annual report 2014 - unit...

A n n u a l R e p o r t 2 0 1 4

Vision

“FHL Fund Management Limited will be the leading Fund Manager operatingin the South Pacific Region.”

Our Mission

FHL 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.

Organisational Values

FFML “HERLP” core values are the underlying principles that strongly bind ourpeople and the organisation together:

i. HONESTY, LOYALTY AND INTERGRITYOur people adhere to high moral principles, they have respect for one anotherand 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 TEAMWORKWe 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 forachieving our mission.

iii. RECRUIT, COMPETITIVELY REWARD AND RETAIN THE BESTWe 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 nothingis impossible for them to do - having a “can do attitude”.

iv. LIFE-TIME LEARNING AND GROWTHWe nurture and develop all our people through progressive lifetime learning,coaching and mentoring and we also encourage everyone to participate andget involved in the business all the time.

v. PLAY TO WIN, CREATIVE AND CELEBRATEEvery opportunity is a challenge for our people to achieve business solutionsahead 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.

Core Purpose

The principal reason for Fijian Holdings Fund Management Limited's existenceis:

“To maximise unit holders wealth through the management of high qualityinvestment products that are affordable and offers competitive returns and indoing so maximises our shareholders value.”

Contents

Corporate Governance 02

FHL Trustees Limited - Directors 03

Management Company Directors 04

FHL Fund Management Limited Team 05

FHL Fund Management Limited Chairman's Report 06

FHL Fund Management Limited General Manager's Report 07

FHUT Investment Portfolio 09

Trustee's and Managers Report 14

Statement by Trustee and Manager 16

Independent Audit Report 17

Statement of Comprehensive Income 18

Statement of Changes in Equity 19

Statement of Financial Position 20

Statement of Cash Flows 21

Notes to the Financial Statements 22

Financial Highlights

FHUT | Annual Report 2014 01

Corporate Governance

FHUT | Annual Report 201402

In compliance with the RBF Corporate Governance Code for the Capital Markets, FHL Fund Management Limited (FHLFML), the Fund Manager for Fijian Holdings Unit Trust (FHUT) acknowledges and supports this requirement and reportson 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.

Principle FHL FML Comments

Establish Clear Responsibilities forBoard 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 dutiesof the Board to manage the company effectively and efficiently. FHL FML continuouslydevelops policy guidelines to strengthen its role.

Constitute an Effective Board The FHL FML Memorandum & Articles of Association covers the required constitutionof the Board. Directors are selected for their experience and competencies and areevaluated on their suitability for the Board by the FHL Board of Directors.

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

Appointment of a General Manager FHL Fund Management Limiteds' structure including the appointment of the officer/sin charge is determined by the Board and Holding Company of FHL FML.

Board and Company Secretary The Board appoints a suitably qualified and competent Company Secretary, who is theadministrative link between the Board and the Management and is responsible forensuring compliance with regulatory requirements.

Timely and balanced reporting FHUT complies with its disclosure obligations under the Unit Trust Act 1978 andCapital Markets Decree 2009. FHL FML Board meetings are held monthly to updatedirectors on the Fund's performance and to review and provide approvals andconfirmations of key aspects of the operations of the Fund.

Promote ethical and responsibledecision-making

FHL FML has adopted the FHL Group approved Code of Conduct that sets out theprinciples of ethical behaviour by all Group personnel. This ethical framework commitsits Directors, employees, contractors and consultants to not only comply with the law,but to conduct business in accordance with the highest ethical standards. FHL FMLalso ensures it complies with the Unit Trust Act 1978 whereby directors and employeesof 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 thatmay arise in the course of the business.

Respect the rights of shareholders FHUT complies with all disclosure requirements under the Trust Deed, Unit Trust Act1978 and Capital Markets Decree 2009. FHL FML with the concurrence of the Trusteesensures that all material changes made during the course of operations are communicatedto unit holders in a press release and individually through mail. FHL FML also conductstraining sessions for the unit holders upon request.

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

Accountability and Audit Financial statements of FHUT are audited annually by independent auditors whoprovide their report to the unit holders. Regular internal audits are conducted by ourGroup Auditors on operational matters whilst the RBF conducts routine on-siteexamination of the Fund.


Sakiasi SeruChairman

Sakiasi Seru is a Chartered Engineerand a member of the Institute ofElectrical and Electronic (MIEE) UK.He graduated with BSc in Electronics& Computer Engineering (UK),Diploma in TelecommunicationManagement (UK) and attendedKellogg Business School (NorthWestern University). He is a formerActing CEO of Telecom Fiji Limited.Sakiasi has over 38 years' experiencein the telecom industry and 22 yearsof which he held various seniormanagement positions at TelecomFiji Limited. He was previously aboard member of Airport FijiLimited, Xceed Pasifika Limited andInternet Services Fiji Limited.

Arun Kumar NarseyDirector

Arun Narsey is a Char teredAccountant by Profession andpractices under the name styled as AM Narsey & Co., Char teredAccountants. He has over 30 years'experience in the field of professionalaccounting holding various seniorand management positions withKPMG (locally and internationally)and Ernst & Young. He is a memberof the Fiji Institute of Accountantsand the Institute of CharteredAccountants in Australia. Arun iscurrently a director of AmalgamatedTelecom Holdings Limited, FHLProperties Ltd, Fiji Directories, aLocal Advisory Board Member ofBank of Baroda, and a Commissionerwith Fij i Higher EducationCommission. Arun also serves on themanagement board of Jai NarayanCollege and honorary auditor of FijiSociety for the Blind. He haspreviously served as a board memberof Telecom Fiji Limited, Chairmanof XceedPasifika Limited and a BoardMember of Maritime & PortsAuthority of Fiji.

Seruwaia Hong-TiyDirector

Seruwaia Hong-Tiy is a HealthProfessional - Physiotherapist whoobtained a Diploma in Physiotherapyfrom the University of Otago, NewZealand. In 1992, together with herhusband, they established a familybusiness called the Shipping Services(Fiji) Limited. She formerly held theHealth Portfolio and Women & SocialWelfare in the SVT government.Currently, Seruwaia is a member ofthe sub-committee for the iTaukeiE d u c a t i o n C o m m i t t e e , t h eInvestment Committee and aDirector for the Nadroga NavosaProvincial development company.

FHL Trustees Limited - Directors

FHL Fund Management Company Directors


Ulaiasi Taoi is a businessman by profession and holds a Bachelor of Arts degree in Management and Political Science. He is theManaging Director and owner of UTECH. Currently he is the Chairman for FHL Fund Management Limited and by appointmentis also a Board member of FHL Properties Limited and FHL Sub Committee on Audit & Risk. He also serves as a Director onthe Fiji Indigenous Business Council.

Robin Yarrow was educated at Suva Grammar School and then at Sydney and London Universities, after growing up in Vatukoula.

Was a Fiji civil servant for 30 years and served as Permanent Secretary for Agriculture for 10 years and Foreign Affairs for 3 yearsas well as in 2 other Ministries. Also served as Fiji Ambassador to Japan, China and Korea.

Mr. Yarrow retired 13 years ago and currently is a member of several Boards, including the National Trust of Fiji, NatureFiji,Vodafone Fiji Ltd and Fiji Red Cross Council. Recently served as Director of the Reserve Bank of Fiji for 9 years and has servedon many other Government Boards and Committees. Is especially interested in the environment, Fiji's heritage and sustainabledevelopment and is committed to serving Fiji and the community. Has been awarded the Fiji Civil Service Medal.

