navigator personal retirement plan a.b.n. 40 … · close of business on the balance sheet date....

NAVIGATOR PERSONAL RETIREMENT PLAN

A.B.N. 40 022 701 955

FINANCIAL STATEMENTS FOR THE YEAR ENDED 30 JUNE 2009


FOR THE YEAR ENDED 30 JUNE 2009

Contents Statement by Trustee .................................................................................................................................................1

Statement of Financial Position ..............................................................................................................................2

Operating Statement...................................................................................................................................................3

Cash Flow Statement .................................................................................................................................................4

Notes to the Financial Statements..........................................................................................................................5 1. Trust Deed/Plan Operations ...........................................................................................................5 2. Summary of Significant Accounting Policies .................................................................................5 3. Investments ......................................................................................................................................9 4. Controlled Entities – Interest in Subsidiaries .................................................................................10 5. Changes in Net Market Value of Investments ...............................................................................10 6. Liability for Accrued Benefits..........................................................................................................10 7. Vested Benefits ..............................................................................................................................11 8. Guaranteed Benefits ......................................................................................................................11 9. Funding Arrangements...................................................................................................................11 10. Income Tax.....................................................................................................................................11 11. Cash Flow Statement.....................................................................................................................13 12. Related Parties...............................................................................................................................14 13. Financial Instruments .....................................................................................................................17 14. Financial Risk Management Objectives, Policies and Processes.................................................18 15. Auditor’s Remuneration..................................................................................................................22 16. Receivables....................................................................................................................................22 17. Payables.........................................................................................................................................23 18. Events after the Balance Sheet Date.............................................................................................23 19. Commitments and Contingent Liabilities .......................................................................................23

Auditor’s Report ....................................................................................................................................................... 24



1

Statement by Trustee The directors of NULIS Nominees (Australia) Limited (ABN 80 008 515 633) as Trustee of the Navigator Personal Retirement Plan (“the Parent”) confirm that in their opinion: a) the accompanying consolidated financial statements of the Navigator Personal Retirement Plan are properly drawn up so

as to present fairly the financial position of the Parent and the consolidated entity constituted by the Navigator Personal Retirement Plan and the entities that it controlled from time to time during the financial year (“the Group”) as at 30 June 2009, and the results of their operations and cashflows for the year then ended in accordance with Australian Accounting Standards and other mandatory professional reporting requirements in Australia; and

b) the Parent has been conducted in all material respects in accordance with the requirements of its constituent Trust Deed

dated 24 September 1990, as amended, the requirements of the Superannuation Industry (Supervision) Act 1993 and Regulations and the Corporations Act 2001 and Regulations and Guidelines during the year.

Signed at Melbourne this 28th of September 2009 in accordance with a resolution of the Board of Directors of the Trustee. ………………………………………………….. Bruce Hawkins Director …………………………………………………… Elizabeth Flynn Director



The above Statement of Financial Position should be read in conjunction with the accompanying notes

2

Statement of Financial Position As at 30 June 2009 Consolidated Parent entity 2009 2008 2009 2008 Notes $’000 $’000 $’000 $’000 Assets

Cash and cash equivalents 11 241,229 134,754 - - Receivables 16 165,138 384,236 3,123 2,572 GST receivable 1,198 1,182 292 240 Investments 3 7,772,057 8,279,396 7,757,171 8,424,824 Income tax receivable 10 12,531 9,218 - - Deferred tax asset 10 65,892 69,793 - - Total Assets 8,258,045 8,878,579 7,760,586 8,427,636 Liabilities Payables 17 23,282 26,046 3,415 2,812 Net asset value attributable to external unitholders 477,592 427,709 - - Total Liabilities 500,874 453,755 3,415 2,812

Net Assets Available to Pay Benefits 7,757,171 8,424,824 7,757,171 8,424,824

Represented by: Liability for Accrued Benefits Allocated to members’ accounts 6,7,8 7,757,171 8,424,824 7,757,171 8,424,824

Total Members' Funds 7,757,171 8,424,824 7,757,171 8,424,824



The above Operating Statement should be read in conjunction with the accompanying notes

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Operating Statement For the year ended 30 June 2009 Consolidated Parent entity 2009 2008 2009 2008 Notes $’000 $’000 $’000 $’000 Investment Revenue Distributions 329,342 658,112 - - Dividends 7,217 6,103 - - Rebates 4,243 6,916 - - Interest 61,106 69,088 - - Other income 77 - - - Changes in net market values 5 (1,323,778) (1,928,458) (1,058,103) (1,206,731) (921,793) (1,188,239) (1,058,103) (1,206,731) Contributions Revenue Employer contributions 188,814 162,976 188,814 162,976 Member contributions 350,385 623,442 350,385 622,917 Transfer from other funds 753,647 1,112,650 753,647 1,112,650 Insurance proceeds 2,136 114 2,136 639 Compensation to members 3,731 1,021 3,731 1,021 1,298,713 1,900,203 1,298,713 1,900,203 Total Revenue 376,920 711,964 240,610 693,472

General Administration Expenses Management fees 118,278 140,050 - - Entry fees 8,321 11,508 8,321 11,508 Deferred entry fees 7,788 6,660 7,788 6,660 Insurance premiums 8,842 4,302 8,842 4,302 Adviser review fees 5,753 5,474 5,753 5,474 Other fees 1,174 737 989 590 Superannuation contributions surcharge 298 435 298 435 Other 34 131 34 57 Increase in amounts due to external unitholders 11,093 18,062 - - Total Expenses 161,581 187,359 32,025 29,026

Benefits accrued before Income Tax 215,339 524,605 208,585 664,446 Income tax expense/(benefit) 10 6,754 (139,841) - - Benefits accrued as a result of operations 208,585 664,446 208,585 664,446



