MCP INCOME
OPPORTUNITIES
TRUST
ANNUAl REPORT
For the year ended 30 June 2020
ARSN 631 320 628
MCP Income Opportunities Trust
Annual Report
CONTENTS
MCP Income Opportunities Trust Appendix 4E
Investment manager’s report
Directors’ report
Corporate governance statement
Auditor’s independence declaration
Statement of comprehensive income
Statement of financial position
Statement of changes in equity
Statement of cash flows
Notes to the financial statements
Directors’ declaration
Audit report
ASX Additional Information
1
3
5
8
13
14
15
16
17
18
38
39
43
These financial statements cover MCP Income Opportunities Trust as an individual entity.
The Responsible Entity of MCP Income Opportunities Trust is
The Trust Company (RE Services) Limited (ABN 45 003 278 831) (AFSL 235 150).
The Responsible Entity’s registered office is:
Level 18 Angel Place
123 Pitt Street
Sydney NSW 2000
MCP Income Opportunities Trust
Annual Report
1
MCP INCOME OPPORTUNITIES TRUST APPENDIX 4E
FOR THE YEAR ENDED 30 JUNE 2020
DETAIlS OF REPORTING PERIOD
Current:
Year ended 30 June 2020
Previous corresponding: Period 7 February 2019 to 30 June 2019
The Directors of The Trust Company (RE Services) Limited, the Responsible Entity of the MCP Income Opportunities Trust
(the “Fund”) announce the audited results of the Fund for year ended 30 June 2020 as follows:
RESUlTS FOR ANNOUNCEMENT TO THE MARKET
Extracted from Financial Statements for the year ended 30 June 2020.
Revenue from ordinary activities
Profit/(loss) from the year
Total comprehensive income/(loss) for the period
DETAIlS OF DISTRIBUTIONS
The distributions for the year were as follows
2020
$’000
29,470
24,678
24,678
2019
$’000
%
INCREASE/
(DECREASE)
4,074
623.37%
3,286
650.99%
3,286
650.99%
YEAR ENDED
30 JUNE 2020
PERIOD 7 FEBRUARY 2019
30 JUNE 2019
$’000
23,758
CPU
14.34
$’000
3,049
CPU
2.0324
Subsequent to year end, on 28 July 2020, the Directors declared a distribution of 1.03 cents per ordinary unit which amounted
to $1,783,606 and was paid on 10 August 2020.
DETAIlS OF DISTRIBUTION REINVESTMENT PlAN
The Responsible Entity has established a Distribution Reinvestment Plan (“DRP”) on 13 May 2019 in relation to all
future distributions.
The Responsible Entity expects to make distributions on a monthly basis. For such distributions, it is expected the record date
will be the first ASX trading day of each month and the last day for electing into the DRP will be 5.00pm (Sydney time) on the
first business day after the record date.
Units under the DRP are currently issued at the net asset value of a unit as determined in accordance with the Fund’s
constitution on the record date.
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MCP Income Opportunities Trust
Annual Report
NET TANGIBlE ASSETS
Total Net Tangible Assets attributable to unitholders ($’000)
Units on issue (‘000)
Net Tangible Assets attributable to unit holders per unit ($)
AS AT
30 JUNE 2020
AS AT
30 JUNE 2019
347,384
173,111
2.01
300,237
150,000
2.00
CONTROl GAINED OR l OST OVER ENTITIES DURING THE YEAR
There were no entities over which control was gained or lost during the year ended 30 June 2020 other than the MCP Credit
Trust, detailed as follows. On 1 October 2019 Wholesale subscriptions to the MCP Credit Trust increased such that the interests
in equity controlled by the Fund reduced below 50%.
NAME OF ENTITIES
MCP Wholesale Income Opportunities Trust
MCP Credit Trust
GAIN OF
CONTROL
LOSS OF
CONTROL
CONTRIBUTION
TO PROFIT
($’000)
23 April 2019
N/a
23 April 2019 1 October 2019
28,956
14,999
DETAIlS OF ASSOCIATES AND JOINT VENTURE ENTITIES
The Fund did not have any interest in associates and joint venture entities during the current period.
INDEPENDENT AUDIT REPORT
Additional disclosure requirements can be found in the notes to the MCP Income Opportunities Trust financial statements
for the year ended 30 June 2020.
This report is based on the financial report which has been audited by the Fund’s auditor. All the documents comprise
the information required by Listing Rule 4.3A.
MCP Income Opportunities Trust
Annual Report
3
INVESTMENT MANAGER’S REPORT
At the end of the June 2020 financial year, the MCP Income
Opportunities Trust (“Fund”) has a net asset value (“NAV”) of
$347 million, compared to $300 million in June 2019. During
the year, the Fund has continued to deliver monthly cash
income and generated a one‑year net return of 7.6%,
exceeding the Fund’s target cash return of 7% p.a. with no
losses. In a market environment where investors are looking
for investments generating an attractive income and can
deliver lower market volatility, the Fund has sought to provide
this investment choice, particularly for investors seeking to
lower their exposure to public market equity investments.
By raising additional investor capital of $45 million in
November 2019, the Investment Manager (“Metrics”)
has delivered on its commitments to increase the Fund’s
participation in the Australian corporate lending market,
develop greater portfolio diversification and promote
additional market liquidity for the Fund through an
expanded investor base.
As at 30 June 2020, the Fund has been deployed across
69 individual assets including Australian midmarket
corporates, commercial real estate, and structured finance
transactions at different levels of the capital structure. Risks
have been appropriately managed and underlying asset
quality is sound. The Fund has delivered annualised cash
distributions of 7.1% p.a. and a total net annualised return
of 7.3% p.a. since inception.
The performance of the Fund has been strong and delivered
in excess of the minimum target cash return of 7% p.a. (net of
fees) despite the significant reduction of 1.25% to the RBA
cash rate since the launch of the fund in April 2019.
Metrics continues its commitment to provide investors in
the Fund with access to a diversified portfolio of private
credit assets with exposure to equity upside gains through
its investment in the wholesale funds managed by Metrics.
Metrics believes that access to a diversified portfolio of
private credit assets with exposure to equity upside gains
provides enhanced risk adjusted returns and is a highly
unique investment option for investors. The ability to trade
units on the ASX provides investors with a means of
managing liquidity in this otherwise less liquid asset class..
The Fund provides investors with an investment product
that delivers a highly skilled investment team and a robust,
independent governance framework under the control of the
Responsible Entity. Metrics continues to seek opportunities
to diversify the portfolio, build scale, lower costs and manage
the investment risks associated with the operations of
the Fund.
As part of its continued growth, Metrics has opened new
origination offices in Melbourne (September 2019) and
Auckland, New Zealand (March 2020) and increased staff
numbers to a current total of close to 60, bringing onboard
a wealth of experience and direct lending relationships.
In addition, while existing policies and procedures already
embedded an approach to Environmental, Social and
Governance criteria (“ESG”) reflective of the United Nations
Principles for Responsible Investment (“UNPRI”), Metrics
also took the formal step of becoming a signatory to UNPRI
in October 2019. This is an acknowledgement of the
importance of ESG and Metrics’ role in ensuring ESG
is embedded across all its investment activities.
COVID‑19 IMPACT
From February 2020, the spread of COVID‑19 quickly
evolved into an event that created substantial public market
volatility and resulted in a significant working capital liquidity
squeeze for companies globally. The volatility evident in
public equity, fixed income and offshore credit markets was
absent in Australia’s bank‑dominated Corporate Loan Market,
reflecting a private market where borrowers and lenders
engage directly and where credit risk is the primary focus.
While new‑money primary lending transactions slowed,
Metrics has noted that loan transactions negotiated
pre‑COVID‑19 were successfully closed and has selectively
invested in several new loans.
Despite material economic headwinds and public market
volatility, the Fund’s portfolio has continued to deliver capital
stability, reflected in the daily published NAV, as well as pay
monthly cash distributions and meet its Target Return. The
Fund’s underlying portfolio is appropriately diversified and
while some borrowers experienced the demand, supply
and/or liquidity impacts of COVID‑19, loans to which the Fund
is exposed have covenants, controls, security and equity
buffer which enabled Metrics, as investment manager of
these underlying funds, to actively manage risk to protect
investor capital. Metrics has also avoided lending to some of
the most affected industries, such as consumer discretionary,
travel and tourism and student accommodation.
Metrics has continued to be actively engaged with borrowers
and undertook a thorough risk analysis of each borrower to
assess the impact of the cashflow/liquidity squeeze both
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MCP Income Opportunities Trust
Annual Report
during and after the pandemic. In all cases, Metrics is
satisfied that the valuation risk remained firmly with equity
and was able to reconfirm the stated, and independently
verified, NAV. In the Fund’s underlying investments there
have been no borrowers in default, no bad debts and no
arrears of either principal or interest.
As a result of the extreme equity market volatility, the Fund’s
Unit Price traded below NAV for the first time in March 2020,
however with investors and funds associated with Metrics
acquiring the Fund units, the gap has reduced. The discount
of the Fund’s unit price to NAV is not easily explained by
reference to the fundamental values of the performing
instruments which it is exposed. The loans to which the Fund
is exposed are mostly short dated mitigating credit and
market risk, and have been originated over time resulting in
regular repayments at par. The weighted average tenor of the
Fund’s loan investments is 1.5 years (excluding equity and
equitylike instruments), with a staggered repayment profile.
As a result of market conditions, debt structures are likely to
become more conservative and loan pricing has begun to
increase and may continue further. It is expected that this is
likely to provide attractive lending opportunities for the Fund.
MCP Income Opportunities Trust
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5
DIRECTORS’ REPORT
The Trust Company (RE Services) Limited
(ABN 45 003 278 831) is the responsible entity
(the “Responsible Entity”) of MCP Income Opportunities
Trust (the “Fund”). The directors of the Responsible Entity
(the “Directors”) present their report together with the
financial statements of the Fund for the period ended
30 June 2020.
DIRECTORS
The Directors of The Trust Company (RE Services) Limited
during the period and up to the date of this report are shown
below. The Directors were in office for this entire period
except where stated otherwise:
NAME
DATE OF APPOINTMENT/RESIGNATION
PRINCIPAl ACTIVITIES
The Fund is a registered managed investment scheme
domiciled in Australia.
The Fund’s investment strategy is to create a diversified
exposure to private credit investments and other assets
such as warrants, options, preference shares and equity.
Through active portfolio risk management, the Investment
Manager seeks to provide quarterly cash income and
preserve investor capital. Amounts raised by the Fund are
invested in the MCP Wholesale Income Opportunities Trust.
The MCP Wholesale Income Opportunities Trust invests
directly in wholesale funds or directly in investment assets.
Through active portfolio risk management, the Investment
Manager (Metrics Credit Partners Pty Ltd) will seek to
balance the delivery of unitholder returns and preserving
investor capital.
The Fund was constituted on 25 February 2019, commenced
operations on 23 April 2019 and its units commenced
trading on the Australian Securities Exchange (ASX: MOT)
on 29 April 2019.
The Fund did not have any employees during the period.
There were no significant changes in the nature of the
Fund’s activities during the period.
Glenn Foster
Richard McCarthy
Vicki Riggio
Simone Mosse
Appointed as Director
on 27 September 2019
Michael
Vainauskas
Resigned as Director
on 27 September 2019
Phillip Blackmore
Alternate Director for Vicki Riggio
Andrew McIver
Resigned as Alternate Director
for Michael Vainauskas on
2 September 2019
Appointed as Alternate Director for
Glenn Foster on 2 September 2019
Resigned as Alternate Director for
Glenn Foster on 27 September 2019
UNITS ON ISSUE
Units on issue in the Fund at the end of the period are set
out below:
AS AT
30 JUNE 2020
UNITS (’000)
30 JUNE 2019
UNITS (’000)
Units on issue
173,111
150,000
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MCP Income Opportunities Trust
Annual Report
REVIEW AND RESUlTS OF OPERATIONS
During the period, the Fund invested in accordance with
the investment objective and guidelines as set out in the
governing documents of the Fund and in accordance
with the provision of the Fund’s Constitution.
RESUlTS
The performance of the Fund, as represented by the results
of its operations, was as follows:
YEAR ENDED
30 JUNE 2020
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
24,678
3,286
23,758
3,049
14.34
2.03
Profit/(loss) for the
period ($’000)
Distributions paid
and payable
($’000)
Distributions
(cents per unit)
SIGNIFICANT CHANGES IN STATE OF AFFAIRS
On 4 October 2019 the Responsible Entity announced that
the Fund would change the distribution frequency from
quarterly to monthly, effective from 31 October 2019.