Nouzab Fareed joined FHL in 2004 and is a Charted Accountant, Chartered Certified Accountant (UK), Chartered ManagementAccountant (UK), Chartered Marketer (UK) and a Fellow of CPA (Australia). He has a MBA in Banking & Marketing and aMaster of Arts in International Economics. He is a Licensed Investment Advisor (Fiji) and a Certified Fraud Examiner of USA.He is a fellow of Financial Services Association of Australasia (FINSIA) and also a a Graduate of Australian Institute of CompanyDirectors (GAICD).Fareed is a Board Director for all FHL Group companies. In addition, he is also a Board Director for Marsh Insurance Ltd, GoldenManufacturing Ltd, Goodman Fielder International Ltd and South Pacific Stock Exchange.

Prior to joining FHL, he was the Director Business Development with Mercantile Merchant Bank Ltd in Sri Lanka and was alsoa Board Director for FedEx, NIIT and Western Union in Sri Lanka. He has more than 24 years of Corporate Finance andInvestment Banking experience. He is the founding President of Australia Institute of Company Directors - Fiji Chapter andalso the current President of Fiji - PNG Business Council. He is the Vice President of Fiji Institute of Accountants (FIA) as wellas the Vice President of Suva Chamber of Commerce.

He is a council member for CPA Fiji Branch and Fiji Exporters Council. In addition, he sits on MBA Advisory Committee ofUniversity of South Pacific. Fareed has received Executive Training from Harvard Business School, Australian Graduate Schoolof Management (AGSM), Graduate Business School of Auckland, Asian Productivity Organization (APO) and Association ofOverseas Technical Scholarship of Japan. Nouzab Fareed is the only Distinguished Toastmaster (DTM) in South Pacific.

Ulaiasi TaoiChairman - FHL Fund Management Limited

Nouzab FareedGroup Chief Executive Officer,Fijian Holdings Group.

Robin YarrowDirector - FHL Fund Management Limited

Catherine Grey joined the Fijian Holdings Group in 2004 and for the past eight years she was the Compliance Officer and laterAssistant Manager Risk & Compliance for FHL Stockbrokers Ltd, FHL Fund Management Limited and Fijian Holdings Ltdbefore she was transferred to Basic Industries Ltd in late 2012 as the Human Resources Manager and Public Relations.

She is currently the Human Resources Manager for Fijian Holdings Limited and a member of the Fiji Human Resources Institute,the Merchant Finance Human Resources Sub-Committee and served as Company Secretaries for a few of the FHL subsidiariesBoards. She is also the Chairperson of the FHL Group Tender Committee.

She holds a Post Graduate Certificate in Human Resources and is currently pursuing her MBA at the University of the SouthPacific. Catherine has completed the Securities Licensing Examination with the Securities Institute of Australia.

She was appointed last year as an Alternate Director for FHL Fund Management Limited and was recently appointed a directorfor FHL Stockbrokers Limited and FHL Fund Management Ltd.Catherine Grey

Group Manager Human ResourcesFijian Holdings Group

1. Sowani Tuidrola

Sowani Tuidrola is the GeneralM a n a g e r f o r F H L F u n dManagement Limited. He hassuccessful ly completed theAustralian Institute of BoardMembers course and holds aprofessional membership for theAustralian Institute of Directors andthe Fiji Institute of Directors. He isa Board member for variouscompanies; Merchant Finance &Investment Company Limited, DataBureau Limited, and Pacific GreenLimited. Mr. Tuidrola is also acommittee member of the ReserveBank of Fiji's Working Group One.He has successfully completed theSecurities Licensing Examinationsand holds a Broker Dealer and UnitTrust Representative License.


2. Archana Chand

Archana is the Assistant ManagerFinance for FHL FML. She holds aBachelor of Ar ts Degree inA c c o u n t i n g & F i n a n c i a lManagement and Economics fromthe University of the South Pacificand a Post Graduate Diploma inProfessional Accounting at theUniversity of the South Pacific. Sheis currently pursuing CPA. She hassuccessfully completed the CapitalMarkets Securities LicensingExamination.

3. Priscilla Greig

Priscilla is the Manager Sales andMarketing. She is a licensed UnitTrust Representative for FHUTwith over 10 years' experience inthe Capital Markets Industry. Sheis the Company Secretary for FHLRetailing Limited. Currentlypursuing a Professional Diploma inBusiness Leadership and hassuccessfully completed the FijianSecurities Examinations. She is am e m b e r o f t h e C a p i t a lToastmaster(TM) Suva.

4. Sainiana Serevi

Sainiana is the Assistant ManagerBusiness Development andCompany Secretary for FHL FML. She holds a Bachelor of CommerceDegree majoring in Accounting andEconomics from the University ofthe South Pacific. She joined FHLFML on November 2013. She alsoholds a professional membershipfor the Institute of InternalAuditors. She is a member of theCapital Toastmaster(TM) Suva andis currently pursuing the CapitalMarkets Securities LicensingExamination (SIIA).

5. Joana Saqalagilagi

Joana is the Fund Administrator atFHL FML. She holds a Bachelor ofArts Degree in Economics &M a n a g e m e n t a n d P u b l i cAdministration from the Universityof the South Pacific. She hassuccessfully completed the FijianSecurities Licensing Examinationand is a Licensed Broker/Dealer andUnit Trust representative for FHUT.

6. Simione Vitiarai

Simione is a Sales & MarketingOfficer for FHUT. He is currentlypursuing Bachelor's Degree inAccounting and InformationSystems from the Fiji NationalUniversity. He is a member of theCapital Toastmaster(TM) Suva andis currently pursuing the CapitalMarkets Securities LicensingExamination (SIIA).

7. Ramendra Bhan

Ramen is a Sales and Marketingofficer with FHL FML. He holds anAdvanced Diploma in Computingfrom NZPTC and is pursuing aDegree In customs at the FijiNational University. He is am e m b e r o f t h e C a p i t a lToastmaster(TM) Suva and iscurrently pursuing the CapitalMarkets Securities LicensingExamination (SIIA).

8. Sainimili Balenagaga

Sainimili is the Finance Officer withFHL FML. She joined FHL in 2012.She holds a Bachelor of Commercemajoring in Accounting andEconomics from the University ofthe South Pacific. She is currentlypursuing the Capital MarketsSecurities Licensing Examination(SIIA).

9. Mereti Monomono

Mereti is an Administration Officer(EDS). She joined FHL FML in July2013. She has graduated with aDiploma in Business Accountingfrom the Fiji National University.She and is currently pursuing theCapital Markets Securities LicensingExamination (SIIA).

10. Kelera Gade

Kelera Gade is the CustomsRelations Officer. She joined FHLin 2013. She has attained aCertificate in Purchasing &Inventory Management with TPAFand a Certificate for CustomerS e r v i c e a n d Fr o n t O f f i c eManagement from the Fiji NationalUniversity. She is a member of theCapital Toastmaster(TM) Suva andis currently pursuing the CapitalMarkets Securities LicensingExamination (SIIA).

11. Mereseini Serevi

Mereseini is the Finance Officer forFHL. She joined FHL in 2013. Shehas attained an Advance Certificate& Diploma in Web Design andComputing from UniversalNetwork of InfoTech.

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FHL Fund Management Limited Team

was achieved despite the challenging economiccondition.

Investments

In the quest for new investment FHUT has partneredwith Rittam Investment Limited a subsidiary of PMeghji Limited with the development of the formerAmanuca Resort on Tokoriki Island which is currentlymanaged by Sheraton Hotels. This investment showsthe Board and the Trustees confidence in the tourismIndustry.