The above Cash Flow Statement should be read in conjunction with the accompanying notes

4

Cash Flow Statement For the year ended 30 June 2009 Consolidated Parent entity 2009 2008 2009 2008 Notes $’000 $’000 $’000 $’000 Cash Flows from Operating Activities Employer contributions received 188,814 162,976 188,814 162,976 Member contributions received 350,385 623,442 350,385 623,442 Transfers in received 736,593 1,084,349 736,593 1,084,349 Distributions received 536,006 924,829 - - Dividends received 7,217 6,103 - - Rebates received 4,243 6,918 - -

Interest received 61,318 70,000 - -

Other Income received 2,213 153 2,136 114 Compensation received 3,826 986 3,826 986 Redemptions paid (595,509) (828,779) (595,509) (828,779) Pensions paid (280,597) (262,654) (280,597) (262,654) Management fees paid (118,948) (140,407) - - Entry fees paid (8,733) (12,366) (8,548) (12,366) Deferred entry fees paid (7,545) (6,344) (7,545) (6,344) Insurance premiums paid (8,340) (4,069) (8,340) (4,069) Adviser review fees paid (5,733) (5,489) (5,733) (5,489) Superannuation contributions surcharge paid (298) (435) (298) (435) Other (1,002) (883) (1,002) (649) Tax paid to ATO (6,027) (83,167) - - Net cash flows from operating activities 11(b) 857,883 1,535,163 374,182 751,082

Cash flows from investing activities Purchase of investments (5,034,085) (4,982,966) (1,282,445) (1,871,085) Proceeds on the sale of investments 4,293,770 3,240,708 908,263 1,120,003 Amounts paid to external unitholders (11,093) (18,062) - - Net cash flows used in investing activities (751,408) (1,760,320) (374,182) (751,082)

Net Increase/(Decrease) in Cash and Cash Equivalents 106,475 (225,157) - -

Cash and cash equivalents at Beginning of the Financial Year 134,754 359,911 - -

Cash and cash equivalents at the End of the Financial Year 11(a) 241,229 134,754 - -



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Notes to the Financial Statements 1. Trust Deed/Plan Operations

The Navigator Personal Retirement Plan (“the Parent”) was established under a Trust Deed dated 24 September 1990, as amended, by NULIS Nominees (Australia) Limited (“NULIS”). NULIS is the Trustee of the Parent. The Parent is a defined contribution fund which is domiciled in Australia. The address of the Parent’s registered office is 509 St Kilda Road, Melbourne. In accordance with amendments to the Superannuation Industry (Supervision) Act 1993 the Parent was registered with the Australian Prudential Regulation Authority on 1 March 2006 (registration no. R1004069).

2. Summary of Significant Accounting Policies Basis of Preparation The financial statements are consolidated general purpose statements which have been drawn up in accordance with Australian accounting standards including AAS 25 “Financial Reporting by Superannuation Plans” (“AAS 25”) as amended by AASB 2005-13 “Amendments to Australian Accounting Standards [AAS25]”, the Superannuation Industry (Supervision) Act 1993 and Regulations and the provisions of the Trust Deed. The financial statements have been prepared in accordance with the historical cost convention, except for the valuation of investments, derivatives and benefits payable which are measured at net market value. Assets of the Parent comprise units in the Navigator Pooled Super Trust (“the Trust”). Units in the Trust are valued at the redemption price at balance date, which is based on the market value, less disposal costs, of the underlying investments. Changes in the net market value of investments are recognised in the Operating Statement in the periods in which they occur. Net market values of the underlying investments have been determined as follows: in the case of shares in listed companies at closing sell price on the Balance Sheet date, in the case of debt and discount securities, by reference to published bid prices at the close of business on the Balance Sheet date, in the case of units in unit trusts at the ex-distribution redemption price, quoted by the investment manager, on the Balance Sheet date, in the case of derivative financial instruments open bought derivatives are based on the last published bid prices at the close of business on the Balance Sheet date, open sold derivative contracts are based on the last published “ask” price at the close of business on the Balance Sheet date. Gains and losses on investments and derivative financial instruments are recognised in the Operating Statement. Where necessary comparatives have been reclassified and repositioned for consistency with current year disclosures. Statement of Compliance The financial report complies with Australian Accounting Standards as issued by the Australian Accounting Standards Board and International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Since AAS 25 is the principal standard that applies to the financial statements, other standards, including IFRS, are also applied where necessary except to the extent that they differ from AAS 25. Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2009 reporting periods. The Trustees’ assessment of the impact of these new standards (to the extent relevant to the Plan) and interpretations is set out below: (i) Revised AASB 101 “Presentation of Financial Statements” and AASB 2007-8 “Amendments to Australian Accounting Standards arising from AASB 101”. AASB 101 (Revised) is applicable to annual reporting periods beginning on or after 1 January 2009. The Plan has not adopted this standard early. It requires the presentation of a statement of comprehensive income and makes changes to the Statement of Financial Position but will not affect any of the amounts recognised in the financial statements. If the Plan makes a prior period adjustment or reclassifies items in the financial statements, it will need to disclose a third Balance Sheet (Statement of Financial Position), this one being at the beginning of the comparative period. The Plan has elected to early adopt the following accounting standard: (i) AASB 8 “Operating Segments” and AASB 2007-3 “Amendments to Australian Accounting Standards arising from AASB 8”. As the Plan does not fall into the scope of AASB 8, the impact of early adoption of this standard has been to remove disclosures previously presented under AASB 114 “Segment Reporting”.



Notes to the Financial Statements

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2. Summary of Significant Accounting Policies (cont.)