On 13 January 2020 the Responsible Entity announced that
the Fund’s Unit Registry had transitioned from Mainstream
Fund Services Pty Ltd (“Mainstream”) to Automic Group.
Furthermore, on 20 January 2020, the Fund Administration
function transitioned from Mainstream to MCH Fund
Administration Services Pty Ltd, a wholly owned subsidiary
of Metrics Credit Holdings Pty Ltd.
On 21 January 2020, the Responsible Entity announced that
Metrics had voluntarily agreed to waive Performance Fees
to prevent investor returns being impacted by record low
interest rates. The Fund Hurdle is equal to the RBA Cash
Rate plus 600 basis points per annum. As at 21 January 2020
Performance Fees were payable on returns in excess of
6.75% per annum, which is lower than the Fund’s target cash
return to investors of 7.00% per annum (net of fees and costs).
Metrics intends that the Performance Fee will only apply
on the Fund’s returns which exceed 7.50% per annum.
The Performance Fee Waiver will continue until such time as:
> 90 days notice is provided to the Responsible Entity;
> Metrics is no longer the manager of the Fund; or
> The RBA cash rate is equal to or exceeds 1.50% p.a.
Other than the impact of COVID‑19 described below, the
Directors are of the opinion that there are no other significant
changes in the state of affairs of the Fund that occurred
during the year.
COVID‑19
The Directors continue to assess the potential financial and
other impacts of the coronavirus (COVID‑19) outbreak to the
Fund. The current high‑level of uncertainty regarding the
severity and length of COVID‑19 on investment markets has
impacted investment outcomes and increased volatility in
investment performance during the year.
At the date of signing, the future impacts of COVID‑19 on
global and domestic economies and investment market
indices, and their resulting impact on the Fund are uncertain.
The Directors and Investment Manager will continue to
monitor this situation.
MATTERS SUBSEQUENT TO THE END OF THE
FINANCIAl PERIOD
As noted above, the impacts of COVID‑19 are still unfolding,
and there may be further impacts on the Fund. Other than
COVID‑19 impacts, no other matter or circumstance has
arisen since 30 June 2020 that has significantly affected,
or may significantly affect:
(i)
the operations of the Fund in future financial years, or
(ii) the results of those operations in future financial years, or
(iii) the state of affairs of the Fund in future financial years.
MCP Income Opportunities Trust
Annual Report
7
lIKElY DEVElOPMENTS AND EXPECTED RESUlTS
OF OPERATIONS
The Fund will continue to be managed in accordance with
the investment objectives and guidelines as set out in the
governing documents of the Fund and in accordance with
the provisions of the Fund’s Constitution.
The results of the Fund’s operations will be affected by a
number of factors, including the performance of investment
markets in which the Fund invests. Investment performance
is not guaranteed and future returns may differ from past
returns. As investment conditions change over time, past
returns should not be used to predict future returns.
INDEMNIFICATION AND INSURANCE OF OFFICERS
AND AUDITORS
No insurance premiums are paid for out of the assets of
the Fund in regard to the insurance cover provided to either
the officers of the Responsible Entity or the auditors of
the Fund. So long as the officers of the Responsible Entity
act in accordance with the Fund’s Constitution and the
Corporations Act 2001, the officers remain indemnified
out of the assets of the Fund against losses incurred while
acting on behalf of the Fund.
The auditor of the Fund is in no way indemnified out of the
assets of the Fund.
FEES PAID TO AND INTERESTS HElD IN THE FUND
BY THE RESPONSIBlE ENTITY OR ITS ASSOCIATES
Fees paid to the Responsible Entity and its associates out
of the Fund’s property during the period are disclosed in
Note 12 of the financial statements.
No fees were paid out of the Fund’s property to the Directors
of the Responsible Entity during the period.
The number of interests in the Fund held by the Responsible
Entity or its associates as at the end of the financial period
are disclosed in Note 12 of the financial statements.
UNITS IN THE FUND
The movement in units on issue in the Fund during the period
is disclosed in Note 7 of the financial statements.
The value of the Fund’s assets and liabilities is disclosed
in the statement of financial position and derived using the
basis set out in Note 2 of the financial statements.
ENVIRONMENTAl REGUlATION
The operations of the Fund are not subject to any particular
or significant environmental regulations under Commonwealth,
State or Territory law.
ROUNDING OF AMOUNTS TO THE NEAREST
THOUSAND DOllARS
The Fund is an entity of a kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 issued by the Australian Securities and
Investments Commission (ASIC) relating to the “rounding off”
of amounts in the Directors’ report. Amounts in the Directors’
report and Financial Statements have been rounded to the
nearest thousand dollars in accordance with that ASIC
Corporations Instrument, unless otherwise indicated.
AUDITOR’S INDEPENDENCE DEClARATION
A copy of the Auditor’s independence declaration as
required under section 307C of the Corporations Act 2001
is set out on page 13.
This report is made in accordance with a resolution of the
Directors of The Trust Company (RE Services) Limited.
Director
The Trust Company (RE Services) Limited
Sydney
25 August 2020
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MCP Income Opportunities Trust
Annual Report
CORPORATE GOVERNANCE STATEMENT
AS AT 30 JUNE 2020
BACKGROUND
The Trust Company (RE Services) Limited (“Responsible
Entity”) is the responsible entity for the MCP Income Trust
Opportunities (“Trust”), a registered managed investment
scheme that is listed on the Australian Securities Exchange
(“ASX”).
The Responsible Entity is a wholly owned subsidiary of
Perpetual Limited (ASX: PPT) (“Perpetual”).
The Responsible Entity is reliant on Perpetual for access to
adequate resources including directors, management, staff,
functional support (such as company secretarial, responsible
managers, legal, compliance, risk and finance) and financial
resources. As at the date of this Corporate Governance
Statement, Perpetual has at all times made such resources
available to the Responsible Entity.
In operating the Trust, the Responsible Entity’s overarching
principle is to always act in good faith and in the best
interests of the Trust’s unitholders, in accordance with
our fiduciary duty. The Responsible Entity’s duties and
obligations in relation to the Trust principally arise from:
the Constitution of the Trust; the Compliance Plan for the
Trust; the Corporations Act 2001 (“Act”); the ASX Listing
Rules; the Responsible Entity’s Australian Financial Services
Licence; relevant regulatory guidance; relevant contractual
arrangements; and other applicable laws and regulations.
CORPORATE GOVERNANCE
At Perpetual, good corporate governance includes a genuine
commitment to the ASX Corporate Governance Council
Corporate Governance Principles and Recommendations
3rd Edition (“Principles”).
The directors of the Responsible Entity are committed to
implementing high standards of corporate governance in
operating the Trust and, to the extent applicable to registered
managed investment schemes, are guided by the values and
principles set out in Perpetual’s Corporate Responsibility
Statement and the Principles . The Responsible Entity is
pleased to advise that, to the extent the Principles are
applicable to registered managed investment schemes;
its practices are largely consistent with the Principles.
As a leading responsible entity, the Responsible Entity
operates a number of registered managed investment
schemes (“Schemes”). The Schemes include the Trust
as well as other schemes that are listed on the ASX. The
Responsible Entity’s approach in relation to corporate
governance in operating the Trust is consistent with its
approach in relation to the Schemes generally.
The Responsible Entity addresses each of the Principles that
are applicable to externally managed listed entities in relation
to the Schemes, including the Trust, as at the date of this
Corporate Governance Statement.
Principle 1 – Lay Solid Foundations for Management
and Oversight
The role of the Responsible Entity’s Board is generally to set
objectives and goals for the operation of the Responsible
Entity and the Schemes, to oversee the Responsible Entity’s
management, to regularly review performance and to monitor
the Responsible Entity’s affairs acting in the best interests of
the unitholders of the Trust. The Responsible Entity’s Board is
accountable to the unitholders of the Trust, and is responsible
for approving the Responsible Entity’s overall objectives and
overseeing their implementation in discharging their duties
and obligations and operating the Trust.
The role of the Responsible Entity’s management is to
manage the business of the Responsible Entity in operating
the Trust. The Responsible Entity Board delegates to
management all matters not reserved to the Responsible
Entity’s Board, including the day‑to‑day management of the
Responsible Entity and the operation of the Trust. Directors,
management and staff are guided by Perpetual’s Code of
Conduct and Perpetual Risk Appetite Statement which is
designed to assist them in making ethical business decisions.
The Responsible Entity has appointed agents (“Service
Providers”) to provide investment management, administration,
custody and other specialist services and functions in
relation to the Trust.
Effective processes for monitoring Service Providers are
integral to the Responsible Entity’s operations, given that
substantial operational activities are outsourced to third
parties. The Management of the Responsible Entity ensure
a systematic and rigorous approach is applied with respect
to monitoring the performance of outsourced Service
Providers to the Trust.
The Responsible Entity views all interactions with Service
Providers as a monitoring opportunity, from the informal
discussions that regularly occur with Service Providers, to
more formalised monitoring reviews. The outcomes of all
interactions with Service Providers inform the Responsible
Entity’s view as to the extent to which the Service Provider
MCP Income Opportunities Trust
Annual Report
9
is complying with their operational obligations to the
Responsible Entity.
Prior to appointment, all Service Providers are subject to
operational due diligence, to verify that the Service Provider
can deliver the outsourced services in an efficient, effective
and compliant manner. All Service Providers are assigned
an initial operational risk rating.
The Responsible Entity’s approach to Service Provider
monitoring is outlined in the diagram below. In addition to
the continuous monitoring that occurs through day to day
interactions with Service Providers in the regular course of
business, all Service Providers are required to periodically
report to the Responsible Entity as to the extent to which they
have met their obligations. Periodically, the Service Provider’s
risk rating is reviewed by the stakeholders within the business,
based on the outcomes of all interactions that have occurred
with the Service Provider during the review period.
Informal
engagement
Formal
reviews
Compliance
reporting
The RE and
Management
Market
intellegence2
Key
scheme
data1
1.
Includes information regarding investment performance, actual
versus strategic asset allocation, liquidity where applicable and
complaints, incidents and issues arising with respect to the operation
of the Trust
2.
Information from secondary sources, including the media and
analysts and rating house reports.
The Responsible Entity maintains policy, procedure and
program documents that determine the nature and frequency
of formal service provider monitoring reviews. Service
providers are typically subject to annual review.
The Service Provider risk rating dictates any additional
monitoring measures required to be put in place – for
example a Service Provider assessed as ‘low to medium risk’
will be subject to the standard monitoring measures the
Responsible Entity utilises under the Service Provider
Monitoring Framework. Service Providers risk rated ‘high to
very high’ may be subject to additional oversight measures
to deal with the factors that caused the Service Providers risk
rating to be high or very high. In addition, management and
stakeholders utilise the risk assessment rating in determining
if any action is required when considering information and
the outcomes of all interactions that have occurred with the
Service Provider during the review period.
Principle 2 – Structure the Board to be Effective
and Add Value
At present the Responsible Entity Board consists of four
executive directors and one alternate director. The names
of the current directors and year of appointment is
provided below:
Name of Director
Glenn Foster
Richard McCarthy
Vicki Riggio
Phillip Blackmore
(alternate for Vicki Riggio)
Simone Mosse
Year of
Appointment
2015
2018
2018
2018
2019
As the Responsible Entity’s Board consists of only executive
directors, a Compliance Committee is appointed in relation to
the Trust (refer to Principle 7). None of the executive directors
of the Responsible Entity are independent and they are not
remunerated by the Responsible Entity. The Compliance
Committee comprises of a majority of external members and
is chaired by an external member who is not the chair of the
Responsible Entity Board.
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MCP Income Opportunities Trust
Annual Report
Principle 3 –Acting Ethically and Responsibly
The Responsible Entity relies on a variety of mechanisms
to monitor and maintain a culture of acting lawfully, ethically
and responsible:
> policies and procedures: a Code of Conduct which
articulates and discloses Perpetual’s values, cyclical
mandatory training, a Whistleblowing Policy and a Gifts,
Political Donations, Bribery and Corrupt Practices Policy
(further details noted below);
> “The Way We Work” behaviour framework, and risk ratings
that are intertwined into its annual performance,
remuneration and hiring processes; and
> employee engagement surveys and action planning
conducted to address any gaps or concerns in culture.
These apply to all directors and employees of Perpetual, and
the Responsible Entity. The Code of Conduct, The Way We
Work and core values supports all aspects of the way the
Responsible Entity conducts its business and is embedded
into Perpetual’s performance management process.
The Code of Conduct draws from and expands on Perpetual’s
Core Values of integrity, partnership and excellence. The Code
of Conduct underpins Perpetual’s culture. The Responsible
Entity Board and the Compliance Committee are informed of
material breaches of the Code of Conduct which impact the
Scheme and the Responsible Entity.