Future

During this financial year a significant number ofchanges and reviews were undertaken on the fundadministration and the investment portfolio. The NewYear will see the implementation of the new initiativesto improve service delivery to our unit holders and toimprove the accessibility of the fund to investors. Thesenew initiatives will drive FHUT to be an investmentproduct of choice to all Fijians. FHL FML anticipatesthat the 2015 will be another challenging year howeverwe are mindful of the expectations of unit holders andwe will continue to work towards providing unit holderswith a competitive return in this challenging investmentmarket.

Appreciation

It is my pleasure to extend my profound appreciationto our unit holders past and present for their continuedconfidence in the fund which is the key to the successof FHUT.

We would like to thank the service providers for theircontinued cooperation in promoting the FHUT product.The dedicated and diligent management team of FHLFML for their tireless commitment and passion to drivethe fund and achieving the desired results.Finally I would like to record my appreciation of myfellow Directors for their support and valuablecontributions during the year. On behalf of FHL fundManagement Limited, a sincere appreciation is extendedto my fellow Directors who have resigned during year,namely, Ulaiyasi Baya, Colonel (Retired) Sakiusa Raivoce,Paulo Vanualailai, and Ratu Samu Nawalowalo. I alsowelcomed the new directors Mr. Robin Yarrow, NouzabFareed and Catherine Grey.

FHL Fund Management LimitedChairman's Report

Dear Unit Holders

t is with great pleasure to announce thatFijian Holdings Unit Trust (FHUT) profitafter tax of $3.204 million is attributed tothe unit holders for the financial year endingJune 2014 as compared to $2.427 million

in June 2013 which is an increase of 32.00%. Wehave concluded another year of customer centeredservice for our customers, the unit holders to makeFHUT an investment product of choice.

Effective from 1 January 2014, FHUT has reducedthe minimum initial entry for joining the fundand the dividend entitlement from 250 units to100 units. The decision for the reduction was tomake it more accessible to all individuals to startan investment and assist to grow their wealth overtime.

Our overall financial performance has been robustdespite the intense competition faced from otherfund manager.

Economic Outlook

During the year, Fiji's Economy grew by anestimated 4.60% better than initially forecasted. For the coming year this figure isexpected to increase by 3.80%. There was low inflation and continuing low bank interestrates. During the year the Fiji Government demonstrated a consistent policy ofaggressively investing in infrastructure and transportation network. The successfulupgrades provided by infrastructure together with good socio economic policy is a keyenabler of a sustainable, vibrant economy that will generate economic growth.

Five Year Strategic Plan

FHL Fund Management Limited (FHL FML) the manager of FHUT has completed the5 year Strategic Plan on the premise of a vibrant economy and the adoption of theCapital Markets Development Master Plan 2020 which aims to “increase the numberof adult investors in the capital markets to 100,000 by 2020”.

FHL FML is currently engaged in the development of a new registry system which willautomate the unit creation process and the data management system. We have alsoidentified sales and marketing strategies to grow the total number of unit holders andthe FHUT portfolio.

FHUT Results

During the year the FHUT portfolio grew to $59.965 million compared to $45.773million in FY 2013 which is a 31.00% growth. The total number of unit holdersincreased from 3,115 to 4,469 an increase of 43.00%. The growth in the portfolio andthe number of unit holders are a direct reflection of the high liquidity in the bankingsystem and the robust sales and marketing strategies adopted by the team.FHUT paid out a record dividend of $3.175 million compared to $2.421 million inFY 2013 which is a 31% increase in dividend payout. The dividend return for the sameperiod was 5.54% and a positive growth return of 0.40%. The fund has paid out a totalof $19.00 million in dividends to unit holders since its inception. The positive result


I

During the year the FHUT portfolio grew to $59.965 million compared to $45.773million in FY 2013 which is a 31.00% growth. The total number of unit holdersincreased from 3,115 to 4,469 an increase of 43.00%.

Ulaiasi TaoiChairman,

FHL Fund Management Limited

Pls provide signature.


$2.42 million in 2013 which represents a 31%increase.

Sales & Marketing

With the introduction of the 2020 plan by theReserve Bank of Fiji in 2012 which focus onMicro finance and the Capital Market. Thenational target is to achieve 100,000 investorsin the Capital Markets by the year 2020.Management has adopted strategies which hasresulted in the growth of the new investors by1,564 to 4,469 in FY14 compared to 3,115 inFY13. This represents a growth of 43%.

We are committed to ensuring that our productis made available and accessible throughout therural Fiji, and also to overseas customers. Weaspire to target this market through theextensive use of print, voice and electronicmedia. We continue to strive for 100% coverageof the whole of Fiji in promoting investmentawareness and appreciation of the FHUTproduct.

Investment

During the year, Management was faced witha major challenge of finding good investmentopportunities to invest its funds in. The highliquidity in the economy had caused theInstitutional clients to move their funds toinvestment products like FHUT where theinterest rate were very attractive and above themarket rates.

In comparison to the last financial year's result(2013) the value of the listed equities whichaccounts for 7% of FHUT total portfolio. FHUThad bought shares in three listed stocks namelyAmalgamated Telecom Holdings Limited(ATH) of 275,299 shares, Rice Company ofFiji Limited (RCF) of 17,152 shares and VBHoldings Ltd (VBH) of 100,000 shares.An independent valuation was carried out forunlisted equities which accounts for 27% of theFHUT portfolio as at the end of June 2014.

The notable changes were the positiverevaluation of shares in all the unlisted equitiesin Merchant Finance & Investment CompanyLimited, Golden Manufacturing Limited, NewWorld Supermarkets Limited and Data BureauLimited.

t the beginning of July 2013 thename of the Fund Managerchanged from Fijian HoldingsTrust Management Limited( F H T M L ) t o F H L Fu n d

M a n a ge m e n t L i m i te d ( F H L F M L ) .The 2014 financial year marked another periodof significant achievements for Fijian HoldingsUnit Trust (FHUT) delivering another year ofrobust growth. This year, as the fund concludedits thirteenth year of operations, I am pleasedto report that FHUT'S total portfolio value hasgrown to $59.97 million as compared to $45.77million in June 2013, an increase of 31% dueto positive unit sales. This commendableincrease due to the investor growing confidencein the fund.

Operating Environment

The world economy is expected to grow by 3.0%as forecasted by the International MonetaryFund (IMF) led by improved demand inadvanced economies and China, and thesubsequent export led rebound in otheremerging market economies.

On the domestic front, the economy is expectedto grow by 3.60% following a 1.70% growth in2012. Over the year, domestic activitiescontinue to strengthen broadly as a result ofincreased consumption and investmentspending.

Financial Performance

FHUT delivered a positive total return of 5.93%which is made up of 5.53% in distribution(dividend) return and 0.40% in growth (capital)return. This is a commendable increase of 112%from the previous year considering theextremely challenging economic and operatingenvironment. This result was achieved throughrobust sales and positive revaluation of ourportfolio.

Furthermore, I wish to highlight that the strongportfolio performance proven by the growth ofFHUT under management from inception todate, has seen the fund pay out total dividendsamounting to $19.50 million. FHUT alsodistributed its highest dividend payout in termsof dollar value of $3.18 million compared to

AFHUT delivered a positive total return of 5.94% which is made up of 5.54% indistribution (dividend) return and 0.40% in growth (capital) return.

FHL Fund Management LimitedGeneral Manager's Report

The 2014 financial yearmarked another period ofsignificant achievements forFijian Holdings Unit Trust(FHUT) delivering anotheryear of robust growth. Thisyear, as the fund concludedits thirteenth year ofoperations, I am pleased toreport that FHUT'S totalportfolio value has grown to$59.965 million ascompared to $45.773million in June 2013

funds continue to attract the highest returnswhich will lead to attractive and sustainabledividends to our unit holders.I acknowledge the continued assistance andcommitment of our service providers, ANZ Bank,ANZ Internet banking, BSP Internet banking,WBC Internet banking, BRED Internet banking,Merchant Finance & Investment Co, Ltd, Post FijiLtd, FHL Securities Ltd, Fiji Stock Brokers Ltdand Kontiki Stockbroking Ltd in promoting theFHUT product.