Significant Accounting Judgements, Estimates and Assumptions The preparation of the financial report requires the making of estimates and assumptions that affect the recognised amounts of assets, liabilities, revenues and expenses and the disclosure of contingent liabilities. The estimates and associated assumptions are based on experience and various other factors that are believed to be reasonable in the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities where they are not available from independent sources. The key estimates and assumptions that have a significant risk of causing a material adjustment to the values of assets and liabilities are: Valuation of Investments and Derivatives – The key assumptions are set out under “Investments” below Basis of Consolidation Subsidiaries Subsidiaries are entities controlled by the Parent. Control exists when the Parent has the power, directly or indirectly, to govern the financial and operating policies of another entity so as to obtain benefits from its activities. This will generally be when the Parent has greater than 50% of the units in another scheme. The financial statements of subsidiaries are included in the consolidated financial report from the date that control commences until the date that the control ceases. Where the units in the subsidiary scheme are classified as a liability, the external unitholders (i.e. non-scheme unitholders) are classified as ‘net assets attributable to external unitholders’ on the Statement of Financial Position and changes in the amount payable are recorded as ‘increase in amounts due to external unitholders’ in the Operating Statement. Transactions eliminated on consolidation Intra-scheme balances, and any unrealised gains and losses or income and expenses arising from intra-scheme transactions are eliminated in preparing the consolidated financial statements. Currency and Rounding Both the functional and presentational currency of the Group accounts is Australian dollars. Amounts are shown rounded to the nearest thousand ($’000) under the option available to the Group under ASIC Class Order 98/100. Investments Investments and derivatives are initially recognised at cost, being the fair value of the consideration paid excluding transaction costs. After initial recognition the investments and derivatives are included in the Statement of Financial Position at net market value as at balance date and movements in the net market value of assets are recognised in the Operating Statement in the periods in which they occur. Purchases and sales of investments and derivatives that require delivery of assets within the timeframe generally established by regulation and/or convention in the market place are recognised on the trade date i.e. the date that the entity commits to purchase or sell the asset. Investments are maintained for the long-term purpose of providing benefits to members on their retirement, reaching a specified age, death or termination of employment. Net market values of investments and derivatives have been determined as follows: ♣ Investments in the Navigator Pooled Superannuation Trust (“the Trust”) Investments of the Parent comprise units in the Trust. Units in the Trust are valued at the redemption price at balance date, which is based on the market value, less disposal costs of the underlying financial assets and is advised by the investment manager.




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2. Summary of Significant Accounting Policies (cont.)

Investments (cont.) ♣ Listed shares Listed shares are carried at net market value, which is the closing sell price, on the Balance Sheet date, as quoted on the relevant exchange. ♣ Units held in unlisted investment trusts Net market value of units in unlisted unit trusts is valued at the ex-distribution redemption price, quoted by the investment manager, on the balance date. Net market value of investments in frozen managed funds has been valued at the ex-distribution redemption price, quoted by the investment managers, on the balance date. Although redemptions have been suspended, recent distributions and regular updates in the unit price confirms the underlying investments are being regularly valued by the investment managers. ♣ Debt and Discount Securities Net market value of debt and discount securities is valued by reference to published bid prices at the close of business on the Balance Sheet date. ♣ Derivative financial instruments Net market value of open bought derivative contracts are based on the last published bid prices at the close of business on the Balance Sheet date, the net market value of open sold derivative contracts are based on the last published ask price at the close of business on the Balance Sheet date. Gains and losses on investments and derivative financial instruments are recognised in the Operating Statement. ♣ Term deposits Term deposits are carried at cost, which approximates net fair value because of their short term to maturity. Income Tax The Parent is a complying fund within the provisions of the Income Tax Assessment Act. Accordingly, the concessional tax rate of 15% has been applied to taxable income. Income tax on the Operating Statement for the year comprises current and deferred tax. Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities based on the current period’s taxable income. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the balance date. Deferred income tax is provided on all temporary differences at the balance date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred income tax liabilities are recognised for all taxable temporary differences, except where the deferred income tax liability arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised, except where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor the taxable profit or loss. The deferred income tax asset has been calculated at 5% of capital losses, (2008: 10%) as this is an estimate of the realised and unrealised tax losses that can be expected to be recouped within the next five years.




8

2. Summary of Significant Accounting Policies (cont.) Income Tax (cont.) The carrying amount of the deferred income tax assets is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income to be utilised. Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority. Section 275 of the Income Tax Assessment Act enables a complying superannuation fund, which has investments in the form of units in a Pooled Superannuation Trust, to transfer liability to tax on taxable contributions. Consequently, the Parent transfers its taxable contributions to the Trust. Goods and Services Tax (GST) Where applicable, GST incurred by the Group, that is not recoverable from the Australian Taxation Office, has been recognised as part of the expense to which it applies. Receivables and payables are stated with any applicable GST included in the value. The amount of any GST recoverable from or payable to the Australian Taxation Office is included as a receivable or payable in the Statement of Financial Position. Cash flows are included in the Cash Flow Statement on a gross basis. The GST component of cash flows arising from investing activities, which are recoverable from, or payable to the taxation authority are classified as operating cash flows. Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Group and the revenue can be reliably measured. The following specific recognition criteria have been adopted before recognising revenue: (i) Distribution and dividend income is recognised when the right to receive payment is established; (ii) Rebate income is recognised on receipt; (iii) Interest income on cash at bank is recognised as interest accrues using the effective interest method, interest on term

deposits is recognised on receipt at maturity; (iv) Changes in net market value of investments are calculated as the difference between the net market value at sale, or at

balance date, and the net market value at the previous valuation point and recognised in the Operating Statement; and (v) Contributions and transfers in are recognised when control of the asset has been attained and are recorded in the

period to which they relate. Accrued Benefits The liability for accrued benefits represents the Group’s present obligation to pay benefits to members and beneficiaries. It is calculated as the difference between the carrying amount of the assets and liabilities of the Group as at balance date. Receivables and Other Payables Receivables are carried at nominal amounts due which approximate net market value. Receivables are normally settled within 30 days. An allowance for uncollectible amounts is only made where there is objective evidence that the debt will not be collected. Other payables are recognised for amounts to be paid in the future for goods and services received, whether or not billed to the economic entity. Payables are normally settled on 30 day terms. Derecognition of Financial Assets and Financial Liabilities A financial asset is derecognised when: ♣ The rights to receive cash flows from the asset have expired; or ♣ The Group transfers substantially all the risks and rewards of ownership of the asset. A financial liability is derecognised when: ♣ The obligation under the liability is discharged, cancelled or expired.