Additional policies deal with a range of issues such as the
obligation to maintain client confidentiality and to protect
confidential information, the need to make full and timely
disclosure of any price sensitive information and to provide
a safe workplace for employees, which is free from
discrimination. Compliance with Perpetual’s Code of
Conduct is mandatory for all employees. A breach is
considered to be a serious matter that may impact an
employee’s performance and reward outcomes and may
result in disciplinary action, including dismissal.
A full copy of the Code of Conduct is available on
Perpetual’s website (https://www.perpetual.com.au/about/
corporate‑governance/code‑of‑conduct).
Perpetual also has a Whistleblowing Policy to protect
directors, executives, employees, contractors and suppliers
who report misconduct, including:
> conduct that breaches any law, regulation, regulatory
licence or code that applies to Perpetual;
> fraud, corrupt practices or unethical behaviour;
> bribery;
> unethical behaviour which breaches Perpetual’s Code
of Conduct or policies;
> inappropriate accounting, control or audit activity; including
the irregular use of Perpetual or client monies; and
> any other conduct which could cause loss to, or be
detrimental to the interests or reputation of, Perpetual
or its clients.
As part of Perpetual’s Whistleblowing Policy, a third party has
been engaged to provide an independent and confidential
hotline for Perpetual employees who prefer to raise their
concern with an external organisation.
A full copy of the Whistleblowing Policy is available on
Perpetual’s website (https://www.perpetual.com.au/about/
corporate‑governance/code‑of‑conduct).
As part of Perpetual’s commitment to promoting good
corporate conduct and to conducting business in accordance
with the highest ethical and legal standards, bribery and
corrupt practices will not be tolerated by Perpetual under
any circumstances. Perpetual’s Gifts, Political Donations,
Bribery and Corrupt Practices Policy supports Perpetual’s
commitment by:
> prohibiting the payment of political donations;
> instituting proper procedures regarding the exchange
of gifts;
> clearly outlining Perpetual’s zero tolerance for bribery
and corruption; and
> including avenues where concerns may be raised.
A full copy of the Gifts, Political Donations, Bribery and
Corrupt Practices Policy is available on Perpetual’s website
(https://www.perpetual.com.au/about/corporate‑governance/
code‑of‑conduct).
Mechanisms are in place to ensure the Responsible Entity
Board and the Compliance Committee are informed of
material breaches which impact the Trust and the
Responsible Entity which would include material breaches
MCP Income Opportunities Trust
Annual Report
11
of the Code of Conduct and material incidences reported
under the Whistleblowing Policy and the Gifts, Political
Donations, Bribery and Corrupt Practices Policy.
Principle 4 – Safeguard the Integrity of Corporate Reports
The functions of an audit committee are undertaken by
the full Responsible Entity Board with assistance from
management. The Responsible Entity has policies and
procedures designed to ensure that the Trust’s:
> financial reports are true and fair and meet high standards
of disclosure and audit integrity; and
would influence an investment decision in relation to any of
the Trust, is disclosed to the market. The Responsible Entity’s
Company Secretary may assist management and/or the
directors in making disclosures to the ASX after appropriate
Responsible Entity’s Board consultation for material market
announcements. The Responsible Entity requires service
providers, including the Investment Manager, to comply
with its policy in relation to continuous disclosure for the
Trust. The Responsible Entity’s Company Secretary is the
Continuous Disclosure Officer for the Trust in accordance
with the ASX Listing Rules.
> other reports released on ASX are materially accurate
Principle 6 – Respect the Rights of Unitholders
and balanced.
This includes policies relating to the preparation, review
and sign off process required for the Trust’s financial reports,
the engagement of the Trust’s independent auditors and
the review and release of certain reports on the ASX.
The declarations under section 295A of the Corporations
Act 2001 provide formal statements to the Responsible
Entity Board in relation to the Trust (refer to Principle 7).
The declarations confirm the matters required by the
Corporations Act in connection with financial reporting. The
Responsible Entity receives confirmations from the service
providers involved in financial reporting and management
of the Trust, including the Investment Manager. These
confirmations together with the Responsible Entity’s Risk
and Compliance Framework which includes the service
provider oversight framework, assist its staff in making
the declarations provided under section 295A of the
Corporations Act. The Responsible Entity manages the
engagement and monitoring of independent ‘external’
auditors for the Trust. The Responsible Entity Board receives
periodic reports from the external auditors in relation to
financial reporting and the compliance plans for the Trust.
Principle 5 – Make Timely and Balanced Disclosure
The Responsible Entity has a continuous disclosure policy
to ensure compliance with the continuous disclosure
requirements of the Corporations Act and the ASX Listing
Rules in relation to the Trust which sets out the processes to
review and authorise market announcements and which is
periodically reviewed to ensure that it is operating effectively.
The policy requires timely disclosure of information to be
reported to the Responsible Entity’s management and/or
directors to ensure that, information that a reasonable person
would expect to have a material effect on the unit price or
The Responsible Entity is committed to ensuring timely and
accurate information about the Trust is available to security
holders via the Trust’s website. All ASX announcements are
promptly posted on the Trust’s website: www.metrics.com.au.
The annual and half year results financial statements and
other communication materials are also published on
the website.
In addition to the continuous disclosure obligations, the
Responsible Entity receives and responds to formal and
informal communications from unitholders and convenes
formal and informal meetings of unitholders as requested or
required. The Responsible Entity has an active program for
effective communication with the unitholders and other
stakeholders in relation to Trust.
The Responsible Entity handles any complaints received
from unitholders in accordance with Perpetual’s Complaints
Handling Policy. The Responsible Entity is a member of
the Australian Financial Complaints Authority (AFCA), an
independent dispute resolution body, which is available
to unitholders in the event that any complaints cannot be
satisfactorily resolved by the Responsible Entity.
The Responsible Entity is also committed to communicating
with shareholders electronically in relation to communications
from the share registry. Shareholders may elect to receive
information from the Company’s share registry electronically.
Principle 7 – Recognise and Manage Risk
The Responsible Entity values the importance of robust
risk and compliance management systems and maintains
a current risk register as part of its formal risk management
program. The systems supporting the business have been
designed to ensure our risks are managed within the
boundaries of the Perpetual Risk Appetite Statement and
12
MCP Income Opportunities Trust
Annual Report
consistent with our core values built on integrity, partnership
and excellence.
The Responsible Entity has established a Compliance
Committee, comprised of Johanna Turner (Chair), Virginia
Malley and Simone Mosse.
The Compliance Committee meets at least quarterly.
The Compliance Committee Terms of Reference sets out
its role and responsibilities, which is available on request.
The Compliance Committee is responsible for compliance
matters regarding the Responsible Entity’s Compliance Plan,
Constitution and the Corporations Act.
The declarations under section 295A of the Act provide
assurance regarding sound system of risk management and
internal control and that the system is operating effectively
in all material respects in relation to financial reporting
risks. The Responsible Entity also receives appropriate
declarations from the service providers involved in
financial reporting.
The Responsible Entity manages the engagement and
monitoring of independent external auditors for the Trust.
The Responsible Entity’s board receives periodic reports
in relation to financial reporting and the compliance plan
audit outcomes for the Trust.
The Perpetual Board has the responsibility and commitment
to monitor that the organisation has a framework in place to
manage risk. The Board’s commitment is reflected through
the establishment of, and investment in the Perpetual Group
Risk, Group Compliance and Internal Audit functions, led
by the Chief Risk Officer. The Chief Risk Officer has the
mandate to design and implement this Risk Management
Framework (RMF).
Perpetual’s Audit, Risk and Compliance Committee (ARCC)
is responsible for oversight and monitoring of the Perpetual’s
risk appetite statement, compliance and risk management
frameworks and internal control systems, and risk culture.
The ARCC is also responsible for monitoring overall legal
and regulatory compliance across Perpetual including the
Responsible Entity. The RMF was reviewed, updated and
approved by the Audit, Risk and Compliance Committee
during the 2020 financial year. The RMF consists of programs
and policies which are designed to address specific risk
categories – strategic, financial, operational, outsourcing,
investment, reputation, people and compliance, legal and
conduct risk. Programs supporting the RMF are regularly
reviewed to confirm their appropriateness. The Audit, Risk
and Compliance Committee is comprised of Ian Hammond
(Chair), Nancy Fox, Craig Ueland and Gregory Cooper. The
Audit, Risk and Compliance Committee Terms of Reference
sets out its role and responsibilities. This can be obtained on
the Perpetual website. All members of the Perpetual Audit,
Risk and Compliance Committee members are independent
non‑executive directors of Perpetual Limited. A majority of
the Responsible Entity Compliance Committee is comprised
of external members, including an external Chair.
All Perpetual Group Executives are accountable for managing
risk within their area of responsibility, including the extent
to which the Responsible Entity is effectively applying and
acting in accordance with the RMF. They are also required
to manage risk as part of their business objectives with risk
management integrated across business processes.
The RMF is underpinned by the “Three Lines of Defence”
model. This model sees the first line, being business unit
management, accountable for the day to day identification
and management of risks. The Risk and Compliance function
represents the second line and consists of risk management
professionals who provide the framework, tools, advice and
assistance to enable management to effectively identify,
assess and manage risk and is responsible for overseeing
first line activities. Internal Audit provides independent
assurance, representing the third line, and reports to
the ARCC.
In respect of economic, environmental and social
sustainability risks, the Investment Manager has policies
and procedures in place to assess the Environmental, Social
and Governance (“ESG”) impacts of the Fund’s investment
activities. These policies and procedures have been
developed in accordance with the United Nations Principals
for Responsible Investment (“UNPRI”). In October 2019 the
Investment Manager took the formal step of becoming a
signatory to UNPRI as an acknowledgement of the important
of ESG and the Investment Manager’s responsibility to ensure
that ESG is embedded across all its investing activities.
Principle 8 – Remunerate Fairly and Responsibly
The RE does not have a Remuneration Committee.
The fees and expenses which the Responsible Entity is
permitted to pay out of the assets of the Trust are set out in
the Trust constitution. The Trust financial statements provide
details of all fees and expenses paid by the Trust during
a financial period.
MCP Income Opportunities Trust
Annual Report
13
AUDITOR’S INDEPENDENCE DEClARATION
Lead Auditor’s Independence Declaration under
Section 307C of the Corporations Act 2001
To the Directors of The Trust Company (RE Services) Limited (the Responsible
Entity) of MCP Income Opportunities Trust
I declare that, to the best of my knowledge and belief, in relation to the audit of MCP Income
Opportunities Trust for the financial year ended 30 June 2020 there have been:
i.
ii.
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the audit; and
no contraventions of any applicable code of professional conduct in relation to the
audit.
KPMG
Andrew Reeves
Partner
Sydney
25 August 2020
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional Standards Legislation.
14
MCP Income Opportunities Trust
Annual Report
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2020
Investment income
Interest income
Net gains/(losses) on financial instruments at fair value
through profit or loss
Distribution income
Total investment income/(loss)
Expenses
Responsible Entity’s fees
Management fees
Investor equalisation expense
Administrative and other expenses
Total expenses
Profit/(loss) for the period
Other comprehensive income
Total comprehensive income/(loss) for the period
Earnings per unit for profit attributable to unitholders of the Fund
YEAR ENDED
30 JUNE 2020
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
NOTES
$’000
$’000
514
489
12
12
944
28,012
29,470
142
3,374
857
419
4,792
24,678
–
24,678
243
3,342
4,074
26
576
144
42
788
3,286
–
3,286
Basic and diluted gain/(loss) per unit (cents)
9
14.94
2.19
The above statement of comprehensive income should be read in conjunction with the accompanying notes.
STATEMENT OF FINANCIAl POSITION
AS AT 30 JUNE 2020
Assets
Cash and cash equivalents
Interest receivable
Distributions receivable
GST receivable
Financial assets
Total assets
Liabilities
Distributions payable
Responsible Entity’s fees payable
Management fees payable
Other payables
Total liabilities
MCP Income Opportunities Trust
Annual Report
15
AS AT
30 JUNE 2020
AS AT
30 JUNE 2019
NOTES
$’000
$’000
10
1,083
28,488
–
3,703
86
90
3,342
53
5
346,356
271,715
351,228
303,688
8
12
12
3,341
106
314
83
3,844
3,049
26
344
32
3,451
Net assets attributable to unitholders – equity
7
347,384
300,237
The above statement of financial position should be read in conjunction with the accompanying notes.