In addition, the achievement of FHUT during thefinancial year would not have been possiblewithout the support of the FHL FML boardmembers. Our sincere appreciation to theDirectors of FHL Trustees Ltd for theirprofessional advice and support. The outstandingportfolio growth with FHUT is also attributedwith the continuous support from Fijian HoldingsLimited through the Group Chief ExecutiveOfficer, Mr. Nouzab Fareed, the executive teamat FHL and the dedicated and committed staff ofFHL FML.

Finally and most importantly, I take thisopportunity to thank all our unit holders for theircontinued confidence in our service and product.The protection of your hard earned funds and theachievement of competitive returns for our unitholders remain our core purpose.

There were slight reductions in both the valueof bonds and the short term deposits recordedby the fund.

Trust Administration

Management is currently working on a newregistry system for the fund. The new systemhas an expanded scope to meet the futurechallenges for the fund. The system is currentlydeveloped by a local service provider.

Compliance

During the year the Compliance committee metto deliberate on complaints received during theperiod. All complaints were appropriately dealtwith and corrective measures implemented toavoid these issues happening in the future. TheFund has complied with all mandatory reportingrequirements for the financial year.

Service Providers

We have recruited two new individual persons asservice providers for FHUT namely Mr. PrafulPatel and Mr. Deven Magan. These two peoplehave Investment Advisors license by the ReserveBank of Fiji.

We wish to highlight that service providers areaudited twice a year to ensure funds are receivedby them are accurately accounted for. During thesame audit, Management also conducts trainingto enable the service providers to better serve ourunit holders. A total of ten training sessions wereundertaken during the year.

The Year Ahead:

FHL FML is committed to proactively manage andgrow FHUT portfolio to ensure that the managed


Sowani TuidrolaGeneral Manager,

FHL Fund Management Limited

Management hasadopted strategieswhich has resulted inthe growth of the newinvestors by 1,564 to4,469 in FY14compared to 3,115 inFY13. This representsa growth of 43%.


Being a good corporate citizen, the companycontributed to providing employment to thelarge pool of University graduates that arelooking for employment. Graduate traineesand attachees now contribute to the servicesoffered by the company Fiji wide.

To continue offering exceptional service tocustomers, the company opened a new branchat Damodar City Complex, Suva, during thesecond half of the year. A strategic move wasto establish this separate branch for Corporateand Rural customers in response to theincreasing demand from the growing clientele.The new branch has increased business serviceaccessibility, exposure and visibility for thecompany in the financial market.

In the coming year the company anticipatescompetition to intensify with competitiveentrants and new products. Merchant Financeis well positioned to counter these competitionswith its continuous product review andtailoring of financial solutions to suit ourcustomers and vehicle dealers. Furthermore thecompany will be reviewing its Strategic Planand related strategies to ensure that its businessmodel is refined to complement its competitiveedge and at the same time made sustainable forthe current economic environment.

BSP Convertible Notes LimitedFHUT Portfolio: 0.78%

BSP Convertible Notes Limited is a specialpurpose financing vehicle which issues debt.The company was formerly known asTourmaline Limited and changed its name toBSP Convertible Notes Limited in October2009. BSP Convertible Notes Limited wasincorporated in 2006 and is based in Suva, Fiji.BSP Convertible Notes Limited operates as asubsidiary of Bank of South Pacific Limited.

FHUT Investment Portfolio

Equity Investments

FINANCE

The finance sector makes up 23.17% of theFHUT Portfolio, which is the investment inMerchant Finance & Investment CompanyLimited.

Merchant Finance & Investment LimitedFHUT Portfolio 17.79%

The year was another challenging one forMerchant Finance with continued high marketliquidity, increased competition and subduedcredit demand. The high market liquiditycontinued to provide challenges to financialinstitutions on how to utilize those funds toget a return on them.

Despite these challenges, Merchant Financehad a very good year with another record pre-tax profit of $9.8 million for the year, comparedto F$9.1 million registered the year earlier; arecord up to that time.

The company continued to meet prudentialrequirements set by the Reserve Bank of Fiji forlicensed credit institutions and is wellcapitalized with a strong liquidity position.Apart from delivering a record profit, MerchantFinance increased its human resource capacityby providing staffs with the best training andeducation to carry out the roles they servewithin the company. Managers wereencouraged to undertake managementdevelopment training and staffs were alsoencouraged to pursue advanced academicqualifications to complement/develop theirskills. Succession planning initiatives are inplace to ensure that business thrives togetherwith the proficiency of staff.

The following are brief reports on the investments within the FHUT Portfolio and hasbeen classified by sector.

markets). The search for new sites for storescontinues keeping in mind that these shouldadd value for our shareholders. Further propertyd eve l o p m e n t s o n t h e J e t Po i n t a n dHarbourPoint sites are being considered.Looking forward, Directors and Managementhave continued to look for growthopportunities. The concerns of doing businessin Fiji have increased and continue to do so dueto cost structures. New legislations, new andincreased licence fees and other costs togetherwith the implementation of new OHS, NFAand health regulations continue to test ourability to maintain costs within the overallgrowth parameters of businesses.

NewWorld LimitedFHUT Portfolio: 1.23%

New world limited is the fastest growingsupermarket chain in Fiji. The primary activitiesof the company are retailing and wholesalingof groceries and general merchandise. Thecompany has highly grown in terms of sale inthe highly competitive market. Othershortcomings during the year, together withcost factor, did not let the company lose in thestiff competition. Building on such successes,it plans to establish more stores in the nearfuture.

MANUFACTURING

Manufacturing makes up 9.03% of the FHUTportfolio consisting of equity investments withGolden Manufacturers Limited, Atlantic &Pacific Packaging Company Limited, PunjasFlour Limited and Rice Company of Fiji.

Golden Manufacturers LimitedFHUT Portfolio: 3.81%

Golden Manufacturers is the South Pacificmarket leader in corrugated fibre packaging (or'cardboard boxes' as it is more commonlyknown). We have a varied product mix,specialising in corrugated packaging for the

RETAIL

The retail sector is one of the fastest growingsectors in Fiji and currently makes up 3.40 %of the FHUT portfolio. FHUT has investmentsin two of the largest retailers in the Fiji market,RB Patel Group Limited and New WorldLimited.

RB Patel Group LimitedFHUT Portfolio: 2.17 %

For this financial year, 2014 RBG reached a netprofit after tax of $5.90 million compared to$5.30 million, an 11% increase from theprevious year. Additionally there was also anincrease in their Revenue from sales and otherincome; from $102 million to $103 million,which is an increase of 1.5%. Similarly, the EPS(Earnings per share) has increased by 11% from18 cents last year to 20 cents this year.

Construction of the company's CinemaMultiplex at its JetPoint Complex in Martintar,Nadi is progressing well although there havebeen some delays. The construction is expectedto be completed by the end of 2014. Thestructure of the management company for theoperation of the multiplex is also in its finalstages.

During the financial year, RBG partnered withSunergise (Fiji) Limited and installed aphotovoltaic solar system at its JetPointsupermarket in Nadi. The system has to dateprovided a saving in carbon emission of 85.2tonnes which is equivalent to the use of 30tonnes of diesel. A similar system has beeninstalled at the WestPoint supermarket inLautoka. The systems supply a significantamount of the daytime energy of thesupermarkets.