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2. Summary of Significant Accounting Policies (cont.) Cash and Cash Equivalents Cash and cash equivalents include deposits held at call with a bank or financial institution and highly liquid investments. These investments are readily convertible to cash on hand at the manager’s option and are used for the day to day management of the Group's cash requirements. For the purpose of the Cash Flow Statement, cash includes cash on hand and at bank. Superannuation Contributions Surcharge The Trustee recognises amounts paid or payable in respect of the superannuation contributions surcharge as an expense of the Group. The expense (and any corresponding liability) is brought to account in the period in which the assessments are received by the Trustee and are properly payable by the Group. No estimate has been made in these financial statements for the balance of any tax payable in respect of surchargeable contributions as the Trustee is unable to determine this amount until receipt of applicable assessments. The Superannuation Laws Amendment (Abolition of Surcharge) Act 2005 abolishes both the superannuation contributions surcharge and the termination payments surcharge in respect of superannuation contributions and certain termination payments made or received on or after 1 July 2005. Assessments for surcharge in respect of contributions and payments for the year ended 30 June 2005 and prior years will continue to be issued and remain payable.

3. Investments Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Units held in unlisted Investment Trusts 6,167,769 7,160,009 - - Investments held in the Navigator Pooled Superannuation Trust

- - 7,757,171 8,424,824

Corporate bonds - 96,326 - - Semi-Government securities 150,464 - - - Discount securities 404,605 115,625 - - Floating rate notes 470,819 754,895 - - Listed shares 167,178 123,793 - - Term deposits 411,222 28,748 - - Investments 7,772,057 8,279,396 7,757,171 8,424,824 Investments by category Investments used to fund pensions 3,419,200 3,579,861 Investments used to fund superannuation benefits 4,337,971 4,844,963 Investments 7,757,171 8,424,824




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4. Controlled Entities – Interest in Subsidiaries Details of investments in controlled entities are as follows: Entity

Beneficial Percentage held by Parent Entity Fair Value

2009 2008 2009 2008 % % $’000 $’000 Navigator Pooled Superannuation Trust 100.00 100.00 7,757,171 8,424,824 Cash Account Income Fund (held within the “PST”)

59.64

-

705,758 -

Navigator Income Trust (held within the “PST”)

-

56.51

- 555,758

On 31 May 2009 a restructure occurred, this restructure was effected by all Aviva Australia Holdings Limited’s related entities and products redeeming their units in the Navigator Income Trust (“NIT”) and applying for units in the Cash Account Income Fund (“CAIF”). The CAIF in turn applied for units in the Long Term Income Fund (“LTIF”) and also in the Navigator Income Trust (“NIT”). Both the CAIF and the LTIF are newly created managed investment funds of which NAL is the Responsible Entity.

5. Changes in Net Market Value of Investments Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Investments held at reporting date (982,132) (1,686,187) (763,464) (950,802) Investments realised during the year (341,646) (242,271) (294,639) (255,929) Total changes in net market value (1,323,778) (1,928,458) (1,058,103) (1,206,731)

6. Liability for Accrued Benefits Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Liability for accrued benefits at beginning of the year 8,424,824 8,851,355 8,424,824 8,851,355 Plus: Benefits accrued after income tax 208,585 664,446 208,585 664,446 Less: Members' redemptions (595,638) (828,655) (595,638) (828,655) Less: Pension payments (280,600) (262,322) (280,600) (262,322) Liability for accrued benefits at the end of the year 7,757,171 8,424,824 7,757,171 8,424,824




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7. Vested Benefits Vested benefits are benefits, that are not conditional upon continued membership of the Parent (or any factor other than resignation from the Parent), and include benefits which members were entitled to receive had they terminated their Parent membership as at end of the year.

Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000

Vested benefits 7,757,171 8,424,824 7,757,171 8,424,824

8. Guaranteed Benefits No guarantees have been made in respect of any part of the liability for accrued benefits.

9. Funding Arrangements Funding is determined via the application forms submitted by the members at the point of entry. Contributions are received from individual members and self-employed members. Employer sponsored contributions are also accepted into the Parent on behalf of individual and self-employed members.