16
MCP Income Opportunities Trust
Annual Report
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2020
Total equity at the beginning of the period
Comprehensive income for the period
Profit/(loss) for the period
Total comprehensive income for the period
Transactions with unitholders
Capital raising – Initial Public Offering (IPO)
Capital raising
Units issued upon reinvestment of distributions
Distributions paid and payable
Total transactions with unitholders
YEAR ENDED
30 JUNE 2020
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
$’000
300,237
24,678
24,678
$’000
–
3,286
3,286
–
300,000
45,000
1,227
(23,758)
22,469
–
(3,049)
296,951
NOTES
7
7
7, 8
Total equity at the end of the period
347,384
300,237
The above statement of changes in equity should be read in conjunction with the accompanying notes.
MCP Income Opportunities Trust
Annual Report
17
STATEMENT OF CASH FlOWS
FOR THE YEAR ENDED 30 JUNE 2020
YEAR ENDED
30 JUNE 2020
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
NOTES
$’000
$’000
Cash flows from operating activities
Interest received
Net investor equalisation expense paid
Distribution income received
Management fees paid
Responsible Entity’s fees paid
Administration and other expenses paid*
Net cash inflow/(outflow) from operating activities
10
Cash flows from investing activities
Purchase of financial assets
Investment manager loan drawdown
Net cash inflow/(outflow) from investing activities
Cash flows from financing activities
Proceeds from application by unitholders
Distributions paid to unitholders
Net cash inflow/(outflow) from financing activities
Net increase/(decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the period
Cash and cash equivalents at the end of the period
10
141
(48)
27,652
(3,405)
(62)
(408)
23,870
(73,500)
(570)
(74,070)
45,000
(22,205)
22,795
(27,405)
28,488
1,083
325
–
–
(232)
–
(73)
20
(270,435)
(1,097)
(271,532)
300,000
–
300,000
28,488
–
28,488
* Administration expenses line item has been removed and merged in Other expenses in current year as compared to prior year.
The above statement of cash flows should be read in conjunction with the accompanying notes.
18
MCP Income Opportunities Trust
Annual Report
NOTES TO THE FINANCIAl STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2020
CONTENTS
1 General information
2 Summary of significant accounting policies
3 Financial risk management
4 Fair value measurements
5 Financial assets
6 Structured entities
7 Net assets attributable to unitholders
8 Distributions to unitholders
9 Earnings per unit
10 Reconciliation of profit/(loss) to net cash
inflow/(outflow) from operating activities
11 Auditor’s remuneration
12 Related party transactions
13 Segment information
14 Significant changes in state of affairs
15 Events occurring after the reporting period
16 Contingent assets and liabilities and commitments
18
18
23
28
30
30
31
32
33
33
34
34
36
36
37
37
1 GENERAl INFORMATION
These financial statements covers the MCP Income
Opportunities Trust (the “Fund”) as an individual entity.
The Fund was constituted on 25 February 2019, registered
with the Australian Securities and Investments Commission
on 7 February 2019, commenced operations on 23 April 2019
and its units commenced trading on the Australian Securities
Exchange (ASX: MOT) on 29 April 2019. The Fund will terminate
in accordance with the provisions of the Fund’s Constitution.
The Trust Company (RE Services) Limited
(ABN 45 003 278 831, AFSL 235 150) is the Responsible
Entity of the Fund (the “Responsible Entity”). The Responsible
Entity’s registered office is Level 18 Angel Place, 123 Pitt Street,
Sydney, NSW 2000.
The Investment Manager of the Fund is Metrics Credit
Partners Pty Ltd (AFSL 416 146).
The Custodian of the Fund is Perpetual Corporate
Trust Limited.
The Fund’s investment strategy is to create a diversified
exposure to private credit investments and other assets
such as warrants, options, preference shares and equity.
Through active portfolio risk management, the Investment
Manager seeks to provide quarterly cash income and
preserve investor capital. Amounts raised by the Fund are
invested in the MCP Wholesale Income Opportunities Trust.
The MCP Wholesale Income Opportunities Trust invests
directly in wholesale funds or directly in investment assets.
The financial statements were authorised for issue by the
directors of the Responsible Entity (the “Directors of the
Responsible Entity”) on 25 August 2020. The Directors
of the Responsible Entity have the power to amend and
reissue the financial statements.
2 SUMMARY OF SIGNIFICANT ACCOUNTING POlICIES
The principal accounting policies applied in the preparation
of these financial statements are set out below.
(a) Basis of preparation
These general purpose financial statements have been
prepared in accordance with Australian Accounting
Standards and Interpretations issued by the Australian
Accounting Standards Board (“AASB”) and the Corporations
Act 2001 in Australia. The Fund is a for‑profit entity for the
purpose of preparing the financial statements.
MCP Income Opportunities Trust
Annual Report
19
The financial statements are prepared on the basis of fair
value measurement of assets and liabilities except where
otherwise stated.
The statement of financial position is presented on a liquidity
basis. Assets and liabilities are presented in decreasing order
of liquidity and are not distinguished between current and
non‑current. All balances are generally expected to be
recovered or settled within twelve months, except for
investments in financial assets and net assets attributable to
unitholders. The amount to be recovered or settled in twelve
months in relation to these balances remain subject to the
performance of the Fund and its operations in accordance
with the Constitution. Investors in the Fund have no rights
to redeem and can only sell units on the ASX. The Fund is
operated by the Investment Manager to ensure the investment
in MCP Wholesale Income Opportunities Trust are held
at fair value.
Investment Entity
The Fund has been deemed to meet the definition of
an investment entity, as the following conditions exist:
(i) Compliance with International Financial Reporting
Standards (IFRS).
The financial statements of the Fund also comply
with International Financial Reporting Standards and
Interpretations as issued by the International Accounting
Standards Board (IASB).
(ii) New and amended standards adopted by the Fund
There are no standards, interpretations or amendments
to existing standards that are effective for the first time for
the financial year beginning 1 July 2019 that have a material
impact on the amounts recognised in the prior period or will
affect the current or future periods.
(iii) New accounting standards and interpretations
not yet adopted.
A number of new standards, amendments to standards and
interpretations are effective for annual reporting periods
beginning after 1 July 2020. Management has made an
assessment and concluded that none of these are expected
to have a material impact on the financial statements.
> The Fund has obtained funds for providing investors
(b) Financial instruments
with investment management services;
> The Fund’s business purpose, which was communicated
directly to investors, is investing solely for returns from
capital appreciation and investment income; and
> The performance of investments made through the
Fund are measured and evaluated on a fair value basis.
Refer to note 6 for further details.
The MCP Income Opportunities Trust and the MCP
Wholesale Income Opportunities Trust were formed
due to legal, regulatory, tax or similar requirements.
When considered together they display the
characteristics of an investment entity:
(a) the Fund indirectly holds more than one investment
because the wholesale funds holds a portfolio
of investments;
(b) the MCP Wholesale Income Opportunities Trust
is largely wholly capitalised by the Fund, the Fund
is funded by more than one investor who are
related to the Fund; and
(c) ownership in the Fund and the MCP Wholesale Income
Opportunities Trust are represented by the Fund interests
to which a proportion of the net assets of the investment
entity are attributed.
(i) Classification
> Assets
The Fund classifies its investments based on its business
model for managing those financial assets and the contractual
cash flow characteristics of the financial assets. The Fund’s
portfolio of financial assets is managed and performance is
evaluated on a fair value basis in accordance with the Fund’s
documented investment strategy. The Fund’s policy is for the
Responsible Entity to evaluate the information about these
financial assets on a fair value basis together with other
related financial information.
The Fund holds financial assets, comprising of unlisted unit
trusts, which are measured at fair value through profit or loss.
The Fund holds financial assets including loans which are
classified and measured at amortised cost, as the loans are
held to maturity and to collect contractual cash flows.
> Liabilities
The Fund holds derivative contracts that have a negative
fair value are presented as liabilities at fair value through
profit or loss. The Fund holds financial liabilities comprising
of distribution and fee payables, which are classified and
measured at amortised cost.
20
MCP Income Opportunities Trust
Annual Report
(ii) Recognition/derecognition
The Fund recognises financial assets and financial liabilities
on the date it becomes party to the contractual agreement
(trade date) and recognises changes in fair value of the
financial assets or financial liabilities from this date.
Investments are derecognised when the right to receive cash
flows from the investments have expired or the Fund has
transferred substantially all risks and rewards of ownership.
Any gains or losses arising on derecognition of the asset
held at fair value through profit and loss (calculated as the
difference between the disposal proceeds and the carrying
amount of the asset) are included in the statement of
comprehensive income in the period the asset is derecognised
as realised gains or losses on financial instruments.
(iii) Measurement
> Financial assets and liabilities held at fair value through
profit or loss
At initial recognition, the Fund measures financial assets and
financial liabilities at fair value. Transaction costs of financial
assets and financial liabilities carried at fair value through
profit or loss are expensed in the statement of
comprehensive income.
Subsequent to initial recognition, all financial assets and
financial liabilities at fair value through profit or loss are
measured at fair value. Fair value is the price that would be
received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the
measurement date. Fair value is calculated as the present
value of expected cash flows arising from the asset having
regard to current market prices and returns for assets of
comparable credit quality, terms and contracted remaining
term to maturity. Gains and losses arising from changes in
the fair value of the financial assets or financial liabilities at
fair value through profit or loss category are presented in the
statement of comprehensive income within ‘net gains/(losses)
on financial instruments at fair value through profit or loss’
in the period in which they arise.
Further details on how the fair value of financial instruments
are determined are disclosed in note 4.
> Other financial assets and liabilities
Management considers that the carrying amount of cash
and cash equivalents, loans and receivables approximate
fair value.
Other financial liabilities are initially measured at fair value
and subsequently at amortised cost. Management considers
the carrying amount of payables approximate fair value.
(iv) Offsetting financial instruments
Financial assets and liabilities are offset and the net amount
reported in the statement of financial position when there is
a legally enforceable right to offset the recognised amounts
and there is an intention to settle on a net basis, or realise
the asset and settle the liability simultaneously.
(v) Impairment
At each reporting date, the Fund shall measure the loss
allowance on financial assets at amortised cost (cash, loans
and receivables) at an amount equal to the lifetime expected
credit losses (ECL) if the credit risk has increased significantly
since initial recognition. If, at the reporting date, the credit
risk has not increased significantly since initial recognition,
the Fund shall measure the loss allowance at an amount
equal to 12‑month ECL. Significant financial difficulties of the
counter party, probability that the counter party will enter
insolvency or require financial reorganisation, and default in
payments are all considered indicators that a loss allowance
may be required. If the credit risk increases to the point that
it is considered to be credit impaired, interest income will
be calculated based on the amortised cost. A significant
increase in credit risk is defined by management as any
contractual payment which is more than 30 days past due.
Any contractual payment which is more than 90 days past
due is considered credit impaired.
(c) Net assets attributable to unitholders – equity
Units in the Fund are listed on the ASX and traded by
unitholder’s and are classified as equity. The units can be
traded on the ASX at any time for cash based on listed price.
While the Fund is a listed investment and liquidity is generally
expected to exist in the secondary market (ASX), there are
no guarantees that an active trading market with sufficient
liquidity will be available. In addition to units being traded
on the ASX, under the Constitution, request for redemption
to the Responsible Entity may be made, however redemption
is dependent on the Responsible Entity’s discretion
(see note 2 (m)).
The units issued by the Fund meet the requirements
of AASB 132 for classification as equity.
MCP Income Opportunities Trust
Annual Report
21
(d) Cash and cash equivalents
(h) Distributions
Cash comprises cash on hand, deposits held at call with
financial institutions. Cash equivalents are short‑term, highly
liquid investments with an original maturity of three months or
less that are readily convertible into known amounts of cash,
are subject to an insignificant risk of changes in value and are
held for the purpose of meeting short‑term cash commitments
rather than for investment or other purposes.
(e) Investment income
(i) Interest income
The Fund generates interest income from its investments in
financial assets, loans, and cash investments. Interest income
from financial assets at amortised cost is recognised using
the effective interest method and includes interest from cash
and cash equivalents. Interest income from financial assets
at amortised cost is recognised using the effective interest
method and includes interest from cash and cash equivalents.
Interest income is recognised daily as it accrues, taking into
account the actual interest rate on the financial asset and
is recognised in profit or loss.
(ii) Distribution income
Distribution income from financial assets at fair value through
profit or loss is recognised in the statement of comprehensive
income within distribution income when the Fund’s right to
receive payments is established.
(f) Expenses
All expenses, including Responsible Entity fees, investor
equalisation expense (refer to Note 5 for further detail) and
administrative expenses, are recognised in the statement
of comprehensive income on an accruals basis.