In May 2014, the company closed its WaimanuRoad supermarket due to the significant shiftof customers from the store to its MarketPointsupermarket (opposite the Suva municipal





attractive packaging, boxes and corrugatedcartons. It not only serves the local market buthas created an export market to countriesincluding Tonga, Samoa, Tahiti and NewCaledonia. Atpack's largest customer is theBiscuit Company of Fiji.Flour is still the foundation of majority of ourbusiness but over the years we have grown tobecome one of the largest manufactures in theSouth Pacific with production expanding to awide variety of product starting from creambiscuits to rice, from noodles to dhal, from chocchip cookies to self-raising flour, from pancakepremix to carton packaging.

Pacific Green Industries (Fiji) LimitedFHUT Portfolio: 0.86%

PGI has designed and manufactured exoticfurniture and home accessories for 40 years.Their unique collection includes tropicalfurniture, island furniture and resort furniture,with influences from traditional indigenousarts. Pieces are carefully handcrafted and madefrom superior natural materials, includingPalmwood, a sustainable product made fromplantation coconut. The company sets abenchmark for modern, sustainable businessin the Pacific. Land is leased, not bought, torespect indigenous ownership. Pacific Greencontinues its charter to provide inspirationalsustainable products to consumers globally.

Rice Company of FijiFHUT Portfolio: 0.08%

Rice Company of Fiji, a subsidiary of FMF FoodsLimited began operations in 1996 and hasdeveloped a highly efficient processing lineusing fully automated machinery. RCF imports,mills, cleans, repacks, and sells rice.

INFORMATION,COMMUNICATION & TECHNOLOGY

Though a dynamic sector with lots of growthpotential, the communication and information

beverage (including bottled water), food andgarment industries.Making packing boxes forworld renowned Fiji Water, Starkist, SamoaPacking, Foster Group, Nestle and Coca Colais a statement in and of itself. GML hasproduced packaging for several industriesincluding beverages, canned fish and meat,packed food, horticulture and industrialproduce to name a few.

Punjas Flour LimitedFHUT Portfolio: 3.36%

Punjas operates a multi-million dollar flourmill where premium Australian wheat isprocessed and packaged into a range of qualityproducts for the Pacific market. These includenormal flour, Whole meal, Self-raising, Bakers,Noodle and Biscuit flours, Semolina, Atta andMill Mix. The plant is ISO 9001:2008 and ISO22000:2005 certified, and HACCP (HazardAnalysis and Critical Control Point) for foodsafety. Punjas purpose-built plant houses thelatest Swiss technology from Buhler, the world'slargest flour mill engineering company. PFLqualified millers are accredited by the NationalAssociation of British and Irish Millers(NABIM).

VB Holdings LimitedFHUT Portfolio: 0.52%

VB Holdings Limited, formerly known asVishal Bhartiyaa Company Limited wasfounded in 1946 offers property and fleetmanagement services. VBH recorded a growthof 8.50% as at end of June 2014 compared tothe corresponding period last year. PropertyManagement recorded a positive growth of 45%compared to the previous year while it FleetManagement division recorded a revenue of$1.50m as at end of June 2014.

Atlantic & Pacific Packaging Company LimitedFHUT Portfolio: 0.40%

APP a subsidiary of FMF Foods Limited, wasset up in 1998, to produce good quality,



Communications Fiji LimitedFHUT Portfolio: 0.42%

CFM is the largest radio broadcasting companyin the South Pacific. CFM operates five radiostations in Fiji and, under subsidiary PNG FM,a further three in Papua New Guinea. CMFreported an unaudited six monthly group aftertax profit of $417,071 compared to $707,958the previous year. Based on July managementaccounts, CMF's Fiji operations are performingexceptionally with a 97% result ahead of 2013.

MANAGED FUNDS

FHUT has less than 1% of its portfolio investedin other local managed funds.

BONDS

FHUT investments in bonds make up 17.08%of the portfolio consisting of Fiji DevelopmentLoan andFiji Infrastructure bonds.

CASH & FIXED INTEREST SECURITIES

This sector makes up 48.91% of the FHUTportfolio consisting mainly of on-call and termdeposits andsecured short term loans with various deposittaking institutions and well establishedreputablecompanies to allow the Fund to access fundsreadily for investment opportunities that mayarise.

sector makes up only 2.85 % of the FHUTPortfolio. This consists of Communications FijiLimited, Amalgamated Telecom HoldingsLimited (ATH) and Data Bureau Limited.

Amalgamated Telecom Holdings LimitedFHUT Portfolio: 1.97%

ATH Group achieved a higher profit afterincome tax in the current financial year of$22.027 million compared to $16.547 millionfor the previous financial year. ATH's moderninvestments in next-generation technology andnetwork infrastructure are ushering in thefuture of telecommunications to Fiji. As a result,in FY 2013/2014, your company has thedistinction of being the first country in theSouth Pacific to commercially launch 4Gmobile services, driving the digital age of mobilebroadband services.

Data Bureau LimitedFHUT Portfolio: 0.46%

Data Bureau Limited is the leading provider ofcredit historical information on individual andbusinesses in the South Pacific.

Principal business is the operation of a CreditBureau database where members can access thecredit history and identify details of theircustomers. The Credit Bureau also assists ourmembers with debt collection when defaultingdebtors are listed on the Credit Bureau.This information is available to our membersthrough a sophisticated but user friendlysoftware system accessed through the internet.

Trustee's and Managers Report 14

Statement by Trustee and Manager 16

Independent Audit Report 17

Statement of Comprehensive Income 18

Statement of Changes in Equity 19

Statement of Financial Position 20

Statement of Cash Flows 21

Notes to the Financial Statements 22

Financial Statements


FIJIAN HOLDINGS UNIT TRUSTTrustee's And Manager's ReportFOR THE YEAR ENDED 30 JUNE 2014

In accordance with resolutions of the Trustee and Manager, the Trustee and Manager herewith submit the statementof financial position of the Trust as at 30 June 2014, the related statement of comprehensive income, the statementof changesin 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 inreturn are issued with units and become unit holders in the trust. The pooled funds are then invested by the Manageracross a range of investments in accordance with the investment guidelines contained in the Investment Policy statement.

ResultThe Trust recorded a net income available for distribution of $3,204,209 (2013: $2,426,770).

Dividends

The Trust declared and paid a final dividend for 2013 of $1,501,669 and an interim dividend for 2014 of $1,071,252during the year.

AssetPrior to the completion of the financial statements of the Trust, the Trustee and Manager took reasonable steps toascertain whether any assets were unlikely to be realised in the ordinary course of business compared to their valuesas shown in the accounting records of the Trust. Where necessary these assets have been written down or adequateprovision 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 thevalues 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 werenot substantially affected by any item, transaction or event of a material unusual nature, nor has there arisen betweenthe end of the financial year and the date of this report any item, transaction or event of a material unusual naturelikely, in the opinion of the Trustee and Manager, to affect substantially the results of the operations of the Trust inthe 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 untilthe 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 Trustwill be able to continue in operation for at least 12 months from the date of this report. Accordingly, the Trustee andManager believe that the classification and carrying amounts of the assets and liabilities as stated in the financialstatements to be appropriate.

Related Party Transactions

In the opinion of the Trustee and Manager all related party transactions have been adequately recorded in the booksof 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 thosealready included in the financial statements.

Events Subsequent to Balance Date

The Trustee and Manager are not aware of any matter or circumstance not otherwise dealt with in the report or financialstatements that will significantly or may significantly affect the operations of the Trust, the results of those operationsor state of affairs of the Trust in subsequent financial years.