10. Income Tax a) Major components of income tax expense/(benefit) for the years ended 30 June 2008 and 2009 are: Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Operating Statement Current income tax Current income tax charge 5,180 20,106 - - Adjustments in respect of current income tax of previous years

(2,327) 767 - -

Deferred income tax

Relating to origination and reversal of temporary differences

3,901 (160,714) - -

Income tax expense/(benefit) reported in Operating Statement

6,754 (139,841) - -




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10. Income Tax (cont.)

b) A reconciliation between income tax expense/(benefit) and the accounting profit before income tax multiplied by the applicable tax rate is as follows:

Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Benefits accrued before income tax 215,339 524,605 208,585 664,446 Prima facie tax payable @ 15% 32,301 78,691 31,288 99,667 Changes in net market value (taxed at source) - - 158,715 181,010 Non taxable income (2,593) (11,318) (560) (170) Contributions not subject to tax (154,305) (246,614) (154,305) (246,614) Non deductible expenditure 938 938 938 938 Gross up of imputation credits 4,376 4,907 - - Gross up of foreign tax credits 264 513 - - Claim of imputation credits (49,714) (53,303) - - Claim of foreign tax credits (1,763) (3,422) - - Difference between realised accounting losses and taxable capital losses

44,196 37,123 - -

Difference between unrealised accounting losses and taxable capital losses

152,577 87,704 - -

Net exempt pension income (15,935) (34,659) - - Superannuation contributions surcharge 45 65 45 65 Anti-detriment payments (1,306) (1,233) (1,306) (1,233) Under/(over) provision of prior year (2,327) 767 - - 6,754 (139,841) 34,815 33,663 Less: s275 transfer to the Navigator Pooled Superannuation Trust

- - (34,815) (33,663)

Income tax expense/(benefit) reported in operating statement

6,754 (139,841) - -

The Parent will transfer taxable contributions of $232,103,547 (2008: $224,417,043) to the PST under Section 275 of the Income Tax Assessment Act prior to the lodgement of the 2009 tax return. c) Deferred tax asset at 30 June relates to the following: Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Realised and Unrealised losses in financial assets subject to CGT

65,892

69,793 -

- Deferred tax asset 65,892 69,793 - -




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10. Income Tax (cont.)

d) Income tax receivable Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000

Income tax receivable 12,531

9,218 -

- Income tax receivable 12,531 9,218 - -

The amount receivable relates to the excess of quarterly tax payments over the current year provision for tax.

11. Cash Flow Statement a) Reconciliation of cash Cash balance comprises: Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Cash and cash equivalents 241,229 134,754 - - Cash at bank earns interest at floating rates based on daily bank deposit rates. b) Reconciliation of benefits accrued from ordinary activities after income tax to net cash provided by operating

activities Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Benefits accrued from ordinary activities after income tax

208,585 664,446 208,585 664,446

Changes in net market values of investments 1,323,778 1,928,458 1,058,103 1,206,731 In-species transfers in (17,054) (28,301) (17,054) (28,301) Declared bonuses (35) (190) - - Members redemptions (595,638) (828,655) (595,638) (828,655) Pension payments (280,600) (262,322) (280,600) (262,322) Amounts to external unitholders 11,093 18,062 - - (Increase)/decrease in sundry receivables 233 (178) 235 (174) (Increase)/decrease in accrued income 207,048 267,819 - - (Increase)/decrease in GST receivable (16) 171 (52) 100 Increase/(decrease) in payable to related parties (111) (736) 595 (402) Increase/(decrease) in sundry payables 12 (403) 8 (341) (Increase)/decrease in Income tax receivable (3,313) - - - Increase/(decrease) in income tax payable - (62,294) - - (Increase)/decrease in deferred tax assets 3,901 (69,793) - - Increase/(decrease) in provision for deferred tax - (90,921) - - Net cash flows from operating activities 857,883 1,535,163 374,182 751,082




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12. Related Parties

Trustee and Key Management Personnel NULIS, which is a wholly owned subsidiary of Aviva Australia Holdings Limited (“AAHL”), acted as Trustee during the year. The Parent does not employ personnel in its own right however it is required to have a Trustee. The names of the directors of the Trustee who held office at any time during the year ended 30 June 2009 are: Bruce Hawkins Charles Clark David Trenerry Diana Taylor Elizabeth Flynn Sam Simopoulos (appointed 1 July 2008) Anne Wright was appointed Company Secretary on 29 May 2008 and resigned as Company Secretary on 23 July 2009. Rachel Saffron was appointed Company Secretary on 23 July 2009. The Trustee holds a Registrable Superannuation Entity (“RSE”) licence (licence no. L0000741). Certain directors of the Parent are members of the Navigator Personal Retirement Plan (“Navigator PRP”) and are entitled to discounted fees. Remuneration The directors of the Trustee received no remuneration from the Group directly in connection with the management of the Group. Related Party Transactions The Administrator of the Parent is Navigator Australia Limited (“NAL”) which, like NULIS as Trustee, is a wholly owned subsidiary of Aviva Australia Holdings Limited. The ultimate holding company is Aviva plc, a company incorporated in the United Kingdom. In its capacity as Administrator, NAL derives management and other fees. A restructure of the Navigator Income Trust (“NIT”) was carried out on 31 May 2009 in order to reduce volatility in relation to investment returns. This restructure was effected by all Aviva Australia Holdings Limited’s related entities and products redeeming their units in the Navigator Income Trust (“NIT”) and applying for units in the Cash Account Income Fund (“CAIF”). The CAIF in turn applied for units in the Long Term Income Fund (“LTIF”) and also in the Navigator Income Trust (“NIT”). Both the CAIF and the LTIF are newly created managed investment funds of which NAL is the Responsible Entity. The Responsible Entity of the Navigator Pre Select Funds is NAL. NAL derives management fees in its capacity as Responsible Entity for these trusts. There are number of investment options made available from which related parties derive fees on an arms length basis. Aviva Investors Australia Limited (“AIAL”) formerly named Portfolio Partners Limited (“PPL”) (also a subsidiary of Aviva plc) provides investment management services to the entities within the CAIF, several Pre Select Funds and Navigator Access Funds and derives investment management fees and administration fees in respect of these services. The Group also holds investments in various AIAL Trusts. AIAL acts as the Responsible Entity of the Aviva Investors Australia Limited Trusts and receives management fees for these investment products. Norwich Union Life Australia Limited (“NULAL”), a wholly owned subsidiary of AAHL whose ultimate holding company is Aviva plc, also offers investment products to the Group and provides an optional wealth protection product to unitholders of the Parent. The Parent holds 100% of the units on issue in the Trust. The Parent has transferred its tax liability in respect of taxable contributions to the Trust pursuant to Section 275 of the Income Tax Assessment Act. The Parent will transfer $ 232,103,547 (2008: $224,417,043) of taxable contributions to the Trust.




