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Annual Report2017

Wisdom for the FutureF I J IA N H O L D I N G SUNIT TRUST

While I Live, I Grow

ORGANISATIONAL VALUESFHL FML “HERLP” core values are the underlying principles that strongly bind our people and the organization together:

i. HONESTY, LOYALTY AND INTERGRITY Our people adhere to high moral principles, they

have respect for one another and are treated with fairness. We ensure that our environment nurtures loyalty and open communication. We have no hidden agendas.

ii. EMPLOYEE EMPOWERMENT AND TRUST AND TEAMWORK

We delegate to our people with authority and accountability giving them a high degree of responsibility resulting in the achievement of superior results.

We will work together as a team using our employee’s unique talents and skills in a spirit of cooperation and trust, holding each other responsible for achieving our mission.

iii. RECRUIT, COMPETITIVELY REWARD AND RETAIN THE BEST

We are always looking for people that will exceed our expectations, dynamic, high-achievers, conscientious, highly motivated and a team player.

We ensure that our work environment facilitates lifetime commitment of our people and continuous achievement of superior results.

We also challenge our people to be the best at whatever they do and nothing is impossible for them to do - having a “can do attitude”.

iv. LIFE-TIME LEARNING AND GROWTH We nurture and develop all our people through

progressive lifetime learning, coaching and mentoring and we also encourage everyone to participate and get involved in the business all the time.

v. PLAY TO WIN, CREATIVE AND CELEBRATE Every opportunity is a challenge for our people to

achieve business solutions ahead of everyone and where there is no opportunity, we will create it.

Our people and our network facilitate the maximization of shareholder value. We always celebrate the achievement of our people and the business.

OUR VISION“FHL Fund Management Limited will be the leading Fund Manager operating in the South Pacific Region.”

OUR MISSIONFHL Fund Management Limited is committed to the following mission statements:

1. We aspire to be the market leader in managed funds;

2. We will exceed our customer’s expectations at all times;

3. We will grow our managed funds portfolio at least 10% per annum;

4. We will be the preferred fund management employer;

5. We will aspire to have the best corporate governance standards and practices;

6. We will provide our shareholders with the maximum sustainable return on their investment.

CORE PURPOSEThe principal reason for FHL Fund Management Limited’s existence is:

“To maximize unit holders’ wealth through the management of high quality investment products that are affordable and offers competitive returns and in doing so maximizes our shareholders value.”

Fijian Holdings Unit Trust Annual Report 2017 1

The Fijian Holdings Unit Trust was first launched on 27th April 2001 as an investment product under the Fijian Holdings Limited (FHL) umbrella designed to offer investors an affordable, high quality investment product that offers attractive returns. Investment is open to all races, residents and non-residents.

ContentsFinancial Highlights 2

Corporate Governance Statement 4

FHL Trustees Ltd Directors 5

FHL Fund Management Ltd Directors 6

FHUT Risk Management 8

FHL Fund Management Team 9

Fund Manager’s Report 10

General Manager’s Report 11

FHUT Investment Portfolio 13

Financial Statements 16

2 Fijian Holdings Unit Trust Annual Report 2017

Investment Portfolio (Market Value)

Portfolio by Sector

Financial Highlights

22.0%

0.12%12.7%

0.6%

47.3%

5.0%12.3%

0.4%

7.0%

0.8% 0.6%

52.3%

0.1%

4.4%

12.3% 14.4%

7.7%

Investment PortfolioUnlisted securities 22.0%

Listed Securities 12.7%

Overseas Investment 0.6%

Short term Investments 47.3%

Cash 5.0%

Bond 12.3%

Managed funds 0.1%

100.0%

Portfolio by Sector

Communication/Information/Media 4.4%

Finance 14.4%

Manufacturing 7.0%

Cash & Fixed Interest Securities 52.3%

Bonds 12.3%

Retail 7.7%

Transportation 0.8%

Overseas 0.6%

Energy 0.4%

Managed Funds 0.1%

100.0%


Financial Highlights

20,000,000

40,000,000

60,000,000

80,000,000

80,000,000

120,000,000

NUM

BER

OF U

NIT

S

YEAR

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Units on Issue

20.00

40.00

60.00

80.00

100.00$ M

YEAR

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Portfolio Value F ($) M

-10.00

-5.00

0.00

5.00

10.00

15.00

YEAR Growth(%) Dividend(%)

RETU

RNS

(%)

Returns to Unitholders

Entry PriceExit Price

0.000.100.200.300.400.500.600.700.800.90

PRIC

E ($

)

YEAR

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

Units Price Since Inception


Principle FHL FML Comments

Establish Clear Responsibilities for Board Oversight

The FHUT Trust Deed stipulates the powers and duties of the Manager and the Trustee. The FHL FML Memorandum & Articles of Association sets out the powers and duties of the Board to manage the company effectively and efficiently. FHL FML continuously develops policy guidelines to strengthen its role.

Constitute an Effective Board

The FHL FML Memorandum & Articles of Association covers the required constitution of the Board. Directors are selected for their experience and competencies and are evaluated on their suitability for the Board by the FHL Board of Directors.

FHL FML also has a Compliance Committee that addresses all compliance issues and complaints. This committee meets quarterly and comprises of three independent members and a representative from the Board of FHL FML.

Appointment of a General Manager FHL FML structure including the appointment of the officer/s in charge is determined by the Board and Holding Company of FHL FML.

Board and Company Secretary The Board appoints a suitable, qualified and Company Secretary who is the administrative link between the Board and the Management and is responsible for ensuring compliance with regulatory requirements.

Timely and balanced reportingFHUT complies with its disclosure obligations under the Fiji Companies Act 2015. FHL FML Board meetings are held once every two months at the minimum, to update directors on the Fund’s performance and to review and provide approvals and confirmations of key aspects of the operations of the Fund

Promote ethical and responsible decision-making

FHL FML has adopted the FHL Group approved Code of Conduct that sets out the principles of ethical behaviour by all Group personnel. This ethical framework commits its Directors, employees, contractors and consultants to not only comply with the law, but to conduct business in accordance with the highest ethical standards. FHL FML also ensures it complies with the RBF Capital Markets policies and the Companies Act 2015 whereby directors and employees of the Fund Manager cannot purchase units created by the Fund.

Register of Interests Directors and Officers of the Fund Manager must disclose any conflict of interest that may arise in the course of the business.

Respect the rights of shareholders

FHUT complies with all disclosure requirements under the Trust Deed, Companies Act 2015 and Capital Markets Decree 2009. FHL FML with the concurrence of the Trustees ensures that all material changes made during the course of operations are communicated to unit holders in a press release and individually through mail. FHL FML also conducts training sessions for the unit holders upon request.

Accountability and AuditFinancial statements of FHUT are audited annually by independent auditors who provide their report to the unit holders. Regular internal audits are conducted by our Group Auditors on operational matters whilst the RBF conducts routine on-site examination of the Fund.

Recognize and manage risk Based on the Funds operations FHL FML has developed a detailed procedures manual to manage operational and data risks with appropriate controls and procedures. FHL FML continues to review the Fund operations and develop appropriate mitigation strategies.

Evaluation of Board PerformancesFHL FML undertakes to conduct an evaluation of Board performance on an annual basis to ensure that individual directors and the Board as a whole work efficiently and effectively in achieving their functions.

Securities Trading PolicyBased on the operations, the Company has established a policy that imposes certain restrictions on FHL FML Directors, senior management and employees directly owning an investment account with FHUT.

Insolvency – Directors Duties

If the Company is insolvent or there is a real risk of insolvency, Directors duties expand to include creditors (including employees with outstanding entitlements) such as:• The duty to exercise powers and duties with the care and diligence that a reasonable person would have

which includes taking steps to ensure the financial position of the Company is properly informed and ensuring the Company doesn’t trade if it is insolvent.

• The duty to exercise powers and duties in good faith in the best interests of the Company and for a proper purpose;

• The duty not to improperly use position to gain a personal advantage or o cause detriment to the Company.

Corporate GovernanceAs at 30 June 2017

FHL Fund Management LimitedThe Manager for the FHUT is FHL Fund Management Limited. The Manager is responsible for investing FHUT’s pooled funds and managing the investment on a daily basis. This includes monitoring investments to ensure that risks and returns are appropriate for FHUT, keeping records and processing the buying and selling of units for unitholders.

In compliance with the Reserve Bank of Fiji’s (RBF) Corporate Governance Code for the Capital Markets, FHL Fund Management Limited (FHL FML), the Fund Manager for Fijian Holdings Unit Trust (FHUT) acknowledges and supports this requirement and reports on the Company’s Corporate Governance Code.

FHL FML Corporate Governance Code is aligned to the Fijian Holdings Limited (FHL) Code as a fully owned subsidiary.


Mr. Nesbitt Hazelman Chairman

Nesbitt Hazelman is the Chief Executive Officer of Fiji Commerce Employers Federation. He holds a Masters in Industrial Relations & Human Resource Management from Sydney University, a Post Graduate Certificate in Human Resource Management from Australian Quality College, a BA with Double Majors in Management and Sociology with a Diploma in Industrial Relations and Personnel Management from the University of the South Pacific. He has more than 15 years’ experience in Human Resource & Industrial Relations with 9 years in Executive Management.

Mr. Emitai Boladuadua Director

Mr Emitai Boladuadua holds a Bachelor of Science Degree and a Diploma in Education from the University of New England, Armidale, Australia. Mr. Boladuadua was a civil servant for 38 years, 25 years of which were in the Ministry of Education. He served as Permanent Secretary in 4 Ministries including Home Affairs & Immigration, Education, and Foreign Affairs & External Trade. For 4 years he served as Fiji’s High Commissioner to the United Kingdom, at the same time served as non-resident Ambassador to the Republic of Ireland, Denmark, Germany, Israel and Egypt. Served in Boards including the LTA Board, FIT Council, FNTC Council, and USP Council. He is a member of the Cakaudrove Provincial Council since 2008 and was the Chairman of the same Council from 2008 to 2013.