Other CircumstancesAs 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 otherwisedealt with in this report or the Trust's financial statements, which would make adherence to the existing method ofvaluation 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 andManager 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 whichthey 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 2014 together with the accompanying notes set out on pages 6to 20 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 25th day of September 2014.

FIJIAN HOLDINGS UNIT TRUSTTrustee's And Manager's Report - Cont.FOR THE YEAR ENDED 30 JUNE 2014

FHL Fund Management Limited FHL Trustees LimitedManager - Fijian Holdings Unit Trust Trustee - Fijian Holdings Unit Trust

FIJIAN HOLDINGS UNIT TRUSTStatement by Trustee and ManagerFOR THE YEAR ENDED 30 JUNE 2014

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 2014;

(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 2014;

(iii) the accompanying statement of financial position of the Trust is drawn up so as to give a true and fair view ofthe state of affairs of the Trust as at 30 June 2014;

(iv) the accompanying statement of cash flows of the Trust is drawn up so as to give a true and fair view of the cashflows of the Trust for the year ended 30 June 2014;

(v) at the date of this statement there are reasonable grounds to believe that the Trust will be able to pay its debtsas 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 25th day of September 2014.




INDEPENDENT AUDIT REPORT

TO THE UNIT HOLDERS OF FIJIAN HOLDINGS UNIT TRUST

We have audited the accompanying Financial Statements of Fijian Holdings Unit Trust, which comprise the statementof financial position as at 30 June 2014, the statement of comprehensive income, the statement of changes in equity,the statement of cash flows for the year ended and a summary of significant accounting policies and other explanatorynotes.

Trustee's and Manager's Responsibility for the Financial StatementsThe trustee and manager are responsible for the preparation and fair presentation of these Financial Statements inaccordance with International Financial Reporting Standards ("IFRS"), the requirements of the Unit Trust Act 1978,provisions of the Trust Deed, Trustee Act 1966 and Capital Markets Decree 2009. This responsibility includes:designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financialstatements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriateaccounting policies; and making estimates that are reasonable in the circumstances.

Auditor's ResponsibilityOur responsibility is to express an opinion on these Financial Statements based on our audit. We conducted our auditin accordance with International Standards on Auditing. Those standards require that we comply with ethicalrequirements, plan and perform the audit to obtain reasonable assurance about whether the financial statements arefree from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditor's judgment, including the assessment of risks of materialmisstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditorconsiders internal control relevant to the trust's preparation and fair presentation of the financial statements in orderto design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinionon the effectiveness of the trust's internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion.

Opinion

In our opinion, the financial statements give a true and fair view of the financial position of Fijian Holdings Unit Trustas at 30 June 2014 and its financial performance, changes in equity and cashflows for the year ended in accordancewith International Financial Reporting Standards.

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 necessaryfor the purposes 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.

Suva, Fiji Ernst & Young25th September 2014 Chartered Accountants

A member firm of Ernst & Young Global Limited.

FIJIAN HOLDINGS UNIT TRUSTStatement of Comprehensive IncomeFOR THE YEAR ENDED 30 JUNE 2014


Note

2014 2013$ $

Revenue

Interest income 2(a) 1,873,635 1,510,872

Dividend income 2(b) 2,207,358 1,625,145

Net equalization 134,605 72,496

4,215,598 3,208,513Expenses

Bank charges 2,327 2,633

Management fees 1.2(g) 913,221 726,209

Professional fees 2(c) 26,489 20,671

Trustee's fees 1.2(h) 59,513 32,000

Other expenses 9,839 230

1,011,389 781,743

Net income available for distribution 3,204,209 2,426,770

Net income for the year attributable to unit holders 3,204,209 2,426,770

Other comprehensive income 3 2,536,682 340,311

Total comprehensive income for the year 5,740,891 2,767,081

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


FIJIAN HOLDINGS UNIT TRUSTStatement of Changes in EquityFOR THE YEAR ENDED 30 JUNE 2014

Note

2014 2013$ $

Unit holders' equity

At 1 July 36,936,909 30,829,18718,441,603 units created during the year (2013: 11,139,448 units) 13,101,800 7,743,0662,986,290 units redeemed during the year (2013: 2,384,355 units) (2,078,459) (1,635,344)

At 30 June 8 47,960,250 36,936,909

Net income available for distribution

At 1 July 1,507,690 1,077,736Net income available for distribution 3,204,209 2,426,770Dividend declared and paid during the year (2,572,921) (1,996,816)

At 30 June 6 2,138,978 1,507,690

Fair value reserves

At 1 July 7,328,839 6,988,528Fair value gain 2,536,682 340,311

At 30 June 3 9,865,521 7,328,839

Total unit holders' equity 59,964,749 45,773,438

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

FIJIAN HOLDINGS UNIT TRUSTStatement of Financial PositionAS AT 30 JUNE 2014


Note

2014 2013$ $

Assets

Cash and short term deposits 10 9,257,530 3,775,891Accrued income 5 514,218 265,518Investments - loans and receivables 4(a) 19,890,000 14,600,000Investments - available-for-sale financial assets 4(b) 30,399,362 27,177,868

60,061,110 45,819,277LiabilitiesNet income declared for distribution 2,210 946Other liabilities 7 94,151 44,893

96,361 45,839

Net assets 59,964,749 45,773,438

Unit holders' equity

Unit holders' equity repayable on demand: 79,088,053 unitsfully paid (2013: 63,632,740 units) 8 47,960,250 36,936,909

Net income available for distribution 6 2,138,978 1,507,690Fair value reserves 3 9,865,521 7,328,839

Total unit holders' equity 59,964,749 45,773,438

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

The accompanying notes form an integral part of this Statement of Financial Position.



FIJIAN HOLDINGS UNIT TRUSTStatement of Cash FlowsFOR THE YEAR ENDED 30 JUNE 2014

Note

2014 2013$ $

Operating activities

Cash received in the course of operations 3,966,898 3,158,559Cash payments in the course of operations (962,131) (784,880)

Net cash flows from Operating Activities 3,004,767 2,373,679

Investing activities

Disbursement on purchase of investments (684,812) (5,835,560)Disbursement of loan and receivables (11,090,000) (5,850,000)Proceeds from loan and receivable 5,800,000 5,600,000

Net cash flows (used in) Investing Activities (5,974,812) (6,085,560)

Financing activities

Proceeds from issue of units 13,101,800 7,743,066Payments for repurchase of unit (2,078,459) (1,635,344)Distributions paid (2,571,657) (1,996,649)

Net cash flows from Financing Activities 8,451,684 4,111,073

Net increase in cash and short term deposits 5,481,639 399,192

Cash and short term deposits at the beginning of the year 3,775,891 3,376,699

Cash and shorts deposits at the end of the year 10 9,257,530 3,775,891

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

FIJIAN HOLDINGS UNIT TRUSTNotes to the Financial StatementsFOR THE YEAR ENDED 30 JUNE 2014


1.1 GENERAL INFORMATION

Fijian Holdings Unit Trust ("the Trust") is a unit trust domiciled in Fiji. The 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 25th September 2014.

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 InternationalFinancial Reporting Standards ("IFRS").

b) Basis of preparation

The financial statements have been prepared primarily on the basis of historical costs and except wherespecifically stated, do not take into account current valuations of assets.

Standards, amendments and interpretations issued

The following standards, amendments and interpretations to existing standards were published andare mandatory for the accounting periods beginning on or after 1 January 2013 or later periods. No significant impact arise out of these standards, amendments and interpretations. The amendments to existing standards were for the following:

- IAS 1, 'Presentation of Items of Other Comprehensive Income' - Amendments to IAS 1;

- IAS 19, 'Employee Benefits (revised)'; and

- IAS 13, 'Fair Value Measurement'.

