsastheyfalldue.Tomeetbothexpectedandunexpectedfluctuationsinoperatingcashflows,theFundmaintainsastockofliquidinvestments.AsaresultoftheFund’sresolutiontowindupthefund(refernote15)theleveloffundsheldtocoveroperatingcashflowshasbeenreducedtolevelsproportionatetotherisk
Capital ManagementThe Fund has no externally-imposed capital requirements other than thoseset out in theTrust Deed dated 26 June 2001 (as amended) and Investmentguidelines.However,sincethedecisionwastakentowinduptheFund,thefocushasbeenonmaximisingloanrecoveries.TheFundretainsonlysufficientcapitaltomeetitsoperationalrequirements.Allsurplusfundsarerepaidtounitholders.
b. Quantitative Risk Exposure DisclosuresConcentration of Funding 31March 31March 2011 2010CanterburyRegion 16,817,931 42,542,869OtherSouthIslandRegions 3,696,846 9,203,516NorthIslandRegions 4,483,459 9,272,978Offshore 245,246 555,984
25,243,482 61,575,347
FundingisprimarilyfromunitholdersintheCanterburyregionofNewZealand.
Fair ValuesThecarryingamountsoffinancial instrumentsarethesameastheirfairvalue.Fairvaluehasbeendeterminedwithreferencetotheexpectedrecoveryoneachindividualmortgageadvance.
Credit RiskAtbalancedate$1,387,471(31March2010$10,733,230)or5.50%(31March201017.43%)of theFundwas investedwith theANZNationalBankofNewZealandLimited.OnegroupofcloselyrelatedcounterpartiestowhichtheFundhasacreditexposureexceeded5%ofunitholdersfundsat31March2011andthisexposurewas6.55%(31March20106.21%).At balance date the 6 largest borrower exposures amounted to 70.81% ofunitholderfunds(31March201042.37%).Thisexceedsthecreditriskexposureguidelineof20%,establishedpriortowindup.Sincethedecisiontowindup,theFundhasbeenunable toadhere to thisguideline,dueto the reduction insizeofunitholders fundsand theongoing realisationof the loanbook.WhilsttheManagerandTrusteecontinuetomonitorthis,giventhereducingfundsizetheFundisunabletoreducethisexposureandtherefore,remedythesituation.The maximum credit exposure (net of provisions and write-offs) of the Fundis $25,915,784 (31 March 2010 $61,729,597). Collateral held in respect ofadvancesof$26,523,313(31March2010$50,583,120)isbywayofregisteredfirst mortgage. One loan equalling $9,080,718(gross) (31 March 2010$9,202,564(gross)), recordedas fully impaired,was incorrectlysecuredbyfirstmortgage over a neighbouring property and proceedings are ongoing againsttheactingsolicitor,withfurtherlegalremediesbeingexplored.Theaverageloanto valuation ratio (LVR)onmortgageadvances as at the timeof lendingwas56.03%(31March201050.76%).Thedeteriorationinthepropertymarket(refernote15)hashada significantadverse impacton theLVRasatbalancedate.AssetQualityisfurtherdiscussedinNote12.
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
Not
esN
otes
18 Canterbury Mortgage Trust 19Group Investment Fund
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
10. FINANCIAL INSTRUMENTS (continued)Liquidity RiskCanterburyMortgageTrust’sTrustDeedprescribesthatliquidassets(asdefinedin the Trust Deed as including cash, bank deposits and securities) are to bemaintainedataminimumof5%ofTotalTangibleassetslessreserves.SincetheresolutiontowinduptheFundinFebruary2009,theFundhastodatemaintainedapolicyofpayingallsurplusfundstounitholders,asreturnsofcapital,thusnotcomplyingwiththisrequirement.
Sensitivity AnalysisTheFundisfocusedsolelyontherecoveryoftheremainingloans,themajorityof these loansare significantly inarrearsandarenotmaking regular interestpayments. It is not considered relevant or practical to calculate the Fund’ssensitivity to changes in interest rates. The overall recovery of the loans ismoresensitivetothepropertymarket,asthiswilldeterminetheFund’soverallrecoveryontheremainingloans.