Ms Fay Yee Director

Fay Yee is a Chartered Accountant and obtained her Degree in Arts majoring in Accounting from the University of the South Pacific. She worked for the accounting firm Ernst & Young, prior to commencing her own accounting practice, Fay Yee & Co, and has more than 35 years of accounting, business advisory and tax experience. She has also served as a board director of Fiji Revenue & Customs Authority, Fiji Public Trustee Corporation Limited, Fiji Revenue & Customs Appeals Board, Fiji Red Cross Society and Fiji Chinese Education Society. She is a member on the University of the South Pacific Council and was Chair of the University’s Finance and Investment Committee. She is also a member of FASANOC Audit and Finance Committee.

FHL Trustees Limited Directors


FHL Fund Management Company Directors

Ana Tuiketei - Director - FHL Fund Management LtdIs a Legal Consultant and graduated with a LLB and PDLP from the University of the South Pacific. She is a sessional lecturer with the School of Law, University of the South Pacific; School of Law- University of Fiji and a part time consultant with the Fiji National University. She currently is an Executive Member for the Fiji Chamber of Commerce & Industry; Fiji National Research Ethics Review Committee; the Fiji Industry Training Advisory Committee (NPTC); and is the Vice President for the Fiji Women Lawyers Association. She has also been involved in drafting legislative reviews, strategic policies (humanitarian negotiations and international trade policy) and industry negotiations for regional institutions such as University of the South Pacific, Fiji National University, Ministry of Health, Fiji Employers Federation; Fiji Hotel Association, statutory bodies, non-profit organizations; international organizations, private and public sector organizations.

Nouzab Fareed - Group Chief Executive Officer, Fijian Holdings GroupIs the Group Chief Executive Officer for Fijian Holdings Group. He is a Board Director for all FHL Group companies. In addition, he is also a Board Director for Goodman Fielder Ltd, Marsh Fiji Ltd and South Pacific Stock Exchange. Fareed has more than 25 years of Corporate Executive Experience in diverse sectors ranging from Corporate Finance, Financial Services, Education, IT, Tourism, Media, Commodity Broking, Building & Construction, Logistics, Investment Research & Manufacturing. Prior to joining FHL, he was the Director Business Development with Mercantile Merchant Bank Ltd in Sri Lanka and a Board Director for FedEx, NIIT and Western Union in Sri Lanka. Fareed is a Chartered Accountant (Fiji), Chartered Management Accountant (FCMA-UK) and a Fellow of CPA (Australia). He is also Chartered Marketer (UK), a Licensed Investment Advisor (Fiji), a Certified Fraud Examiner (CFE) of USA. He is a Graduate Member of Australian Institute of Company Directors (GAICD) and has a MBA in Banking & Marketing and a Master of Arts in International Economics. He is a guest lecturer for MBA Program at University of South Pacific and has made presentations at several international conferences. Fareed has received Executive Training from Harvard Business School, University of Oxford, Australian Graduate School of Management (AGSM), Graduate Business School of Auckland, Asian Productivity Organization and AOTS (Japan). Nouzab Fareed is the only Distinguished Toastmaster (DTM) in South Pacific.

Adrian Sofield - ChairmanIs an Architect by profession. He holds an Associateship in Achitecture from the West Australian Institute of Technology. He was an associate Member of Royal Australian Institute of Architects in 1970, Registered Architect Fiji 1994, Member of Australian Institute of Company Directors 2017 and also Fellow Royal Australian Institute of Architects, 1982. In the year 2010 - 2014, Sofield was a former Board Member at Housing Authority & Public Rental Board and Chairman at Investment Fiji & Airports Fiji Ltd. Currently, He is the Chairman for Project Bula Mai, Fiji Hardwood Corporation Ltd, Naisoso Island Body Corporate and Fijian Holdings Limited. He is currently the Managing Director for Adrian Sofield & Associates Ltd and two other family owned business named For Earth (South Pacific) Ltd and Mangrove Jacks Ltd.

Navin Raj - DirectorIs currently the Executive Director for Fiji Institute of Accountants (FIA). He graduated with Masters in Business Administration, Post Graduate Diploma for Advanced Analytical Skills (PGDAAS), Post Graduate Certificate in Education (PGCE) and Bachelor of Science (Physics & Chemistry) from the University of the South Pacific. Navin was a former School Principal at Jai Narayan College (formerly known as Indian College) from 2013 to 2015 and has been teaching for 19 years.

Gyaneshwar Prasad - DirectorIs a Chartered Accountant by Profession and member of Fiji Institute of Accountants. Mr. Prasad graduated with Bachelor of Arts in Accounting & Economics and Diploma in Accounting from the University of the South Pacific. He was a Vice President for Body Building Fiji from 2013 – 2016 and Journal Committee member for Fiji Institute of Accountants from 2014-2016. He is also the Credit Committee Member for Merchant Finance and Audit & Risk Committee Member for Fijian Holdings Ltd. He commenced accounting, tax and business consultancy practice, which has rapidly grown into a 13 staffed operation with wide & cross section of clients and has work experience in accounting since 1988.


opportunity for

“As you nurture your life, FHUT will nurture your Future.It starts with you.”

growth Fijian Holdings Unit Trust Annual Report 2016 7


FHUT RISK MANAGEMENT

SPECIFIC RISKS

While there are many factors which may impact the performance of share, property, fixed interest or cash investments, below is a summary of some of the major risks that exist when investing in unit trusts and how FHUT mitigates the risks.

1. Market risk

This is the risk that the value of the FHUT portfolio will change due to movements in market factors.

Mitigation Strategy

FHUT’s funds are invested in different markets to minimize this risk.

2. Performance risk

This risk relates to the performance of the investment which FHUT has invested in. The return on a particular investment, such as a share or bond, is affected by the performance of the issuer of that investment.

Mitigation Strategy

Different investments (cash/shares/bonds/property) tend to perform differently under the same operating environment. Therefore, FHUT at all times will try to have different types of investments in its portfolio. The Manager also continues to monitor the investment on a frequent basis.

3. Liquidity risk

This is the risk that FHUT will not be able to pay unit holders’ redemption requests.

Mitigation Strategy

FHUT aims to maintain a buffer fund in liquid assets at all times to meet expected normal redemptions.

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.

4. Credit risk

This refers to the risk of losing investment funds due to companies we have provided short term loans defaulting on their repayments of principal or interest or both.

Mitigation Strategy

FHL FML conducts thorough due diligence on any investments it makes, ensures that there are guarantees on these investments by principal directors or holding companies, limit the amount that is given as loans and implement certain conditions to allow FHUT to collect funds.

5. Interest rate risk

This is the risk borne by interest bearing assets such as loans and bonds due to the changes in interest rate.

Mitigation Strategy

Through its investment policy, FHUT aims to balance its portfolio through short term deposits and term loans.

6. Data risk

This is the risk of losing information including a unit holder’s account details even though there is dual system storage of hard copy filing system and electronic database.

Mitigation Strategy

FHL FML always ensures confidentiality and security of all unit holders’ information. It is currently developing a new database system to store more information, conduct daily backups of electronic system and have also developed a Disaster Recovery Plan.

7. Operational risk

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

Mitigation Strategy

FHL FML has developed an operations manual to deal with all operational processes in line with necessary regulations. The Manager has developed a five year strategic plan and annual KPIs to ensure performance of the Trust. The Manger also conducts third party due diligence on new investments

8. Legal risk

Legal risk refers to the risk of being legally non-compliant due to changes in Government and Regulators current policies and regulations.

Mitigation Strategy

FHL FML has recently appointed a Risk/Compliance Officer who reports directly to the General Manager and the Compliance Committee. The officer monitors changes to regulations for compliance and implementation of market best practices.

9. Currency Risk

Currency risk is the chance that foreign currencies may fall in value relative to the Fiji dollar. This is not relevant to FHUT as it does not invest offshore at the current time although it has an approved allocation.

Mitigation Strategy

If FHUT does invest offshore, it will invest in economies that are well developed and have stringent monetary policy that may not affect the value of its currency.

10. Politically Exposed Person(s)

PEP is someone who, through their prominent position or influence is more susceptible to be involved in bribery or corruption.

Mitigation Strategy

FHL FML has developed a Risk Management policy to identify PEPs.

Whilst FHUT will do all it can to try to minimize the risks associated with the Fund. The appropriate risk-return combination will depend on your financial objectives. For more information, it is advisable to seek advice from a licensed FHUT representative or a licensed investment adviser.


FHL Fund Management Team

Priscilla GreigDeputy General Manager Business

Development

Joana SaqalagilagiStockbroking

Epeli VakatawaSales & Marketing

Mereti MonomonoRegistry

Viliame CakacakaAccountant/FTL Company Secretary

Sainiana SereviCompliance/ FHL FML Company

Secretary

Saleshni WarranActing General Manager


Dear Valued Unit Holders:

It is with great pleasure we present our Annual Report for the year ended 30th June 2017. As Directors of FHL Fund Management Limited (the Fund Manager for FHUT) we present the Financial Statements for the year ended 30th June 2017 for FHUT and the Independent Audit Report to you our valued unitholders. We have concluded another year of customer centred service to our unit holders with the vision to be the leading Fund Manager operating in the South Pacific region.

The Fund recorded a net income for distribution of $3.26 million for the year, bringing the total dividend paid out since inception to over $30 million. The Fund also recorded a negative total return of 1.85%, including a dividend return of 3.03% and a negative capital growth of 4.88%. Total portfolio grew by 6% to $96.21 million, along with a growth of 31% in total number of unit holders to 11,469 recorded for the year.

The Funds primary value is by pooling risk and investment funds to provide long-term financial security and stability, augmented by the provision of credit facilities and ancillary financial services. Income received from our Investments was likewise affected by the abundance liquidity in the market with our term deposits, bond and loan portfolio yielding lower returns than forecasted. New government incentives such as increase in tax threshold and tax reforms will encourage economic growth in targeted sectors and relieve the tax burden on ordinary Fijians to reduce the overall cost of living and increase opportunity for investment in Fiji.