Interest expense is recognised in the statement of
comprehensive income as it accrues, using the effective
interest method.
(g) Income tax
The Fund is not subject to income tax provided the taxable
income of the Fund is attributed in full to its unitholders each
financial year either by way of cash or reinvestment. Unitholders
are subject to income tax at their own marginal tax rates on
amounts attributable to them.
In accordance with the Fund’s Constitution, the Fund may
attribute its distributable (taxable) income, and any other
amounts determined by the Responsible Entity, to unitholders
by cash or reinvestment. The distributions are recognised
in the statement of changes in equity as equity.
Financial instruments at fair value may include unrealised
capital gains. Should such a gain be realised, that portion of
the gain that is subject to capital gains tax will be distributed
so that the Fund is not subject to capital gains tax.
Realised capital losses are not distributed to unitholders
but are retained in the Fund to be offset against any realised
capital gains. If realised capital gains exceed realised capital
losses, the excess is distributed to unitholders.
(i) Increase/decrease in net assets attributable to unitholders
Income not distributed is included in net assets attributable
to unitholders. As the Fund’s units are classified as equity,
movements in net assets attributable to unitholders are
recognised in the statement of changes in equity.
(j) Foreign currency translation
(i) Functional and presentation currency
Items included in the Fund’s financial statements are
measured using the currency of the primary economic
environment in which it operates (the “functional currency”).
This is the Australian dollar, which reflects the currency of
the economy in which the Fund competes for funds and
is regulated. The Australian dollar is also the Fund’s
presentation currency.
(k) Receivables
Loans and receivables are measured initially at fair value
plus transaction costs and subsequently at amortised cost;
using the effective interest rate method, less impairment
losses if any. In order to be measured at amortised cost, the
loan or receivable must meet both the following conditions;
(i) it is held within a business model whose objective is to
hold assets to collect contractual cashflows, and (ii) its
contractual terms give rise on specified dates to cash flows
that are solely payments of principal and interest (“SPPI”) on
the principal amount outstanding. Such assets are reviewed
at each reporting date to determine whether there is
objective evidence of impairment.
22
MCP Income Opportunities Trust
Annual Report
At each reporting date, the Fund shall measure the loss
allowance on receivables at an amount equal to the lifetime
expected credit losses if the credit risk has increased
significantly since initial recognition. If, at the reporting date,
the credit risk has not increased significantly since initial
recognition, the Fund shall measure the loss allowance
at an amount equal to 12‑month expected credit losses.
Receivables may include amounts for interest and trust
distributions. Interest is accrued at each dealing date
in accordance with policy set out in note 2(e) above.
Trust distributions are accrued when the right to receive
payment is established. Amounts are generally received
within 30 days of being recorded as receivables.
Receivables are measured at their nominal amounts.
Receivables also include such items as Reduced Input
Tax Credits (RITC).
Collectability of trade receivables is reviewed on an ongoing
basis. Debts which are known to be uncollectible are written
off by reducing the carrying amount directly. An allowance
account (provision for impairment of trade receivables) is
used when there is objective evidence that the Fund will not
be able to collect all amounts due according to the original
terms of the receivables. Significant financial difficulties of
the debtor, probability that the debtor will enter insolvency or
require financial reorganisation, and default or delinquency
in payments (more than 30 days overdue) are considered
indicators that the trade receivable is impaired. The amount
of the impairment allowance is the difference between the
asset’s carrying amount and the present value of estimated
future cash flows, discounted at the original effective interest
rate. Cash flows relating to short‑term receivables are not
discounted if the effect of discounting is immaterial.
The amount of the impairment loss, if any, is recognised
in the Statement of comprehensive income within other
expenses. When a trade receivable for which an impairment
allowance had been recognised becomes uncollectible in
a subsequent period, it is written off against the allowance
account. Subsequent recoveries of amounts previously
written off are credited against other expenses in the
statement of comprehensive income.
(l) Payables
Payables include liabilities and accrued expenses owed by the
Fund which are unpaid as at the end of the reporting period.
Payables may include amounts for redemptions of units
in the Fund where settlement has not yet occurred.
These amounts are unsecured and are usually paid
within 30 days of recognition.
The distribution amount payable to unitholders as at the
end of each reporting year is recognised separately in the
Statement of financial position as a payable when determined
by Responsible Entity in accordance to the Fund’s Constitution.
(m) Applications and redemptions
Applications received for units in the Fund are recorded
net of any transaction costs payable prior to the issuance
of units in the Fund.
In accordance with the Constitution, the Responsible Entity
may determine to reject a redemption request in its absolute
discretion. The Responsible Entity is not obliged under any
circumstances to pay any part of the redemption price out
of its own funds.
The redemption transaction costs are an estimate by the
Responsible Entity of the total transaction cost the Fund
would incur selling the Trust Property/Units. If appropriate,
the Responsible Entity may apply estimate redemption
transaction costs in regard to the actual cost incurred from
the redemption. If the Responsible Entity makes no estimate,
the redemption transaction costs are zero.
(n) Goods and Services Tax (GST)
The GST incurred on the costs of various services provided
to the Fund by third parties such as audit fees, custodian
services and management fees have been passed onto the
Fund. The Fund qualifies for RITC, hence Management fees,
Administration and custody fees and other expenses have
been recognised in the statement of comprehensive income
net of the amount of GST recoverable from the Australian
Taxation Office (“ATO”). Accounts payable are inclusive of
GST. The net amount of GST recoverable from the ATO is
included in receivables in the statement of financial position.
Cash flows relating to GST are included in the statement
of cash flows on a gross basis.
MCP Income Opportunities Trust
Annual Report
23
(o) Use of estimates and judgement
3 FINANCIAl RISK MANAGEMENT
The Fund makes estimates and assumptions that affect the
reported amounts of assets and liabilities within the next
financial year. Estimates are continually evaluated and are
based on historical experience and other factors, including
expectations of future events that are believed to be
reasonable under the circumstances.
For the majority of the Fund’s financial instruments, quoted
market prices are readily available. However, certain financial
instruments, including unquoted securities are fair valued
using valuation techniques determined by the Investment
Manager, in accordance with the valuation procedures
approved by the Responsible Entity. Where valuation
techniques (for example, pricing models) are used to
determine fair values, they are validated and periodically
reviewed by experienced personnel of the Investment
Manager, independent of the area that created them.
Models use observable data, to the extent practicable.
However, areas such as credit risk (both own and
counterparty), volatilities and correlations require
management to make estimates. Changes in assumptions
about these factors could affect the reported fair value
of financial instruments.
For certain other balances reported on statement of financial
position, including amounts due from/to brokers, accounts
payable and accrued expenses, the carrying amounts
approximate fair value due to the immediate or short‑term
nature of these financial instruments.
(a) Overview
The Fund’s activities expose it to a variety of financial risks.
The management of these risks is undertaken by the Fund’s
Investment Manager who has been appointed by the
Responsible Entity (“RE”) under an Investment Management
Agreement to manage the Fund’s assets in accordance
with the Investment Objective and Strategy.
The RE has in place a framework which includes:
> The Investment Manager providing the RE with regular
reports on their compliance with the Investment
Management Agreement;
> Completion of regular reviews on the Service Provider
which may include a review of the investment managers
risk management framework to manage the financial
risks of the Fund; and
> Regular reporting on the liquidity of the Fund in accordance
with the Fund’s Liquidity Risk Management Statement.
The Fund’s Investment Manager has in place a framework
to identify and manage the financial risks in accordance
with the investment objective and strategy. This includes
an investment due diligence process and on‑going
monitoring of the investments in the Fund. Specific controls
the Investment Manager applies to manage the financial risks
are detailed under each risk specified below and in the
Product Disclosure Statement (PDS) available on the
Investment manager’s website.
(p) Rounding of amounts
(b) Market risk
The Fund is an entity of a kind referred to in ASIC
Corporations (Rounding in Financial/Directors’ Reports)
Instrument 2016/191 issued by the Australian Securities and
Investments Commission (ASIC) relating to the “rounding off”
of amounts in the financial statements. Amounts in the
financial statements have been rounded to the nearest
thousand dollars in accordance with the ASIC Corporations
Instrument, unless otherwise indicated.
Market risk is the risk that the fair value or future cash flows
of a financial instrument will fluctuate due to the changes in
market variables such as interest rates, foreign exchange
rates and equity prices.
(i) Price risk
Market price risk is the risk that the value of a financial
instrument will fluctuate as a result of changes in market
prices, whether those changes are caused by factors
specific to the individual instrument or factors affecting
all instruments in the market.
24
MCP Income Opportunities Trust
Annual Report
The Fund invests in corporate loans and debt securities
indirectly through its investment in MCP Wholesale Income
Opportunities Trust. As a result, the Investment Manager
manages this risk through the daily review of the carrying
value of each of the assets held by the Wholesale Funds
having regard to the market prices of similar assets being
transacted in both the primary and secondary market for
assets of similar credit quality, tenor and loan purpose.
Any adjustment to the fair value of the investment is
reflected through profit or loss.
As at period end, the overall market exposures were
as follows:
Interest rate duration risk is minimised as individual
borrowers under loan contracts generally have the flexibility
to select interest rate reset periods from 30 to 180 days.
In addition to the ongoing short term re‑setting of the market
benchmark interest rate most loan facilities incorporate a
contractual mechanism to re‑price based on migration of
credit quality over the term of the facility. This is known
as a credit margin pricing grid and incorporates changes
to the credit margin based on certain key credit metrics.
The Fund’s interest‑bearing financial assets and liabilities
expose it to risks associated with the effects of fluctuations
in the prevailing levels of market interest rates on its
financial position and cash flows.
AS AT
30 JUNE 2020
AS AT
30 JUNE 2019
FAIR VALUE
$’000
FAIR VALUE
$’000
338,640
264,196
7,716
7,519
Financial assets
MCP Wholesale Income
Opportunities Trust
Investment manager
loan asset
(ii) Interest rate risk
Interest rate risk is the risk that the value of a financial
instrument will fluctuate due to changes in market
interest rates.
The Fund invests (through the MCP Wholesale Income
Opportunities Trust) primarily in floating rate loans meaning
that as the underlying base rate rises and falls, the relative
attractiveness to other instruments may change.
The investment manager believes there is a strong
correlation between the RBA Cash Rate and the base
rates upon which loans are priced. Absolute returns
on loans therefore rise and fall largely in correlation
with the RBA Cash Rate.
MCP Income Opportunities Trust
Annual Report
25
The tables below summarise the Fund’s exposure to interest rate risk.
WEIGHTED
AVERAGE
EFFECTIVE
INTEREST
RATE
%
FLOATING
INTEREST
RATE
$’000
FIXED
INTEREST
RATE
$’000
NON-
INTEREST
BEARING
$’000
0.66%
1,083
6%*
–
–
–
–
1,083
–
–
TOTAL
$’000
1,083
0
3,703
86
–
–
–
–
–
0
3,703
86
7,716
7,716
338,640
346,356
342,429
351,228
–
–
3,341
106
314
83
3,341
106
314
83
–
1,083
–
3,844
3,844
7,716
338,585
347,384
1.25%
28,488
6%*
–
–
–
–
28,488
–
–
–
–
–
–
–
–
–
–
90
3,342
53
28,488
90
3,342
53
7,519
7,519
264,196
271,715
267,681
303,688
–
–
–
–
–
3,049
3,049
26
344
32
26
344
32
3,451
3,451
28,488
7,519
264,230
300,237
AT 30 JUNE 2020
Financial assets
Cash and cash equivalents
Interest receivable
Distributions receivable
GST receivable
Financial assets
Total financial assets
Financial liabilities
Distributions payable
Responsible Entity’s fees payable
Management fees payable
Other payables
Total financial liabilities
Net exposure
AT 30 JUNE 2019
Financial assets
Cash and cash equivalents
Interest receivable
Distributions receivable
GST receivable
Financial assets
Total financial assets
Financial liabilities
Distributions payable
Responsible Entity’s fees payable
Management fees payable
Other payables
Total financial liabilities
Net exposure
*Weighted effective interest rate only applies to loan assets.
26
MCP Income Opportunities Trust
Annual Report
At 30 June 2020, should interest rates have increased/
decreased by 25 basis points (2019: 75 basis points) with
all other variables remaining constant, the increase/decrease
in net assets attributable to unitholders and profit/loss
for the year would amount to approximately $21,682
(2019: $211,000).
(iii) Currency risk
Currency risk is the risk that the value of financial instruments
will fluctuate due to changes in foreign exchange rates.