Interest RevenueCanterbury Mortgage Trust as an entity accumulates income from mortgageloanswhich,afterdeductionofexpensesisthenpaidouttounitholders.
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
11. LIQUIDITY PROFILEThefollowingtablesdetailtheFund’sremainingcontractualmaturityforitsfinancial assetsandliabilities.ThetableshavebeendrawnupbasedonundiscountedcashflowsbasedontheearliestdateonwhichtheFundisentitledtoreceivethefinancialasset orrequiredtopayforthefinancialliability.Thetableincludesbothinterestandprincipalcashflows:31 MARCH 2011 On Demand 0-6 Months 6-12 Months 1-2 Years 2-5 Years Over 5 Years TotalFinancialAssets:CashandCashEquivalents 1,387,471 - - - - - 1,387,471Advances 24,079,932 559,099 114,041 1,697,859 38,576 195,138 26,684,645
$25,467,403 $559,099 $114,041 $1,697,859 $38,576 $195,138 $28,072,116
FinancialLiabilities:TradeandOtherPayables - 227,527 - - - - 227,527
$- $227,527 $- $- $- $- $227,527
31 MARCH 2010 On Demand 0-6 Months 6-12 Months 1-2 Years 2-5 Years Over 5 Years TotalFinancialAssets:CashandCashEquivalents 10,733,230 - - - - - 10,733,230Advances 28,559,203 16,987,336 5,079,399 290,029 121,113 627,142 51,664,222
$39,292,433 $16,987,336 $5,079,399 $290,029 $121,113 $627,142 $62,397,452
FinancialLiabilities:TradeandOtherPayables - 246,950 - - - - 246,950
$- $246,950 $- $- $- $- $246,950
Advances include all contractual cashflows for theperiod defined. The interest rate appliedtothesecontractualcashflowsisthefloatingrateapplicabletotheseadvancesatBalanceDate.Whilstmortgagesareadvancedonanondemandbasis,alladvanceswiththeexception of9loans(asnotedinNote10aabove)haveexpiredandbeencalledup,itisnotexpectedthatthesewillberepaidonthatbasis.DuetotheFundbeingwoundupitisnotpossible topredictwithanycertaintywhentheremainingmortgageadvanceswillberepaid(RefertoNote15).The weighted average interest rate on performing advances is 11.29% (March 2010 11.67%).A0.5%movementintheinterestratewouldresultina$50,000movementininterestrevenueresultinginanincreaseordecreasetoprofitandequity(March2010 $109,000).Advanceswhicharesignificantlyimpairedaresetasnonaccruinguntiltheloanisbroughtuptodateorrepaid.Interestratesonalladvancesarefloatingwith14days noticeofachange.Thereforealladvancesrepricein14days.Interestratesonbankcallandtermdepositaccountsarewithintherangeof2.50%to3.50%.Interestratescan beresetdailyforcallaccountsoronmaturityofthetermdeposit.While all financial assets/liabilities are ultimately at call the ability to liquidate a financialassettorepayunitholdersisultimatelyconstrainedbythetimelinesstorealisetheasset(referalsotonote15).
Not
esN
otes
20 Canterbury Mortgage Trust 21Group Investment Fund
12. ASSET QUALITYa. Past due assetsThe past due assets include the total amounts owing by the borrowers who are inarrears,notjustthepastdueportion.Asat31March2011thepastdueportionwas$1,814,335(31March2010$2,734,534).Pastdueassetsexcludeimpairedassetsasnotedin(b)below.ThepastdueassetsaresecuredbyfirstmortgagesoverpropertiesinNewZealandwithanaverageLVRof35.36%,basedonvaluationatthetimeoflending.Duetotheuncertaintyin the property markets (Refer Note 15) the Manager considers it impracticable toestimatethefairvalueofthecollateralheldassecurityasatbalancedate.