Fund Manager’s Report

The Manager anticipates 2018 to be another challenging year for the Fund, however we are wary of the expectations of unit holders and will continue to work towards providing a competitive return in this challenging investment environment. FY2018 will see the implementation of new initiatives to improve service delivery to our unit holders and to improve accessibility of fund to investors. These new initiatives will drive FHUT to be an investment product of choice to all Fijians.

We would like to thank the Board for both FHL Fund Management Limited and FHL Trustees Limited for their guidance, encouragement and support during the year. We extend our profound appreciation to our unit holders past and present for their continued confidence in the fund which is the key to the success of FHUT.

We would like to acknowledge the support of our service providers who are the backbone to the continued success of the Fund over the years.

Finally, we would like to record our appreciation to the dedicated and diligent management team of FHL FML for their tireless commitment and passion to drive the fund and achieve the desired results. We look forward to their support in the new year.

Mr. Nouzab Fareed

Director


Dear Valued Unit Holders,

I am very pleased to report another successful year of operations in a year of continued business challenges. The seed of success planted 16 years ago with the passion in line with our slogan “While I live, I Grow” has over the years grown tremendously. As at 30th June 2017, the fund grew with the total portfolio of $96.21 million, as compared to $90.09 million in FY2016. Fijian Holdings Unit Trust, again reported an increase in the number of unit holders who continue to entrust us with their investments. A total dividend of 3.03 cents per unit was paid out during the year to unit holders holding at least 50 units in their accounts.

Operating Environment

The overall market condition was relatively positive and stable throughout the year, however, the Fund encountered several challenges within the operating environment. These resulted in declining returns from a few of our investments, despite the increase in units over 122 million units on issue. Based on the results of 2017, there was a high level of liquidity and frequent challenges faced across all financial institutions of locating appropriate platforms to invest these funds to earn profitable return.

Financial Performance

The year ending 30th June 2017, saw the fund experience a decline in total growth returns by negative 1.85%. The negative growth was the result of a reduced value for some of our unlisted and listed stock as at

General Manager’s Report

the end of the financial year. The Fund recorded a significant growth of 6% in funds under management from $90.09 million to $96.21 million during the year as a result of positive net sales and increase of value in listed equities.

Dividend return for FHUT declined significantly as some of our key investments paid out lower dividends than previous years however it should be noted that the 2017 financial year was an exceptional year in terms of the dividends paid by our key listed investments.

Sales and Marketing

FHUT continues to align our sales and marketing initiatives with the Reserve Bank of Fiji’s ‘Capital Markets Master’ plan to increase the number of investors to 100,000 by 2025. FHUT has achieved 11% of the capital markets master plan with 11,469 active unit holders as at June 2017. The growth is also attributed to the awareness and initiatives by our sales and marketing team through our various media partnerships and service providers which resulted in a greater part of the sales achieved, coming in from our high net-worth clients, land & resource owners and institutional clients.

Based on the results of a very successful Employee Deduction Scheme (EDS), conducted by our resilient sales and marketing team, we are consciously targeting working groups, institutional groups, corporative and investment accounts for trust group. By expanding EDS from civil servants to other organisation, with the minimum of 50 units and option to deduct from source is a marketing strategy, and we are hoping to retain more of our unit holders, anticipating they continue to save for rainy days and don’t feel compelled to close their accounts once they retire.

Our team is committed to ensuring that our product is made available and accessible throughout the rural Fiji, and also to overseas investors. We aspire to target these markets through extensive use of print, voice and electronic media with the objective of acquiring a 100% coverage of the whole of Fiji in promoting investment awareness and appreciation of the FHUT product.

The team continues to expand our reach to rural areas and mark our presence in the community. As such, we aspire to target this market through the extensive use of print, voice and electronic media. We are persistent to working on better access to information for all unit holders by improving our Website, updating social media pages, LED advertising, and radio awareness programs.

Investment

Generating a favourable high income return is one of our prime objectives in FHUT. This can be accomplished with some potential for capital growth through investment exposure in various sectors of the financial market. However, it has been a challenging year for us against the milieus of operating environment in finding good investments, which continues to be one of the major obstacles for the Fund Manager. There were slight reductions in both the value of bonds and the short term deposits recorded by the fund.


The high liquidity in the economy had caused the Institutional clients to move their funds to investment products like FHUT where the interest rate were very attractive and above the market rates.

Income received from our Investments was similarly affected by the copious liquidity in the market with our unlisted equities portfolio yielding lower returns than forecasted.

As an active, medium to long term investment manager, we measure success by returns from our investment and returns to our unit holders. A key focus in the year ahead will be the objective on attracting highest returns to unit holders and also in terms of capital growth. Compliance

During the year, the compliance team have been reviewing all policies to ensure they comply with the rules and regulations of the Reserve Bank of Fiji and the Company’s Act 2015. By reducing risks and ensuring continued profitability and strength for the fund is met, and being guided by our vision and mission so that we will be able to deliver results with the set targets.

We have been very vigilant in our commitment to integrity by establishing the policies and plans in line with our stringent corporate governance requirements within the fund management. These have also been circulated to our compliance to review key policies, risks, mitigations and strategies ensuring that the operations and all risk related compliance requirements are satisfied.

Service Providers

Our service providers continue to contribute immensely towards providing the platform for accessibility to our valued unit holders. For compliance and governance purposes, the service providers are audited thrice a year before registry closure periods to ensure that funds are accounted for and units are correctly allocated to investors. Management also conducts training to enable the service providers to

better serve you, our unit holders and be updated on any changes that directly affects the Fund.

The Year Ahead

We believe we have an unprecedented opportunity to chart a new course for our unit holders, delivering innovation across our product to be able to pay out the expected returns. We continue to focus on strategies that complements our goals of meeting both our income and capital growth targets as well as positioning ourselves in challenges operating environment. AppreciationI would like to thank the Board for FHL Fund Management Limited and FHL Trustees Limited for their expertise guidance to our team during the financial year. On the same note, I would like to thank the Management team, for their commitment and efforts and look forward to their continued support in the next financial year.

I would like to express my gratitude to our service providers Mr Deven Magan, Mr Praful Patel, Merchant Finance Limited, Post Fiji Limited, FijiStock Bokers Limited, Kontiki Stockbroking Limited, FHL Stockbrokers Limited and other internet banking platforms through ANZ, BSP, Bred Bank and WBC for the continuing support.

Finally, to our faithful and devoted unit holders, a big vinaka vakalevu to you all for your continuous confidence and trust in our product which provides a solid foundation to our success.

We look forward to another successful year in 2018

Saleshni WarranActing General ManagerFHL Fund Management Limited


FINANCEThe finance sector makes up 14.42% of the FHUT Portfolio, comprising of investments in Merchant Finance & Investment Company Limited and BSP Convertible Notes

Merchant Finance LimitedFHUT’s Portfolio: 13.87 %FY2017 was a difficult yet challenging year for MFL comprising of an aggressively competitive market in both credit and investments and the impact of some new products that was launched during the year.

There was a slight increase of interest income by 7% due to the trade finance products available in the first part of the year. Additionally, surplus funds being invested in short term deposits earned higher interest in the shorter term. Customers took advantage of the increased competition in the market as financial institutions competed for funds. Merchant Finance had to match or offer better rates for new and maturing term deposits which saw interest expense increasing by 26% compared to prior year.

Loan impairment expense was a significant factor towards the increase in the company’s overall expenses. The 250% surge was due to a $3.9m provision on a loan which at year end, was still in recovery stage. The company is working towards recovering this debt but took a conservative approach and provided for the loan at year end.

The above resulted in a significant decrease of 44% in Profit before Interest and Tax from $9,399,548 in 2016 to $5,304,760 in 2017.

Earlier in the financial year, Merchant Finance opened its Sigatoka Branch to better service customers along the Navua – Sigatoka corridor. The demand for financial services in this corridor was evident with the branch portfolio growing from $3,397,351 in July 16 to $5,301,910 at the end of the financial year, an increase of 56%.

Also during the year, after considering its risk impact on the financial security, Management and the MFL Board halted the Trade Finance product. MFL then refocused its operations on our their core products commercial lending, personal lending and high notes.

The community is MFL’s biggest asset which is what drove the Company to give back to the community through:• Cash donations to Fiji Cancer Society, Lifeline Fiji (organization

aimed at reducing suicide’s in Fiji) ;• Participation and awareness in municipal carnivals e.g. National

road safety for LTA(Hibiscus festival), Nausori Crime Prevention (Tebara carnival);

• Accountants Congress (both CPA and FIA)• Rural assistance – sponsorship of the BUA province scholarship and

Nadroga team uniform;• Production of brochures for the Southern Division Duavata

Community Policing model and Southern Division Crime Prevention tips;

• Tour of the Northern region meeting customers in Taveuni, Savusavu and Labasa to see how their business were operating in current economic circumstances, problems they were facing and how MFL could assist.

The 2018 financial year looks promising and MFL is determined to rise above past and current year challenges and provide better financial services to its customers and stakeholders. Plans are underway to restructure management and approval delegations to assist customers with more timely response times and improved services. MFL’s new Nakasi branch, which will replace the Damodar Branch, is due to open

in September and aims to better serve the public in the Nakasi to Rakiraki stretch thus bringing financial solutions closer to you.

BSP Convertible Notes Limited (BCN)FHUT’s Portfolio: 0.55%BSP Convertible Notes Limited is a wholly owned subsidiary of the Bank of South Pacific (BSP) and has been incorporated in Fiji as a special purpose vehicle which lends funds to BSP. The company was formerly known as Tourmaline Limited and changed its name to BSP Convertible Notes Limited in October 2009. BCN has mandatorily converted into Fiji Class Shares which has been quoted on SPSE. The net profit of the group for the half year ended 30th June 2017, after tax was $232.50m (K370.885m) (half year ended 30th June 2016; $188.93m (K301.376m)

RETAILThe retail sector is one of the fastest growing sectors in Fiji and currently makes up 7.74 % of the FHUT portfolio. FHUT has investments in three of the largest retailers in the Fiji market, RB Patel Group Limited , New World Limited and Vision Investments Limited.

