Convenience Retail REIT
Convenience Retail REIT No. 1 ARSN 101 227 614
Convenience Retail REIT No. 2 ARSN 619 527 829
Convenience Retail REIT No. 3 ARSN 619 527 856
ANNUAL REPORT
2020
APN Funds Management Limited
ACN 080 674 479 AFSL No 237500
APN Convenience Retail REIT is a listed Australian Real Estate Investment
Trust (“REIT”) (ASX code: AQR) that wholly owns a portfolio of 79 service station
and convenience retail assets located across Australia with a skew towards the
eastern seaboard, independently valued at $445 million. The portfolio is leased
to high-quality tenants on attractive, long-term leases. The objective of the REIT
is to provide investors with sustainable and stable income and the potential for
both income and capital growth through annual rental increases.
Contents
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02
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PERFORMANCE SNAPSHOT
LETTER FROM THE FUND MANAGER
ABOUT THE MANAGER
SENIOR MANAGEMENT
DIVERSIFIED PORTFOLIO
STRONG LEVEL OF INCOME SECURITY
FINANCIAL REPORT
Directors' report
Corporate governance statement
Auditor's independence declaration
Independent auditor's report
SUMMARY OF SECURITYHOLDERS
CORPORATE DIRECTORY
Performance snapshot
Financial Performance
21.8c
DISTRIBUTION
PER SECURITY
▲ 4.3% on FY2019
21.6c
FFO
PER SECURITY
▲ 0.4% on FY20191
$3.27
NTA
PER SECURITY
▲ 10.5% from June 2019
Portfolio Performance
$31.9m
VALUATION
UPLIFT
2.8%
CONTRACTED ANNUAL
RENTAL GROWTH
10.6yrs
WEIGHTED AVERAGE
LEASE EXPIRY
Capital Management
$90.2m
TOTAL COMMITTED
ACQUISITIONS
$101.6m
NEW EQUITY
RAISED2
16.5%
GEARING3
1 FFO per security reflects the issuance of new securities during the period. 2 Excludes $10.7m of new equity raised post balance date comprising $10.0m
from the securities purchase plan and $0.7m from the DRP for the June 2020 quarter distribution. 3 Pro forma gearing of 24.8% after adjusting for new
equity raised post balance, fund-through development pipeline of $22.4m and contracted acquisitions of $38m.
APN CONVENIENCE RETAIL REIT 1
APN CONVENIENCE RETAIL REIT 1
LETTER FROM THE FUND MANAGER
represents a 0.4% increase on FY2019 due to the issuance
of new securities during the period. The increase in FFO
was primarily driven by a 6.9% increase in net property
income due to like-for-like property rental growth of 2.8%,
the contribution from 12 acquisitions completed during the
period and a full year’s contribution from the Mount Larcom
acquisition in August 2018.
Net tangible assets per security increased during the
period by 31 cents, or 10.5%, to $3.27.
Property performance
The portfolio continues to be resilient in the midst of the
COVID-19 pandemic, with all sites remaining open and
trading and with minimal impact on rental income. We
expect service station and convenience retail properties to
remain highly sought after as a stable and defensive asset
class due to their long leases and strong lease covenants.
The portfolio is well diversified by geography, tenant and
site type. It is underpinned by long-term leases to high
quality and experienced global operators, with 97% of the
rental income derived directly from major service station
tenants.
The portfolio remains 100% occupied and is supported
by a long weighted average lease expiry (WALE) of 10.6
years as well as an attractive lease expiry profile with 74%
of rental income expiring in FY2030 and beyond, providing
securityholders with a strong level of income security.
The portfolio also provides a sustainable and growing
income stream with 80% of rental income being subject
to annual increases of 3% or more and 20% being linked
to CPI rental escalations, resulting in an average portfolio
rental growth of 2.8% per annum.
As at 30 June 2020, the APN Convenience Retail REIT
portfolio comprised 79 properties with the total portfolio
value increasing by $89.9 million, or 25.1%, to $448.2
million during the financial year. This increase was driven
by $58 million of net acquisitions and a $31.9 million
revaluation uplift.
On 30 June 2020, Chevron (AA/Aa2 credit ratings),
who are one of the world’s leading integrated energy
companies, operating in excess of 19,500 service stations
in 84 countries, announced that they had successfully
completed the acquisition of Puma Energy Australia. Puma
Energy Australia is the tenant at 46 sites in the Fund’s
portfolio, representing 58% of AQR’s rental income at the
time of acquisition.
The portfolio’s weighted average capitalisation rate
tightened by 33 basis points to 6.58% with 76 of the 79
properties being the subject of independent valuations
during the period.
The revaluation uplift is a strong endorsement of the
portfolio and reflects the enhanced credit quality of a
Chevron lease covenant for 46 of our properties.
Dear Securityholders,
It is my pleasure to present the Annual Report for APN
Convenience Retail REIT (the ‘Fund’) for the financial year
ended 30 June 2020.
No one could ever have imagined a financial year like 2020
with plenty more twists and turns to come I’m sure. Yet
despite this extraordinary year, I’m delighted to report that
APN Convenience Retail REIT is in a very healthy position.
The Fund has secure and transparent cash flows backed
by long-term leases to national and international tenants
and benefits from a strong balance sheet with gearing at
the bottom of our target range. This will ensure that we can
continue to deliver on our strategy of providing investors
with a defensive and growing income stream.
The Fund’s investments are defensive due to their
exposure to non-discretionary spending, and the portfolio
is unique and considered difficult to replicate given the
limited availability of strategically located land which is
not impacted by zoning restrictions. These factors will
ensure that this asset class continues to be a sought-after
investment and reliable income source.
We maintain a strong focus on actively managing the
portfolio and pursuing acquisition and divestment
opportunities to enhance the Fund and create long term
sustainable value for securityholders.
Financial results
During the year, APN Convenience Retail REIT recorded a
statutory profit of $45.8 million.
The Fund delivered distributions for FY2020 of $20.5
million, or 21.8 cents per security, representing an increase
of 4.3% on FY2019. This income combined with the Fund’s
strong security price performance has resulted in a total
return for securityholders for the financial year of 14.7%,
outperforming the S&P/ASX 300 A-REIT Accumulation
Index by 36.3%.
Funds from Operations (FFO) for the period was $19.3
million, representing an increase of 13.3% on FY2019. On
a per security basis, FFO of 21.6 cents per security which
2 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
LETTER FROM THE FUND MANAGER
Continued execution of successful acquisition
strategy
During the period we successfully committed to $90.2
million of property acquisitions of which $67.8 million has
settled, while $22.4 million relates to development projects
which are forecast to complete in FY2021. In addition
to these acquisitions, we also completed $9.8 million of
divestments during the period. Subsequent to financial year
end, the Fund has also contracted a further $38 million of
property acquisitions which are due to settle by the end of
September 2020.
These transactions will contribute to extending the
portfolio WALE, improving geographic diversification and
strengthening the quality and diversification of tenants.
They also demonstrate our patient and focused approach
to our acquisition growth strategy which includes
developing partnerships with developers and tenants to
enhance the Fund and create long-term sustainable value
for securityholders.
Capital management
APN Convenience Retail REIT’s balance sheet is in a
position of strength and flexibility, with a gearing ratio of
16.5%. After adjusting for the remaining $22.4 million
development pipeline and contracted acquisitions of $38
million, the pro forma gearing of 24.8% is at the bottom
of our target range of 25 – 40%. This provides the Fund
significant capacity to deliver on its strategy of investing
in strategically located convenience retail assets while
maintaining a prudent balance sheet.
During the period, the Fund raised $101.6 million of new
equity comprising:
¡ $88 million of fully underwritten institutional placements
and an $8.1 million security purchase plan; and
¡ $5.5 million proceeds from AQR’s Distribution
Reinvestment Plan (DRP) for the September 2019 and
December 2019 quarters.
Subsequent to 30 June 2020, the Fund also completed
a $10 million security purchase plan in July 2020 while
the DRP remained activated for the June 2020 quarter
distribution, raising a further $0.7 million.
During the period, the Fund refinanced $105 million of
existing debt facilities as well increased the total debt
facility limit by $40 million. The overall result was an
increase in the weighted average debt maturity by 2.2
years to 3.8 years, a 0.3% reduction in the weighted
average interest margin and improved funding and flexibility
that will support our growth plans.
Strategy and outlook
The Fund is very well positioned with a strong balance
sheet that has a significantly reduced gearing (16.5%
versus 32.3% at June 2019) allowing the Fund to pursue
additional acquisition opportunities that deliver further long-
term sustainable earnings growth for securityholders.
FY2021 FFO and distribution guidance is 21.8 – 22.0
cents per security, subject to current market conditions
continuing and no unforeseen events.
This guidance includes the acquisitions contracted post
balance date but assumes no further acquisitions.
I would like to take this opportunity to thank you for your
continued support of APN Convenience Retail REIT, and
we look forward to another successful year ahead.
Yours sincerely,
Chris Brockett
Fund Manager
APN Convenience Retail REIT
APN CONVENIENCE RETAIL REIT 3
APN CONVENIENCE RETAIL REIT 3
ABOUT THE MANAGER
The Responsible Entity is APN Funds Management Limited (APN FM). APN FM has appointed Convenience Retail
Management Pty Ltd as Manager. APN FM and Convenience Retail Management Pty Ltd are wholly owned subsidiaries of
APN Property Group Limited (APN).
APN is a specialist real estate investment manager established in 1996. APN trades on the ASX under the code "APD".
APN Property Group - aligned and experienced manager
Strong investor
alignment
¡ APN is strongly aligned
to delivering investor
returns – owning a
$36.3 million co-
investment stake
¡ Simple and transparent
sliding fee structure
– no additional
transactional or
performance fees
Focused
and dedicated
management team
¡ Dedicated Fund
Manager and
management team
¡ Leveraging 19 average
years of experience in
real estate
Governance
overseen by
independent Board
¡ Independent Board,
ensuring robust
governance framework
¡ 30 years average
experience and
Director roles on
Boards including Sims
Metal, MetLife, QV
Equities, Folkestone,
and the Chairman
was a member of the
Takeovers Panel for
nine years
Manager with long
track record and
deep relationships
across capital and
investment markets
¡ Relationships generate
leasing, investment
opportunities and
access to multiple
capital sources
¡ A specialist real estate
investment manager
since 1996 - including
direct and listed real
estate mandates
4 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
4 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
SENIOR MANAGEMENT
Chris Brockett
Fund Manager
Jessie Chen
Head of Accounting -
Managed Funds
Gordon Korkie
Business Manager –
Direct Real Estate
Jessie has extensive experience
across financial reporting, internal
controls and external audit, and
leads a team that is responsible for
accounting, taxation and treasury
across all managed funds at APN
Property Group.
Prior to joining APN, Jessie’s
professional career includes over
eight years at Deloitte where she
provided assurance and advisory
services to a range of ASX listed,
multinational and boutique wealth
management companies reporting
under international accounting
standards.
She holds a Bachelor of Commerce/
Media & Communications from the
University of Melbourne, and is a
member of Chartered Accountants
Australia and New Zealand.
Gordon has over nine years’
experience in the property industry
across retail, office and industrial
sectors, working across funds
management, corporate advisory,
investment management and investor
relations. Gordon joined APN funds
management in August 2016 with
previous roles at Federation Centres
(now Vicinity Centres) and within
equity research at Credit Suisse.
Gordon holds a Bachelor of
Management Studies (1st Class
Honours) from the University of
Waikato and a Master of Commerce
from the University of New South
Wales.
Chris joined APN in March 2016
and was previously responsible for
managing the Direct Property Funds
business before the listing of the
Convenience Retail REIT.
Chris has over 14 years of experience
in direct real estate, funds and asset
management, predominately in the
retail property space.
Prior to joining APN, Chris was
with Vicinity Centres for over 13
years, where he held a number
of senior roles including Head of
their Unlisted Funds Management
business (formerly known as Centro
MCS Direct Property) where he
was responsible for funds under
management of $1.7 billion,
comprising 75 properties, across a
number of Australian, New Zealand
and US unlisted property funds. More
recently, he has been responsible for
managing Vicinity Centres’ key joint
venture partnerships.
Chris holds a Bachelor of Business
at Swinburne University and is also a
member of the Institute of Chartered
Accountants Australia and New
Zealand.