As at 30 June 2020, the Fund did not hold any assets or
liabilities denominated in currencies other than the Australian
Dollar and therefore was not exposed to any foreign
exchange risk.
(c) Credit risk
Credit risk is the risk that an issuer or counterparty will
be unable or unwilling to pay amounts in full when due.
The Investment Manager manages credit risk by undertaking
a detailed due diligence process prior to entering into
transactions with counterparties and ongoing daily
monitoring of the credit exposures.
The initial due diligence process is detailed in the
Operational and Investment Policies of the Investment
Manager and addresses aspects relevant to an assessment
of the credit risk and includes risk assessments of both a
qualitative and quantitative nature. Pre‑lending due diligence
may include independent experts reports provided to the
Investment Manager covering matters such as commercial/
industry risks, accounting and tax reports, legal due diligence,
property valuation, technical risk reports and environmental
reports. As part of the initial due diligence risk assessment
process key risks are identified and the key determinants of
future cash flows and servicing capacity of the counterparty
are identified. Scenario planning and sensitivity testing is
undertaken to model the impact on counterparty credit risk
under a range of adverse events. Financial analysis and
peer group benchmarking is undertaken to determine the
appropriate credit metrics and a credit rating identified and
allocated. The Investment Manager uses a range of proprietary
credit rating data and analysis in addition to credit research
materials from third party providers including credit rating
agencies to analyse and monitor counterparty credit risk.
The Investment Manager further seeks to mitigate credit risk
by adhering to the investment parameters of the Fund which
have been designed in a manner that seeks to mitigate credit
risk by ensuring the portfolio is diversified by industry,
counterparty, credit quality, maturity and loan market.
The Investment Manager maintains active engagement with
other market participants and meets regularly and receives
regular reporting from banks, borrowers and ratings agencies
and uses this reporting to manage and monitor performance
of financial assets held by the Fund. Such reporting includes
macro‑economic risk and analysis reporting.
The Investment Manager is provided with ongoing
compliance reporting from borrowers which typically includes
the provision of covenant compliance certificates, financial
accounts, operational management reporting and forward
financial projections and ongoing reporting of performance
against budget projections.
The Investment Committee of the Investment Manager aims
to meet weekly to monitor reporting and financial obligations
of counterparties, reconciles payment of interest and fees
and reviews credit, market and liquidity risks of each financial
asset held in the portfolio. Any payment arrears is monitored
on a daily basis and reported to the Investment Committee.
The Fund’s exposure to credit risk for cash and cash
equivalents is low as all counterparties have a rating of A‑1+
(as determined by public ratings agencies such as Standard &
Poor’s, Moody’s or Fitch) or higher. The Fund is also exposed
to credit risk on corporate loans and debt securities through
its investments in MCP Wholesale Income Opportunities Trust.
Corporate loans and debt securities are rated by the
Investment Manager in accordance with its ratings
methodology, and may also be rated by public ratings
agencies such as Standard & Poor’s, Moody’s or Fitch.
Where a corporate loan or debt security is publicly rated,
it is the Investment Manager’s policy to apply the lower of a
public credit rating or the Investment Manager’s own credit
rating. The Fund’s exposure to credit risk is monitored and
managed on a daily basis, and credit ratings are reviewed and
confirmed as part of the Investment Manager’s investment
processes. Credit risk is managed through daily investment
analysis (reporting, covenant compliance, management and
market engagement) as well as through portfolio construction.
The Fund has defined targets and limits based on both
individual counterparty credit quality as well as total
aggregated credit exposure levels. By limiting credit risk
MCP Income Opportunities Trust
Annual Report
27
exposure to individual investments based on credit quality
and also limiting the total aggregated exposure to investments
of a defined credit quality, the Fund’s acceptable level of
credit risk is defined and controlled. Credit risk management
is ongoing and the Investment Manager adopts an active
approach to monitoring and managing these risks.
The Investment Manager adheres to the portfolio investment
parameters set out in the offer document of the Fund.
Credit risk is managed with regard to individual counterparty
credit quality and single counterparty exposure limits.
The Investment Manager seeks to manage portfolio risks
by diversifying risks with portfolio construction adhering
to diversification by credit quality, individual counterparty,
industry and contracted maturity profile of assets held within
the portfolio. The Investment Manager seeks to manage
risk by investing in shorter dated credit assets with the
expectation that the weighted tenor to contracted maturity
is within the target portfolio parameters. The portfolio
construction and investment management processes
adopted by the Investment Manager are implemented
with the expectation of seeking to reduce Fund exposure
to both credit and market risks.
The Fund provided a working capital loan to the Investment
Manager. The Responsible Entity has a right of recourse
against the Investment Manager for the amounts owned
under the Manager Loan. The Investment Manager may
assign its obligations under the Investment Manager Loan
to an entity that is controlled by the Investment Manager
or a person that is under the common control of the
Investment Manager.
(d) Liquidity risk
Liquidity risk is the risk that the Fund may not be able to
generate sufficient cash resources to settle its obligations
in full as they fall due and can only do so on terms that
are materially disadvantageous.
The Investment Manager monitors the Fund’s cash flow
requirements and undertakes cash flow forecasts including
capital budgeting on a daily basis. Cash flow reconciliations
are undertaken daily to ensure all income and expenses are
managed in accordance with contracted obligations.
The table below analyses the Fund’s non‑derivative
financial liabilities into relevant maturity groupings based
on the remaining period to contractual maturity, as of the
reporting period end. The amounts in the table are the
contractual undiscounted cash flows. Balances that are
due within 12 months equal their carrying balances as
the impact of discounting is not significant.
AT 30 JUNE 2020
Distributions payable
Responsible Entity’s fees payable
Management fees payable
Other payables
Total financial liabilities
AT 30 JUNE 2019
Distributions payable
Responsible Entity’s fees payable
Management fees payable
Other payables
Total financial liabilities
LESS THAN
1 MONTH
$’000
1–6
MONTHS
$’000
6–12
MONTHS
$’000
OVER
12 MONTHS
$’000
NO STATED
MATURITY
$’000
3,341
106
314
83
3,844
3,049
26
344
32
3,451
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
28
MCP Income Opportunities Trust
Annual Report
4 FAIR VAlUE MEASUREMENTS
The Fund measures and recognises the following assets
and liabilities at fair value on a recurring basis.
> Financial assets/liabilities at fair value through profit
or loss (FVTPL) (see note 5)
The Fund has no assets or liabilities measured at fair value
on a non‑recurring basis in the current reporting period.
AASB 13 requires disclosure of fair value measurements
by level of the following fair value hierarchy:
(a) quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1);
(b) inputs other than quoted prices included within level 1
that are observable for the asset or liability, either directly
or indirectly (level 2); and
(c) inputs for the asset or liability that are not based on
observable market data (unobservable inputs) (level 3).
(i) Fair value in an active market (level 1)
The fair value of financial assets and liabilities traded in
active markets is based on their quoted market prices
at the end of the reporting period without any deduction
for estimated future selling costs.
The Fund values its investments and derivatives in
accordance with the accounting policies set out in note 2
to the financial statements. For the majority of investments,
information provided by independent pricing services is
relied upon for valuation of investments.
The quoted market price used to fair value financial
assets and financial liabilities held by the Fund is the
last‑traded prices.
A financial instrument is regarded as quoted in an active
market if quoted prices are readily and regularly available
from an exchange, dealer, broker, industry group, pricing
service, or regulatory agency, and those prices represent
actual and regularly occurring market transactions on an
arm’s length basis.
An active market is a market in which transactions for the
asset or liability take place with sufficient frequency and
volume to provide pricing information on an ongoing basis.
(ii) Fair value in an inactive or unquoted market
(Level 2 and Level 3)
The fair value of financial assets and liabilities that are not
exchange‑traded in an active market is determined using
valuation techniques. These include the use of recent arm’s
length market transactions, reference to the current fair value
of a substantially similar other instrument, discounted cash
flow techniques, option pricing models or any other valuation
technique that provides a reliable estimate of prices obtained
in actual market transactions. If all significant inputs required
to fair value an instrument are observable, the instrument
is included in level 2. If one or more of the significant inputs
is not based on observable market data, the instrument is
included in level 3. This may be the case for certain corporate
debt securities and unlisted unit trusts with suspended
applications and withdrawals.
Where discounted cash flow techniques are used, estimated
future cash flows are based on management’s best estimates
and the discount rate used is a market rate at the end of the
reporting period applicable for an instrument with similar
terms and conditions.
For other pricing models, inputs are based on market data
at the end of the reporting period.
Some of the inputs to these models may not be market
observable and are therefore estimated based on assumptions.
The output of a model is always an estimate or approximation
of a value that cannot be determined with certainty, and
valuation techniques employed may not fully reflect all factors
relevant to the positions the Fund holds. Valuations are
therefore adjusted, where appropriate, to allow for additional
factors including liquidity risk and counterparty risk.
The carrying value less impairment provision of other
receivables and payables are assumed to approximate their
fair values. The fair value of financial liabilities for disclosure
purposes is estimated by discounting the future contractual
cash flows at the current market interest rate that is available
to the Fund for similar financial instruments.
The determination of what constitutes ’observable’ requires
significant judgment by management. Management consider
observable data to be that market data that is readily
available, regularly distributed or updated, reliable and
verifiable, not proprietary and provided by independent
sources that are actively involved in the relevant market.
MCP Income Opportunities Trust
Annual Report
29
Recognised fair value measurements
The following table presents the Fund’s financial assets and liabilities measured and recognised at fair value as at
30 June 2020 and 30 June 2019.
30 JUNE 2020
Financials assets
MCP Wholesale Income Opportunities Trust
Investment manager loan asset
Total
JUNE 30,2019
Financials assets
MCP Wholesale Income Opportunities Trust
Investment manager loan asset
Total
(i) Transfers between levels
LEVEL 1
$’000
LEVEL 2
$’000
LEVEL 3
$’000
TOTAL
$’000
–
–
–
–
–
–
338,640
–
338,640
–
338,640
7,716
7,716
7,716
346,356
264,196
–
264,196
–
264,196
7,519
7,519
7,519
271,715
The Fund’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.
There were no transfers between the levels in the fair value hierarchy for the period ended 30 June 2019.
(ii) Fair value measurements using significant unobservable inputs (level 3)
The following table present the movement in level 3 instruments, by class of financial instruments, for the period ended
30 June 2019.
YEAR ENDED 30 JUNE 2020
Opening balance
Drawdown by Investment Manager
IEE
Interest accrued
Closing balance
PERIOD 7 FEBRUARY 2019 TO 30 JUNE 2019
Opening balance
Loan provided to Investment Manager
Drawdown by Investment Manager
IEE
Interest accrued
Closing balance
INVESTMENT
MANAGER
LOAN
ASSETS
$’000
7,519
570
(835)
462
7,716
–
6,482
1,097
(134)
74
7,519
TOTAL
$’000
7,519
570
(835)
462
7,716
–
6,482
1,097
(134)
74
7,519
30
MCP Income Opportunities Trust
Annual Report
(iii) Valuation processes
Investment manager loan assets are classified and measured
at amortised costs.
(iv) Fair values of other financial instruments
The Fund did not hold any financial instruments which were
not measured at fair value in the statement of financial
position. Due to their short‑term nature, the carrying amounts
of receivables and payables are assumed to approximate fair
value. Net assets attributable to unitholders’ carrying value
may differ from its par value (deemed to be redemption price
for individual units) due to differences in valuation inputs.
This difference is not material in the current period.
5 FINANCIAl ASSETS
MCP Wholesale Income Opportunities Trust
Investment manager loan asset
AS AT
30 JUNE 2020
$’000
AS AT
30 JUNE 2019
$’000
338,640
264,196
7,716
346,356
7,519
271,715
> Investment manager loan asset
6 STRUCTURED ENTITIES
The Fund provided a working capital loan to the
Investment Manager. Over a period of ten years the
Investment Manager will repay the Investment Manager
Loan, including payment of interest on the loan which
will be interest income to the Fund.
> Investor equalisation expense (IEE)
In consideration for the Investment Manager providing
advisory and management services to the Fund under
the Investment Management Agreement, the Investment
Manager is paid an IEE. The IEE is a monthly expense to
the Fund calculated based on NAV and payable to the
Investment Manager for a period of 10 years from
25 February 2019.
An overview of the risk exposure relating to financial assets
at fair value through profit or loss is included in note 3.
A structured entity is an entity that has been designed so that
voting or similar rights are not the dominant factor in deciding
who controls the entity, and the relevant activities are directed
by means of contractual arrangements. An interest in a
structured entity is any form of contractual or non‑contractual
involvement which creates variability in returns arising from
the performance of the entity for the Fund. The Fund considers
investments in managed investment schemes (the “Schemes”)
to be structured entities. The Fund invests in Schemes for
the purpose of capital appreciation and/or earning
investment income.