TheageanalysisofthePastdueassetsandthePastdueportionis:
31 MARCH 2011 0-3 Mths 3-6 Mths 6-9 Mths 9-12 Mths 12 Mths + Total
Pastdueassets 174,846 - 1,689,103 - - 1,863,949
Pastdueportion 125,232 - 1,689,103 - - 1,814,335
31 MARCH 2010 0-3 Mths 3-6 Mths 6-9 Mths 9-12 Mths 12 Mths + Total
Pastdueassets 4,412,093 2,020,649 516,797 - - 6,949,539
Pastdueportion 2,217,088 649 516,797 - - 2,734,534
31March 31March 2011 2010b. Impaired AssetsOpeningImpairedassets 29,752,041 79,753,915NewImpairedassets 1,885,500 6,625,069Impairedassetsrepaid/writtenoff (15,592,035) (56,626,943)
ClosingImpairedassets $16,045,506 $29,752,041
The impaired assets include the total amounts owing by the borrowers who are inarrears,notjustthepastdueportion.Therecordedamountsarenetofwrite-downsforpreviouslyidentifiedimpairments.InterestIncomeonImpairedFinancialAssetsfortheperiodwas$120,375(31March2010$2,003,876).The impairedassets are securedbyfirstmortgagesover properties inNewZealandwithanaverageLVRatthetimeoflendingof40.79%,withtheexceptionofonefullyimpairedloanequalling$9,080,719(31March2010$9,202,564),thatwasincorrectlysecured by first mortgage over a neighbouring property. As stated in Note 6 theManagerandtheTrusteehavedeterminedthatduetochangesinthepropertymarketthese impaired loan assets should be considered bad debts. Accordingly Impairedadvanceshavehadabaddebtwritedownappliedtothemof$27,240,229(31March2010$33,313,786),toreflectacurrentestimatedfairmarketvalue.
TheageanalysisoftheImpairedassetsandthePastdueportionis:
31 MARCH 2011 0-6 Months 6-12 Months 12 Months+ TotalImpairedassets 1,205,424 180,076 14,660,006 16,045,506Pastdueportion 759,910 180,076 14,660,006 15,599,992
31 MARCH 2010 0-6 Months 6-12 Months 12 Months+ TotalImpairedassets 3,962,602 5,701,185 20,088,254 29,752,041Pastdueportion 3,228,016 1,152,305 20,088,254 24,468,575
c. Restructured Assets.AsatBalanceDate,noloans(31March2010-noloans)withinteresttotalling$Nil(March2010$Nil)wascapitalisedontotheprincipalbalanceoftheloans.Inallcases,theseloanscontinuedtomeettheloansecurityvalueratiosanddonotformpartofthepastdueassets.WhiletherearenorestructuredloanstheFundhasadvancesoutstandingat31March2011of$2,342,188tothreeborrowers(31March2010$313,448tooneborrower),ontermsthatwouldnotmeettheFund’sformer investmentguidelines.Theseadvancesweremadeas theManagerandTrusteebelieve theywill improve thefinal recoverytotheFund.
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
13. COMMITMENTS
Commitments inrespectofmortgageadvancesapprovedbutnotyetpaidoutat31March2011totalled$Nil(March2010$Nil)asincludedinNote11.
14. SEGMENT REPORTING
Adoption of NZ IFRS 8 Operating Segments
CanterburyMortgageTrustGroupInvestmentFundhasadoptedNZIFRS8OperatingSegments, with effect from 1 April 2009. NZ IFRS 8 requires operating segmentstobe identifiedon thebasisof internal reportsaboutcomponentsof theFund thatare regularly reviewedby thechiefoperatingdecisionmaker (which is theBoardofDirectorsoftheManager),inordertoallocateresourcestothesegmentandtoassessitsperformance.
Products and services from which reportable segments derive their revenues
TheFundoperatesinoneindustry,receivingdepositsforinvestmentsfromunitholders(funding) and making advances secured by mortgages and other forms of security(lending).On11February2009theManagerresolvedthattheFundshouldbewound-upandtheassetsrealisedtopermitthepro-ratarepaymentofcapitaltounitholders.Since that date the activities of the Fund have been limited to permit the pro-ratarepayment of capital to unitholders. The service provision process for each of theinvestmentsandmortgagesissimilar.