RB Patel Group Limited (RBG)FHUT’s Portfolio: 1.75%Retailing and wholesaling of general merchandise and also owners and managers of property and equity investments. The Company operates supermarket stores in Nausori, Nakasi, Nasinu, Suva, Sigatoka, Nadi, Lautoka, Labasa and Lami.

During the year construction work on the three level car park and retail space building at RB Patel JetPoint Complex in Martintar Nadi continued and is expected to be completed in December 2017 with the eight residential apartment’s development in Suva expected to be completed in early 2018.

The group operating profit for FY17 after tax was $8.5 million compared to $7.3 million last FY – an increase of just over 15.4% over the previous year. This reflects earnings per share of 28 cents (FY18), an increase of 12% over last financial year.

The company declared and paid an interim dividend of $1,500,000 (2016: $1,200,000). Furthermore, during June 2017, the directors proposed the payment of a final interim dividend of $3,300,000 (2016: Proposed dividends of $3,300,000) from the profits for the year ended 30 June 2017. Total dividends declared and paid or proposed for the year ended 30 June 2017 amounted to $4,800,000 (2016: $4,500,000)

NEWWORLD LIMITEDFHUT’s Portfolio: 2.12% It was an inspiring year for the company as there were challenges faced and the competition of retail industries are increasing in the country. The company is making an effort to outpace them which are reflected in the remarkable results achieved by the Company. The Company posted an increase in sales of 7.73% and a post-tax net profit of $8.21m.

Taking into account the impressive performance of IGA Stores, the Company has opened another IGA store in Greig St, Suva in April 2017. The management is confident of replicating its success story here also. These new stores are expected to draw more customers by offering a wide range of products and also contribute in a major way to the Company’s top line and bottom line.

The management continues to invest into systems and processes improvement measures together with skill up gradation of its human capital in order to pursue other investment & growth opportunities. They will continue to hire experienced and professionals, to elevate its operational efficiency so as to provide good returns to all stakeholders.

FHUT Investment Portfolio


Vision Investment Limited (VIL)FHUT’s Portfolio: 3.87%Vision Investments Limited is a diversified and successful enterprise with a solid track record of growth and sustained earnings and a long history of trading in Fiji. Currently VIL consists of Courts, Vision Motors, Mahogany Industries (Fiji) and Vision Finance.

The Group performed strongly in the year (as at 31st March 2017) with revenue increasing to $170.3million (31st March 2016 Revenue: $134.7m) and the profit after tax increasing to $18.4million (31st March 2017 NPAT: $11.5m). As a result, earnings per share increased from 15cents per share to 18cents per share. The Group Financials for the first time includes the financials of the Company’s fully owned subsidiary– Vision Home centres limited operating in PNG.

MANUFACTURINGManufacturing makes up 6.99 % of the FHUT portfolio consisting of equity investments with Punjas Flour Limited, Golden Manufacturers Limited, Atlantic & Pacific Packaging Company Limited, Pacific Green Industries (Fiji) Limited, Rice Company of Fiji, Pleass Global Limited and FMF Foods Limited

Punjas Flour Limited FHUT’s Portfolio : 2.10%Punjas began operating 1935 today it is one of the largest privately-owned group of companies in the South Pacific, employing more than 800 people.

Headquartered in Lautoka, Fiji, the Punjas Group of Companies manufactures, markets and distributes a comprehensive range of food and beverage products and other consumer goods throughout the South Pacific, Australia and New Zealand. Punjas also has its own design, printing, plastic packaging and corrugated box manufacturing operations.

The company invests heavily in its people, in research and development, and in quality control and all Punjas products and services meet the highest international manufacturing and food safety standards. Its production facilities use the latest machinery and computer-controlled technology sourced from the world’s leading equipment manufacturers.

Golden Manufacturers LimitedFHUT’s Portfolio: 3.09% Being the leading manufacturer of corrugated packaging in the South Pacific, Golden Manufacturers Limited has packaging solutions for beverage, canned fish and meat, packed food, garment, horticulture, and industrial produce markets in the South Pacific, New Zealand, Australia, the Asian rim, and internationally. It offers pre-printed regular slotted cartons, wax cartons, die-cut cartons, and heavy duty packaging products. The company was founded in 1980 and is based in Nasinu, Fiji.

GML basically based in Fiji but serves the entire South Pacific, New Zealand, Australia as well as the Asian region. The company delivers packaging globally with competitive efficiency that matches and goes beyond market standards all over the world. The commitment of the company means that they deliver the goods to the highest quality standards and specification. A wide range of international and local clients have been relying on Golden Manufacturers for over 30 years. Whether it’s a small local distributor or a multi-faceted corporate, all of their clients feel confident with entrusting their packaging operations with Golden Manufacturers Limited.

Atlantic & Pacific Packaging Company Ltd (APP)FHUT’s Portfolio: 0.46%Atlantic & Pacific Packaging Company Limited or Atpack as it is

commonly known is a subsidiary of FMF Foods Limited was established in 1998, operates as a manufacturer of a wide range of packaging materials including corrugated cartons, assorted containers and bags.

The company recorded a net profit after tax (NPAT) of $376,000 for half year ended 31st December, 2016 compared to its previous corresponding period, the company recorded a net profit after tax of ($1,344,000).

Pacific Green Industries (Fiji) Limited (PGI)FHUT’s Portfolio: 0.27%Engages in manufacturer and sale of furniture and architectural products made from coconut palm wood. For the half year ended 30th June 2017, the company earns a net profit after tax (NPAT) of $154,707 compared to corresponding half year which was $123,829.

Earnings per share increases from $0.016 (30th June, 2016) to $0.020 (30th June, 2017).

The Rice Company of Fiji Limited (RCF)FHUT’s Portfolio: 0.07%Rice Company of Fiji, a subsidiary of FMF Foods Limited is a dealer in rice and allied products. The company which began operation in 1996 has advanced a highly well-organized processing line using fully automated machinery where the imported rice is milled, cleaned, repacked, and sold.

For the half year ended 31st December 2016, RCF recorded an unaudited net profit after tax (NPAT) of $1.47m compared to $1.45m on its previous corresponding period.Earnings per share increases from 24.25cents (31st December, 2015) to 24.49cents (31st December, 2016).

Pleass Global Limited (PBP)FHUT’s Portfolio: 0.69%A diverse and growing corporation principally engaged in production and marketing of bottled water plus single use daily items concurrently operating adventure eco-tourism services and is in establishment phase of organic farming and property development.

The company recorded a net pro fit after tax (NPAT) of $458,040; a decrease on the six month period ending 30 June 2016 (NPAT $536,188). Earnings per share are 7 cents; down compared to 2016 half year (9 cents).

FMF Foods Limited (FMF)FHUT’s Portfolio: 0.30%FMF Foods Limited deals in activities of flour milling, managing of SNAX factory production including biscuits and potato chips with two of its subsidiaries. The company has been listed on the stock exchange since 1979.

The company recorded a net profit after tax (NPAT) of $6,241,000 for half year ended 31st December, 2016 compared to its previous corresponding period, the company recorded a net profit after tax of $5,367,000

Earnings per share increased to 3.82 cents compared to its previous corresponding period half year of 3.69 cents.

TRANSPORTATIONTransportation makes up 0.84% of the FHUT portfolio consisting of equity investments with VB Holdings Limited.

VB Holdings Limited (VBH)FHUT’s Portfolio: 0.84%VB holdings Limted was formed in 1945 and having completed 70 years of trading, sets aside a portion of its profit for educational and social cause. The company was formed as public company 71 years ago, but was restructured and listed on the SPSE in 2001. It was not formed to


take advantage or that it needed to be enticed by incentives to become a public listed company.

The financial result of the company for the 1st half year recorded (30th June 2017) a pre-tax profit of $0.66million (Unaudited). Profit after tax was $0.60 million (Unaudited), which is an increase of 15% compared to previous year’s corresponding period results.

The highest share price during the year was $4.05 per share and the market capitalisation of the company arrives to $8.6million compared to $7.9million.

ENERGYEnergy - solar makes 0.42% of the FHUT portfolio consisting of equity investments with Pernix (Fiji) Limited

Pernix (Fiji) Limited FHUT’s Portfolio: 0.42%Pernix (Fiji) Limited (PFL) is a subsidiary of Pernix Group Inc. It was established in 2000 to diesel fired power generation plants and later operation and maintenance services in the Fiji Islands. It was formerly known as Telesource Fiji Limited. PFL is currently under contract with the Fiji Electricity Authority (FEA) to operate and maintain two separate power generation plants in Kinoya and Vuda, to sell electrical energy produced on a wholesale level. The two largest diesel based power plants in Fiji are located in Kinoya and Vuda. Most recently, PFL was instrumental in providing local man power support to its parent company for work on the New U.S Embassy Compound.

In November 2015, Pernix (Fiji) Limited completed the construction of the 36 megawatt Kinoya expansion plant in Suva, Fiji and also announced the award of a 13 year Fiji Electric Authority operations and maintenance (O&M) Contract. Furthermore, the Pernix subsidiary was awarded a 5 year extension, on its 20 year FEA O&M contract for the existing Kinoya and Vuda Power Stations. The new agreement and the existing contract extension is expected to generate approximately $42 million dollars in gross revenue through 2028.

INFORMATION, COMMUNICATION, MEDIA & TECHNOLOGYThough a dynamic sector with lots of growth potential, the communication and information sector makes up only 4.35 % of the FHUT Portfolio. This consists of Amalgamated Telecom Holdings Limited, Communications Fiji Limited and Life Cinema Limited.

Amalgamated Telecom Holdings Ltd (ATH)FHUT’s Portfolio: 2.77%ATH is Fiji’s main telecommunications holding company through its investments and provision of direct services in a broad range of telecommunications and related services. The company has extended its focus to the region following acquisitions in Kiribati and recently in Vanuatu with a transaction underway covering American Samoa, Samoa and Cook Islands.

ATH in the last financial year ended March 2017 recorded a significant increase in its profit after tax of $42.7 million (2016: $34.27 million). The consolidated profit after tax attributable to members of the holding company was $54.22 million (2016: $56.72 million).