APN CONVENIENCE RETAIL REIT 5
APN CONVENIENCE RETAIL REIT 5
DIVERSIFIED PORTFOLIO
Portfolio overview as at 30 June 2020
79
INVESTMENT
PROPERTIES
$445m
PORTFOLIO
VALUE
6.58%
WEIGHTED
AVERAGE
CAP RATE
100%
OCCUPANCY
10.6 yrs
WALE
(by income)
52,988
NLA
(sqm)
60%
11%
Western Australia
Investment properties
Value ($m)
Weighted avg cap rate
Occupancy
WALE (years by income)
9
50.1
7.03%
100%
10.5
6%
21%
2%
South Australia
Investment properties
Value ($m)
Weighted avg cap rate
Occupancy
WALE (years by income)
5
25.5
6.15%
100%
14.6
Victoria
Investment properties
Value ($m)
Weighted avg cap rate
Occupancy (by area)
WALE (years by income)
2
9.5
6.37%
100%
1.9
of portfolio located
83%
in Australia’s eastern
seaboard states
~78% of Australia’s
population live in the eastern
seaboard states1
Queensland
Investment properties
Value ($m)
Weighted avg cap rate
Occupancy
WALE (years by income)
54
268.0
6.70%
100%
10.3
New South Wales
Investment properties
Value ($m)
Weighted avg cap rate
Occupancy
WALE (years by income)
9
91.4
6.14%
100%
11.7
Portfolio by classification
Top tenants by income
Regional 15%
Highway
20%
16%
9%
Puma
EG Australia
7-Eleven
Liberty
Coles Express
Viva Energy
Mobil
4%
3%
2%
2%
BP
1%
Complementary retail
3%
Metropolitan
65%
58%
85% of the portfolio are
metropolitan or highway sites
Major tenants account for
97% of portfolio income
1 ABS 3101.0 - Australian Demographic Statistics, June 2019. Eastern Seaboard states defined as NSW, VIC, QLD.
6 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
STRONG LEVEL OF INCOME SECURITY
Lease expiry profile (by income)
No. of service
station tenant
expiries:
15
1
1
1
1
5
1
3
6
16
21
8
19.1%
74%
of lease income expiring
FY30 and beyond
30.5%
16.6%
9.7%
0.1%
1.9%
0.2%
0.6%
1.2%
1.6%
1.5%
5.8%
3.3%
1.1%
6.9%
FY20
FY21
FY22
FY23
FY24
FY25
FY26
FY27
FY28
FY29
FY30
FY31
FY32
FY33
FY34
FY35
FY36
Rent review type by income
CPI
19%
80%
of income subject
to fixed annual
increases of
3% or more
2.8%
Average annual
rental growth
across the
portfolio1
Fixed at 3.0%
or greater
81%
1 Assuming CPI of 1.8%
APN CONVENIENCE RETAIL REIT 7
APN CONVENIENCE RETAIL REIT 7
Financial
report
‘APN Convenience Retail REIT’
being Convenience Retail REIT No. 2 and
its Controlled Entities ARSN 619 527 829
Stapling arrangement
The ‘APN Convenience Retail REIT’ stapled group
(“Group”) was established on 27 July 2017 by stapling the
securities of the following entities:
¡ Convenience Retail REIT No.1;
¡ Convenience Retail REIT No.2; and
¡ Convenience Retail REIT No.3.
These consolidated financial statements represent the
consolidated results of APN Convenience Retail REIT for
the full financial year.
8 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
8 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
FINANCIAL REPORT
Contents
Directors’ report
Corporate governance statement
Auditor’s independence declaration
Independent auditor’s report
Directors’ declaration
Consolidated statement of profit or loss and other comprehensive income
Consolidated statement of financial position
Consolidated statement of changes in equity
Consolidated statement of cash flows
Notes to the consolidated financial statements
About this report
1 General information
2 Statement of compliance
3 Critical accounting judgements and key sources of estimation uncertainty
Performance
4 Segment information
5 Revenue
6
Investment properties
Capital structure, financing and risk management
7 Contributed equity
8 Distributions
9 Earnings per security
10 Borrowings
11 Capital risk management
12 Financial and risk management
13 Commitment and contingencies
Efficiency of operation
14 Cash and cash equivalents
15 Trade and other receivables
16 Trade and other payables
Other notes
17 Income taxes
18 Related party transactions
19 Controlled entities
20 Remuneration of auditors
21 Parent entity financial information
22 Subsequent events
23 Adoption of new and revised accounting standards
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APN CONVENIENCE RETAIL REIT 9
APN CONVENIENCE RETAIL REIT 9
10 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
10 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
DIRECTORS' REPORT
The directors of APN Funds Management Limited (“APN FM”),
the Responsible Entity of Convenience Retail REIT No. 2 (the
“Fund”) present the financial report on the consolidated entity
(the “Group”), being the Fund and its controlled entities for
the financial year ended 30 June 2020. The Fund is one of
three entities that together comprise the stapled entity APN
Convenience Retail REIT which is listed on the Australian
Securities Exchange (“ASX”) (ASX Ticker: “AQR”).
To comply with the provisions of the Corporations Act 2001,
the directors report as follows:
Information about the directors
The following persons were directors of the Responsible Entity
during the financial year and up to the date of this report:
APN CONVENIENCE RETAIL REIT 11
APN CONVENIENCE RETAIL REIT 11
DIRECTORS’ REPORT
Geoff Brunsdon AM
B.Com, CA, F Fin, FAICD
Independent Chairman
¡ Director since 2009
¡ Chairman since 2012
Member of the Audit, Risk &
Compliance Committee and member
of the Nomination & Remuneration
Committee.
Geoff has had a career in investment
banking spanning more than 30
years. He is currently Chairman
of Sims Metal Management Ltd
and MetLife Insurance Ltd. He is a
Director of The Wentworth Group of
Concerned Scientists and Purves
Environmental Custodians.
Geoff was previously Managing
Director and Head of Investment
Banking of Merrill Lynch International
(Australia) Limited until 2009.
Geoff was a member of the Listing
Committee of the Australian Stock
Exchange between 1993 and
1997, a member of the Takeovers
Panel between 2007 and 2016 and
Chairman of Redkite (supporting
families who have children with
cancer) until 2015 and is now a
Patron. He is a Fellow of FINSIA, a
Fellow of the Institute of Company
Directors and a Fellow of Chartered
Accountants Australia & New
Zealand.
Howard Brenchley
BEc
Independent Director
¡ Director since 1998
¡ Independent Director since March
2018
Howard has a long history in the
Australian property investment
industry with over 30 years’
experience analysing and investing in
the sector.
Howard joined APN in 1998 and
was responsible for establishing the
APN FM business. In this capacity
he developed a suite of new property
securities and direct property funds,
including the flagship APN AREIT
Fund and the APN Property for
Income Fund, both market leading
property securities funds in Australia.
Prior to joining APN, Howard was
co-founder and research director of
Property Investment Research Pty
Limited, one of Australia’s leading
independent research companies,
specialising in the property fund
sector.
Howard is also a director of APN
PG (since 2004), National Storage
Holdings Limited (since 2014) and
National Storage Financial Services
Limited (since 2015), both listed as
National Storage REIT (ASX Code:
NSR).
Michael Johnstone
BTRP, LS, AMP (Harvard)
Independent Director
¡ Director since 2009
Chairman of the Nomination &
Remuneration Committee and
member of the Audit, Risk &
Compliance Committee.
Michael has 45 years of global
experience in Chief Executive
and General Management Roles
and more recently in company
directorships. His two principal
corporate executive engagements
have been with Jennings Industries
Ltd and the National Australia
Banking Group. At Jennings, he
was successively General Manager
of AVJennings Homes, General
Manager Commercial Property,
CEO of Jennings Properties Limited
(Centro etc.) and President Jennings
USA. Within NAB, he was Global
Manager Real Estate responsible
for commercial property lending and
corporate property investment. He
has extensive experience in mergers
and acquisitions, capital raising,
property investment and funds
management. In the not for profit
sector, he has chaired the Cairnmillar
Institute and been a board member
of the Salvation Army and Yarra
Community Housing.
Michael is also a non-executive
director of Charter Hall Social
Infrastructure REIT (CQE) and in
the private sector, a non-executive
director of Dennis Family Holdings
and Chairman of Dennis Family
Homes.
12 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
DIRECTORS’ REPORT
Jennifer Horrigan
BBus, GradDipMgt, GradDipAppFin,
MAICD
Independent Director
¡ Director since 2012
Chairman of the Audit, Risk
& Compliance Committee
and member of the
Nomination & Remuneration
Committee.
Jennifer brings 25 years’
experience across
investment banking,
financial communications
and investor relations.
She was formerly the
Chief Operating Officer
in Australia of the
independent investment
bank Greenhill & Co. She
has extensive experience
in enterprise management,
including the supervision
and management of
compliance, HR and
financial management.
Jennifer is also a director
of QV Equities (ASX: QVE),
Yarra Funds Management
Limited and is Chairman
of Redkite (national cancer
charity supporting children
and young people with
cancer and their families).
Michael Groth
BCom, BSc, DipIFR, CA
Alternate Director for
Howard Brenchley
Joseph De Rango
BCom, BBIS (IBL)
Alternate Director for
Howard Brenchley
¡ Alternate Director since
¡ CFO and Alternate
Chantal Churchill
BSc(Psych), DipHRM, GIA(Cert)
Company Secretary and
Head of Risk and
Compliance
March 2014
¡ Resigned as CFO and
Alternate Director in
September 2019
Michael’s professional
career includes over
seven years with KPMG
Melbourne, where he
worked closely with
a number of major
listed companies and
stockbrokers before moving
to the United Kingdom
to work in the financial
services industry and for
a government regulatory
body.
Since joining APN in 2006,
Michael has had broad
exposure across all areas
of the group and was
appointed Chief Financial
Officer in June 2014.
Michael is responsible
for accounting, taxation
and treasury across the
business and is a key
contributor to setting APN’s
direction and strategy.
Director since September
2019
¡ Company Secretary
since December 2016
Chantal is the Company
Secretary and Head of
Risk and Compliance for
the APN Property Group.
Chantal is responsible for
the company secretarial,
corporate governance,
risk management and
compliance functions.
Chantal has over 15 years’
professional experience in
company administration,
corporate governance, risk
and compliance having
been involved with several
listed and unlisted public
companies. Prior to joining
APN in 2015, Chantal held
various risk and compliance
roles predominately in
financial services and funds
management including
seven years at Arena
Investment Management.
Chantal is a member of
the Governance Institute of
Australia.
Joseph was appointed
as Chief Financial Officer
of APN Property Group
Limited on 1 September
2019. He has over 13 years’
experience in real estate,
corporate advisory and
investment banking.
Joseph has had broad
exposure across all areas
of the APN Property Group
and is a member of APN’s
executive leadership team.
He has led and been
responsible for a number of
significant corporate finance
transactions including
real estate acquisitions,
equity raisings and bank
financings, as well as being
integrally involved with
the successful IPOs of
APN Convenience Retail
REIT (ASX: AQR) and APN
Industria REIT (ASX: ADI) in
2017 and 2013 respectively.
Prior to joining APN, Joseph
held leadership roles
and worked on a broad
range of transactions at
National Australia Bank and
PricewaterhouseCoopers.
APN CONVENIENCE RETAIL REIT 13
DIRECTORS’ REPORT
Meetings of Directors
The following table sets out the number of directors’ meetings (including meetings of committees of directors for APN FM)
held during the financial year and the number of meetings attended by each director (while they were a director or committee
member).
Directors
Held1
Attended
Held1
Attended
Held1
Attended
APN FM Board
Audit, Risk and
Compliance Committee
Nomination and
Remuneration Committee
Geoff Brunsdon AM
Jennifer Horrigan
Michael Johnstone
Howard Brenchley
Michael Groth2
Joseph De Rango3
14
14
14
14
2
12
14
14
14
13
-
-
6
6
6
N/A
N/A
N/A
6
6
6
N/A
N/A
N/A
1
1
1
N/A
N/A
N/A
1
1
1
N/A
N/A
N/A
1 Number of meetings held during the time the director held office or was a member of the committee during the year.
2 Michael Groth resigned as Alternate Director for Howard Brenchley on 2 September 2019. Mr Groth attended each Board Meeting held in his capacity as
CFO.
3 Joseph De Rango was appointed as Alternate Director for Howard Brenchley on 2 September 2019. Mr De Rango attended each Board Meeting held in his
capacity as CFO.
Principal activities
The principal activity of the Group is to own and manage a quality portfolio of convenience retail properties that offer secure
income streams and have the potential for capital growth.
The Fund is a registered managed investment fund domiciled in Australia and forms part of APN Convenience Retail REIT
which is listed on the Australian Securities Exchange (“ASX”) (ASX Ticker: “AQR”), with the parent entity being Convenience
Retail REIT No. 2.
No significant change in the nature of these activities occurred during the financial year. The Group did not have any
employees during the year.
Significant changes in the state of affairs
During the year, the Group raised $100.7 million from:
¡ the institutional placements (“Placements”) and Security Purchase Plans (“SPP”) announced on the ASX in October 2019,
November 2019 and June 2020; and
¡ the new stapled securities issued to the Group’s appointed underwriter of its distribution reinvestment plan.
All new stapled securities issued ranks equally with the Group’s existing securities.
There were no other significant changes in the state of affairs of the Group during the financial year.
14 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
DIRECTORS’ REPORT
Review of operations
The principal investment objective of the Group is to invest in convenience retail properties that provide investors with a high
and consistent income distribution that maintains its real value for the life of the Group.
The results of the operations of the Group are disclosed in the consolidated statement of profit or loss and other
comprehensive income.
The Group’s total comprehensive income was $45,799,000 for the financial year ended 30 June 2020 (30 June 2019:
$24,001,000). A summary of APN Convenience Retail REIT’s results for the financial year is as follows:
30 June 2020
$’000
30 June 2019
$’000
Net property income
Straight line rental income
Other income
Interest income
Total revenue
Management fees
Other expenses
Finance costs
Total expenses
Profit / (loss)
Fair value loss on derivatives
Fair value gain on investment properties
Total comprehensive income / (loss) for the year
26,352
4,175
111
25
30,663
(2,526)
(693)
(4,595)
(7,814)
22,849
(952)
23,902
45,799
24,732
4,473
-
22
29,227
(2,295)
(684)
(5,186)
(8,165)
21,062
(2,402)
5,341
24,001
The Responsible Entity uses the Group’s Funds from Operations (“FFO”) as the key performance indicator.
FFO adjusts statutory net profit / (loss) for certain items that are non-cash, unrealised or capital in nature, in line with the
guidelines established by the Property Council of Australia. Statutory net profit / (loss) is determined in accordance with
Australian Accounting Standards and includes a number of non-cash items including fair value movements, straight line
lease accounting adjustments and amortisation of borrowing and leasing costs and incentives.