Standards issued but not effective

The standards and interpretations that are issued, but not effective, up to issuance of the company's financial statements disclosed below. The company intends to adopt these standards, if applicable, when it becomes effective.

- IFRS 9, 'Financial Instruments'

The Trustee and Manager will review the impact of these standards in the next financial year. Based on preliminary analysis, there is no significant impact on the Trust.

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.

Estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods affected.


FIJIAN HOLDINGS UNIT TRUSTNotes to the Financial Statements - continuedFOR THE YEAR ENDED 30 JUNE 2014

1.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - continued

c) Use of estimates and judgments - continued

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

Note 1.2(d) - InvestmentsNote 1.2(e) - Revenue recognition

d) Investments

Investments are classified into the following categories: trading, held-to-maturity, loans and receivablesand available-for-sale financial assets. The classification is dependent on the purpose for which the investments are acquired. The Manager determines the classification of investments at the time of thepurchase and re-evaluates such designation at each reporting date.

(i) Trading investments

Investments that are acquired principally for the purposes of generating a profit from short-term fluctuations in price are classified as trading investments. Trading investments are carriedat fair value. Realised and unrealised gains and losses arising from changes in the fair value of trading investments are included in the statement of comprehensive income in the period inwhich they arise. During the year, the Trust did not hold any investments in this category.

(ii) Held-to-maturity investments

Held-to-maturity investments are non derivative financial assets with fixed or determinable payments and fixed maturities that the Trust's Manager has the positive intention and abilityto hold to maturity.

(iii) Available-for-sale financial assets

Available-for-sale financial assets are non derivatives financial assets that are either designatedin this category or not classified in any of the other categories.

Purchases and sales of investments are recognised on trade-date - the date on which the Trustcommits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets. Loans and receivables and held-to-maturity investmentsare carried at amortised costs using the effective interest method.

Unrealised gains and losses arising from changes in the fair value of non-monetary investmentsclassified as available-for-sale financial assets are recognised in other comprehensive income and presented in the fair value reserve in equity. When available-for-sale financial assets are derecognised or impaired, the accumulated fair value adjustments are included in the incomestatement as gains or losses.

The fair values of quoted investments are based on current market prices. Other unlisted equities are valued by independent valuers approved by the Manager and Trustee as per the Trust Deed.

Fair value in an inactive or unquoted market

The fair value of financial assets that are not traded in an active market is determined using valuation techniques. These include the use of recent arm's length market transactions, referenceto the current fair value of a substantially similar other instrument, discounted cash flow techniques or any other valuation technique that provides a reliable estimate of prices obtainedin actual market transactions.



Where discounted cash flow techniques are used, estimated future cash flows are based on manager'sbest estimates and the discount rate used is a market rate at the balance date applicable for an instrumentwith similar terms and conditions.

For other pricing models, inputs are based on market data such as their quoted market prices at the end of the reporting period without any deduction for estimated future selling costs at the balance date. Fair values for unquoted equity investments are estimated, if possible, using applicable pricing/earnings ratios for similar listed companies adjusted to reflect the specific circumstances of the issuer.

Investments in other unlisted unit trusts are recorded at the redemption value per unit as reported bythe manager of such trusts.

The Manager with the endorsement of the Trustee assesses at balance date whether there is objectiveevidence that a financial asset or a group of financial assets is impaired. In the case of equity securitiesclassified as available-for-sale, significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired.

If such evidence exists for available-for-sale financial assets, the cumulative loss - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit or loss - is removed from reserves and recognised in thestatement of comprehensive income.

(iv) Loans and receivables

Loans and receivables are recognised at recoverable amount, after assessing required provisions for impairment. Impairment of a loan is recognised when there is reasonable doubt that not all the principaland interest can be collected in accordance with the terms of the loan agreement.

Impairment is assessed by specific identification in relation to individual loans and estimation of expected losses in relation to loan portfolios where specific identification is impracticable. Bad debtsare written off when identified. If an allowance for impairment has been recognised in relation to a loan, write-offs for bad debts are made against the allowance. If no allowance for impairment has previously been recognised, write-offs for bad debts are recognised as expenses in the statement of comprehensive income.

e) Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Trustand 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 receivable.

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 distributableincome 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.


d) Investments - continued




g) Management fees

Management fees are standard fees stated under the terms of the Trust Deed and based on 1.75% onthe value of total Trust Fund. This was changed from 1.5% to 1.75% commencing 1 July 2009. This is payable after creation end and is calculated on the net asset value of the unit trust at the beginningof the next creation.

h) Trustee fees

Trustee fees payable to FHL Trustees Limited were fixed at $32,000 until the Trust's portfolio reaches$45 million or 0.125% of the total value of the Trust Fund when it exceeds $45 million. This amountis paid quarterly 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 thefinancial year and which are unpaid.

j) Entry fees

The Manager is entitled under the Trust Deed to an entry fee of up to 4% (2013: 4%). The entry feesonly 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 distributionto 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 investments.

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 presentationin the current year.



2. REVENUE AND EXPENSES Note

2014 2013$ $

a) Interest income 1,873,635 1,510,872

Interest income is earned from short-term loans and receivables and bonds. The interest rate on short-term loans ranged from 2% to 8.7% (2013: 2% to 9%). The average bond price is 1.3041 (2013: 1.2187).

b) Dividend income

Listed securities 180,748 133,041Unlisted securities 2,026,610 1,492,104

2,207,358 1,625,145

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

c) Professional fees

Auditor's remuneration - audit fees 7,000 7,000 - other services 2,864 4,347

Investment valuation fees 16,625 7,500Consultancy fees - 1,824

26,489 20,671

3. FAIR VALUE RESERVES

Net change in the fair value of available-for-sale financial assets 9,865,521 7,328,839

This is represented by as follows:

Listed equities

Communications Fiji Limited 182,900 88,660Amalgamated Telecom Holdings Limited (14,759) (44,508)RB Patel Group Limited 767,570 602,570Pacific Green Limited 9,707 9,707Atlantic & Pacific Packaging Limited (153,451) (153,451)VB Holdings Limited 5,000 -Rice Company of Fiji 132 -BSP convertibles notes 49,523 49,523

846,622 552,501

Unlisted equities

Merchant Finance & Investment Company Limited 7 , 6 0 7 , 5 4 5 6 , 8 0 9 , 3 8 5Data Bureau Limited 165,236 94,824New World Limited (365,951) (633,528)Golden Manufacturers Limited 105,104 (697,446)

7,511,934 5,573,235Quoted managed fund

Unit Trust Of Fiji 2,851 851



3. FAIR VALUE RESERVES - continued Note

2014 2013$ $

Bonds

Fiji Development Bank Bond 850,047 623,651Fiji Infrastructure Bond 654,067 578,601

1,504,114 1,202,252

Total unrealised fair value movement 9,865,521 7,328,839

Balance as at 1 July 7,328,839 6,988,528Movement during the year 2,536,682 340,311

Balance as at 30 June 9,865,521 7,328,839

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

4. INVESTMENTS

(a) Loans and receivables

Short-term loans and receivables 14,700,000 12,450,000On-call facility 5,190,000 2,150,000

19,890,000 14,600,000

Less: Allowance for impairment losses - -

19,890,000 14,600,000

(b) Available-for-sale financial assets

Listed equities (quoted on the South Pacific Stock Exchange) 4,288,057 3,414,964

Unlisted equities

Shares in unlisted companies 15,859,051 13,814,512Quoted managed fund 89,967 87,967Bonds 10,162,287 9,860,425

26,111,305 23,762,904

Less: Allowance for impairment losses - -

26,111,305 23,762,904

Total value of equities held by the Trust as at balance date 30,399,362 27,177,868

Unrealised net change in fair value of available-for-sale financial assets at balance date is $9,865,521 (2013: $7,328,839).