Communications (Fiji) Limited (CFM)FHUT’s Portfolio: 1.19%Communications Fiji Ltd (CFM), the largest radio broadcasting company in the South Pacific. CFM operates five radio stations in Fiji and, under subsidiary PNG FM, a further three in Papua New Guinea. Communications Fiji Ltd today announced half year net profit after tax 30TH June 30th, 2017 of $1,205,170. This compares with a loss of ($10,700) for the same period in 2016.

The result was driven by-on improvement in the company’s operational profit’s that increased by 8l% to $558,050 (2016: $308,186). This reflected a belter performance from both its Fiji and PNG media operations. The company was pleased with the Fiji result, considering that it is comparing it with a very tough first six months in 2016.

While the Papua New Guinea market continues to be a challenge, PNGFM Ltd has managed to stabilize performance and show a small profit against a loss of for the first six months of last year. With the elections recently completed, there will be an improvement in this important market. However, the group recognize that Papua New Guinea, despite its huge potential, faces a number of significant economic challenges.

Life Cinema Limited FHUT’s Portfolio: 0.39%)Life Cinema Limited first opened in 2014 at the RB Patel Jet Point Martintar in Nadi. In 2016 the financial year for Life Cinema was very challenging with their local team trying to be familiar with the operations of local market. The team have learnt a great deal and have seen much more successes and positive growth in the cinema industry. A lot of time was also spent during the year to fine-tune their customer experience, film selection and product range to provide a movie experience far greater than what has been considered the norm in Fiji. More customers from all over Fiji are traveling to experience the innovative cinema experience that Life Cinema provides. Many outstanding and incredible movies have been released with some amazing results at the box office. Life Cinema recently opened three cinema screens in Nakasi and also two multiplexes in Lautoka. This is expected to improve their overall performance and provide a wider coverage for Life Cinemas. Life Cinema is optimistic to attaining growth at the cinemas in the year to come as their local team are committed and driven to see a positive growth for Life Cinema in the cinema industry.

OVERSEAS INVESTMENTS

The Fund has also invested in the Australian Stock Exchange listed stocks; Market – ASX, ANZ Banking Corp, Telstra Corp, Woolworth Corp, Wesframers Ltd, and BHP Billiton Ltd. FHUT has 0.55% of its portfolio invested in Overseas listed stocks.

MANAGED FUNDSFHUT has less than 1% of its portfolio invested in other local managed funds.

BONDS

FHUT investments in bonds make up 12.29% of the portfolio consisting of Fiji Development Loan, Fiji Development Bonds, Fiji Infrastructure bonds, Housing Authority bonds, and Treasury Bill Bonds.

CASH & FIXED INTEREST SECURITIESThis sector makes up 52.28 % of the FHUT portfolio consisting mainly of on-call, term deposits and secured short term loans with various financial institutions and well established reputable companies to allow the Fund to access funds readily for investment opportunities that may arise.

Financial Statements

Trustee’s and Managers Report 17

Statement by Trustee and Manager 19

Independent Audit Report 20

Statement of Comprehensive Income 22

Statement of Changes in Equity 23

Statement of Financial Position 24

Statement of Cash Flows 25

Notes to the Financial Statements 26


The Fijian Holdings Unit Trust was first launched on 27th April 2001 as an investment product under the Fijian Holdings Limited (FHL) umbrella designed to offer investors an affordable, high quality investment product that offers attractive returns. Investment is open to all races, residents and non-residents.


FIJIAN HOLDINGS UNIT TRUST TRUSTEE’S AND MANAGER’S REPORTFOR THE YEAR ENDED 30 JUNE 2017

In accordance with resolutions of the Trustee and Manager, the Trustee and Manager herewith submit the statement of financial position of the Fijian Holdings Unit Trust (“Trust”) as at 30 June 2017, the related statement of comprehensive income, the statement of changes in equity and the statement of cash flows for the year ended on that date and report as follows: Trustee and Manager The names of Trustee and Manager in office at the date of this report are:FHL Trustees Limited Trustee FHL Fund Management Limited Manager Date of Formation The Trust was formed on 27 April 2001 and has a life of 60 years from its inception. Principal Activity The Trust is an investment vehicle that allows investors’ monies to be pooled with other unit holders’ monies that in return are issued with units and become unit holders in the trust. The pooled funds are then invested by the Manager across a range of investments in accordance with the investment guidelines contained in the Investment Policy statement. Results The Trust recorded a net income available for distribution of $3,258,910 (2016: $3,410,737 ). Dividends The Trust declared and paid a final dividend for 2016 of $1,852,509 and an interim dividend for 2017 of $1,801,284 during the year (2016: $4,343,274) Assets Prior to the completion of the financial statements of the Trust, the Trustee and Manager took reasonable steps to ascertain whether any assets were unlikely to be realised in the ordinary course of business compared to their values as shown in the accounting records of the Trust. Where necessary these assets have been written down or adequate provision has been made to bring the values of such assets to an amount that they might be expected to realise. As at the date of this report, the Trustee and Manager are not aware of any circumstances, which would render the values attributed to assets in the Trust’s financial statements misleading. Unusual Transactions In the opinion of the Trustee and Manager, the results of the operations of the Trust during the financial year were not substantially affected by any item, transaction or event of a material unusual nature, nor has there arisen between the end of the financial year and the date of this report any item, transaction or event of a material unusual nature likely, in the opinion of the Trustee and Manager, to affect substantially the results of the operations of the Trust in the current financial year, other than those reflected in the financial statements. Fair Value Reserves The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the investments are derecognised, disposed or impaired. Basis of Accounting The Trustee and Manager believe that the basis of preparation of the financial statements is appropriate and the Trust will be able to continue in operation for at least 12 months from the date of this report. Accordingly, the Trustee and Manager believe that the classification and carrying amounts of the assets and liabilities as stated in the financial statements to be appropriate.


FIJIAN HOLDINGS UNIT TRUST TRUSTEE’S AND MANAGER’S REPORT - continuedFOR THE YEAR ENDED 30 JUNE 2017

Related Party Transactions In the opinion of the Trustee and Manager all related party transactions have been adequately recorded in the books of the Trust and reflected in the financial statements. Significant Events As at the date of this report, the Trustee and Manager are not aware of any other significant event, other than those already included in the financial statements. Events Subsequent to Balance Date In July 2017, the Directors declared final dividend of $1,210,348 for the year ended 30 June 2017. Apart from this, the Trustee and Manager are not aware of any matter or circumstance not otherwise dealt with in the report or financial statements that will significantly or may significantly affect the operations of the Trust, the results of those operations or state of affairs of the Trust in subsequent financial years. Other Circumstances As at the date of this report: (i) no charge on the assets of the Trust has been given since the end of the financial year to secure the liabilities of any other person;

(ii) no contingent liabilities have arisen since the end of the financial year for which the Trust could become liable; and

(iii) no contingent liabilities or other liabilities of the Trust has become or is likely to become enforceable within the period of twelve months

after the end of the financial year which, in the opinion of the Trustee and Manager, will or may substantially affect the ability of the Trust to meet its obligations as and when they fall due.

As at the date of this report, the Trustee and Manager are not aware of any circumstances that have arisen, not otherwise dealt with in this report or the Trust’s financial statements, which would make adherence to the existing method of valuation of assets or liabilities of the Trust misleading or inappropriate. Trustee’s and Manager’s Benefits Since the end of the previous financial year, no Trustee or Manager has received or become entitled to receive a benefit (other than those included in the aggregate amount of emoluments received or due and receivable by Trustee and Manager shown in the financial statements or received as the fixed salary of a full-time employee of a related party) by reason of a contract made by the Trust or by a related party with the Trustee or Manager or with a firm of which they are a member, or with a company in which they have a substantial financial interest. Approval of the Financial Statements The financial statements for the year ended 30 June 2017 together with the accompanying notes set out on pages 26 to 38 are approved as being in accordance with the books and records of the Fijian Holdings Unit Trust. Signed for and on behalf of the Trustee and Manager in accordance with resolutions of the Trustee and Manager. Dated at Suva this 27th day of October 2017.

…………………………………………………………………………… ………………………………………………………………………… FHL Fund Management Limited FHL Trustees Limited Manager - Fijian Holdings Unit Trust Trustee - Fijian Holdings Unit Trust


FIJIAN HOLDINGS UNIT TRUST STATEMENT BY TRUSTEE AND MANAGERFOR THE YEAR ENDED 30 JUNE 2017

In accordance with resolutions of the Trustee and Manager, we state that in our opinion:

(i) the accompanying statement of comprehensive income of the Trust is drawn up so as to give a true and fair view of the results of the Trust for the year ended 30 June 2017;

(ii) the accompanying statement of changes in equity of the Trust is drawn up so as to give a true and fair view of the changes in equity of the Trust for the year ended 30 June 2017;

(iii) the accompanying statement of financial position of the Trust is drawn up so as to give a true and fair view of the state of affairs of

the Trust as at 30 June 2017;

(iv) the accompanying statement of cash flows of the Trust is drawn up so as to give a true and fair view of the cash flows of the Trust for the year ended 30 June 2017;

(v) at the date of this statement there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they fall due; and

(vi) all related party transactions have been adequately recorded in the books of the Trust.

Signed for and on behalf of the Trustee and Manager in accordance with resolutions of the Trustee and Manager .

Dated at Suva this 27th day of October 2017.