APN CONVENIENCE RETAIL REIT 15
DIRECTORS’ REPORT
A reconciliation of statutory net profit / (loss) to FFO since the establishment of the Group is outlined as follows:
Funds from Operations
Statutory net profit / (loss)
Adjusted for:
Reversal of straight line lease revenue recognition
Reversal of fair value (gain) / loss on investment properties
Reversal of fair value (gain) / loss on derivatives
Add back amortisation borrowing costs
Add back amortisation leasing costs and rent-free adjustments
FFO
Key financial performance metrics:
FFO per security (cents)
Distributions per security (cents)
Payout Ratio (Distribution per security / FFO per security)
Statutory earnings / (loss) per security (cents per security)
Weighted average securities on issue (thousands)
Securities on issue (thousands)
Distribution declared (thousands)
30 June 2020
$’000
30 June 2019
$’000
45,799
(4,175)
(23,902)
952
483
107
19,264
21.61 c
21.80 c
100.88%
51.37 c
89,153
109,685
$20,451
24,001
(4,473)
(5,341)
2,402
385
25
16,999
21.54 c
20.90 c
97.03%
30.41 c
78,918
78,910
$16,494
Operating Result
The Group’s total Funds from Operations increased by $2,265,000 to $19,264,000. The key drivers of this result included:
¡ acquisition of additional properties post corresponding year end;
¡ contractual annual rent increases; and
¡ net property income growth was partially offset by increases in management fees as a result of portfolio revaluation uplift
and property acquisitions.
Net tangible assets and asset valuations
As at balance date, 64 properties were subject to external independent valuations performed by Savills Valuations Pty Ltd.
As a result of this exercise, the value of these properties increased by $18,970,000 since interim reporting at 31 December
2019. The uplift is primarily due to annual rent increases as well as a small tightening of the portfolio’s weighted average
market capitalisation rate.
The remaining 15 properties were subject to Directors’ valuations as at 30 June 2020. This portfolio increased by $590,000
since 31 December 2019, predominantly due to the annual rent increases.
Overall, the entire investment properties portfolio increased in valuation by $19,560,000 as at balance date in addition to the
fair value gain recognised for the half-year ended 31 December 2019.
.
16 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
DIRECTORS’ REPORT
Market Overview
Service station investments remain highly sought after as
a stable and defensive asset class due to their long leases
and strong lease covenants. While the COVID-19 outbreak
in March 2020 has impacted global financial markets and
economic conditions more generally, fuel and convenience
retail businesses have continued to trade through domestic
lock down periods and have played an important role in the
community as an essential service, proving this asset class
is one of the most resilient.
Transaction volumes have decreased since March 2020,
however investment yields have remained steady with
agents reporting heightened interest in single tenant
investments (supermarkets, Liquor, Quick Service Retail
and Fuel) given they have continued to trade through
government-imposed lock downs. The depth of the market
has certainly reduced as private investors deal with the
uncertainty of impacts from COVID-19.
The affordability of most service stations is also a
contributing factor to the continued strength of this sector.
Below $5,000,000 there is an active market for such
investment property, and the majority of older assets are
sub-$3,000,000, which is highly accessible for private
investors.
Likely developments
Current uncertainty in the financial markets and broader
disruption arising from the COVID 19 outbreak remain
factors which are all outside the control of the Directors,
and the Board of APN Funds Management Limited
continues to focus on key risks and opportunities that are
within their control. Principally these include:
¡ Investing in strategically located services station and
convenience retail assets with long term leases to
quality tenants;
¡ Providing investors with an attractive, defensive and
growing income stream, with the potential for capital
growth over time;
¡ Maintaining a capital structure that is conservatively
geared and debt expiry profile that is staggered and
reduces material bullet repayment risks;
¡ Operating in an environment where there is alignment
of interest between management and securityholders
through a meaningful co-ownership stake; and
¡ Ensuring the fund has appropriate compliance systems
and processes in place and fosters a corporate culture
consistent with investor and community expectations
surrounding accountability, ownership, and a strong
degree of honesty and integrity that puts customers first.
The Board believes that APN Convenience Retail
REIT is well placed with regard to the above risks and
opportunities, and accordingly will continue to deliver a
sustainable and growing income yield over the long term.
Distributions
Distributions of $20,451,000 were declared by the Group
during the financial year ended 30 June 2020 (2019:
$16,494,000).
For full details of distributions paid and/or payable during
the financial year, refer to note 8 of the consolidated
financial statements.
Matters subsequent to the end of
the financial year
Other than matters noted in note 22, there has not been
any other matter or circumstance occurring subsequent to
the end of the financial year that has significantly affected,
or may significantly affect, the operations of the Group, the
results of the Group, or the state of affairs of the Group in
future financial years.
Non-audit services
During the year, the auditor of the Group performed certain
other services in addition to their statutory duties.777
The directors of the Responsible Entity have considered
the non-audit services provided during the year by the
auditor and in accordance with written advice provided
by resolution of the audit committee, is satisfied that the
provision of those non-audit services during the year by the
auditor is compatible with, and did not compromise, the
auditor independence requirements of the Corporations
Act 2001 for the following reasons:
¡ all non-audit services were subject to the corporate
governance procedures adopted by the Responsible
Entity and have been reviewed by the Board to ensure
they do not impact the integrity and objectivity of the
auditor; and
¡ none of the services undermine the general principles
relating to auditor independence as set out in Code
of Conduct APES 110 Code of Ethics for Professional
Accountants issued by the Accounting Professional &
Ethical Standards Board, including reviewing or auditing
the auditor’s own work, acting in a management or
decision-making capacity for the Group, acting as
advocate for the Group or jointly sharing economic risks
and rewards.
Details of the amounts paid to the auditor, which includes
the amounts paid for non-audit services relating to audit of
compliance plan and other approved advisory services, are
set out in note 20 to the consolidated financial statements.
APN CONVENIENCE RETAIL REIT 17
DIRECTORS' REPORT
Auditor’s Independence Declaration
A copy of the external auditor’s independence declaration,
as required under section 307C of the Corporations Act
2001 is set out on page 20.
Options granted
As the Group is an externally managed vehicle, no options
were:
¡ granted over unissued securities in the Group during or
since the end of the financial year; or
¡ granted to the Responsible Entity.
No unissued securities in the Group were under option as
at the date on which this report is made.
No securities were issued in the Group during or since the
end of the financial year as a result of the exercise of an
option over unissued securities in the Group.
Indemnification of officers of the
Responsible Entity and auditors
APN Funds Management Limited (“APN FM”) in its capacity
as the Responsible Entity of the Group has agreed to
indemnify the directors and officers of APN FM and its
related body’s corporate, both past and present, against all
liabilities to another person (other than APN FM or a related
body corporate) that may arise from their position as
directors and officers of APN FM and its controlled entities,
except where the liability arises out of conduct involving a
lack of good faith. APN FM will meet the full amount of any
such liabilities, including costs and expenses. In addition,
APN FM has paid a premium in respect of a contract
insuring against a liability incurred by an officer of the
Group. Under the contract of insurance, disclosure of the
nature of the insured liabilities and the amount of premium
paid is prohibited. APN FM has not indemnified or made a
relevant agreement to indemnify the auditor of the Group or
of any related body (corporate) against a liability incurred by
the auditor.
Fund information in the
directors’ report
Fees paid to the Responsible Entity during the financial
year and the number of securities in the Group held by
the Responsible Entity, its associates and independent
directors are disclosed in note 18 to the consolidated
financial statements. Other than the directors included
in note 18, no other directors own securities, or rights or
options over securities in the Group.
The number of securities in the Group issued, bought
back and cancelled during the financial year, and the
number of securities on issue at the end of the financial
year is disclosed in note 7 to the consolidated financial
statements.
The value of the Group’s assets as at the end of the
financial year is disclosed in the consolidated statement
of financial position as “total assets” and the basis of
valuation is included in note 6 to the consolidated financial
statements.
Rounding of amounts
The Group is an entity of the kind referred to in ASIC
Corporations (Rounding in Financials/Directors’ Reports)
Instrument 2016/191, dated 24 March 2016, and in
accordance with that Corporations Instrument, amounts
in the directors’ report and the financial report have been
rounded to the nearest thousand dollars, unless otherwise
stated.
Signed in accordance with a resolution of the directors of
the Responsible Entity made pursuant to section 298(2) of
the Corporations Act 2001.
On behalf of the directors
Geoff Brunsdon AM
Director
Melbourne, 18 August 2020
18 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
CORPORATE GOVERNANCE STATEMENT
APN Convenience Retail REIT (Fund) is a triple stapled entity comprising the following three managed investment schemes
(MIS):
¡ Convenience Retail REIT No. 1;
¡ Convenience Retail REIT No. 2; and
¡ Convenience Retail REIT No. 3
Securityholders in the Fund hold a unit of each of the above entities that are stapled together, such that an individual unit
in one of the above entities may not be transferred or dealt with without the others. The Fund is listed on the Australian
Securities Exchange (ASX) under the code AQR.
APN Funds Management Limited is the Responsible Entity (APN FM or Responsible Entity) of each of the three MIS’s.
APN FM has appointed Convenience Retail Management Pty Ltd (Manager) as the Manager. APN FM and the Manager
are wholly owned subsidiaries of APN Property Group Limited (APN PG). APN Property Group (APN) comprises the staple
of APN PG and APD Trust and trades on the ASX under the code APD. APN and its subsidiaries together are referred to as
the “APN Group” in this Statement. APN FM oversees the management and strategic direction of APN’s listed and unlisted
managed investment schemes and mandates (APN Funds) in its role as responsible entity, trustee and/or manager.
The board of APN FM (Board) comprises four Independent Directors (including the Chairman), one of whom is also an
APN PG Director. Each Director has a legal obligation to put the interests of investors in the funds for which APN FM is
responsible entity and/or trustee of ahead of their own and those of APN FM’s sole shareholder, APN PG.
The Responsible Entity is committed to achieving and demonstrating the highest standards of governance. The Fund’s
Corporate Governance Statement (Statement) has been prepared in accordance with the principles and recommendations
set by the ASX Corporate Governance Council (Corporate Governance Principles and Recommendations 4th Edition)
(Recommendations), and any departure from these Recommendations are stated within.
The Responsible Entity’s governance framework, as summarised in the Statement has been designed to ensure that the
Fund meets its ongoing statutory obligations, discharges its responsibilities to all stakeholders and acts with compliance and
integrity.
The Statement outlines the main corporate governance practices in place throughout the financial year ended 30 June 2020
(Reporting Period) and incorporates the requirements of market regulators, adopted codes and charters, documented
policies and procedures and guidance from industry best practice. These policies and practices remain under regular review
as the corporate governance environment and good practices evolve.
The full corporate governance statement is available on the fund website at: https://apngroup.com.au/fund/apn-
convenience-retail-reit/about-us/corporate-governance/.
As APN FM and the Manager do not employ staff directly, the necessary management and resources for the operation of the
Fund are provided by APN PG. For this reason, staff are governed by APN Group policies. The policies, charters and codes
referred to in this Statement are available on the Fund’s website at https://apngroup.com.au/fund/apn-convenience-retail-
reit/about-us/corporate-governance/.
APN CONVENIENCE RETAIL REIT 19
AUDITOR’S INDEPENDENCE DECLARATION
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne VIC 3000
GPO Box 78
Melbourne VIC 3001 Australia
Tel: +61 3 9671 7000
Fax: +61 3 9671 7001
www.deloitte.com.au
18 August 2019
The Board of Directors
APN Funds Management Limited
Level 30, 101 Collins Street
MELBOURNE VIC 3000
Dear Board Members
Independence Declaration – APN Convenience Retail REIT
In accordance with section 307C of the Corporations Act 2001, I am pleased to provide the following
declaration of independence to the directors of APN Funds Management Limited, the Responsible
Entity, regarding the annual financial report for APN Convenience Retail REIT.
As lead audit partner for the audit of the financial report of APN Convenience Retail REIT for the
financial year ended 30 June 2020, I declare that to the best of my knowledge and belief, there have
been no contraventions of:
(i) The auditor independence requirements of the Corporations Act 2001 in relation to the
audit; and
(ii) Any applicable code of professional conduct in relation to the audit.
Yours sincerely
DELOITTE TOUCHE TOHMATSU
Neil Brown
Partner
Chartered Accountants
(cid:62)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:455)(cid:3)(cid:367)(cid:349)(cid:373)(cid:349)(cid:410)(cid:286)(cid:282)(cid:3)(cid:271)(cid:455)(cid:3)(cid:258)(cid:3)(cid:400)(cid:272)(cid:346)(cid:286)(cid:373)(cid:286)(cid:3)(cid:258)(cid:393)(cid:393)(cid:396)(cid:381)(cid:448)(cid:286)(cid:282)(cid:3)(cid:437)(cid:374)(cid:282)(cid:286)(cid:396)(cid:3)(cid:87)(cid:396)(cid:381)(cid:296)(cid:286)(cid:400)(cid:400)(cid:349)(cid:381)(cid:374)(cid:258)(cid:367)(cid:3)(cid:94)(cid:410)(cid:258)(cid:374)(cid:282)(cid:258)(cid:396)(cid:282)(cid:400)(cid:3)(cid:62)(cid:286)(cid:336)(cid:349)(cid:400)(cid:367)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:856)(cid:3)
(cid:68)(cid:286)(cid:373)(cid:271)(cid:286)(cid:396)(cid:3)(cid:381)(cid:296)(cid:3)(cid:24)(cid:286)(cid:367)(cid:381)(cid:349)(cid:410)(cid:410)(cid:286)(cid:3)(cid:4)(cid:400)(cid:349)(cid:258)(cid:3)(cid:87)(cid:258)(cid:272)(cid:349)(cid:296)(cid:349)(cid:272)(cid:3)(cid:62)(cid:349)(cid:373)(cid:349)(cid:410)(cid:286)(cid:282)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:24)(cid:286)(cid:367)(cid:381)(cid:349)(cid:410)(cid:410)(cid:286)(cid:3)(cid:69)(cid:286)(cid:410)(cid:449)(cid:381)(cid:396)(cid:364)(cid:856)(cid:3)
20 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
Deloitte Touche Tohmatsu
ABN 74 490 121 060
477 Collins Street
Melbourne VIC 3000
GPO Box 78
Melbourne VIC 3001 Australia
Tel: +61 3 9671 7000
Fax: +61 3 9671 7001
www.deloitte.com.au
Independent Auditor’s Report to the Stapled
Security Holders of APN Convenience Retail REIT
Report on the Audit of the Financial Report
Opinion
We have audited the financial report of APN Convenience Retail REIT, being Convenience Retail
REIT No. 2 and its controlled entities (collectively, the “Group”) which comprises the consolidated
statement of financial position as at 30 June 2020, the consolidated statement of profit or loss and
other comprehensive income, the consolidated statement of changes in equity, the consolidated
statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial report of the Group is in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the Group’s financial position as at 30 June 2020 and of its financial
performance for the year then ended; and
(ii) complying with Australian Accounting Standards and the Corporations Regulations 2001.