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12. Related Parties (cont.)

Transactions between the related entities and the Parent result from normal dealings in the ordinary course of business. All transactions are conducted on normal commercial terms and conditions. Consolidated Aggregate Amounts 2009 2008 Related Entity Nature of terms of transactions $’000 $’000 Navigator Australia Limited Management fees 118,278 140,050 Entry fees 8,321 11,508 Deferred entry fees 7,788 6,660

Other fees relating to share transactions

173 145

Other fees relating to exit fees, adviser review fees, regular investment facility fees and share transaction fees

6,742 6,063

Responsible Entity fees - Access and Pre Select Funds

4,199 3,884

Responsible Entity fees - NIT 5,048 7,199 Responsible Entity fees - CAIF 462 - Norwich Union Life Australia Limited Insurance premiums 8,842 4,302 Management fees 63 91 Aviva Investors Australia Limited Responsible Entity fees 2,155 2,989 Other The Group owes NAL $14,606,714 (2008: $15,219,476) for management and other fees. NAL owes the Group nil (2008: $104,819) for compensation. The Group owes NULAL $982,239 for insurance premiums (2008: $480,796). The Parent has an inter-fund transfer owing from the Navigator PST of $3,121,418 (2008: $2,335,861). The Parent will transfer taxable contributions of $232,103,547 (2008: $224,417,043) to the PST under Section 275 of the Income Tax Assessment Act prior to the lodgement of the 2009 tax return. Investing activities The Group has no investment in the Administrator or the Trustee.




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12. Related Parties (cont.)

The Group may purchase and sell units in approved trusts established by the related parties or their affiliates in the ordinary course of business at market determined issue and redemption prices. Details of the Group's investments in related parties are set out below: 2009 Net market

value Interest held No. of units No. of units Contribution No. of units of investment in related purchased Sold to held as at as at trust as at during the during the investment 30/06/09 30/06/09 30/06/09 year Year income $ $ Navigator Access Funds

318,656,025 254,048,466 87.65% 147,892,541 59,831,769 9,191,729

Aviva Investors Australia Limited Funds

232,163,536 269,134,925 19.69% 49,706,719 41,477,956 7,420,502

Navigator Pre Select Funds

312,119,200 295,144,081 21.39% 93,420,235 77,448,207 13,349,405

Norwich Union Life Aust. Ltd

1,512,273 4,129,908 0.31% - 272,933 17,989

2008

Net market value Interest held No. of units No. of units Contribution

No. of units of investment in related purchased sold to held as at as at trust as at during the during the investment 30/06/08 30/06/08 30/06/08 year year income $ $

Navigator Access Funds

230,595,253 211,692,038 83.84% 134,355,994 44,884,740 10,995,839

Aviva Investors Australia Limited Funds

223,934,773 279,741,905 18.95% 58,397,103 32,244,268 35,488,758

Navigator Pre Select Funds

296,147,172 323,687,323 22.43% 138,264,901 55,265,812 20,004,483 Norwich Union Life Aust. Ltd

1,785,206 5,994,012 0.33% 272,416 851,958 190,396




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13. Financial Instruments

Investments of the Parent comprise units in the Trust. The Trustee has determined that this type of investment into the Trust is appropriate for the Parent and is in accordance with the Parent’s published investment strategy.

Total carrying amount as per Financial Instruments Interest classification Statement of Financial Position

Consolidated Consolidated 2009 2008 $’000 $’000

i) Financial Assets Term deposits Fixed rate 411,222 28,748 Cash and cash equivalents Floating rate 241,229 134,754 Floating rate notes Floating rate 470,819 754,895 Semi-Government Securities Fixed rate 150,464 - Corporate bonds Fixed rate - 96,326 Discount securities Fixed rate 404,605 115,625 Listed shares Non-interest bearing 167,178 123,793

Units held in unlisted investment trusts Non-interest bearing 6,167,769 7,160,009

Receivables Non-interest bearing 165,137 384,105 Total financial assets 8,178,423 8,798,255 ii) Financial Liabilities Payables Non-interest bearing 23,282 26,046

Total financial liabilities 23,282 26,046




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13. Financial Instruments (cont.)

Total carrying amount as per Financial Instruments Interest classification Statement of Financial Position

Parent Parent 2009 2008

$’000 $’000 i) Financial Assets Units held in the Navigator Pooled Superannuation Trust Non-interest bearing 7,757,171 8,424,824

Receivables Non-interest bearing 3,122 2,441 Total financial assets 7,760,293 8,427,265 ii) Financial Liabilities Payables Non-interest bearing 3,415 2,812