Segment revenues and results
TheaccountingpoliciesofthereportablesegmentarethesameastheFund’saccountingpoliciesdescribed inNote1. As there isonlyone reportable segment for the Fundthesegmentprofit representsprofitearned for thesegmentafterall costs includingallmanagement fees, trustees fees, reduction in provision for impairment, provisionrecoveredandbaddebtwriteoff.TheBoardofDirectorsoftheManagermakeresourceallocationdecisionstothissegmentbasedontheexpectedcashflowsandresultsofFundoperationsasawhole.Forthepurposesofmonitoringsegmentperformanceandallocating resources to the segment, the Board monitors the tangible and financialassetsattributabletothesegment.Allassetsareallocatedtothereportablesegment.
Information about major customers
PleaserefertoNote10bforthesixlargestborrowerexposures.
Geographical reporting
Alloperationsarecarriedout inNewZealand,and there isaconcentrationofbothfunding and lending in the Canterbury region. Therefore there is a geographicalconcentrationof risk regarding lending,withapproximately22.0%(201034.9%)oftheloanportfoliolentinCanterbury,refertoNote2forfurtherdetails.
15. WIND-UP OF THE FUND AND MORTGAGE ADVANCES ARREARS
On22July2008theManageroftheFundadvised its investorsthatallwithdrawalsfromtheFundhadbeensuspendedfor90daysandwouldthenbe followedbythe90 business day redemption period making the effective date for the payment ofredemptionsMarch2009.ThisactionwastakentosecureandprotecttheFundfromanunprecedentedlevelofwithdrawalrequestsfromunitholders.On11February2009theManagerresolvedthat theFundshouldbewound-upandtheassets realisedtopermitthepro-ratarepaymentofcapitaltounitholders.SincethedecisiontowinduptheFund,therealisationoftheFund’sassetshasbeensupervisedbytheTrustee,whohascontractedathirdpartycreditconsultanttomanagetherealisationprocess.
Notes N
otes
22 Canterbury Mortgage Trust 23Group Investment Fund
15. WIND-UP OF THE FUND AND MORTGAGE ADVANCES ARREARS (continued)
ThecontinuedsluggishNewZealandeconomy,thedemiseofanumberoffinancecompaniesandthesoftpropertymarkethaveresultedinverylimitedoptionsformortgageholderstorefinance,makingitincreasinglydifficultformanytorepaytheir loans. The property market continues to be characterised by depressedpricesandslowsalesvolumes.Theseconditionsresultinuncertaintyregardingthevalueandtheabilitytorealisetheunderlyingsecurityonmortgageadvancesonatimelybasis.Theinabilityofborrowerstorepaymortgageadvanceshasreduced the amount estimated to be recoverable on these advances, in realterms,andacollectiveprovisionforimpairmenthasbeenmade.Consistent with the wind-up instructions of the Trustee, the provisioning inrespectofthepotentialimpairmentofadvancesoutstandingatbalancedatehasbeendeterminedbasedonanorderlyrealisationofadvances.In terms of the earthquakes that hit Canterbury in the last year, the Fund’ssecurities within the Canterbury region were all insured and while there isdamage to some properties, theTrust’s position is protected by the insurancecover carried over those properties. Progress on collection outside of theCanterburyregionhascontinueduninterrupted.
noteS to the finanCial StatementSFor the Year Ended 31 March 2011
INDEPENDENT AUDITOR’S REPORT
TO THE UNITHOLDERS OF CANTERBURY MORTGAGE TRUST GROUP INVESTMENT FUND
Report on the Financial StatementsWe have audited the financial statements of Canterbury Mortgage Trust GroupInvestmentFundonpages6to22,whichcomprisethebalancesheetasat31March2011, thestatementof comprehensive income, statementof changes inunitholdersfunds and statement of cash flows for the year then ended, and a summary ofsignificantaccountingpoliciesandotherexplanatoryinformation.This report ismadesolely to theFund’sunitholders,asabody. Ouraudithasbeenundertaken so that we might state to the Fund’s unitholders those matters we arerequiredtostatetotheminanauditor’sreportandfornootherpurpose.Tothefullestextentpermittedbylaw,wedonotacceptorassumeresponsibilitytoanyoneotherthantheFund’sunitholdersasabody, forourauditwork, for this report,or for theopinionswehaveformed.