4. INVESTMENTS - continued Note

2014 2013$ $

Maturity profile of investments in Bonds are as follows:

Bonds Year of Maturity

Fiji Development Bank Bond 2016 1,938,030 2,007,990Fiji Development Bank Bond 2017 846,315 868,182Fiji Development Bank Bond 2018 2,762,110 2,835,290Fiji Infrastructure Bond 2021 109,350 108,920Fiji Development Bank Bond 2022 362,660 360,220Fiji Development Bank Bond 2023 363,180 352,840Fiji Development Bank Bond 2025 282,580 261,300Fiji Development Bank Bond 2026 783,925 714,597Fiji Development Bank Bond 2027 625,120 549,520Fiji Infrastructure Bond 2027 655,772 580,736Fiji Development Bank Bond 2028 213,315 183,230Fiji Development Bank Bond 2029 931,800 800,860Fiji Development Bank Bond 2030 288,130 236,740

10,162,287 9,860,425

5. ACCRUED INCOME

Accrued interest income 422,905 205,629Accrued dividend income 91,313 59,889

514,218 265,518

6. NET INCOME AVAILABLE FOR DISTRIBUTION

Final distribution payable to unit holders 2,138,978 1,507,690

7. OTHER LIABILITIES

Sundry creditors 20,629 18,030Accruals 73,522 26,863

94,151 44,893

8. UNIT HOLDERS' EQUITY

Unit holders' equity - 79,088,053 units (2013: 63,632,740 units) 47,960,250 36,936,909

Note

2014 2013$ $



9. CONTINGENT LIABILITIES AND CAPITAL COMMITMENTS

Contingent liabilities

The Trustee and Manager are not aware of any contingent liabilities at balance date (2013: $Nil).

Capital commitments

There were no capital commitments at balance date (2013: $Nil).

Operating lease commitments

There were no operating lease commitments at balance date (2013: $Nil).

10. CASH AND SHORT TERM DEPOSITS

Cash and short term deposits consist of cash on hand and balances with banks. Cash and short term depositsincluded in the statement of cash flows comprise the following amounts:

Cash at bank 9,257,530 3,775,891

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 HoldingsLimited, Merchant Finance & Investment Company Limited, FHL Logistics Limited, Basic IndustriesLimited, RB Patel Group Limited and South Seas Cruises Limited. FHL Stockbrokers Limited acts asbroker for the Trust's listed investments.



11. RELATED PARTY DISCLOSURES - continued Note

2014 2013$ $

(b) Transactions with related parties

(i) Transactions with Fijian Holdings Limited and its subsidiary companies ("FHL Group")

Related party Nature of transaction

Fijian Holdings Limited Distributions (262,144) (227,100)Fijian Holdings Limited Interest income 188,407 153,914FHL Fund Management Limited Distributions - (110)FHL Fund Management Limited Management fees (913,221) (726,209)FHL Logistics Limited Interest income 18,181 39,621Basic Industries Limited Interest income 98,727 139,358South Seas Cruises Limited Interest income 139,375 26,170RB Patel Group Limited Interest income 92,797 48,760RB Patel Group Limited Dividend 70,000 70,000Merchant Finance & Investment Company Limited Dividend 1,440,000 980,000

(ii) FHL Trustees Limited ("FTL")

Under the terms of the Trust Deed, FTL as Trustee is entitled to receive a fixed yearly fee of $32,000 until the total value of the FHUT investment portfolio reaches $45 million calculated bi monthly and paid out quarterly.When the total value of the Trust's investment portfolio reaches $45 million and over, the trustee fee will be calculated and paid out bi annually on the basis of 0.125% of the total value of the Trust's investment portfolioper annum.

During the year, fees to FHL Trustees Limited amounted to $59,513 (FHL Trustees Limited 2013: $32,000).

Note

2014 2013$ $

(iii) Owing by related parties

Owing by Fijian Holdings Limited 4,150,000 4,150,000Owing by FHL Logistics Limited - 400,000Owing by Basic Industries Limited 1,000,000 1,500,000Owing by South Seas Cruises Limited 3,200,000 900,000Owing by RB Patel Group Limited 3,040,000 1,500,000

11,390,000 8,450,000

(iv) Investments in related parties

Listed securities

RB Patel Group Limited 1,290,000 1,125,000

Unlisted securities

Merchant Finance & Investment Company Limited 10,584,000 9,680,000



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.

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

The Trustee and Manager are not aware of any matter or circumstance not otherwise dealt with in the reportor financial statements that will significantly or may significantly affect the operations of the Trust, the resultsof 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.

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



14. RISK MANAGEMENT POLICIES - continued

Note

2014 2013$ $

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 longterm loans. At the reporting date the interest rate profile of the Trust's interest bearing financial instruments carrying amounts were:

Fixed rate instrument

Short-term loans and receivables 19,890,000 14,600,000

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.

(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 dispositionsof 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 associatesof 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 currentpolicies and regulations.

The Manager has an independent compliance officer who reports directly to the FHL Group Chief ExecutiveOfficer 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 necessaryregulations.

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



Note

2014 2013$ $

Operational risk - continued

(iii) Data risk

This is the risk of losing information including unit holder account details even though there is a dualsystem 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 informationand 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 thatthere are guarantees on these investments by principal stakeholders or sister companies, limit the amount thatis 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 exposureto credit risk at the reporting date was:

Cash and short term deposits 9,257,530 3,775,891Investments - loans and receivables 19,890,000 14,600,000Investments - available-for-sale financial assets 30,399,362 27,177,868Accrued income 514,218 265,518

60,061,110 45,819,277

Liquidity risk

This is the risk that the Trust will not be able to facilitate its unit holders' redemption request. The Trust aimsto 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.

14. RISK MANAGEMENT POLICIES - continued

Corporate Directory


Manager FHL Fund Management LimitedTelephone: (679) 3317152/ 3311120Fax: (679) 3317153Email: [email protected]

Registered OfficeGround Floor, Ra Marama91 Gordon Street, Suva, Fiji.

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

AuditorErnest & YoungChartered AccountantsLevel 7, Pacific HouseButt StreetP. O. Box 1359Suva, FijiTelephone: (679) 3314166Fax: (679) 3300612

RegulatorReserve Bank of FijiPratt Street, SuvaPrivate Mail BagSuva, Fiji

FHL FML DirectorsUlaiasi Taoi- ChairmanRobin YarrowNouzab FareedCatherine Grey

Compliance Committee Laisa Lagilevu - ChairpersonAteen Kumar Shamila NanayakkaraYunus Khan

TrusteesFHL Trustees LimitedGround Floor, Ra Marama91 Gordon Street P. O. Box 2110Government BuildingsSuva, FijiTelephone: (679) 3317152/ 3311120Fax: (679) 3317153

FTL DirectorsSakiasi Seru - ChairmanArun Kumar NarseySeruwaia Hong TiyTelephone: (679) 3311120Fax: (679) 3317153

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

Investor RelationsYou can obtain information about investing with the FijianHoldings Trust by contacting our licensed Unit Trustrepresentative via:Telephone: (679) 3311120 / 3317152Fax: (679) 3317153Email: [email protected]

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

Business Hours8.00am - 5.00pm Mondays - Thursday8.00am - 4.00pm Fridays

annual report 2014 - unit...

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