The exposure to investments in related Schemes at fair
value, and any related amounts recognised in the statement
of comprehensive income is disclosed at Note 12 to the
financial statements.
The exposure to investments in related Schemes at fair value
that the Fund does not consolidate but in which it holds
an interest is disclosed in the following table:
MCP Wholesale Income Opportunities Trust
338,640
264,196
100
100
FAIR VALUE OF INVESTMENTS
AS AT
INTEREST HELD
AS AT
30 JUNE 2020
$’000
30 JUNE 2019
$’000
30 JUNE 2020
%
30 JUNE 2019
%
MCP Income Opportunities Trust
Annual Report
31
The Fund has exposures to structured entities through its
trading activities. The Fund typically has no other involvement
with the structured entity other than the securities it holds as
part of trading activities and its maximum exposure to loss is
restricted to the carrying value of the asset. The Fund does
not have current commitments or contractual obligations to
provide financial or other support to the structured entities.
Exposure to trading assets are managed in accordance with
financial risk management practices as set out in note 3(b).
During the year ended 30 June 2020, total gains/(losses)
incurred on investments in the Schemes were $944,063
(2019: $243,078). The Fund also earned distribution income
of $28,012,400 (2019: $3,341,729) as a result of its interests
in the Schemes.
7 NET ASSETS ATTRIBUTABlE TO UNITHOlDERS
Under AASB 132 Financial instruments: Presentation, puttable
financial instruments meet the definition of a financial liability
to be classified as equity where certain strict criteria are met.
The Fund does not have a contractual obligation to pay
distributions to unitholders. Therefore, the net assets
attributable to unitholders of the Fund meet the criteria
set out under AASB 132 and are classified as equity.
Movements in number of units and net assets attributable to unitholders during the period were as follows:
Opening balance
YEAR ENDED
30 JUNE 2020
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
NO. ’000
$’000
NO. ’000
$’000
150,000
300,237
–
–
Capital raising – Initial Public Offering (IPO)
–
–
150,000
300,000
Capital raising
22,500
45,000
Units issued upon reinvestment of distributions
Distributions paid and payable
Profit/(loss) for the period
Closing balance
As stipulated within the Fund’s Constitution, each unit
represents a right to an individual share in the Fund and
does not extend to a right to the underlying assets of the
Fund. There are no separate classes of units and each
unit has the same rights attaching to it as all other units
of the Fund.
1,227
(23,758)
611
–
–
24,678
150,000
–
–
–
–
–
(3,049)
3,286
173,111
347,384
150,000
300,237
Capital risk management
The fund is a closed‑end vehicle and accordingly there are
no redemptions by investors. Instead, while the Trust is listed,
unitholders who wish to exit their investments will be able to
do so via the ASX.
Units in the Fund are listed on the ASX and traded by
unitholders. The units can be traded on the ASX at any time
for cash based on the listed price. While the Fund is listed
and liquidity is generally expected to exist in the secondary
market (ASX), there are no guarantees that an active trading
market with sufficient liquidity will be available.
The fund classifies its net assets attributable to unitholders
as equity.
32
MCP Income Opportunities Trust
Annual Report
8 DISTRIBUTIONS TO UNITHOlDERS
Distributions are determined by reference to the net taxable income of the Fund. On 31 October 2019 the responsible entity
announced that the Fund intended to pay distributions on a monthly basis instead of quarterly. The first monthly payment was
made in respect to the period ending 31 October 2019.
The distributions for the period were as follows:
Distributions
30 September
31 October
30 November
31 December
31 January
28 February
31 March
30 April
31 May
30 June (payable)
Total
* Distribution is expressed as cents per unit amount in Australian Dollar.
YEAR ENDED
30 JUNE 2020
7 FEBRUARY 2019
TO 30 JUNE 2019
NO. ’000
$’000
CPU*
$’000
CPU*
5,355
1,503
2,160
1,884
1,781
1,833
2,318
1,852
1,731
3,341
3.57
1.00
1.25
1.09
1.03
1.06
1.34
1.07
1.00
1.93
23,758
14.34
3,049
3,049
2.03
2.03
MCP Income Opportunities Trust
Annual Report
33
9 EARNINGS PER UNIT
(b) Components of cash and cash equivalents
Earnings per unit amounts are calculated by dividing net
profit/(loss) attributable to unitholders before distributions
by the weighted average number of units outstanding
during the period.
Cash as at the end of the financial period as shown in the
statement of cash flows is reconciled to the statement of
financial position as follows:
Operating profit/
(loss) attributable to
unitholders ($’000)
Weighted average
number of units
on issue (‘000)
Basic and diluted
earnings per unit
(cents)
YEAR ENDED
30 JUNE 2020
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
24,678
3,286
Cash and cash
equivalents
YEAR ENDED
30 JUNE 2020
$’000
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
$’000
1,083
1,083
28,488
28,488
165,124
150,000
(c) Non-cash financing activities
14.94
2.19
YEAR ENDED
30 JUNE 2020
$’000
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
$’000
10 RECONCIlIATION OF PROFIT/(lOSS)
TO NET CASH INFlOW/(OUTFlOW) FROM
OPERATING ACTIVITIES
(a) Reconciliation of operating profit/(loss) to
net cash inflow/(outflow) from operating activities
YEAR ENDED
30 JUNE 2020
$’000
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
$’000
24,678
3,286
(944)
(271)
407
(183)
(3,485)
402
23,870
20
Profit/(loss)
for the period
Net change
in financial assets
Net change
in receivables
Net change
in payables
Net cash inflow/
(outflow) from
operating activities
During the period,
the following
distribution
payments were
satisfied by the
issue of units under
the distribution
reinvestment plan
1,227
1,227
–
–
As described in note 2(i), income not distributed is included
in net assets attributable to unitholders. The change in this
amount each period (as reported in (a) above) represents a
non‑cash financing cost as it is not settled in cash until such
time as it becomes distributable.
34
MCP Income Opportunities Trust
Annual Report
11 AUDITOR’S REMUNERATION
Responsible Entity
During the period the following fees were paid or payable
for audit services provided to the Fund:
YEAR ENDED
30 JUNE 2020
$
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
$
The Responsible Entity of the MCP Income Opportunities
Trust is The Trust Company (RE Services) Limited. The
Responsible Entity is a wholly owned subsidiary in the
Perpetual Limited Group (ASX: PPT). Perpetual Corporate
Trust Limited, a related party of the Responsible Entity,
provides custody services to the Fund. Amounts presented
under the Responsible Entity fees include fees paid for
Responsible Entity services and custody services.
The Investment Manager of the Fund is Metrics Credit
Partners Pty Ltd.
(a) Directors
Key management personnel includes persons who were
Directors of the Responsible Entity at any time during the
financial period as follows:
30,000
28,000
30,000
28,000
NAME
DATE OF APPOINTMENT/RESIGNATION
30,000
28,000
YEAR ENDED
30 JUNE 2020
$
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
$
Glenn Foster
Richard McCarthy
Vicki Riggio
Simone Mosse
Appointed as Director
on 27 September 2019
Michael
Vainauskas
Resigned as Director
on 27 September 2019
Phillip Blackmore
Alternate Director for Vicki Riggio
Andrew McIver
–
–
Resigned as Alternate Director
for Michael Vainauskas on
2 September 2019
Appointed as Alternate Director for
Glenn Foster on 2 September 2019
Resigned as Alternate Director for
Glenn Foster on 27 September 2019
2,585
2,585
2,585
KPMG
Audit and other
assurance services
Audit and review
of financial
statements
Total remuneration
for audit and other
assurance services
Total remuneration
of KPMG
PWC
Audit and other
assurance services
Audit and review
of the annual
compliance plan
Total remuneration
for audit and other
assurance services
Total remuneration
of PWC
12 RElATED PARTY TRANSACTIONS
For the purpose of these financial statements, parties
are considered to be related to the Fund if they have the
ability, directly or indirectly, to control or exercise significant
influence over the Fund in making financial and operating
disclosures. Related parties may be individuals or
other entities.
(b) Other key management personnel
There were no other persons responsible for planning,
directing and controlling the activities of the Fund, directly
or indirectly during the financial period.
MCP Income Opportunities Trust
Annual Report
35
Key management personnel unit holdings
During or since the end of the period, none of the Directors
or Director related entities held units in the Fund, either
directly, indirectly or beneficially.
Neither the Responsible Entity nor its affiliates held units
in the Fund at the end of the period.
Key management personnel compensation
Key management personnel do not receive any remuneration
directly from the Fund. They receive remuneration from a
related party of the Responsible Entity in their capacity as
Directors or employees of the Responsible Entity or its
related parties. Consequently, the Fund does not pay any
compensation to its key management personnel. Payments
made from the Fund to the Responsible Entity do not include
any amounts attributable to the compensation of key
management personnel.
Key management personnel loan disclosures
The Fund has not made, guaranteed or secured, directly
or indirectly, any loans to the key management personnel
or their personally related entities at any time during the
reporting period.
Other transactions within the Fund
Apart from those details disclosed in this note, no key
management personnel have entered into a material contract
with the Fund during the financial period and there were
no material contracts involving Director’s interests existing
at period end.
(i) Responsible Entity
This fee is charged by the Responsible Entity for managing the
Fund and making it available to investors. The fee charged
by the Custodian is for services performed in accordance
with the Custodian Agreement. Fees payable to the
Responsible Entity and Custodian are calculated on the
adjusted net asset value of the Fund and accrued daily and
paid quarterly in arrears from the assets of the Fund and
reflected in the daily unit price.
(ii) Management fee
This fee is charged by the Investment Manager for services
provided under the Investment Management Agreement.
1.03% per annum of the Fund’s net asset value is calculated
and accrued daily and paid monthly in arrears from the
Fund’s assets.
The performance fee for any period is equal to 15.38%
of the amount (if any) by which the Fund’s Total Return
exceeds the Fund’s Hurdle. The performance fee is calculated
and accrued daily and paid monthly in arrears from the
Fund’s assets. Different fees may be negotiated with
wholesale clients.
(iii) Indirect costs
Indirect costs are any amounts that the Responsible Entity
knows or where required, reasonably estimates, will reduce
the Fund’s returns that are paid from the Fund’s assets (other
than the Responsible Entity fee, recoverable expenses and
transactional and operational costs) or that are paid from the
assets of any interposed vehicle (such as the MCP Wholesale
Income Opportunities Trust or wholesale funds) in which the
Fund may invest.
All related party transactions are conducted on normal
commercial terms and conditions. The transactions during
the period and amounts payable at period end between
the Fund and related parties were as follows:
Management fees for the period paid and payable by the Fund
to the Investment Manager
Responsible Entity and Custodian fees for the period paid and payable
by the Fund
Aggregate amounts payable to the Investment Manager at reporting date
Aggregate amounts payable to the Responsible Entity and Custodian
at reporting date
YEAR ENDED
30 JUNE 2020
$
FOR THE PERIOD
7 FEBRUARY 2019
TO 30 JUNE 2019
$
3,374,401
575,905
141,772
313,630
26,082
344,503
105,711
26,082
36
MCP Income Opportunities Trust
Annual Report
Investments
The Fund held investments in the following scheme which is managed by The Trust Company (RE Services) Limited
or its related parties:
AT 30 JUNE 2020
MCP Wholesale Income
Opportunities Trust
AT 30 JUNE 2019
MCP Wholesale Income
Opportunities Trust
FAIR VALUE OF
INVESTMENT
$
INTEREST
HELD
(%)
DISTRIBUTIONS
RECEIVED/
RECEIVABLE
$
UNITS
ACQUIRED
DURING
PERIOD
UNITS
DISPOSED
DURING THE
PERIOD
338,639,724
100
28,012,400
72,268,827
–
264,195,661
100
3,341,729
261,761,281
–
13 SEGMENT INFORMATION
The Fund is organised into one main operating segment
with only one key function, being the investment of funds
predominantly in Australia.
14 SIGNIFICANT CHANGES IN STATE OF AFFAIRS
On 4 October 2019 the Responsible Entity announced that
the Fund would change the distribution frequency from
quarterly to monthly, effective from 31 October 2019.
On 13 January 2020 the Responsible Entity announced that
the Fund’s Unit Registry had transitioned from Mainstream
Fund Services Pty Ltd (“Mainstream”) to Automic Group.
Furthermore, on 20 January 2020, the Fund Administration
function transitioned from Mainstream to MCH Fund
Administration Services Pty Ltd, a wholly owned subsidiary
of Metrics Credit Holdings Pty Ltd.