…………………………………………………………………………… ………………………………………………………………………… FHL Fund Management Limited FHL Trustees Limited Manager - Fijian Holdings Unit Trust Trustee - Fijian Holdings Unit Trust


To the Unit Holders of Fijian Holdings Unit Trust Report on the Audit of the Financial Statements Opinion We have audited the financial statements of Fijian Holdings Unit Trust (‘the trust’), which comprise the Statement of Financial Position as at 30 June 2017, the Statement of Comprehensive Income, the Statement of Changes in Equity and the Statement of Cash Flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the company as at 30 June 2017, its financial performance, changes in equity and its cash flows for the year then ended in accordance with International Financial Reporting standards (IFRS). Basis for OpinionWe conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the trust in accordance with the International Ethics Standards Board for Accountant’s Code of Ethics for Professional Accountants (IESBA Code) together with the ethical requirements that are relevant to our audit of the financial statements in Fiji and we have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Responsibilities of the Trustee’s and Manager’s for the Financial StatementsThe Trustee and manager are responsible for the preparation and fair presentation of the financial statements in accordance with IFRS, the requirements of the Unit Trust Act 1978, provisions of the Trust Deed, Trustee Act 1966 and Capitals Markets Decree 2009. and for such internal control as the Trustee and manager determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, the Trustee and manager are responsible for assessing the Trust’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Trustee and manager either intend to liquidate the trust or to cease operations, or have no realistic alternative but to do so. The Trustee and manager are responsible for overseeing the trust’s financial reporting process. Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud and error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements. As part of an audit in accordance with ISAs, we exercise professional judgement and maintain professional skepticism throughout the audit. We also: • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit

procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.

FIJIAN HOLDINGS UNIT TRUST INDEPENDENT AUDIT REPORT

FOR THE YEAR ENDED 30 JUNE 2017Building a better working world

Pacific HouseLevel 71 Butt Street Suva FijiPO Box 1359 Suva Fiji

Tel: +679 331 4166Fax: +679 330 0612ey.com


FIJIAN HOLDINGS UNIT TRUST INDEPENDENT AUDIT REPORT - continued

FOR THE YEAR ENDED 30 JUNE 2017

Auditor’s Responsibilities for the Audit of the Financial Statements continued • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in

the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s internal control.

• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.

• Conclude on the appropriateness of the Trustee and Manager’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the trust’s ability to continue as a going concern. If we conclude that material uncertainty exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial statements or, if such disclosures, are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Trust to cease to continue as a going concern.

• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

We communicate with the Directors and management regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. We also provide the Directors and management with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards. Report on Other Legal and Regulatory Requirements We have obtained all the information and explanations which, to the best of our knowledge and belief, were necessary for the purpose of our audit. In our opinion, the accompanying financial statements give the information required by the Unit Trust Act 1978, provisions of the Trust Deed, Trustee Act 1966 and the Capital Markets Decree 2009 in the manner so required. Ernst & Young Chartered Accountants

Steven Pickering Partner Suva, Fiji

Building a better working world


FIJIAN HOLDINGS UNIT TRUST STATEMENT OF COMPREHENSIVE INCOMEFOR THE YEAR ENDED 30 JUNE 2017

Notes 2017 2016 $ $

Revenue Interest income 2(a) 2,308,409 1,782,153 Dividend income 2(b) 2,513,191 3,063,464 Realised gain on disposal of financial assets 188,112 - Net equalization 46,587 65,747 5,056,299 4,911,364 Expenses Bank charges 1,632 155 Management fees 1.2(g) 1,530,907 1,380,126 Professional fees 2(c) 29,546 31,276 Trustee’s fees 1.2(h) 38,312 58,488 Doubtful debts 59,042 - Impairment expense 133,130 - Other expenses 4,820 30,582 1,797,389 1,500,627 Net income available for distribution 3,258,910 3,410,737 Net income for the year attributable to unit holders 3,258,910 3,410,737 Other comprehensive income Fair value gain on financial assets 3 1,266,457 1,154,264 Total comprehensive income for the year 4,525,367 4,565,001

The accompanying notes form an integral part of this Statement of Comprehensive Income.


FIJIAN HOLDINGS UNIT TRUST STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 30 JUNE 2017

Notes 2017 2016 $ $

Unit holders’ equity At 1 July 75,484,987 64,709,915 13,770,227 units created during the year (2016: 17,981,842 units) 10,626,474 13,586,610 7,036,537 units redeemed during the year (2016: 3,763,132 units) (5,370,004) (2,811,538) At 30 June 8 80,741,457 75,484,987 Net income available for distributionAt 1 July 1,918,344 2,850,881 Net income available for distribution 3,258,910 3,410,737 Dividend declared and paid during the year (3,653,793) (4,343,274) At 30 June 6 1,523,461 1,918,344

Fair value reserves At 1 July 12,686,426 11,532,162 Fair value gain on financial assets 1,266,457 1,154,264 At 30 June 3 13,952,883 12,686,426 Total unit holders’ equity 96,217,801 90,089,757

The accompanying notes form an integral part of this Statement of Changes in Equity.


FIJIAN HOLDINGS UNIT TRUST STATEMENT OF FINANCIAL POSITIONFOR THE YEAR ENDED 30 JUNE 2017

Notes 2017 2016 $ $

Assets Cash and short term deposits 10 6,248,467 5,164,053 Accrued income 5 951,803 838,670 Loans and receivables financial assets 4(a) 5,190,000 5,190,000 Available-for-sale financial assets 4(b) 45,406,676 43,644,899 Held-to-maturity financial assets 4(c) 39,800,000 35,800,000 97,596,946 90,637,622 Liabilities Net income declared for distribution 6,637 6,637 Other liabilities 7 1,372,508 541,228 1,379,145 547,865 Net assets 96,217,801 90,089,757

Unit holders’ equity “Unit holders’ equity repayable on demand: 116,160,883 units fully paid (2015: 101,942,173 units)” 8 80,741,457 75,484,987 Net income available for distribution 6 1,523,461 1,918,344 Fair value reserves 3 13,952,883 12,686,426 Total unit holders’ equity 96,217,801 90,089,757

The accompanying notes form an integral part of this Statement of Financial Position. Signed for and on behalf of the Trustee and Manager in accordance with resolutions of the Trustee and Manager .

……………………………………………………… …………………………………………………………FHL Fund Management Limited FHL Trustees Limited Manager - Fijian Holdings Unit Trust Trustee - Fijian Holdings Unit Trust


FIJIAN HOLDINGS UNIT TRUST STATEMENT OF CASH FLOWSFOR THE YEAR ENDED 30 JUNE 2017

Notes 2017 2016 $ $ Operating activities Cash received in the course of operations 4,696,012 6,692,444 Cash payments in the course of operations (773,937) (1,502,347) Net cash flows from Operating Activities 3,922,075 5,190,097 Investing activities Acquisition of available-for-sale financial assets (440,338) (4,338,063) Acquisition of term deposits (4,000,000) (1,500,000) Issue of short-term loans - (20,000,000) Repayment from short-term loans - 5,807,546 Net cash flows (used in) Investing Activities (4,440,338) (20,030,517) Financing activities Proceeds from issue of units 10,626,474 13,586,610 Payments for repurchase of units (5,370,004) (2,811,538) Distributions paid (3,653,793) (4,343,274) Net cash flows from Financing Activities 1,602,677 6,431,798 Net increase/(decrease) in cash and short term deposits 1,084,414 (8,408,622) Cash and short-term deposits at 1 July 5,164,053 13,572,675 Cash and short-term deposits at 30 June 10 6,248,467 5,164,053

The accompanying notes form an integral part of this Statement of Cash Flows.


1.1 GENERAL INFORMATION

Fijian Holdings Unit Trust (“the Trust”) is a unit trust domiciled in Fiji. Significant accounting policies which have been adopted in the preparation of these Financial Statements are noted below.

The financial statements were authorised for issue by the Trustee and Manager on 27 October, 2017.

1.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A summary of the significant accounting policies adopted by the Trust is set out in this note. The policies adopted are in accordance with International Financial Reporting Standards (“IFRS”), and unless stated otherwise are consistent with those applied in the prior period. a) Statement of compliance

The financial statements of the Trust have been prepared in accordance with the Unit Trust Act 1978, provisions of the Trust Deed, Trustee Act 1966, the Capital Markets Decree 2009 and International Financial Reporting Standards (“IFRS”).

b) Basis of preparation The financial statements have been prepared primarily on the basis of historical costs and except where specifically stated, do not take into account current valuations of assets.

Standards issued but not effective A number of standards and interpretations have been issued by the IASB during the year, but not yet effective, up to the date of issuance of the Trust’s financial statements. The Trust intends to adopt these standards, if applicable, when they become effective.

Standards Effective date - IFRS 9 Financial Instruments 1 January 2018 - IFRS 15 Revenue from Contracts with Customers 1 January 2018- IFRS 16 Leases 1 January 2019 The Trust will review the impact of these standards in the next financial year.

c) Use of estimates and judgments The preparation of the financial statements requires the Manager to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses, and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future.

In particular, information about significant areas of estimation uncertainty and critical judgments in applying accounting policies that have the most significant effect on the amounts recognised in the financial statements including the following notes:

Note 1.2(d) - Financial assets Note 1.2(e) - Revenue recognition

d) Financial assets

Initial recognition and measurement Financial assets are classified, at initial recognition, as financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments, AFS financial assets, or as derivatives designated as hedging instruments in an effective hedge, as appropriate. All financial assets are recognised initially at fair value plus, in the case of financial assets not recorded at fair value through profit or loss, transaction costs that are attributable to the acquisition of the financial asset. Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e., the date that the trust commits to purchase or sell the asset.

FIJIAN HOLDINGS UNIT TRUST NOTES TO THE FINANCIAL STATEMENTSFOR THE YEAR ENDED 30 JUNE 2017



1.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

Subsequent measurement For the purpose of subsequent measurement financial assets are classified into four categories: • Financial assets at fair value through profit or loss • Loans and receivables • Held-to-maturity investments • Available for sale financial assets Financial assets at fair value through profit or loss Financial assets at fair value through profit or loss include financial assets held for trading and financial assets designated upon initial recognition at fair value through profit or loss. Financial assets are classified as held for trading if they are acquired for the purpose of selling or repurchasing in the near term.

Derivatives, including separated embedded derivatives, are also classified as held for trading unless they are designated as effective hedging instruments as defined by IAS 39. Financial assets at fair value through profit or loss are carried in the statement of financial position at fair value with net changes in fair value presented as finance costs (negative net changes in fair value) or finance income (positive net changes in fair value) in the statement of profit or loss.