Total financial liabilities 3,415 2,812

14. Financial Risk Management Objectives, Policies and Processes The Group’s principal financial instruments, other than derivatives, consist of units in unlisted unit trusts, equity securities, debt and discount securities, cash and short term deposits. The main purpose of these instruments is to generate a return on investment. The Group also enters into derivative transactions, principally fixed interest futures, the main purpose of these financial instruments is the management of financial risk associated with the Group’s financial transactions. The Group also has various other financial instruments such as Receivables and Payables which arise directly from its operations and are current in nature. The Group’s activities expose it to a variety of financial risks: market risk (including price risk, foreign exchange risk and interest rate risk), credit risk and liquidity risk. This note presents information about the Group’s exposure to each of the risks, the Group’s objectives, policies and processes for measuring and managing risk. The investment managers of the collective investment vehicles held by the Trust invest in a variety of financial instruments, including derivatives which expose the Parent’s investments to a variety of investment risks, including market risk, credit risk, interest risk and currency risk. The investment managers provide regular reports on the Parent’s investments to the Trustee. The Trustee seeks information from the Trustee and/or manager of each proposed collective investment and may also seek independent advice from other qualified persons. The information acquired is used to determine the nature and extent of any risks and the expected returns that are associated with each investment prior to determining its suitability as an investment for the Parent. This includes receipt of a formal Risk Management Statement from each investment manager as required by the Australian Prudential Regulation Authority. The risk management programme in relation to investments held by the Cash Account Income Fund (“CAIF”) is based on directives set by the Board in relation to allocation limits, diversification in terms of holdings and in relation to term to maturity and in relation to use of credit ratings. AIAL, as Investment Managers are required to report compliance with these limits to the Board on a monthly basis. Market Risk Exposure Market risk represents the risk that a financial instrument’s value or future cash flows of financial instruments will fluctuate as a result of changes in the market, such as interest rates changes, foreign exchange rate changes and equity price changes. These changes might be caused by factors specific to the individual asset or its issuer or factors affecting all assets in the market. Market risk is minimised through ensuring that all investment activities are undertaken in accordance with established limits and investment strategies.




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14. Financial Risk Management Objectives, Policies and Processes (cont.) Equity Price Risk Exposure Equity price risk is the risk that the fair value of investments in equities decreases or increases as a result of changes in market prices, whether those factors are caused by factors specific to the individual share price or factors affecting all equity instruments in the market. Equity risk is minimised through ensuring that all investment activities are undertaken in accordance with established limits and investment strategies. The effect on the Operating Statement and the Statement of Financial Position due to a reasonably possible change in market factors, as represented by the equity indices, with all other variables as constant is as indicated in the table below.

Equity indices Change in Equity price

2009 2008 2009 2008 +/- % +/- % +/- $’000 +/- $’000 MCSI World ex Australia (hedged) +/-30 +/-22 +/-318,898 +/- 331,435 ASX 200 +/-24 +/-15 +/-1,105,516 +/- 997,213 ASX 200 Property Trusts Index +/-22 +/-20 +/-84,185 +/- 162,199 Effect on Operating Statement / Net Assets

+/-1,508,599 +/-1,490,847

Foreign Exchange Risk Exposure The Group is indirectly exposed to foreign exchange risk via its investment in unlisted investment trusts as detailed in Note 3. Foreign exchange risk exposure is considered to be not material. Interest Rate Risk Exposure Interest rate risk is the risk that the value of a financial instrument will fluctuate due to changes in market interest rates. The interest rate risk of the Group is managed by any or all of the following: ♣ Hedging returns on interest bearing securities through transacting in interest rate swaps, forward rate agreements and

bond and bill futures. ♣ Transacting in interest rate swaps and forward rate agreements to hedge interest rate movements on interest bearings

securities by fixing interest streams over a number of rollover points to a committed return. ♣ Using interest rate derivatives to manage interest rate risk profile in the short term without transacting in physical

securities. ♣ Usage of minimum credit rating requirements, allocation limits for certain types of investments together with mandated

upper term to maturity levels. The Group employs derivatives to maintain targeted duration exposure without requiring transactions of physical securities. Bond futures have been used to implement strategies regarding targeted duration and exposure levels. All long futures positions are asset backed and therefore there is no gearing involved, while short futures positions are backed by an equivalent value in the underlying asset. The Group is also indirectly exposed to interest rate risk via its investment in unlisted investment trusts as detailed in Note 3.




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14. Financial Risk Management Objectives, Policies and Processes (cont.)

Interest Rate Risk Exposure (cont.) The table below summarises the impact of the Group’s exposure to interest rate risk. Change in Interest rate 2009 2008

(basis points) $’000 $’000 Sensitivity of interest rate risk on Operating Profit +/-50 bps +/-4,015 +/-929 Sensitivity of interest rate risk on Net Assets +/-50 bps +/-4,015 +/-929 Liquidity Risk Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. The minimum liquidity requirements of the Group provide control over liquidity and cash flow risk enabling the Group to meet day to day operational expenses. The Group also mitigates this risk by having maximum portfolio allocations and maturities for all securities which are set by the Board. Payables consist of amounts which are due within twelve months. Net asset value attributable to external unitholders relates to those net assets attributable to external unitholders in NIT. The liability for accrued benefits represents the Group’s present obligation to pay benefits to members and beneficiaries. It is calculated as the difference between the carrying amount of the assets and liabilities of the Group as at the end of the year and therefore the liability would be funded by the sale of the associated assets. It is considered highly unlikely that all members would wish to withdraw from the Group at the same time. Consolidated Parent entity Liquidity Rating 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Due within twelve months 23,282 26,046 3,415 2,812 Payables 23,282 26,046 3,415 2,812 Credit Risk Exposure Credit risk represents the risk that the counterparty to the financial instrument will fail to discharge an obligation and cause the Group to incur a financial loss. Investments of the Parent comprise units in the Trust. Units in the Trust are valued at the redemption price at balance date, which is based on the market value, less disposal costs of the underlying financial assets and is advised by the investment manager. The Group’s maximum exposure to credit risk as at balance date in relation to each class of recognised financial assets is the carrying amount of those assets as indicated in Note 13. Credit risk is minimised through ensuring counterparties are appropriately monitored.