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. 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 Group in accordance with the auditor
independence requirements of 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 also fulfilled our other ethical responsibilities in accordance with
the Code.
We confirm that the independence declaration required by the Corporations Act 2001, which has
been given to the directors of APN Funds Management Limited (the “Responsible Entity”), would be
in the same terms if given to the directors as at the time of this auditor’s report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis
for our opinion.
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 for 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.
(cid:62)(cid:349)(cid:258)(cid:271)(cid:349)(cid:367)(cid:349)(cid:410)(cid:455)(cid:3)(cid:367)(cid:349)(cid:373)(cid:349)(cid:410)(cid:286)(cid:282)(cid:3)(cid:271)(cid:455)(cid:3)(cid:258)(cid:3)(cid:400)(cid:272)(cid:346)(cid:286)(cid:373)(cid:286)(cid:3)(cid:258)(cid:393)(cid:393)(cid:396)(cid:381)(cid:448)(cid:286)(cid:282)(cid:3)(cid:437)(cid:374)(cid:282)(cid:286)(cid:396)(cid:3)(cid:87)(cid:396)(cid:381)(cid:296)(cid:286)(cid:400)(cid:400)(cid:349)(cid:381)(cid:374)(cid:258)(cid:367)(cid:3)(cid:94)(cid:410)(cid:258)(cid:374)(cid:282)(cid:258)(cid:396)(cid:282)(cid:400)(cid:3)(cid:62)(cid:286)(cid:336)(cid:349)(cid:400)(cid:367)(cid:258)(cid:410)(cid:349)(cid:381)(cid:374)(cid:856)(cid:3)
(cid:68)(cid:286)(cid:373)(cid:271)(cid:286)(cid:396)(cid:3)(cid:381)(cid:296)(cid:3)(cid:24)(cid:286)(cid:367)(cid:381)(cid:349)(cid:410)(cid:410)(cid:286)(cid:3)(cid:4)(cid:400)(cid:349)(cid:258)(cid:3)(cid:87)(cid:258)(cid:272)(cid:349)(cid:296)(cid:349)(cid:272)(cid:3)(cid:62)(cid:349)(cid:373)(cid:349)(cid:410)(cid:286)(cid:282)(cid:3)(cid:258)(cid:374)(cid:282)(cid:3)(cid:410)(cid:346)(cid:286)(cid:3)(cid:24)(cid:286)(cid:367)(cid:381)(cid:349)(cid:410)(cid:410)(cid:286)(cid:3)(cid:69)(cid:286)(cid:410)(cid:449)(cid:381)(cid:396)(cid:364)(cid:856)(cid:3)
APN CONVENIENCE RETAIL REIT 21
INDEPENDENT AUDITOR’S REPORT
Key Audit Matter
How the scope of our audit responded to the
Key Audit Matter
Valuation of investment properties
held at fair value
As at 30 June 2020 the Group's investment
properties represent the largest category of
assets with a carrying value of
$448,159k, including a $23,902k
revaluation gain recognised in the
consolidated statement of profit or loss and
other comprehensive income as disclosed
in note 6.
The investment properties are measured
under the fair value model. The
determination of fair value requires
significant judgement due to the degree of
subjectivity used by management, together
with their internal and external valuation
specialists (the “valuers”), in estimating the
inputs used in the determination of the fair
value of the investment properties
including, but not limited to:
•
•
•
•
•
•
net passing rentals;
net market rentals;
average market rental growth
rates;
terminal yields;
discount rates; and,
capitalisation rates.
In conjunction with our valuation specialists, our
procedures relating to the valuation of the
investment properties included, but were not
limited to:
-
-
-
-
-
-
-
-
evaluating the independence, competence
and objectivity of the valuers by
understanding their credentials, their
experiences, their remuneration basis and
the extent of their relationship to APN;
assessing the scope of the valuers’ work;
assessing the timeliness of the valuation and
the date at which it was given, in relation to
the financial year end;
challenging the appropriateness of the
valuation techniques against industry
practice and approach, and assessing the
reasonableness of the approaches adopted
in light of COVID-19;
on a sample basis, challenging the
appropriateness of the net market rentals,
the average market rental growth rates, the
terminal yields, the discount rates and the
capitalisation rates with reference to
external industry and market economic
data;
testing on a sample basis, the passing rental
balances by agreeing them back to tenancy
schedules and signed lease agreements, and
considering the impact of any rent deferrals
or rent reductions thereon;
reviewed tenancy schedules in light of
COVID-19 to understand the composition of
the tenants, including their location, their
industry and for material clients, any
publicly available information on the
underlying performance of those tenants;
and
recalculating the mathematical accuracy of a
sample of the valuation models.
We have also assessed the appropriateness of the
disclosures in note 6 to the financial statements.
22 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
INDEPENDENT AUDITOR’S REPORT
Other Information
The directors of the Responsible Entity (the “Directors”) are responsible for the other information.
The other information comprises the information included in the Group’s annual report for the year
ended 30 June 2020, but does not include the financial report and our auditor’s report thereon.
Our opinion on the financial report does not cover the other information and we do not express any
form of assurance conclusion thereon.
In connection with our audit of the financial report, our responsibility is to read the other information
and, in doing so, 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. If,
based on the work we have performed, we conclude that there is a material misstatement of this
other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Report
The directors are responsible for the preparation of the financial report that gives a true and fair
view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for
such internal control as the directors determine is necessary to enable the preparation of the
financial report that gives a true and fair view and is free from material misstatement, whether due
to fraud or error.
In preparing the financial report, the directors are responsible for assessing the ability of the Group
to continue as a going concern, disclosing, as applicable, matters related to going concern and using
the going concern basis of accounting unless the directors either intend to liquidate the Group or to
cease operations, or has no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Financial Report
Our objectives are 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 the Australian Auditing Standards will always detect a material
misstatement when it exists. Misstatements can arise from fraud or error and are considered material
if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of this financial report.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional
judgement and maintain professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the financial report, whether due
to fraud or error, design and perform audit procedures responsive to those risks, and obtain
audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as
intentional omissions,
involve collusion,
fraud may
misrepresentations, or the override of internal control.
forgery,
• Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
• Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
APN CONVENIENCE RETAIL REIT 23
INDEPENDENT AUDITOR’S REPORT
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are
required to draw attention in our auditor’s report to the related disclosures in the financial
report or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial report, including the
disclosures, and whether the financial report represents the underlying transactions and
events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the financial report. We are
responsible for the direction, supervision and performance of the Group’s audit. We remain
solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing
of the audit and significant audit findings, including any significant deficiencies in internal control
that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical
requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, actions
taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most
significance in the audit of the financial report of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter
should not be communicated in our report because the adverse consequences of doing so would
reasonably be expected to outweigh the public interest benefits of such communication.
DELOITTE TOUCHE TOHMATSU
Neil Brown
Partner
Chartered Accountants
Melbourne, 18 August 2020
24 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
DIRECTORS’ DECLARATION
The directors of APN Funds Management Limited, the Responsible Entity of Convenience Retail REIT No. 2 (the "Fund"),
declare that:
(a)
in the directors’ opinion, there are reasonable grounds to believe that the Fund will be able to pay its debts as and
when they become due and payable;
(b)
in the directors’ opinion, the attached consolidated financial statements are in compliance with International Financial
Reporting Standards, as stated in note 2 to the consolidated financial statements;
(c)
in the directors’ opinion, the attached consolidated financial statements and notes thereto are in accordance with
the Corporations Act 2001, including compliance with accounting standards and giving a true and fair view of the
financial position and performance of the Fund and the Group; and
(d)
(d) the directors have been given the declarations required by section 295A of the Corporations Act 2001.
Signed in accordance with a resolution of the directors of the Responsible Entity made pursuant to section 295(5) of the
Corporations Act 2001.
On behalf of the directors of the Responsible Entity, APN Funds Management Limited.
Geoff Brunsdon AM
Director
Melbourne, 18 August 2020
APN CONVENIENCE RETAIL REIT 25
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
AND OTHER COMPREHENSIVE INCOME
For the year ended 30 June 2020
Revenue
Straight line rental income recognition
Other income
Total revenue from continuing operations
Other income
Interest income
Net fair value gain / (loss) on investment properties
Fair value (loss) / gain on derivatives
Total other income
Total income
Expenses
Property costs
Management fees
Finance costs
Other expenses
Total expenses
Net profit / (loss)
Attributable to:
Securityholders of Convenience Retail REIT No. 2
Securityholders of non-controlling interests1
Other comprehensive income
Total comprehensive income for the year
Total comprehensive income is attributable to:
Securityholders of Convenience Retail REIT No. 2
Securityholders of non-controlling interests1
Notes
5
6
18
10
2020
$’000
29,175
4,175
111
33,461
25
23,902
(952)
22,975
56,436
(2,823)
(2,526)
(4,595)
(693)
2019
$’000
27,196
4,473
-
31,669
22
5,341
(2,402)
2,961
34,630
(2,464)
(2,295)
(5,186)
(684)
(10,637)
45,799
(10,629)
24,001
26,629
19,170
45,799
-
45,799
26,629
19,170
45,799
12,654
11,347
24,001
-
24,001
12,654
11,347
24,001
Earnings per security
Basic and diluted (cents per security)
9
51.37
30.41
1 Represents the net profit and comprehensive income attributable to the other stapled entities comprising the APN Convenience Retail REIT Group.
Notes to the consolidated financial statements have been included in the accompanying pages.
26 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 30 June 2020
Current assets
Cash and cash equivalents
Trade and other receivables
Other assets
Total current assets
Non-current assets
Investment properties
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Distributions payable
Derivative financial instruments
Total current liabilities
Non-current liabilities
Derivative financial instruments
Borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Securityholders of Convenience Retail REIT No. 2:
Contributed equity
Retained earnings
Securityholders of non-controlling interests1:
Contributed equity
Retained earnings
Total equity
Net tangible assets ($ per security)
Notes
14
15
6
16
8
10
10
10
7
7
2020
$’000
2,331
856
274
3,461
448,159
448,159
451,620
(6,993)
(5,978)
(1,190)
(14,161)
(2,305)
(75,826)
(78,131)
(92,292)
359,328
149,718
16,215
160,403
32,992
359,328
3.27
2019
$’000
289
95
30
414
358,293
358,293
358,707
(2,846)
(4,123)
(898)
(7,867)
(1,646)
(115,400)
(117,046)
(124,913)
233,794
114,004
(317)
95,931
24,176
233,794
2.96
1 Represents the net assets attributable to the other stapled entities comprising the APN Convenience Retail REIT Group.
Notes to the consolidated financial statements have been included in the accompanying pages.
APN CONVENIENCE RETAIL REIT 27
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 30 June 2020
Contributed
equity
$’000
Retained
earnings
$’000
Notes
Total equity
$’000
Non-
controlling
interests1
$’000
Total equity
$’000
Balance at 1 July 2018
114,019
(4,867)
109,152
117,166
226,318
Net profit / (loss)
Other comprehensive income
Total comprehensive income for the year
Security issuance costs
Securities buy-back
Distributions paid or payable
Balance as at 30 June 2019
Net profit / (loss)
Other comprehensive income
Total comprehensive income for the year
Issue of new securities
Security issuance costs
Securities buy-back
Distributions paid or payable
-
-
-
-
(15)
-
12,654
12,654
11,347
24,001
-
-
-
-
12,654
12,654
11,347
24,001
-
-
-
(15)
(1)
(15)
(1)
(30)
(8,104)
(8,104)
(8,390)
(16,494)
114,004
(317)
113,687
120,107
233,794
-
-
-
26,629
26,629
19,170
45,799
-
-
-
-
26,629
26,629
19,170
45,799
36,344
(565)
(65)
-
36,344
65,215
101,559
-
-
(565)
(65)
(676)
(67)
(1,241)
(132)
-
(10,097)
(10,097)
(10,354)
(20,451)
7
7
8
7
7
7
8
Balance as at 30 June 2020
149,718
16,215
165,933
193,395
359,328
1 Represent the equity attributable to the other stapled entities comprising the APN Convenience Retail REIT Group.
Notes to the consolidated financial statements have been included in the accompanying pages.
28 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 30 June 2020
Notes
14
6
6
6
14
Cash flows from operating activities
Net rental income received
Other income received
Interest received
Other expenses paid
Finance costs paid
Net cash inflow / (outflow) from operating activities
Cash flows from investing activities
Proceeds from sale of investment properties
Payments for acquisition of investment properties
Payments for capital expenditure on investment properties
Net cash (outflow) / inflow from investing activities
Cash flows from financing activities
Net proceeds from borrowings
Net proceeds from issue of new securities
Equity issuance and liquidity offer costs paid
Distributions paid
Distributions reinvested
Payments for securities buy-back
Net cash inflow / (outflow) from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial
Cash and cash equivalents at the end of the financial year
2020
$’000
27,701
111
22
(761)
(4,707)
22,366
9,800
(70,080)
(1,525)
(61,805)
(39,462)
100,712
(1,888)
(18,596)
847
(132)
41,481
2,042
289
2,331
2019
$’000
24,036
-
25
(2,677)
(4,945)
16,439
-
(7,881)
(106)
(7,987)
5,416
-
(29)
(16,317)
-
(30)
(10,960)
(2,508)
2,797
289
Notes to the consolidated financial statements have been included in the accompanying pages.