Manager’s Responsibility for the Financial StatementsTheManagerisresponsibleforthepreparationoffinancialstatements,inaccordancewith generally accepted accounting practice in New Zealand and that give a trueandfairviewofthematterstowhichtheyrelate,andforsuchinternalcontrolastheManagerdeterminesisnecessarytoenablethepreparationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.
Auditor’s ResponsibilitiesOurresponsibilityistoexpressanopiniononthesefinancialstatementsbasedonouraudit.WeconductedourauditinaccordancewithInternationalStandardsonAuditingand International Standards on Auditing (New Zealand). Those standards requirethatwecomplywithethicalrequirementsandplanandperformtheaudittoobtainreasonableassuranceaboutwhetherthefinancialstatementsarefreefrommaterialmisstatement.Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamountsanddisclosures in thefinancialstatements. Theproceduresselecteddependontheauditor’s judgement, including theassessmentof the risksofmaterialmisstatementof the financial statements, whether due to fraud or error. In making those riskassessments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationoffinancialstatementsthatgiveatrueandfairviewofthematterstowhichtheyrelateinordertodesignauditproceduresthatareappropriateinthecircumstances,butnotforthepurposeofexpressinganopinionontheeffectivenessoftheentity’sinternalcontrol. An audit also includes evaluating the appropriateness of the accountingpoliciesusedandthereasonablenessofaccountingestimates,aswellastheoverallpresentationofthefinancialstatements.Webelievethattheauditevidencewehaveobtainedissufficientandappropriatetoprovideabasisforourauditopinion.Other than in our capacity as auditor, we have no relationship with or interests inCanterburyMortgageTrustGroupInvestmentFund.
OpinionInouropinion,thefinancialstatementsonpages6to22:• complywithgenerallyacceptedaccountingpracticeinNewZealand;• complywithInternationalFinancialReportingStandards;and• giveatrueandfairviewofthefinancialpositionofTheCanterburyMortgageTrust GroupInvestmentFundasat31March2011,anditsfinancialperformanceandits cashflowsfortheyearendedonthatdate.
Notes
Audi
t Rep
ort
24 Canterbury Mortgage Trust
Audi
t Rep
ort
Emphases of MatterBasis of PreparationAsdisclosedintheaccountingpoliciesandNote15tothefinancialstatementson11February2009theManagerresolvedtowind-upandrealisetheassetsoftheFund.Accordingly, thefinancial statements for the yearended31March2011havebeenpreparedonanotherthangoingconcernbasis.
Fundamental Uncertainty Informingourunqualifiedopinion,wehaveconsideredtheadequacyofthedisclosuresinNote15ofthefinancialstatementsregardingtheimpairmentofadvancesandthepotentialimpactofcurrentmarketconditionsontherecoverabilityofadvances.Thesemarket conditions impact on both the realisation value and the expected timing ofrepaymentofadvances.Consistentwiththewind-upinstructionsoftheTrusteetheprovisioninginrespectofthepotentialimpairmentofadvancesoutstandingatbalancedatehasbeendeterminedbasedonanorderlyrealisationoftheadvances.The financial statements do not include any adjustment to the carrying value oftheadvances thatmay result fromfurtherdeterioration inpropertypricesonwhichadvancesaresecuredbeyondthedateofapprovalofthefinancialstatements,northeeffectofanydelaysinliquidatingthepropertysecuritiesthroughasaleprocess.
CharteredAccountants20July2011Christchurch,NewZealand
Canterbury Mortgage Trust Group Investment Fund
Registered office of the Manager Fund Managers Canterbury Limited
Unit 4, 212 Antigua Street, Christchurch03 377 5201 • 03 377 5207 • [email protected]