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Credit Risk Exposure (cont.) The investment managers provide regular reports on the Trust’s investments to the Trustee. The Trustee seeks information from the Trustee and/or manager of each proposed collective investment and may also seek independent advice from other qualified persons. The information acquired is used to determine the nature and extent of any risks and the expected returns that are associated with each investment prior to determining its suitability as an investment for the Trust. This includes receipt of a formal Risk Management Statement from each investment manager as required by the Australian Prudential Regulation Authority. Credit risk is not considered to be material. The Group holds no collateral as security or any other credit enhancements. There are no significant financial assets that are past due or impaired. Credit risk is not considered to be significant to the Plan except in relation to investments in debt and discount securities, this risk is mitigated by having specified credit ratings for all debt and discount securities. There are no significant concentrations of credit risk. The following table details the credit risk in relation to the debt securities held within the “Investments held in the Cash Account Income Fund”, (2008: “Investments held in the Navigator Income Trust”); Consolidated Parent entity Rating 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Standard & Poor’s AAA 240,167 166,998 143,236 94,371 Standard & Poor’s AA+ 101,390 - 60,469 - Standard & Poor’s AA 322,987 64,657 192,629 36,538 Moody’s A2 9,954 9,571 5,937 5,409 Standard & Poor’s AA- 31,170 151,861 18,590 85,817 Standard & Poor’s A+ 10,108 38,204 6,028 21,589 Standard & Poor’s A 50,739 97,090 30,261 54,866 Standard & Poor’s A- 56,575 50,690 33,741 28,645 Moody’s BAA2 - 10,970 - 6,199 Standard & Poor’s BBB+ 103,636 152,669 61,809 86,273 Standard & Poor’s BBB 61,878 159,573 36,904 90,175 Standard & Poor’s BBB- 27,529 63,885 16,418 36,101 Standard & Poor’s BB+ 3,647 - 2,175 - Standard & Poor’s B 472 - 282 - Standard & Poor’s B- 5,191 - 3,096 - Standard & Poor’s CC - 678 - 383 Standard & Poor’s CCC 446 - 266 - 1,025,889 966,846 611,841 546,366 Fair Value of Financial Assets and Liabilities The financial assets and liabilities included in the Statement of Financial Position are carried at amounts that approximate their net market value. Assets of the Parent comprise units in the Navigator Pooled Super Trust (“the Trust”). Units in the Trust are valued at the redemption price at balance date, which is based on the market value, less disposal costs, of the underlying investments. Changes in the net market value of investments are recognised in the Operating Statement in the periods in which they occur. Net market values of the underlying investments have been determined as follows: in the case of shares in listed companies at closing sell price on the Balance Sheet date, in the case of debt and discount securities, by reference to published bid prices at the close of business on the Balance Sheet date, in the case of units in unit trusts at the ex-distribution redemption price, quoted by the investment manager, on the Balance Sheet date, in the case of derivative financial instruments open bought derivatives are based on the last published bid prices at the close of business on the Balance Sheet date, open sold derivative contracts are based on the last published “ask” price at the close of business on the Balance Sheet date. Gains and losses on investments and derivative financial instruments are recognised in the Operating Statement.




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Derivative Instruments The Trust’s fund managers may use derivative financial instruments to reduce risks in the share, bond and currency markets and to increase or decrease the Trust’s exposure to particular investment classes or markets. The investment managers of the collective investment vehicles invest in a variety of financial instruments, including derivatives which expose the Trust’s investments to a variety of investment risks, including market risk, credit risk, interest risk and currency risk. The investment managers provide regular reports on the Trust’s investments to the Trustee. The Trustee seeks information from the Trustee and/or manager of each proposed collective investment and may also seek independent advice from other qualified persons. The information acquired is used to determine the nature and extent of any risks and the expected returns that are associated with each investment prior to determining its suitability as an investment for the Trust. This includes receipt of a formal Risk Management Statement from each investment manager as required by the Australian Prudential Regulation Authority.

15. Auditor’s Remuneration

Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000

Amounts received or due and receivable by Ernst & Young for:

- an audit of the financial statements of the entity 76 76 38 38 NAL pays all auditor’s remuneration on behalf of the Group.

16. Receivables Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Receivable within twelve months Receivable from Navigator Pooled Superannuation Trust - - 3,122 2,336 Receivable from Navigator Australia Ltd - 105 - 105 Lump sum tax receivable 1 131 1 131 Investment income receivable 156,074 363,122 - - Outstanding settlements 9,055 20,872 - - Sundry receivables 8 6 - - Receivables 165,138 384,236 3,123 2,572 Due to the short term nature of these receivables, their carrying value is assumed to approximate their net market value. The maximum exposure to credit risk is the net market value of receivables.




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17. Payables

Consolidated Parent entity 2009 2008 2009 2008 $’000 $’000 $’000 $’000 Due within twelve months - - - - Fees payable to related parties 15,590 15,701 3,407 2,812 Distribution payable to external unitholders 4,248 7,779 - - Outstanding settlements 3,412 2,546 - - Sundry payables 32 20 8 - Payables 23,282 26,046 3,415 2,812 Due to the short term nature of these payables, their carrying value is assumed to approximate their net market value. Information regarding liquidity risk exposure is set out in Note 14.

18. Events after the Balance Sheet Date On 22 June 2009 National Australia Bank Limited announced its intention to purchase Aviva Australia Holdings Limited’s wealth management business. Subject to regulatory approval this purchase is expected to be completed on 30 September 2009. Thereafter the ultimate parent company of Navigator Australia Limited will cease to be Aviva plc and will become the National Australia Bank Limited. This purchase includes the related parties shown in these accounts, with the exception of Aviva Investors Australia Limited (formerly known as Portfolio Partners Limited) who still form part of the Aviva plc group of companies.

19. Commitments and Contingent Liabilities Since 30 June 2009 there has not been any matter or circumstance not otherwise dealt with in the financial report that has significantly affected or may significantly affect the Group (2008: nil).



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navigator personal retirement plan a.b.n. 40 … · close of business on the balance sheet date....

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