APN CONVENIENCE RETAIL REIT 29
NOTES TO THE FINANCIAL STATEMENTS
¡ the Group has adequate levels of liquidity through its
operating cash flows and has available debt lines to be
drawn if required. Total undrawn debt facility as at the
date of issuing the consolidated financial statements is
$88m;
¡ the Group has adequate levels of headroom with
respect to its financial and non-financial covenants as
disclosed in note 10.1 and the Group does not expect
any covenants to be breached; and
¡ the Group’s debt is hedged to a level of 91.44%.
Given consideration to the above, the directors of the
Responsible Entity believe that the Group will be able to
meet its debts as and when they fall due for at least a
period of 12 months from the date of the consolidated
financial statements. Therefore, the consolidated financial
statements have been prepared on a going concern basis.
2.2 Basis of preparation
The consolidated financial statements have been prepared
on the basis of historical cost, except for the revaluation
of investment properties and financial instruments. Cost
is based on the fair values of the consideration given in
exchange for assets. 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, regardless of whether that price is
directly observable or estimated using another valuation
technique. All amounts are presented in Australia dollars,
unless otherwise noted.
The Group is an entity of the kind referred to in ASIC
Corporations (Rounding in Financials / Directors’ Reports)
Instrument 2016/191, dated 24 March 2016, and in
accordance with that Corporations Instrument amounts
in the directors’ report and the financial report have
been rounded off to the nearest thousand dollars, unless
otherwise stated.
About this Report
1. General information
APN Convenience Retail REIT is a stapled entity listed on
the Australian Securities Exchange (trading under ASX
Ticker: “AQR”), incorporated and operating in Australia.
APN Convenience Retail REIT comprises Convenience
Retail REIT No. 2 and its controlled entities.
APN Funds Management Limited, a public company
incorporated and operating in Australia, is the Responsible
Entity of Convenience Retail REIT No. 2. The registered
office and its principal place of business is Level 30, 101
Collins Street, Melbourne, VIC 3000.
2. Statement of compliance
The financial report is a general purpose financial report
which has been prepared in accordance with the
Corporations Act 2001, Australian Accounting Standards
and Interpretations, and complies with other requirements
of the law. Compliance with Australian Accounting
Standards ensures that the consolidated financial
statements and notes of the Fund and the Group comply
with International Financial Reporting Standards (“IFRS”).
The financial statements comprise the consolidated
financial statements of the Group. For the purposes of
preparing these consolidated financial statements, the
Group is a for-profit entity.
The financial statements were authorised for issue by the
directors on 18 August 2020.
2.1. Going concern
The Group has assessed its ability to continue as a going
concern taking into account of all information available
for a period of 12 months from the date of issuing the
consolidated financial statements. The impact of the
COVID-19 pandemic has been minimal with only four small
non-fuel tenants experiencing challenging and uncertain
period. Whilst the situation is still evolving, the directors
of the Responsible Entity remain confident that the Group
will be able to continue trading and realise assets and
discharge liabilities in its ordinary course of business. In
reaching this position, the following factors have been
considered:
¡ 100% of the Group’s portfolio comprises an asset class
which are classified as essential services and remain
open for trading throughout the COVID-19 pandemic;
¡ 97% of the Group’s rental income is derived from major
fuel tenants who are well-capitalised national and
international business with significant exposure to non-
discretionary consumer expenditure;
30 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
2.3 Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Fund and its controlled entities (the
“Group”) – refer to note 19 for a list of controlled entities as at year end. Control is achieved where the Fund:
¡ has power over the investee
¡ is exposed, or has rights, to variable returns from its involvement with the investee; and
¡ has the ability to use its power to affect its returns.
The Responsible Entity of the Fund reassesses whether or not the Fund controls an investee if the facts and circumstances
indicate that there are changes to one or more of the three elements of control listed above.
Consolidation of a subsidiary begins when the Fund obtains control over the subsidiary and ceases when the Fund loses that
control. Income and expenses of a subsidiary are included in the consolidated financial statements from the date the Fund
obtains control until the date the Fund loses control. All intragroup assets and liabilities, equity, income, expenses and cash
flows relating to transactions between members of the Group are eliminated in full on consolidation.
2.3 Other accounting policies
Significant accounting policies that summarise the measurement basis used and are relevant to an understanding of the
consolidated financial statements are provided throughout the notes to the consolidated financial statements.
2.4 The notes to the consolidated financial statements
The notes to these consolidated financial statements include information required to understand the consolidated financial
statements that is relevant and material to the operations, financial position and performance of the Group. The notes have
been collated into sections to help users find and understand inter-related information. Information is considered material and
relevant if, for example:
¡ the amount in question is significant by virtue of its size or nature;
¡ it is important to understand the results of the Group;
¡ it helps explain the impact of significant changes in the Group’s business; or
¡ it relates to an aspect of the Group’s operations that is important to its future performance.
3. Critical accounting judgements and key sources of estimation
uncertainty
In the application of the Group’s accounting policies, the directors have made judgements, estimates and assumptions
about carrying values of assets and liabilities that are not readily apparent from other sources. The judgements, estimates
and assumptions are based on historical experience and various other factors that are believed to be reasonable under the
circumstances, however actual results may differ from these estimates. The critical judgements, estimates and assumptions
made in the current period are contained in the following notes:
Note
Description
Note 6 – Investment properties
Fair value measurement and valuation processes
APN CONVENIENCE RETAIL REIT 31
NOTES TO THE FINANCIAL STATEMENTS
Performance
This section shows the results and performance of the Group and includes detailed information in respect to the revenues,
expenses and the profitability of the Group and its reporting segments. It also provides information on the investment
properties that underpin the Group’s performance.
4. Segment information
The Group derives all income from investment in properties located in Australia. The Group is deemed to have only one
operating segment and that is consistent with the reporting reviewed by the chief operating decision makers.
5. Revenue
Revenue from investment properties comprise of lease components (including base rent, recoveries of property tax and
property insurance) and non-lease components that primarily consists of property outgoing recoveries.
Rental income
Outgoing recoveries
Total revenue
2020
$’000
26,905
2,270
29,175
2019
$’000
25,169
2,027
27,196
Recognition and measurement
Rental income
Rental income is recognised at the fair value of consideration receivable (exclusive of GST). Rental income relating to lease
components is recognised on a straight-line basis over the term of the lease for the period where the rental income is fixed
and determinable. For leases where the rental income is determined based on unknown future variables such as inflation,
market reviews or other variables, rental income is recognised on an accrual basis in accordance with the terms of the lease.
Rental income not received at reporting date, is reflected in the consolidated statement of financial position as a receivable or
if paid in advance, as rent in advance.
Outgoing recoveries
Income from property outgoing recoveries are recognised as the costs are incurred, which is typically when the services are
provided. Outgoing recoveries not received at reporting date is reflected in the consolidated statement of financial position as
a receivable.
Lease incentives, commissions and other costs
Lease incentives provided to tenants, such as fit-outs or rent-free periods and leasing commissions and other costs incurred
in entering into a lease, are recognised as a reduction of rental income on a straight-line basis over the non-cancellable term
of the lease.
Rent concessions
Rent concessions provided to tenants that have been impacted by the COVID-19 pandemic comprised short term waivers
related to future occupancy and are treated as lease modifications. Such modifications are recognised on a straight-line
basis over the non-cancellable term of the modified lease. As at balance date, all waivers provided were on a short-term
basis and in aggregate were insignificant to the Group’s total rental income.
32 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
6. Investment properties
Investment properties represent convenience retail properties held for deriving rental income. For all investment properties, the
current use equates to the highest and best use.
6.1 Reconciliation of carrying amounts
Carrying amount at beginning of the financial year
Purchase of investment properties
Acquisition costs associated with purchase of investment properties
Capital additions to existing investment properties
Straight line rental revenue recognition
Capitalised leasing incentives and fees
Amortisation of lease incentives and fees
Disposals of investment properties
Net gain / (loss) on fair value adjustments:
Net gain / (loss) on fair value adjustments1
Net gain (loss) / on disposal of investment properties
Purchase of land held for development
Development work in progress
2020
$’000
358,293
63,528
2,987
1,495
4,175
91
(107)
(9,800)
23,968
(66)
3,565
30
2019
$’000
340,429
7,313
568
106
4,473
88
(25)
-
5,341
-
-
-
Carrying amount at end of the financial year
448,159
358,293
1 The net gain in fair value adjustments is wholly unrealised and has been recognised as “net gain in fair value adjustments on investment properties” in the
consolidated statement of profit or loss and other comprehensive income.
Included within the investment property fair value is a deduction of $nil (2019: $nil) representing lease incentive commitments
the Group has provided under the lease contracts.
6.2 Leasing arrangements
The majority of the investment properties are leased to tenants under long term operating leases. Rentals are receivable from
the tenants monthly. Revenue from top three tenants represent $26,234,000 (2019: three tenants represent $23,704,000) of
the Group’s total revenue.
Minimum lease payments to be received under non-cancellable operating leases of investment properties not recognised in the
financial statements as receivable are as follows:
Within one year
More than one year but not more than five years
More than five years
2020
$’000
30,097
79,298
277,494
386,889
2019
$’000
25,831
72,370
272,443
370,644
For the year ended 30 June 2020, the Group did not have any contracts for which it is a lessee. The Group is a lessor by virtue
of the lease arrangements associated with its investment properties.
APN CONVENIENCE RETAIL REIT 33
NOTES TO THE FINANCIAL STATEMENTS
6.3 Contractual obligations
Under some of the lease agreements applicable to investment properties, the Group is responsible for capital and structural
repairs to the premises (except to the extent required due to the tenant’s act, omissions or particular use). This contractual
obligation can include the requirement to replace underground tanks and/or LPG tanks if they become worn out, obsolete,
inoperable or incapable of economic repair.
During the year, the replacement of the underground tanks for one of the three investment properties (i.e. Cnr Vardys Rd
& Turbo Rd, Marayong, NSW) was completed. As at the reporting date, the other two investment properties that have
been identified which require underground tank replacements remain outstanding. The current forecast capital expenditure
required to replace the two underground tanks is $1,200,000 which has been reflected as a reduction in the valuation of the
applicable investment property as at the reporting date.
6.4 Individual valuation and carrying amounts
The investment portfolio consists of 79 properties located throughout Australia. 64 properties were independently valued
at 30 June 2020. The Group’s external valuations are performed by independent professionally qualified valuers who hold
a recognised relevant professional qualification and have specialised expertise in the investment properties being valued.
Current year independent valuations were performed by Savills Valuations Pty Ltd (2019: Jones Lang LaSalle Advisory
Services Pty Ltd and Savills Valuations Pty Ltd).
As at 30 June 2020, the remaining 15 properties were subject to internal valuations performed by the Group’s internal
property team and have been reviewed and approved by the Board. The carrying amounts of these investment properties
have been determined based on Directors’ valuations.