On 21 January 2020, the Responsible Entity announced that
Metrics had voluntarily agreed to waive Performance Fees
to prevent investor returns being impacted by record low
interest rates. The Fund Hurdle is equal to the RBA Cash
Rate plus 600 basis points per annum. As at 21 January 2020
Performance Fees were payable on returns in excess of
6.75% per annum, which is lower than the Fund’s target cash
return to investors of 7.00% per annum (net of fees and costs).
Metrics intends that the Performance Fee will only apply
on the Fund’s returns which exceed 7.50% per annum. The
Performance Fee Waiver will continue until such time as:
> 90 days notice is provided to the Responsible Entity;
> Metrics is no longer the manager of the Fund; or
> The RBA cash rate is equal to or exceeds 1.50% p.a.
The Directors continue to assess the potential financial and
other impacts of the coronavirus (COVID‑19) outbreak to the
Fund. The current high‑level of uncertainty regarding the
severity and length of COVID‑19 on investment markets has
impacted investment outcomes and increased volatility in
investment performance during the year.
At the date of signing, the future impacts of COVID‑19 on
global and domestic economies and investment market
indices, and their resulting impact on the Fund are uncertain.
The Directors and Investment Manager will continue to
monitor this situation.
MCP Income Opportunities Trust
Annual Report
37
15 EVENTS OCCURRING AFTER THE
REPORTING PERIOD
Subsequent to year end, on 28 July 2020, the Directors
declared a distribution of 1.03 cents per ordinary unit which
amounted to $1,783,606 and was paid on 10 August 2020.
As noted above, the impacts of COVID‑19 are still unfolding,
and there may be further impacts on the Fund. Other than
COVID‑19 impacts, no other matter or circumstance since
the end of the financial year not otherwise addressed within
this report that has affected or may significantly affect the
operations of the Fund, the results of those operations or
the state of affairs of the Fund in subsequent years. The
Fund continues to operate as a going concern.
16 CONTINGENT ASSETS AND lIABIlITIES
AND COMMITMENTS
There are no outstanding contingent assets, liabilities
or commitments as at 30 June 2020 or 30 June 2019.
38
MCP Income Opportunities Trust
Annual Report
DIRECTORS’ DEClARATION
In the opinion of the Directors of The Trust Company (RE Services) Limited, the Responsible Entity of MCP Income
Opportunities Trust:
(a) the financial statements and notes set out on pages 14 to 37 are in accordance with the Corporations Act 2001, including:
(i) complying with Australian Accounting Standards, the Corporations Regulations 2001 and other mandatory professional
reporting requirements; and
(ii) giving a true and fair view of the Fund’s financial position as at 30 June 2020 and of its performance, for the financial
year ended on that date,
(b) there are reasonable grounds to believe that the Fund will be able to pay its debts as and when they become due and
payable; and
(c) note 2(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued
by the International Accounting Standards Board.
This declaration is made in accordance with a resolution of the Directors of The Trust Company (RE Services) Limited.
Director
The Trust Company (RE Services) Limited
Sydney
25 August 2020
MCP Income Opportunities Trust
Annual Report
39
AUDIT REPORT
Independent Auditor’s Report
To the unitholders of MCP Income Opportunities Trust
Opinion
We have audited the Financial Report of MCP
Income Opportunities Trust (the Fund).
In our opinion, the accompanying Financial Report of
the Fund is in accordance with the Corporations Act
2001, including:
•
•
giving a true and fair view of the Fund's financial
position as at 30 June 2020 and of its financial
performance for the year ended on that date;
and
complying with Australian Accounting Standards
and the Corporations Regulations 2001.
The Financial Report comprises:
•
•
Statement of financial position as at 30 June
2020
Statement of profit or loss and other
comprehensive income, Statement of changes
in equity, and Statement of cash flows for the
year then ended
• Notes including a summary of significant
accounting policies
• Directors' Declaration.
Basis for opinion
We conducted our audit in accordance with Australian Auditing Standards. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our responsibilities under those standards are further described in the Auditor’s responsibilities for
the audit of the Financial Report section of our report.
We are independent of the Fund in accordance with the Corporations Act 2001 and the ethical
requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of
Ethics for Professional Accountants (including Independence Standards) (the Code) that are relevant
to our audit of the Financial Report in Australia. We have fulfilled our other ethical responsibilities in
accordance with the Code.
Key Audit Matters
Key Audit Matters are those matters that, in our professional judgement, were of most significance in
our audit of the Financial Report of the current period.
These matters were addressed in the context of our audit of the Financial Report as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity.
Liability limited by a scheme approved under Professional Standards Legislation.
40
MCP Income Opportunities Trust
Annual Report
Valuation of the financial assets held at fair through profit or loss ($338.6m)
Refer to Note 5 to the Financial Report
The key audit matter
How the matter was addressed in our audit
Financial assets held at fair value
through profit or loss comprise of units
held in the MCP Wholesale Income
Opportunities Trust (100% owned by the
Fund).
Valuation of the units in the MCP
Wholesale Income Opportunities Trust is
a key audit matter owing to:
•
•
•
The assets representing 96.4% of
the Fund’s total assets;
The degree of audit effort and
resources involved in assessing the
underlying transaction records; and
The importance of the performance
of this asset in driving the Fund’s
investment income and capital
performance, as reported in the
Financial Report.
Our procedures included:
•
For the period 1 July 2019 to 17 January 2020, obtained
and read the Fund’s former Investment Administrator’s
GS007 (Guidance Statement 007 Audit Implications of the
Use of Service Organisations for Investment Management
Services) assurance report to assess the Investment
Administrator’s processes to record the Fund’s
investments;
• Obtained and read the Fund’s custodian’s GS007
assurance report to assess the custodian’s processes to
record the Fund’s investments;
• Checked the ownership of the investments to custody
reports to test existence of investments being valued;
• Obtained and read the registrar’s GS007 assurance report
of the units into which the Fund invests to assess the
Registry’s processes to record the Fund’s unit holdings;
• Checking the ownership of the unit holdings to the unit
registry to test the existence of unit holdings being
valued; and
• Checking the valuation of unit holdings, as recorded in the
general ledger, to the latest available audited financial
statements of MCP Income Opportunities Trust; and
•
Evaluating the procedures by us in relation to the audit of
MCP Wholesale Income Opportunities Trust as evidence
of the underlying valuation of the assets held by the Fund.
MCP Income Opportunities Trust
Annual Report
41
Other Information
Other Information is financial and non-financial information in MCP Income Opportunities Trust’s
annual reporting which is provided in addition to the Financial Report and the Auditor’s Report. The
Directors of The Trust Company (RE Services) Limited (the Responsible Entity) are responsible for
the Other Information.
Our opinion on the Financial Report does not cover the Other Information and, accordingly, we do
not express an audit opinion or any form of assurance conclusion thereon.
In connection with our audit of the Financial Report, our responsibility is to read the Other
Information. In doing so, we consider whether the Other Information is materially inconsistent with
the Financial Report or our knowledge obtained in the audit, or otherwise appears to be materially
misstated.
We are required to report if we conclude that there is a material misstatement of this Other
Information, and based on the work we have performed on the Other Information that we obtained
prior to the date of this Auditor’s Report we have nothing to report.
Responsibilities of the Directors for the Financial Report
The Directors of The Trust Company (RE Services) Limited (the Responsible Entity) are responsible
for:
•
•
•
preparing the Financial Report that gives a true and fair view in accordance with Australian
Accounting Standards and the Corporations Act 2001
implementing necessary internal control to enable the preparation of a Financial Report that
gives a true and fair view and is free from material misstatement, whether due to fraud or error
assessing the Fund's ability to continue as a going concern and whether the use of the going
concern basis of accounting is appropriate. This includes disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless they either
intend to liquidate the Fund or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the Financial Report
Our objective is:
•
•
to obtain reasonable assurance about whether the Financial Report as a whole is free from
material misstatement, whether due to fraud or error; and
to issue an Auditor’s Report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with Australian Auditing Standards will always detect a material misstatement when it
exists.
42
MCP Income Opportunities Trust
Annual Report
Misstatements can arise from fraud or error. They are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on
the basis of the Financial Report.
A further description of our responsibilities for the audit of the Financial Report is located at the
Auditing and Assurance Standards Board website at:
http://www.auasb.gov.au/auditors_responsibilities/ar2.pdf. This description forms part of our
Auditor’s Report.
KPMG
Andrew Reeves
Partner
Sydney
25 August 2020
MCP Income Opportunities Trust
Annual Report
43
ASX ADDITIONAl INFORMATION
Additional information required by the Australian Stock Exchange Limited Listing Rules and not disclosed elsewhere
in this report is as follows. The information is current as at 31 July 2020 unless otherwise indicated.
A. DISTRIBUTION OF UNITS
Analysis of numbers of unitholders by size of holding:
SIZE OF HOLDING RANGES:
5
4
3
2
1
1 – 1,000
1,001 – 5,000
5,001 – 10,000
10,001 – 100,000
100,001 and over
NO. OF
HOLDERS
260
1,667
1,194
2,638
133
5,892
TOTAL UNITS
PERCENTAGE
139,218
5,126,898
9,422,243
78,391,164
80,086,081
0.08%
2.96%
5.44%
45.27%
46.25%
173,165,604
100.00%
The number of unitholders holding less than a marketable parcel of $500 worth of units is 45 and they hold a total of 1,789 units.
B. l ARGEST UNITHOlDER
The names of the twenty largest holders of quoted units are listed below:
UNITHOLDER
NO. OF UNITS
PERCENTAGE
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NETWEALTH INVESTMENTS LIMITED
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
NATIONAL NOMINEES LIMITED
PERPETUAL CORPORATE TRUST LTD
MCH INVESTMENT MANAGEMENT SERVICES PTY LTD
IRAL PTY LTD
NETWEALTH INVESTMENTS LIMITED
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
BALMORAL FINANCIAL INVESTMENTS PTY LTD
JOHN SHEARER (HOLDINGS) PTY LIMITED
CITICORP NOMINEES PTY LIMITED
AUSTRALIAN EXECUTOR TRUSTEES LIMITED
A J MESSER PTY LTD
CHARANDA NOMINEE COMPANY PTY LTD
16 MISS KAREN MICHELLE PHILLIPS
17
18
19
BOND STREET CUSTODIANS LIMITED
KUZEN PTY LTD
JT & M (VIC) PTY LTD
20 OBFT PTY LTD
23,010,497
8,388,310
5,863,497
3,561,612
3,169,784
2,966,675
2,425,000
2,179,455
1,591,084
1,000,000
750,000
703,243
653,500
650,423
640,000
608,127
516,119
500,000
500,000
500,000
13.3%
4.8%
3.4%
2.1%
1.8%
1.7%
1.4%
1.3%
0.9%
0.6%
0.4%
0.4%
0.4%
0.4%
0.4%
0.4%
0.3%
0.3%
0.3%
0.3%
44
MCP Income Opportunities Trust
Annual Report
C. SUBSTANTIAl UNITHO lDERS
I. ON ‑MARKET BUY‑BACK
There are no substantial unitholders.
There is no current on‑market buy‑back.
D. VOTING RIGHTS
Voting rights which may attach to or be imposed on any
unit or class of units is as follows:
(a) on a show of hands each unitholder has one vote; and
(b) on a poll, each unitholder has one vote for each dollar
of the value of the total interests they have in the Fund.
E. INVESTMENT TRANSACTIONS
The total number of contract notes that were issued for
transactions in securities during the financial year was 2.
Each investment transaction may involve multiple contract
notes. The total brokerage paid on these contract notes
was $Nil.
F. STOCK EXCHANGE lISTING
The Fund’s units are listed on the Australian Securities
Exchange and are traded under the code “MOT”.
G. UNQUOTED UNITS
There are no unquoted units on issue.
H. VOlUNTARY ESCROW
There are no restricted units in the Fund or units
subject to voluntary escrow.
J. REGISTERED OFFICE OF THE
RESPONSIBlE ENTITY
The Trust Company (RE Services) Limited
Level 18, 123 Pitt Street
Sydney NSW 2000
Telephone: 02 8295 8100
K. UNIT REGISTRY
Automic Pty Ltd trading as Automic Group
Level 15, 126 Phillip Street
SYDNEY NSW 2000
Telephone: 1300 816 157
metrics@automicgroup.com.au
www.automicgroup.com.au
l. RESPONSIBlE ENTITY
COMPANY SECRETARIES
Gananatha Minithantri
Sylvie Dimarco
MCP Income Opportunities Trust
Annual Report
45
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