Derivatives embedded in host contracts are accounted for as separate derivatives and recorded at fair value if their economic characteristics and risks are not closely related to those of the host contracts and the host contracts are not held for trading or designated at fair value though profit or loss. These embedded derivatives are measured at fair value with changes in fair value recognised in profit or loss. Reassessment only occurs if there is either a change in the terms of the contract that significantly modifies the cash flows that would otherwise be required or a reclassification of a financial asset out of the fair value through profit or loss category.

Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial measurement, such financial assets are subsequently measured at amortised cost using the EIR method, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included in finance income in the statement of profit or loss. The losses arising from impairment are recognised in the statement of profit or loss in finance costs for loans and in cost of sales or other operating expenses for receivables. Held-to-maturity investments Non-derivative financial assets with fixed or determinable payments and fixed maturities are classified as held to maturity when the Trust’s Manager has the positive intention and ability to hold them to maturity. After initial measurement, held to maturity investments are measured at amortised cost using the EIR, less impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees or costs that are an integral part of the EIR. The EIR amortisation is included as finance income in the statement of profit or loss.

Available-for-sale financial assets AFS financial assets include equity investments and debt securities. Equity investments classified as AFS are those that are neither classified as held for trading nor designated at fair value through profit or loss. Debt securities in this category are those that are intended to be held for an indefinite period of time and that may be sold in response to needs for liquidity or in response to changes in the market conditions. After initial measurement, AFS financial assets are subsequently measured at fair value with unrealised gains or losses recognised in OCI and credited in the AFS reserve until the investment is derecognised, at which time, the cumulative gain or loss is recognised in other operating income, or the investment is determined to be impaired, when the cumulative loss is reclassified from the AFS reserve to the statement of profit or loss in finance costs. Interest earned whilst holding AFS financial assets is reported as interest income using the EIR method.



d) Financial assets - continued

Available-for-sale financial assets - continued

The Trust’s Manager evaluates whether the ability and intention to sell its available-for-sale financial assets in the near term is still appropriate. When, in rare circumstances, the Manager is unable to trade these financial assets due to inactive markets, the Manage may elect to reclassify these financial assets if the management has the ability and intention to hold the assets for foreseeable future or until maturity. For a financial asset reclassified from the AFS category, the fair value carrying amount at the date of reclassification becomes its new amortised cost and any previous gain or loss on the asset that has been recognised in equity is amortised to profit or loss over the remaining life of the investment using the EIR. Any difference between the new amortised cost and the maturity amount is also amortised over the remaining life of the asset using the EIR. If the asset is subsequently determined to be impaired, then the amount recorded in equity is reclassified to the statement of profit or loss. Derecognition A financial asset (or, where a part of a financial asset or part of a group of similar financial assets) is derecognised when: • The rights to receive cash flow the asset have expired, or

• The Trust’s Manager has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received

cash flows in full without material delay to a third party under a ‘pass-through’ arrangement; and either (a) the Trust’s Manager has transferred substantially all the risks and rewards of the asset, or (b) the Trust’s Manager has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

Purchases and sales of available-for-sale financial assets are recognised on trade-date – the date on which the Manager commits to purchase or sell the asset. Available-for-sale financial assets are initially recognised at fair value plus transaction costs for all financial assets. Loans and receivables and held-to-maturity financial assets are carried at amortised costs using the effective interest method. Impairment of financial assets The Trust’s Manager assesses, at each reporting date, whether there is objective evidence that a financial asset or a company of financial assets is impaired. An impairment exists if one or more events that has occurred since the initial recognition of the asset (an incurred ‘loss event’), has an impact on the estimated future cash flows of the financial asset or the Trust of financial assets that can be reliably estimated. Evidence of impairment may include indications that the debtors or a company of debtors is experiencing significant financial difficulty, default or delinquency in interest or principal payments, the probability that they will enter bankruptcy or other financial reorganisation and observable data indicating that there is a measurable decrease in the estimated future cash flows, such as changes in arrears or economic conditions that correlate with defaults. Financial assets carried at amortised cost For financial assets carried at amortised cost, the Trust’s Manager first assesses whether impairment exists individually for financial assets that are individually significant, or collectively for financial assets that are not individually significant. If the Manager determines that no objective evidence of impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a company of financial assets with similar credit risk characteristics and collectively assesses them for impairment. The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original EIR.




d) Financial assets - continued Financial assets carried at amortised cost - continued

The carrying amount of the asset is reduced through the use of an allowance account and the loss is recognised in the statement of profit or loss. Loans, together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realised or has been transferred to the Trust. If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognised, the previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a write-off is later recovered, the recovery is credited to finance costs in the statement of profit or loss.

The amount of any impairment loss identified is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original EIR.

e) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Trust and revenue can be reliably measured. Amounts disclosed as operating revenue are net of sales discounts, duties and taxes. Revenue is measured at the fair value for the consideration received or receiveable.

Dividend income from listed or quoted entities is recognised when a market announcement is made. Dividend income from private equities is recognised on a receipt basis.

f) Distributions In accordance with the Trust Deed, the Trust may distribute, by cash or reinvestment, all distributable income to unit holders. Distributable income is the Manager’s estimate, with the Trustee’s approval, of the amount the Trustee may distribute, not exceeding the net income of the Trust for an accrual period.

g) Management fees Management fees are standard fees stated under the terms of the Trust Deed and based on 1.65% (2016: 1.65%) on the value of total Trust Fund. This is payable after creation end and is calculated on the net asset value of the unit trust at the beginning of the next creation.

h) Trustee fees Trustee fees payable to FHL Trustees Limited were fixed at $38,000 (2016: $38,000) until the Trust’s portfolio reaches $100 million (2016: $100 million) or 0.05% (2016: 0.05%) of the total value of the Trust Fund when it exceeds $100 million. This amount is paid semi-annually in arrears to the Trustee.

i) Trade and other payables These amounts represent liabilities for goods and services provided to the Trust prior to the end of the financial year and which are unpaid.

j) Entry fees The Manager is entitled under the Trust Deed to an entry fee of up to 3.5% (2016: 3.5%). The entry fees only applies to units that are

purchased.

k) Taxes

Income taxes The Trust is not subject to income tax provided the distributable income is declared for distribution to unit holders

Value Added Tax (“VAT”) The Trust is exempted from VAT.




l) Cash and short term deposits For the purposes of the statement of cash flows, cash and short term deposits comprise cash on hand, deposits held at call with banks and other short-term highly liquid financial assets.

m) Provisions Provisions are recognised when the Trust has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation, and the amount has been reliably estimated. Distributions are recognised as a liability in the period in which they are declared.

n) Reporting currency All figures are reported in Fiji dollars.

o) Comparative figures Where necessary, comparative figures have been reclassified to conform with changes in presentation in the current year.

2. REVENUE AND EXPENSES 2017 2016

$ $

a) Interest income 2,308,409 1,782,153

Interest income is earned from short-term loans and receivables and bonds. The interest rate on short-term loans ranged from 3.5% to 7.75% (2016: 3.5% to 7.75%). The average bond price is 1.0847 (2016: 1.10931 ).

b) Dividend income Listed securities 491,747 507,677 Unlisted securities 2,021,444 2,555,787 2,513,191 3,063,464

Listed securities refers to financial assets listed on the South Pacific Stock Exchange.

c) Professional fees

Auditor’s remuneration - audit fees 7,300 7,000 - other services 1,728 4,276 Other valuation fees 20,518 20,000 29,546 1,276

3. FAIR VALUE RESERVES 2017 2016 $ $

Net change in the fair value of available-for-sale financial assets 13,952,883 12,686,426

This is represented by as follows: Balance as at 1 July 12,686,426 11,532,162 Movement during the year 1,266,457 1,154,264

Balance as at 30 June 13,952,883 12,686,426

The fair value reserve comprises the cumulative net change in the fair value of available-for-sale financial assets until the financial assets are derecognised, disposed or impaired.



4. FINANCIAL ASSETS 2017 2016 $ $ (a) Loans and receivables

On-call facility 5,190,000 5,190,000 5,190,000 5,190,000

(b) Available-for-sale financial assets Listed equities (quoted on the South Pacific Stock Exchange) 12,664,200 10,382,347

Unlisted equities Shares in unlisted companies 21,069,786 20,643,270

Quoted managed fund 110,626 100,629 Bonds 11,695,194 12,518,653 32,875,606 33,262,552 Less: Allowance for impairment losses (133,130) -

33,262,552 33,262,552 Total value of equities held by the Trust as at balance date 45,406,676 43,644,899

Unrealised net change in fair value of available-for-sale financial assets at balance date is $13,952,883 (2016: $12,686,426). Maturity profile of investments in Bonds are as follows: 2017 2016

Bonds Year of Maturity $ $ Fiji Development Bank Bond 2016 - 1,511,034 Fiji Infrastructure Bond 2016 - 200,471 Housing Authority 2016 - 200,721 Treasury Bill Bond 2016 - 291,607 Fiji Development Bank Bond 2017 1,790,638 1,802,921 Fiji Infrastructure Bond 2017 - 100,008 Housing Authority 2017 200,781 199,756 Treasury Bill Bond 2017 - 191,914 Fiji Development Bank Promissory Notes 2017 1,164,746 - Fiji Development Bank Bond 2018 2,500,324 2,580,420 Fiji Infrastructure Bond 2018 300,523 301,405 Housing Authority 2019 202,605 204,037 Fiji Infrastructure Bond 2021 104,790 104,255 Housing Authority 2021 204,443 202,017 Viti Bond 2021 200,000 - Fiji Development Bank Bond 2022 120,228 121,414 Fiji Infrastructure Bond 2022 657,772 645,710 Fiji Development Bank Bond 2023 335,341 332,415 Fiji Infrastructure Bond 2024 148,251 144,643 Fiji Development Bank Bond 2025 245,371 248,616 Fiji Development Bank Bond 2026 677,272 689,617 Fiji Infrastructure Bond 2027 1,605,465 1,123,747 Fiji Development Bank Bond 2028 174,538 184,028 Fiji Development Bank Bond 2029 742,017 793,737 Fiji Infrastructure Bond 2029 88,734 94,048 Fiji Development Bank Bond 2030 231,355 250,111 11,695,194 12,518,653



4. FINANCIAL ASSETS 2017 2016 $ $ (c) Held-to-maturity financial assets

Short-term loans 11,500,000 15,500,000 Short-term deposits 27,300,000 18,800,000 Long -term deposits 1,000,000 1,500,000 39,800,000 35,800,000 The short term deposits have a term of 6 to 12 month whereas long term deposits have a term of more than 12 months and earn

interest at 3.72% to 5.5% per annum.