397 Pacific Hwy, Belmont North, NSW
Cnr Vardys Rd & Turbo Rd, Marayong, NSW
511 Pacific Highway, South Kempsey, NSW
172 New England Highway, Rutherford, NSW
Cnr Northcote St & Main Rd, Heddon Greta, NSW
Cnr Weakleys & Glenwood Drives, Thornton, NSW
M 449 Victoria Street, Wetherill Park, NSW
1 Blueberry Road, Moree NSW
2948 Old Cleveland Rd, Capalaba, QLD
Cnr Anzac Ave & Josey Rd, Mango Hill, QLD
550 -560 Samford Rd, Mitchelton, QLD
420 - 426 Mt Cotton Rd, Capalaba, QLD
1233 Wynnum Rd, Murrarie, QLD
17 - 25 Toombul Rd, Northgate, QLD
124 - 130 Paradise Rd, Slacks Creek, QLD
108 Compton Rd, Woodridge, QLD
708 Gympie Rd, Lawnton, QLD
353 Redbank Plains Rd, Redbank Plains, QLD
264 Browns Plains Rd, Browns Plains, QLD
Sovereign Avenue, Bray Park, QLD
21 Ingham Road, West End, QLD
921 Nambour Connection Rd, Nambour, QLD
1380 Boundary Rd, Wacol, QLD2
19038 Bruce Highway, Bowen, QLD
Latest independent
valuation
Carrying amounts
Capitalisation rate
Valuation
date
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-19
Jun-20
$'000
6,440
9,050
2020
$'000
6,440
9,050
2019
$'000
6,080
7,910
23,310
23,310
19,340
6,260
6,260
10,200
10,200
9,900
9,230
9,900
9,230
5,360
8,760
8,900
7,920
11,910
11,910
10,700
4,990
3,350
4,420
4,120
5,480
4,050
4,100
5,740
4,690
5,590
5,740
4,170
5,940
1,460
5,400
4,050
4,990
3,350
4,420
4,120
5,480
4,050
4,100
5,740
4,690
5,590
5,740
4,170
5,940
1,460
-
4,050
4,730
3,220
4,060
3,960
5,350
3,920
4,000
5,580
4,370
5,560
5,840
4,190
5,600
1,330
5,400
3,750
2020
%
6.25%
6.50%
6.00%
6.00%
6.00%
6.00%
5.75%
6.50%
7.00%
6.75%
7.00%
7.00%
7.00%
7.00%
7.00%
6.25%
7.00%
6.25%
6.25%
6.25%
6.25%
7.25%
-
6.75%
2019
%
6.50%
6.75%
7.00%
6.75%
6.75%
6.50%
6.50%
7.00%
7.25%
7.00%
7.25%
7.25%
7.25%
7.25%
7.25%
6.25%
7.25%
6.25%
6.25%
6.25%
6.50%
7.75%
7.25%
7.00%
34 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
Latest independent
valuation
Carrying amounts
Capitalisation rate
25 Bolam Street, Garbutt, QLD
4545 Flinders Highway, Reid River, QLD
71 Thompson Street, Charters Towers, QLD
77-79 Bowen Road, Rosslea, QLD
900 Ingham Road, Bohle, QLD
45 Range Road, Sarina, QLD
2 Mulgrave Street, Gin Gin, QLD
161 Thozet Road, Koongal, QLD
74 Connor Street, Zilzie, QLD
1 Flinders Street, Monto, QLD
102-104 Cook Street, Portsmith, QLD
28 Supply Road, Edmonton, QLD
45 Arnold Street, Aeroglen, QLD
49 Tolga Road, Atherton, QLD
656 Bruce Highway, Woree, QLD
2215 David Low Way, Peregian Beach, QLD
10 Takalvan Street, Bundaberg, QLD
60 Hawkins Crescent, Bundamba, QLD
1129 Morandah Access Road, Moranbah, QLD
273-279 Gympie Rd, Kedron, QLD
34-36 Cessna Drive, Caboolture, QLD
164-170 David Low Way, Diddilibah, QLD
282 Wardell Street, Enoggera, QLD
840 Steve Irwin Way, Glasshouse Mountains, QLD
1977 Anzac Avenue, Mango Hill, QLD
216 Preston Road, Manly West, QLD2
72 Walker Street, Maryborough, QLD
127 Kingston Road, Woodridge, QLD
1965 D'Aguilar Highway, Villeneuve, QLD2
983 Waterworks Road, The Gap, QLD
63 Raceview Street, Raceview, QLD1
14 Rosemary Street, Durack, QLD1
205 Old Gympie Road, Dakabin, QLD1
Cnr Edith St and Bruce Hwy, Cluden, QLD
22 Nicholson Street, Banana, QLD
25 Kiernan Drive, Roseneath, QLD
53793 Bruce Hwy, Mount Larcom, QLD
591 Dorset Rd, Bayswater North, VIC
Cnr Thompson Rd & Victoria St, Geelong North, VIC
753 North Lake Rd, Southlake, WA
Cnr Amherst & Nicholsons Rd, Canningvale, WA
1 Wishart Street, Gwelup, WA
Valuation
date
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-19
Jun-20
Jun-20
Jun-19
Jun-20
Jun-19
Jun-19
Jun-19
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
Jun-20
$'000
2,750
2,830
6,150
2,970
6,800
2,160
4,410
2,270
1,730
1,410
6,310
6,520
3,970
2,030
1,620
3,640
2,100
2020
$'000
2,750
2,830
6,150
2,970
6,800
2,160
4,410
2,270
1,730
1,410
6,310
6,520
3,970
2,030
1,620
3,640
2,100
2019
$'000
2,360
2,710
5,930
2,630
6,320
1,920
3,960
2,080
1,570
1,280
5,670
6,040
3,670
1,860
1,470
3,370
1,780
19,760
19,760
17,720
6,720
3,730
7,180
3,640
2,120
5,500
4,410
2,200
2,340
5,430
1,900
3,590
9,710
5,700
4,650
6,720
3,730
7,180
3,640
2,120
5,500
4,410
-
2,340
5,430
-
3,590
9,710
5,900
4,730
6,020
3,400
6,400
3,400
1,910
5,000
4,000
2,200
2,130
4,710
1,900
3,240
9,710
5,700
4,650
13,830
13,830
12,500
3,680
7,730
7,760
4,810
4,670
6,200
6,600
4,080
3,680
7,730
7,760
4,810
4,670
6,200
6,600
4,080
3,600
7,250
7,313
4,330
4,390
6,280
6,150
3,700
2020
%
6.75%
8.50%
8.00%
6.25%
6.75%
7.00%
7.00%
6.75%
6.75%
7.00%
6.75%
6.25%
6.75%
7.00%
6.75%
6.75%
6.25%
6.25%
6.50%
6.25%
6.25%
7.00%
6.50%
6.75%
6.50%
-
7.25%
6.25%
-
6.50%
6.75%
6.75%
6.50%
6.75%
7.50%
7.00%
6.50%
6.25%
6.50%
7.75%
7.50%
6.50%
2019
%
7.50%
8.50%
8.00%
6.75%
7.00%
7.50%
7.50%
7.00%
7.00%
7.25%
7.25%
6.50%
7.00%
7.25%
7.00%
7.00%
7.00%
6.75%
7.00%
6.75%
6.75%
7.25%
7.00%
7.25%
7.00%
7.25%
7.75%
7.00%
8.25%
7.00%
6.75%
6.75%
6.50%
7.25%
7.50%
7.25%
6.75%
6.50%
6.75%
7.75%
7.50%
7.00%
APN CONVENIENCE RETAIL REIT 35
NOTES TO THE FINANCIAL STATEMENTS
Latest independent
valuation
Carrying amounts
Capitalisation rate
224 Clontarf Road, Hamilton Hill, WA
1182 Chapman Road, Glenfield, WA
1 Kakadu Road, Yanchep, WA
Valuation
date
Jun-20
Jun-20
Jun-20
Lot 401 Great Northern Highway, South Hedland, WA
Jun-20
702 Main North Road, Gepps Cross, SA1&3
337 St Vincent Street East, Port Adelaide, SA1&3
226-228 Bridge Road, Pooraka, SA1
2341 Albany Highway, Gosnells, WA1&3
323 North East Road, Hampstead Gardens, SA1&3
225 Womma Road, Edinburgh North, SA1&3
342-346 Albany Highway, Orana, WA1&3
130 Edwards Street, Ayr, QLD1&3
51-55 Aerodrome Road, Maroochydore, QLD1&3
Lot 1 / 437 Yaamba Road, Park Avenue, QLD1&3
73-77 Railway Street, Gatton, QLD1&3
176 Otho Street, Inverell, NSW1&3
Land held for development
Oct-194
Nov-194
Oct-194
Oct-194
Oct-194
Oct-194
Jul-19
Jun-19
Aug-19
Sep-19
Feb-20
Feb-20
$'000
5,120
5,200
6,130
5,870
5,055
5,170
5,250
4,754
4,646
5,410
6,150
4,950
6,850
5,650
5,100
5,100
2020
$'000
5,120
5,200
6,130
5,870
5,055
5,170
5,250
4,754
4,645
5,410
6,150
4,950
6,850
5,830
5,100
5,100
473-477 North East Road & 37 Ramsay Avenue,
Hillcrest, SA3
N/A
N/A
3,595
2019
$'000
4,620
4,740
5,540
5,340
-
-
-
-
-
-
-
-
-
-
-
-
-
2020
%
6.50%
7.75%
6.75%
7.50%
6.35%
6.00%
6.00%
6.10%
6.35%
6.10%
6.50%
6.75%
6.75%
6.75%
6.75%
6.25%
N/A
2019
%
7.00%
8.25%
7.25%
8.00%
-
-
-
-
-
-
-
-
-
-
-
-
-
Total investment properties
448,159
358,293
1 The carrying amount of investment property that were not independently valued as at period end have been determined based on Directors’ valuations.
2
Investment properties disposed during the year.
3 New investment properties acquired during the year.
4 Fund-through development projects completed during the year. External valuation for these properties were performed on an “as if completed” basis.
The weighted average capitalisation rate for the financial year ended 30 June 2020 was 6.58% (2019: 7.01%).
Recognition and measurement
Investment properties
Investment properties are properties held to earn rentals and/or for capital appreciation (including property under
construction for such purposes) and are measured initially at cost, including transaction costs.
Subsequent to initial recognition, investment properties are measured at fair value (inclusive of adjustments for straight line
rental revenue recognition, unamortised lease incentives and costs and capital expenditure obligations), with gains and
losses arising from changes in the fair value of investment properties included in the consolidated statement of profit or loss
and other comprehensive income in the period in which they arise.
Valuation process
The purpose of the valuation process is to ensure that assets are held at fair value and all applicable regulations
(Corporations Act 2001 and ASIC regulations) and the relevant Accounting Standards are complied with.
External valuations are performed by independent professionally qualified valuers who hold a recognised relevant
professional qualification and have specialised expertise in the class of investment properties being valued and are
performed for each investment property on at least a three-year rotational basis. Internal valuations are performed by the
Group’s internal property team in the intervening periods and are reviewed and approved by the Board.
The adopted fair value is determined using the income capitalisation method where the key valuation inputs are net passing
rent, net market rent and capitalisation rates based on comparable market evidence.
36 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
Derecognition
An investment property is derecognised upon disposal or when it is withdrawn from use, and when no future economic
benefits are expected from use. The gain or loss arising on derecognition of the property is measured as the difference
between the net proceeds from disposal and its carrying amount at disposal date and is recognised in the consolidated
statement of profit or loss and other comprehensive income in the period in which the property is derecognised.
Key estimates and assumptions – fair value and the valuation process
The Group has investment properties with a net carrying amount of $448,159,000 (2019: $358,293,000), representing
the estimated fair value.
The determination of the fair value of investment property is subject to a number of key estimates and assumptions.
Management has considered the nature, characteristics and risks of its investment properties as well as the level of fair
value hierarchy within which the fair value measurements are categorised.
The fair value of investment property is the price at which it could be exchanged between knowledgeable and
willing parties in an arms’ length transaction. The best evidence of fair value is current prices in an active market for
comparable properties (i.e. properties with similar investment characteristics including, but not limited to, location,
lettable area and land area, building characteristics, property conditions, the tenant in occupation, lease terms and
income potential).
The fair value of investment property has been assessed to reflect market conditions as at the reporting date. While
this represents the best estimate of fair value at the reporting date, the property market dynamics and fundamentals at
the point in time the property is sold may mean that the actual price achieved is higher or lower than the most recent
best estimate of that property's fair value.
The adopted valuation for investment properties, including property under development which is substantially complete
and has pre-committed leases, is determined using the income capitalisation method. The income capitalisation
method uses unobservable inputs (i.e. key estimates and assumptions) in determining fair value, as per the table
below:
Fair Value
Hierarchy
Fair value
30 June 2020
$'000
Level 3
448,159
Valuation
Technique
Inputs used to
measure fair value
Range of
unobservable inputs
Income
capitalisation
method
Net passing rent (per sqm p.a.)
Net market rent (per sqm p.a.)
Adopted capitalisation rate
$209 - $2,028
$205 - $1,968
6.00% - 8.50%
A definition is provided below for each of the inputs used to measure fair value:
Income capitalisation
method
This method involves assessing the total net market income receivable from the property
and capitalising this in perpetuity to derive a capital value, with allowances for capital
expenditure reversions.
Net passing rent
Net market rent
Net passing rent is the contracted amount for which a property or space within a property
is leased. In the calculation of net rent, the owner recovers outgoings from the tenant on a
pro-rata basis (where applicable).
Net market rent is the estimated amount for which a property or space within a property
should lease between a willing lessor and a willing lessee on appropriate lease terms in an
arm’s length transaction, after proper marketing and wherein the parties have each acted
knowledgeably, prudently and without compulsion. In the calculation of net rent, the owner
recovers some or all outgoings from the tenant on a pro-rata basis (where applicable).
Adopted capitalisation
rate
The rate at which net market income is capitalised to determine the value of a property.
The rate is determined with regards to market evidence and the prior external valuation.
APN CONVENIENCE RETAIL REIT 37
NOTES TO THE FINANCIAL STATEMENTS
6.5 Sensitivity information
When calculating fair value using the income capitalisation approach, the net market rent has a strong interrelationship
with the adopted capitalisation rate given the methodology involves assessing the total net market income receivable from
the property and capitalising this in perpetuity to derive a capital value. In theory, an increase in the net market rent and
an increase (softening) in the adopted capitalisation rate could potentially offset the impact to the fair value. The same can
be said for a decrease in the net market rent and a decrease (tightening) in the adopted capitalisation rate. A directionally
opposite change in the net market rent and the adopted capitalisation rate could potentially magnify the impact to the fair
value.
Due to the impact that the COVID-19 pandemic could have on valuations of investment properties, sensitivity analysis has
been performed on the fair values adopted at 30 June 2020, based on a range of potential capitalisation rate movements on
the Group’s investment properties portfolio as compared to the capitalisation rates adopted at 30 June 2020. Capitalisation
rate is considered to be one of the key unobservable input that would have a material impact on the fair values adopted if
they moved.
Outcomes of the sensitivity analysis are set out below:
Significant input
Investment properties
Net Profit
0.25% decrease
in capitalisation
rate
$’000
0.25% increase
in capitalisation
rate
$’000
17,663
(16,357)
The results of the sensitivity analysis demonstrate that the in the event of a softening in capitalisation rates, the Group’s
consolidated financial position would not be materially impacted to the extent that its going concern assumption would need
to be reconsidered.
38 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
Capital structure, financing and risk management
This section outlines how the Group manages its capital structure and related financing activities and presents the resultant
returns delivered to security holders via distributions and earnings per security.
7. Contributed equity
7.1 Carrying amount
At the beginning of the financial year
Issue of new securities
Security issuance costs
Securities buy-back
Distribution reinvestment
2020
$’000
209,935
100,712
(1,241)
(132)
847
2019
$’000
209,966
-
(1)
(30)
-
At the end of the financial year
310,121
209,935
Attributable to:
Securityholders of Convenience Retail REIT No. 2
Securityholders of non-controlling interests
7.2 Number of securities on issue
At the beginning of the financial year
Issue of new securities
Securities buy-back
149,718
160,403
310,121
2020
No.
78,910,051
30,814,807
(40,291)
114,004
95,931
209,935
2019
No.
78,920,051
-
(10,000)
At the end of the financial year
109,684,567
78,910,051
Recognition and measurement
Issued and paid up securities are recognised at the fair value of the consideration received by the Group, net of directly
incurred transaction costs.
The securities of APN Convenience Retail REIT (the “Stapled Security”) comprise the stapled securities of Convenience Retail
REIT No. 1, Convenience Retail REIT No. 3 and this Fund. Whilst these Funds remain stapled, their securities must only be
issued, dealt with or disposed of as a Stapled Security.
APN CONVENIENCE RETAIL REIT 39
NOTES TO THE FINANCIAL STATEMENTS
8. Distributions
Distributions paid during the year:
Quarter ended 30 Sep
Quarter ended 31 Dec
Quarter ended 31 Mar
Distributions payable:
Quarter ended 30 Jun
Total distributions paid/payable
2020
Cents per
security
5.450
5.450
5.450
5.450
21.800
$’000
4,301
5,046
5,126
5,978
20,451
2019
Cents per
security
5.225
5.225
5.225
5.225
20.900
Recognition and measurement
A liability for any distribution declared on or before the end of the reporting period is recognised in the consolidated
statement of financial position in the reporting period to which the distribution pertains.
9. Earnings per security
Total comprehensive income for the year ($’000)
Weighted average number of securities outstanding (thousands)
Basic and diluted earnings (cents per security)
2020
45,799
89,153
51.37
$’000
4,124
4,123
4,124
4,123
16,494
2019
24,001
78,918
30.41
Recognition and measurement
Basic earnings per security
Basic earnings per security is calculated as total comprehensive income of the Group divided by the weighted average
number of ordinary securities outstanding during the year.
Diluted earnings per security
Diluted earnings per security adjusts the figures used in the determination of basic earnings per security to take into account
amounts unpaid on securities and the effect of all dilutive potential ordinary securities.
No dilutive securities were issued/on issue during the current year (2019: nil).
40 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
10. Borrowings
Non-current
Bank loans – secured1
2020
$'000
75,826
75,826
2019
$'000
115,400
115,400
1
Includes deferred borrowing costs of $729,000 (2019: $617,000) that have been allocated against the total amount drawn at balance date.
Recognition and measurement
Borrowings
Borrowings are recorded initially at fair value, net of transaction costs. Subsequent to initial recognition, borrowings are
measured at amortised cost using the effective interest rate method. Gains and losses are recognised in the consolidated
statement of profit or loss and other comprehensive income in the period in which they arise.
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement or repayment of
the facility for at least 12 months after the reporting date.
10.1 Summary of borrowing arrangements
The Group has entered into a revolving credit facility agreement with three banks that is secured and cross collateralised over
the Group’s investment properties (via first registered real property mortgages) and other assets (via a first ranking general “all
assets” security agreement).
Loan facility limit
Amount drawn at balance date
Amount undrawn at balance date
2020
$'000
165,000
(76,555)
88,445
2019
$'000
125,000
(116,017)
8,983
As at 30 June 2020, the total revolving credit facility available of $165,000,000 has the following maturity dates:
¡ Tranche 1: $52,500,000 – repayable Feb 2023;
¡ Tranche 2: $12,500,000 – repayable Feb 2024;
¡ Tranche 3: $21,250,000 – repayable Feb 2024;
¡ Tranche 4: $31,250,000 – repayable Feb 2025;
¡ Tranche 5: $7,500,000 – repayable Feb 2023;
¡ Tranche 6: $20,000,000 – repayable Nov 2023; and
¡ Tranche 7: $20,000,000 – repayable Feb 2023.
Under the terms of this facility, each member of the Group is permitted to draw down or repay amounts subject to the overall
requirement that the Group remains compliant with the facility’s terms and conditions.
This facility agreement contains both financial and non-financial covenants and undertakings that are customary for secured
debt facilities of this nature. The key financial covenants (with capitalised terms being defined terms in the agreement) that
apply to the Group are as follows:
Loan to Value Ratio (“LVR”)
At all times, LVR does not exceed 50%.
Interest Cover Ratio (“ICR”)
On 31 December and 30 June each year, ICR is not less than
2.0 times.
2020
17.08%
5.08 times
APN CONVENIENCE RETAIL REIT 41
NOTES TO THE FINANCIAL STATEMENTS
10.2 Finance costs
Interest expense paid / payable
Line fees
Total finance costs
2020
$’000
3,776
819
4,595
2019
$’000
4,488
698
5,186
The weighted average ‘all-in’ interest rate for the Group (including bank margin, amortisation of borrowing costs and
undrawn line fees) at reporting date was 3.74% (2019: 4.27%).
Recognition and measurement
Interest expense
Interest expense is recognised in the consolidated statement of profit or loss and other comprehensive income using the effective
interest rate method except where it is incurred for the construction of any qualifying asset, where it is capitalised during the period
of time that is required to complete and prepare the asset for its intended use.
The effective interest rate method calculates the amount to be recognised over the relevant period at the rate that exactly
discounts estimated future cash receipts (including all fees that form an integral part of the financial instrument, transaction costs
and other premiums or discounts) through the expected life of the financial instrument, or (where appropriate) a shorter period, to
the net carrying amount on initial recognition. There were no substantial modifications to the terms of existing financial liabilities.
10.3 Derivatives – interest rate contracts
The Group has a debt facility subject to floating interest rates. The Group uses derivative financial instruments to manage
its exposure to interest rates such as interest rate swaps (to lock in fixed interest rates) and/or interest rate caps (to limit
exposure to rising floating interest rates).
All derivative financial instruments are entered into on terms that provide pari-passu security and cross collateralisation rights
over the Fund’s and the Group’s investment properties (via first registered real property mortgages) and other assets (via a
first ranking general “all assets” security agreement) in conjunction with the Group’s revolving credit facility.
Generally, the interest rate swap contracts settle on a quarterly basis, generally coinciding with the dates on which interest
is payable on the underlying debt. The floating rate incurred on the debt is Australian BBSY. The difference between the
fixed and floating interest rate is settled on a net basis by the relevant counterparty. The interest rate contracts have not
been identified as hedging instruments and any movements in the fair value are recognised immediately in the consolidated
statement of profit or loss and other comprehensive income.
As at the reporting date, the fair value of interest rate contracts held by the Group was:
Current liabilities
Interest rate contracts
Non-current liabilities
Interest rate contracts
2020
$'000
2019
$'000
(1,190)
(898)
(2,305)
(1,646)
42 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
The Group’s interest rate contracts in effect at reporting date covered 91.44% (2019: 77.57%) of the principle drawn under
the debt facility and the contract details are as follows:
Notional Value
$'000
Swap Effective
Date
Swap Expiry
Date
Weighted
average
interest rate
2020: Interest rate swaps
Swap 1
Swap 2
Swap 3
Swap 4
Swap 5
Swap 6
Total / Weighted average
2019: Interest rate swaps
Swap 1
Swap 2
Swap 3
Swap 4
Swap 5
Swap 6
Swap 7
Swap 8
Total / Weighted average
23 Nov 2017
6 Nov 2017
2 Aug 2019
29 Mar 2018
2 Nov 2018
7 Jan 2020
2 Feb 2022
6 Nov 2024
2 May 2022
2 May 2023
2 Nov 2023
7 Jan 2023
23 Nov 2017
6 Nov 2017
2 Feb 2022
6 Nov 2020
20 Dec 2017
20 Dec 2019
2 Aug 2019
19 Mar 2018
2 Aug 2019
2 Nov 2018
7 Jan 2020
2 May 2023
2 May 2020
2 Aug 2022
2 Nov 2023
7 Jan 2023
10,000
20,000
10,000
10,000
10,000
10,000
70,000
10,000
20,000
5,000
10,000
15,000
10,000
10,000
10,000
90,000
1.96%
2.26%
Recognition and measurement
Derivatives are categorised as financial instruments at fair value through profit or loss and are initially recognised at fair value
on the date a derivative contract is entered into and are subsequently remeasured to their fair value at each reporting date
based on counterparty bank valuations. Counterparty bank valuations are tested for reasonableness by discounting the
estimated future contractual cashflows and using market interest rates for a substitute instrument at the measurement date.
The resulting gain or loss is recognised immediately in the consolidated statement of profit or loss and other comprehensive
income as hedge accounting has not been applied.
APN CONVENIENCE RETAIL REIT 43
NOTES TO THE FINANCIAL STATEMENTS
10.4 Fair value hierarchy
The following table provides an analysis of financial instruments that are measured at fair value at 30 June 2020, grouped
into Levels 1 to 3 based on the degree to which the fair value inputs are observable:
¡ Level 1 fair value measurements are those derived from quoted prices in active markets for identical assets or liabilities.
¡ Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
¡ Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability
that are not based on observable market data (unobservable inputs).
Financial liabilities at FVTPL
Interest rate contracts
Total
Financial liabilities at FVTPL
Interest rate contracts
Total
Fair value measurement as at 30 June 2020
Level 1
$’000
-
-
Level 2
$’000
(3,495)
(3,495)
Level 3
$’000
-
-
Fair value measurement as at 30 June 2019
Level 1
$’000
-
-
Level 2
$’000
(2,544)
(2,544)
Level 3
$’000
-
-
Total
$’000
(3,495)
(3,495)
Total
$’000
(2,544)
(2,544)
There were no transfers between Levels during the financial year.
44 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
11. Capital risk management
The Responsible Entity's objectives when managing the capital of the Group is to safeguard its ability to continue as a going
concern, so that the Group can continue to provide returns for securityholders in accordance with the Group’s investment
strategy, and to optimise the capital structure and therefore the Group’s cost of capital on a risk adjusted basis.
The capital of the Group is maintained or adjusted through various methods including by adjusting the quantum of
distributions paid, raising or repaying debt, issuing or buying back securities or selling assets.
The Group’s capital position is primarily monitored through its ratio of net debt to total assets (excluding cash) (“Gearing
Ratio”), where a target range of between 25% - 40% has been established.
As at 30 June 2020, APN Convenience Retail REIT’s Gearing Ratio was 16.52% (2019: 32.29%) which is a result of the
funds raised under the Group’s institutional placement and SPP, further strengthening the Group’s balance sheet position
to complete existing contracted acquisitions, support future acquisitions and managing any potential downward risks in
valuations of investment properties.
Total borrowings
Less: cash and cash equivalents
Net debt
Total assets (excluding cash and cash equivalents)
Gearing ratio
2020
$’000
76,555
(2,331)
74,224
449,289
16.52%
2019
$’000
116,017
(289)
115,728
358,418
32.29%
12. Financial and risk management
The Responsible Entity is responsible for ensuring a prudent risk management culture is established for the Group. This is
reflected in the adoption of a Risk Management Framework that clearly defines risk appetite and risk tolerance limits which
are consistent with the the Group’s investment mandate.
The Group’s dedicated Fund Manager is responsible for overseeing the establishment and implementation of appropriate
systems, controls and policies to manage the Group’s risk. The focus is on ensuring compliance with the approved Risk
Management Framework whilst seeking to maximise security holder returns.
The effective design and operation of the risk management systems, controls and policies is overseen by the Responsible
Entity and its Audit, Risk and Compliance Committee.
Risk management in respect to financial instruments is achieved via written policies that establish risk appetite and tolerance
limits in respect to exposure to interest rate risk, credit risk, the use of derivative financial instruments and non-derivative
financial instruments and the investment of excess liquidity. Compliance with these policies and exposure limits is reviewed
by the Responsible Entity on a continuous basis.
12.1 Financial instruments
The Group undertakes transactions in a range of financial instruments including:
¡ cash and cash equivalents;
¡ receivables;
¡ payables;
¡ borrowings; and
¡ derivatives.
Transactions in these instruments expose the Group to a variety of financial risks including market risk (which includes
interest rate risk and other price risks), credit risk and liquidity risk. The Group does not enter into or trade financial
instruments, including derivatives, for speculative purposes.
APN CONVENIENCE RETAIL REIT 45
NOTES TO THE FINANCIAL STATEMENTS
12.2 Market risk (including interest rate risk)
The Group is subject to market risk (the risk that borrowings or derivatives are repriced to different interest rate margins on
refinance or renewal arising from changes in the debt markets) and interest rate risk (the risk that a change in interest rates
may have on the Group’s profitability, cashflows and/or financial position) predominately through its borrowings, derivatives
and cash exposures.
The interest rates applicable to each category of financial instrument are disclosed in the applicable note to the financial
statements.
Market risk sensitivity
The Group’s sensitivity to an assumed 100 basis point change in interest rates or interest rate margins as at the reporting
date, on the basis that the change occurred at the beginning of the reporting period, is outlined in the table below and
includes both increases / decreases in interest payable / receivable and fair value gains or losses on revaluation of
derivatives.
30 June 2020
Variable rate instruments
Derivative financial instruments
30 June 2019
Variable rate instruments
Derivative financial instruments
Net Profit
100bp increase
$’000
100bp decrease
$’000
(766)
2,886
2,120
(1,106)
2,984
1,824
766
(2,669)
(1,903)
1,106
(3,099)
(1,939)
12.3 Credit risk
The Group is subject to credit risk (the risk that counterparty will default on its contractual obligations resulting in financial
loss to the Group) predominately through its trade and other receivables, derivatives and cash exposures. The maximum
exposure to credit risk at a reporting date is the carrying value of each financial asset as disclosed in the applicable note to
the financial statements.
Credit risk is managed by ensuring that at the time of entering into a contractual arrangement or acquiring a property,
counterparties or tenants are of appropriate credit worthiness, provide appropriate security or other collateral and/or do
not show a history of default. The Group’s treasury policy also requires that derivatives and cash transactions are limited to
financial institutions that meet minimum credit rating criteria.