Short-term loans have a term of 6 to 24 months and earn interest at 3.5% to 7.5% per annum.

5. ACCRUED INCOME 2017 2016 $ $ Accrued interest income 630,875 176,984 Accrued dividend income 476,550 758,266

Less: provision for doubtful debts (155,622) (96,580) 951,803 838,670

6. NET INCOME AVAILABLE FOR DISTRIBUTION 2017 2016 $ $ Final distribution payable to unit holders 1,523,461 1,918,344

7. OTHER LIABILITIES 2017 2016 $ $ Trust clearing 1,317,417 469,990 Sundry creditors 33,528 21,629 Accruals 21,563 49,609 1,372,508 541,228

8. UNIT HOLDERS’ EQUITY 2017 2016 $ $ Unit holders’ equity - 122,880,429 units (2016: 116,160,883 units) 80,741,457 75,484,987

9. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

Contingent liabilities The Trustee and Manager are not aware of any contingent liabilities at balance date (2016: $Nil). Capital commitments There were no capital commitments at balance date (2016: $Nil).

Operating lease commitments There were no operating lease commitments at balance date (2016: $Nil).

10. CASH AND SHORT TERM DEPOSITS 2017 2016 $ $

Cash and short term deposits consist of cash on hand and balances with banks. Cash and short term deposits included in the statement of cash flows comprise the following amounts: Cash at bank 6,248,467 5,164,053



11. RELATED PARTY DISCLOSURES

(a) Identity of related parties Trustee The Trustee of the Trust is FHL Trustees Limited (“FTL”). Manager The Manager of the Trust is FHL Fund Management Limited (“FHLFML”). Other The Trust holds investments with companies in the Fijian Holdings Group, including Fijian Holdings Limited, Merchant Finance Limited and RB Patel Group Limited. FHL Stockbrokers Limited acts as broker for the Trust’s listed investments.

(b) Transactions with related parties (i) Transactions with Fijian Holdings Limited and its subsidiary companies (“FHL Group”)

Related party Nature of transaction 2017 2016

$ $ Fijian Holdings Limited Distributions (170,393) (205,437)

Fijian Holdings Limited Interest income 277,250 272,289 FHL Fund Management Limited Management fees (1,530,907) (1,380,126) South Seas Cruises Limited Interest income - 1,818 RB Patel Group Limited Interest income 106,109 116,020 RB Patel Group Limited Dividend income 89,886 70,585 Merchant Finance Limited Interest income 188,771 89,807 Merchant Finance Limited Dividend income 900,000 3,013,600 (139,284) 1,978,556

(ii) FHL Trustees Limited (“FTL”) Under the terms of the Trust Deed, FTL as Trustee is entitled to receive a fixed yearly fee of $38,000 until the total value of the FHUT investment portfolio reaches $100 million calculated semi-annually. When the total value of the Trust’s investment portfolio reaches $100 million and over, the Trustee fee will be calculated and paid out semi-annually on the basis of 0.05% of the total value of the Trust’s investment portfolio per annum. During the year, fees to FHL Trustees Limited amounted to $38,312 (FHL Trustees Limited 2016: $58,488).

(iii) Owing by related parties Owing by Fijian Holdings Limited 6,150,000 6,150,000 Owing by Merchant Finance Limited 5,000,000 4,000,000 Owing by RB Patel Group Limited 3,040,000 3,040,000 13,190,000 10,390,000

(iv) Investments in related parties Listed securities

RB Patel Group Limited 1,662,453 1,566,446

Unlisted securities Merchant Finance Limited 13,200,000 14,478,000

12. TRUST DETAILS Date of formation The Trust was formed on 27 April 2001 and has a life of 60 years from its inception.

Registered office The Trust’s registered office is located at Ground Floor, Ra Marama, 91 Gordon Street, Suva.



12. TRUST DETAILS - continued Principal activity The unit trust is an investment vehicle that allows investors’ monies to be pooled with other unit holders’ monies that in return are issued with units and become unit holders in the unit trust. The pooled funds are then invested by the Manager across a range of investments in accordance with the investment guidelines contained in the Investment Policy Statement.

13. SUBSEQUENT EVENTS In July 2017, the Directors declared final dividend of $1,210,348 for the year ended 30 June 2017. Apart from this, the Trustee and Manager are not aware of any matter or circumstance not otherwise dealt with in the report or financial statements that will significantly or may significantly affect the operations of the Trust, the results of those operations or state of affairs of the Trust in subsequent financial years.

14. RISK MANAGEMENT POLICIES The Trust has exposure to the following risks:

- Market risk; - Operational risk; - Credit risk; and

- Liquidity risk. This note presents information about the Trust’s exposure to each of the above risks, the Trust’s objectives, policies and processes for measuring and managing risk, and the Trust’s management of funds. he 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) Interest rate This is the risk borne by interest bearing assets such as loans and bonds due to the changes in interest rate. Through its investment policy the Trust will aim to balance its portfolio through short term deposits and long term loans. At the reporting date the interest rate profile of the Trust’s interest bearing financial instruments carrying amounts were: 2017 2016 Fixed rate instrument $ $ Short-term loans and receivables 5,190,000 5,190,000 Held-to-maturity financial assets 39,800,000 35,800,000

Fair value sensitivity analysis

The Trust does not account for any financial assets and liabilities at fair value through income and expenses. Therefore a change in interest rates at the reporting date would not affect the income and expenses.

(ii) Performance This relates to the risk that the Manager’s investment selection may not achieve the objective of the Trust or produce acceptable returns for unit holders.

All unit holders (including potential ones) are fully informed of the risks involved.



14. RISK MANAGEMENT POLICIES - continued (iii) Conflicts of interests

Conflicts of interests between the Trust, FHL FML, FTL and FHL may exist and also arise in the future in a number of areas relating to FHL past and on-going relationships, including potential acquisition or dispositions of business or real properties, payment of dividends and FHL FML management arrangements.

Under the Trust Deed, written approval is required from the Trustee for any Trust dealings with the associates of the Manager.

Operational risk

(i) 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 FHL Group Chief Executive Officer and the Compliance Committee. The Manager monitors changes to regulations for compliance and implementation of market best practices.

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

The Manager has developed an operations manual to deal with all operational processes in line with necessary regulations.

The Manager also conducts third party due diligence on new investments.

(iii) Data risk This is the risk of losing information including unit holder account details even though there is a dual system storage of a hard copy filing system and electronic database.

The manager ensures confidentiality and security of all unit holders’ information. The trust has developed a database system to store more information, conducts daily backups of electronic information and has developed a disaster recovery plan.

Credit risk

This refers to the risk of losing investment funds due to companies the Trust has provided short term loans defaulting on their repayments of principal or interest or both.

The Trust will minimize risk by conducting thorough due diligence on any investments it makes, ensure that there are guarantees on these investments by principal stakeholders or sister companies, limit the amount that is given as loans and implement certain conditions to allow the Trust to collect the funds.

The carrying amount of the financial assets represents the maximum credit exposure. The maximum exposure to credit risk at the reporting date was:

2017 2016 $ $ Cash and short term deposits 6,248,467 5,164,053 Loans and receivables financial assets 5,190,000 5,190,000 Available-for-sale financial assets 45,406,676 43,644,899 Held-to-maturity financial assets 39,800,000 35,800,000 Accrued income 951,803 838,670 97,596,946 90,637,622



14. RISK MANAGEMENT POLICIES continued Liquidity risk This is the risk that the Trust will not be able to facilitate its unit holders’ redemption request. The Trust aims to maintain a buffer fund in liquid assets at all times to meet expected normal redemptions. 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 realise sufficient liquid funds to meet any unusual redemption requests.


ManagerFHL Fund Management Limited Telephone: (679) 331 7152/ 331 1120Fax: (679) 331 7153Email: [email protected]

Registered Office Ground Floor, Ra Marama 91 Gordon Street, Suva

Postal AddressFHL Fund Management LimitedP. O. Box 2110Government BuildingsSuva, Fiji

Auditor Ernst & Young Chartered Accountants Level 7, Pacific HouseButt StreetP. O. Box 1359Suva, FijiTelephone: (679) 331 4166Fax: (679) 330 0612

RegulatorReserve Bank of Fiji Pratt Street, Suva Private Mail Bag Suva, Fiji

Principal BankerAustralia & New Zealand Banking Group Limited25 Victoria ParadeGPO Box 179, Suva

FHL FML Directors Adrian Sofield- Chairman Navin RajGyaneshwar PrasadAna Tuiketei Nouzab Fareed

Compliance Committee Tarlochan Singh – Chairperson Tanuj Patel Janice Singh Emele Mafi Nouzab Fareed

TrusteesFHL Trustees Limited Ground Floor, Ra Marama91 Gordon Street P. O. Box 2110Government Buildings Suva, Fiji Telephone: (679) 331 7152 / 331 1120Fax: (679) 331 7153

FTL DirectorsNesbitt Hazelman– ChairmanEmitai BoladuaduaFay Yee

Investor Relations You can obtain information about investing with the Fijian Holdings Units Trust bycontacting our licensed unit trustrepresentative via:Telephone: (679) 331 7152/331 1120Fax: (679) 331 1753Email: [email protected]

You can also contact or visit us at our registered office listed above.

Business Hours 8.00am- 5.00pm Mondays – Thursday8.00am- 4.00pm Fridays

CORPORATE DIRECTORY

F I J IA N H O L D I N G SUNIT TRUST

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