12.4 Liquidity risk
The Group is subject to liquidity risk (the risk that the Group will not be able to meet its contractual or other operating
obligations).
Liquidity risk is managed by continuously monitoring forecast and actual cash flows, maintaining appropriate head room
under debt facilities and matching the maturity profiles of financial assets and liabilities. To help reduce liquidity risks the
Group:
¡ has a policy which targets a minimum level of cash and cash equivalents to be maintained;
¡ has readily accessible standby facilities and other funding arrangements in place;
¡ has a debt maturity policy which targets a maximum percentage of total debt maturing in any one 12-month period; and
¡ has a loan covenant target to ensure that the Group can withstand a downward movement in valuations, a reduction in
income and increase in interest rates without breaching loan facility covenants.
46 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
The Group’s liquidity risk profile, based on the contractual maturities of key obligations but before consideration of operating
cashflows available, is outlined in the following table.
Within 1 year
$’000
Between
1 and 2 years
$’000
Over 2 years
$’000
Total
contractual
cash flows
$’000
Carrying
amounts
$’000
2020
Liabilities
Payables – current
Distribution payable
Interest-bearing liabilities
Interest rate contracts
2019
Liabilities
Payables – current
Distribution payable
Interest-bearing liabilities
Interest rate contracts
12.5 Net fair values
6,993
5,978
1,902
1,529
16,402
2,846
4,123
7,108
818
-
-
1,980
1,424
3,404
-
-
65,927
738
-
-
79,555
1,589
6,993
5,978
83,437
4,542
6,993
5,978
75,826
3,495
81,144
100,950
92,292
-
-
58,878
841
2,846
4,123
131,913
2,397
2,846
4,123
115,400
2,544
14,895
66,665
59,719
141,279
124,913
The carrying values of the Group’s financial instruments as disclosed in the consolidated statement of financial position
approximate their fair values. Refer to the applicable notes to the financial statements for the recognition and measurement
principles applied to each type of financial instrument.
13. Commitment and contingencies
Other than the contractual obligations disclosed in note 6, there are no other commitments and contingencies in effect at 30
June 2020 (2019: $nil).
APN CONVENIENCE RETAIL REIT 47
NOTES TO THE FINANCIAL STATEMENTS
Efficiency of operation
This section presents the Group’s working capital position and the efficiency in which it converts operating profits into cash
available for securityholders / the reinvestment back into the operations of the Group.
14. Cash and cash equivalents
14.1 Reconciliation of profit for the year to net cash provided by operating activities
For the purpose of the consolidated statement of cash flows, cash and cash equivalents includes cash on hand and bank
and short-term deposits at call.
Reconciliation of cash and cash equivalent
Cash and cash equivalents
Reconciliation of net profit / (loss) to net
cash flows from operating activities
Net profit / (loss)
Add / (loss) non-cash items:
Straight line lease revenue recognition
Impairment of rental receivables
Amortisation of borrowing costs
Movement in deferred lease incentives
Fair value loss / (gain) on derivatives
Fair value (gain) / loss on investment properties
Changes in assets / liabilities:
(Increase) / decrease in trade and other receivables
Increase / (decrease) in payables
Net cash inflows from operating activities
2020
$’000
2,331
45,799
(4,175)
57
483
28
952
(23,902)
(1,062)
4,186
22,366
2019
$’000
289
24,001
(4,473)
57
385
(63)
2,402
(5,341)
(141)
(388)
16,439
Recognition and measurement
Cash and cash equivalents comprise cash on hand and cash in banks or other short term highly liquid investments, net of
outstanding bank overdrafts.
Cash flows are included in the consolidated statement of cash flows on a gross basis. The GST component of cash flows
arising from investing and financing activities which is recoverable from, or payable to, the taxation authority is classified as
operating cash flows.
48 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
14.2 Reconciliation of liabilities arising from financing activities
The table below details changes in the Group’s liabilities arising from financing activities, including both cash and non-cash
changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified
in the Group’s consolidated statement of cash flows as cash flows from financing activities.
Notes
10
2020
$’000
2019
$’000
115,400
109,742
Borrowings as at beginning of the year
Net cash inflow / (outflow) from financing activities:
Proceeds from borrowings
Repayments of borrowings
Additional capitalised borrowing costs paid
Non-cash changes:
Amortisation of deferred borrowing costs
Borrowings as at the end of the year
10
15. Trade and other receivables
Current
Rent and recoveries receivable
Interest receivable
15.1 Ageing analysis of receivables past due but not impaired
31-90 days
91+ days
85,567
(125,029)
(595)
483
75,826
44,117
(38,700)
(144)
385
115,400
2020
$’000
853
3
856
2020
$’000
15
1
16
2019
$’000
94
1
95
2019
$’000
11
-
11
As at 30 June 2020, rent receivable of $57,000 was impaired (2019: $57,000) and expensed in the consolidated statement
of profit or loss and other comprehensive income. The Group holds $25,000 security and/or other collateral (2019: $nil) and
does not have any significant credit risk exposure to any single counterparty or counterparties having similar characteristics
in respect of rent receivables past due but not impaired.
There are no significant financial assets that have had renegotiated terms that would otherwise have been past due or
impaired.
APN CONVENIENCE RETAIL REIT 49
NOTES TO THE FINANCIAL STATEMENTS
Recognition and measurement
Rent Receivables
Rent receivables are recorded initially at fair value (including GST) and subsequently at amortised cost, less any impairment
allowances under the expected credit loss (“ECL”) model.
Impairment allowances for rent receivable and other financial assets (other than those measured at fair value through profit and
loss) is assessed at each reporting period and is measured using the simplified approach based on its lifetime ECL. Credit losses
are measured as the difference between cash flows due to the Group in accordance with the contract and the cash flows the
Group expects to receive.
The Group analyses the age of outstanding receivable balances and debts that are known to be uncollectable are written off when
identified.
16. Trade and other payables
Current
Trade payables
Prepaid rental income
Accrued interest expenses
Accrued other expenses
2020
$’000
3,341
2,149
518
985
6,993
2019
$’000
928
70
738
1,110
2,846
Recognition and measurement
Trade and other amounts payable are recorded initially at fair value (including GST) and subsequently at amortised cost. The
average credit term on purchases is 30 days and they are non-interest bearing.
50 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
Other notes
17. Income taxes
Recognition and measurement
All funds that comprise APN Convenience Retail REIT are “flow-through” entities for Australian income tax purposes that
have elected into the Attribution Managed Investment Trusts rules (“AMIT Funds”) from the 2017 income year, such that the
determined trust components of each AMIT Fund will be taxable in the hands of the beneficiaries (the securityholders) on an
attribution basis.
Accordingly, deferred taxes associated with these AMIT Funds have not been recognised in the financial statements in
relation to differences between the carrying amounts of assets and liabilities and their respective tax bases, including taxes
on capital gains / losses which could arise in the event of a sale of properties for the amount at which they are stated in the
consolidated financial statements.
Realised capital losses are not attributed to securityholders but instead are retained within the AMIT Funds to be offset
against realised capital gains. The benefit of any carried forward capital losses is also not recognised in the financial
statements. If in any period realised capital gains exceed realised capital losses, including those carried forward from earlier
periods and eligible for offset, the excess is included in taxable income attributed to securityholders as noted above. For the
year-ended 30 June 2020, there were no unrecognised carried forward capital losses (2019: $nil).
18. Related party transactions
18.1 Transactions with key management personnel
The Group does not employ personnel in its own right. However, it is required to have a Responsible Entity to manage
the activities of the Fund and its controlled entities. As such there are no staff costs (including fees paid to directors of the
Responsible Entity) included in the consolidated statement of profit or loss and other comprehensive income.
18.2 Transactions with the Responsible Entity and related bodies corporate
The Responsible Entity of Convenience Retail REIT No. 2 is APN Funds Management Limited (“APN FM”) (ACN 080 674
479). Convenience Retail Management Pty Limited has been appointed as the Fund Manager (the “Manager”) to provide
investment management services and property management services to APN Convenience Retail REIT. The Manager is a
related body corporate of APN FM and a wholly owned subsidiary of APN Property Group Limited (“APN PG”) (ACN 109 846
068).
Transactions with the Responsible Entity / Manager have taken place at arm’s length and in the ordinary course of business.
The transactions are as follows:
Management fees1
Custody fees
Reimbursement of costs paid
2020
2019
Paid
$’000
2,297
84
27
2,408
Payable
$’000
230
9
-
239
Paid
$’000
2,105
76
24
2,205
Payable
$’000
190
7
6
203
1 APN FM is entitled to a base management fee of 0.65% per annum of the Gross Asset Value of the Group (reducing to 0.60% p.a. of Gross Asset Value between
$500m and $1,000m, 0.55% p.a. of Gross Asset Value between $1,000m and $1,500m and 0.50% of Gross Asset Value in excess of $1,500m). In addition, the
Manager has been appointed, on a non-exclusive basis, to provide property management, financial management, leasing and rent review and project supervision
services.
APN CONVENIENCE RETAIL REIT 51
NOTES TO THE FINANCIAL STATEMENTS
18.3 Security holdings and associated transactions with related parties
The below table shows the number of APN Convenience Retail REIT securities held by related parties (including managed
investment schemes for which a related party is the Responsible Entity or Manager) and the distributions received or
receivable.
APN Property Group Limited
APN Funds Management Limited
APD Trust
APN AREIT Fund
APN Property for Income Fund
APN Property for Income Fund No.2
CFS AREIT Mandate
Howard Brenchley
Geoff Brunsdon AM
Chris Aylward
Tim Slattery
Joseph De Rango
2020
2019
Number of
securities
Distributions
$
Number of
securities
Distributions
$
7,167
2,393,278
8,279,619
5,529,155
507,123
159,478
1,033,887
59,331
58,850
1,048,423
770
6,003
288,626
628,688
1,239,440
663,941
63,232
382,804
113,039
11,209
12,347
57,139
168
1,230
5,275,288
2,029,639
4,355,717
389,027
109,442
304,418
39,075
50,000
322,034
-
-
-
1,102,535
424,195
910,345
81,307
22,873
63,623
8,167
10,450
67,305
-
-
-
Total
19,083,084
3,461,863
12,874,640
2,690,800
17.40% (2019: 16.32%) of APN Convenience Retail REIT stapled securities are held by APN PG and its related parties.
19. Controlled entities
Parent entity
Convenience Retail REIT No. 2
Non-controlling interests
Convenience Retail REIT No. 1
Convenience Retail REIT No. 3
Country of
incorporation
Percentage owned (%)
2020
2019
Australia
Australia
Australia
-
-
-
-
Convenience Retail REIT No. 1 and Convenience Retail REIT No. 3 were acquired through a stapling arrangement, and thus
no ownership has been obtained. The financial results and financial position attributable to these entities are disclosed as
‘non-controlling interests’ in the consolidated financial statements.
52 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
20. Remuneration of auditors
Deloitte and related network firms*
Audit or review of financial reports:
Group
Controlled entities
Statutory assurance services required by legislation to be provided by the
auditor
Total
*The auditor of the Group is Deloitte Touche Tohmatsu.
2020
$’000
38,000
31,000
69,000
10,200
79,200
21. Parent entity financial information
The individual financial statements for the parent entity show the following aggregate amounts:
Financial position
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Equity
Issued capital
Retained earnings
Total equity
Financial performance
Profit for the financial year
Other comprehensive income
Total comprehensive income
2020
$’000
1,550
194,400
195,950
(5,947)
(24,070)
(30,017)
165,933
149,718
16,215
165,933
26,629
-
26,629
2019
$’000
38,000
26,000
64,000
6,000
70,000
2019
$’000
159
173,920
174,079
(3,689)
(56,703)
(60,392)
113,687
114,004
(317)
113,687
12,654
-
12,654
At 30 June 2020, the parent entity had not provided guarantees (2019: $nil), has no contingent liabilities (2019: $nil) and no
contractual commitments (2019: $nil).
APN CONVENIENCE RETAIL REIT 53
NOTES TO THE FINANCIAL STATEMENTS
22. Subsequent events
22.1 Acquisition of investment properties
Subsequent to 30 June 2020, the Group completed its acquisition of Brisbane Airport Link Service Centre and one land held
for development totaling $12.2 million. These acquisitions were funded from the Group’s existing debt facility.
Further, on 14 August 2020, the Group agreed to acquire three Coles Express sites in Queensland collectively for $27.5m.
These acquisitions will be debt funded.
22.2 Security purchase plan
On 15 July 2020, the Group successfully completed its security purchase plan (“SPP”) announced on 22 June 2020. A total
of $10 million was raised under the SPP and 3.2 million new stapled securities (“New Securities”) were issued under the SPP
and allotted on 20 July 2020. The New Securities issued under the SPP ranks equally with existing securities and will carry
the same voting rights and entitlements to receive distributions.
There has not been any other matter or circumstance occurring subsequent to the end of the financial year that has
significantly affected, or may significantly affect, the operations of the Group, the results of the Group, or the state of affairs of
the Group in future financial years.
22.3 COVID-19 pandemic
The COVID-19 pandemic has created unprecedented uncertainty, in particular the continued lack of market transactions
which are ordinarily a strong source of evidence for valuations of investment properties. Actual economic events and
conditions in the future may be materially different from those estimated by the Group at the reporting date. In the event
that COVID-19 impacts are more severe or prolonged than anticipated, the fair value of the Group’s investment properties
may be adversely impacted. At the date of issuing the consolidated financial statements, an estimate of the future impact of
COVID-19 on the Group’s investment properties cannot be made as this will depend on the magnitude and duration of the
economic downturn, where the full range of possible effects are currently unknown.
At the date of signing these financial statements, no additional rent relief has been granted by the Group since the reporting
date and there are no outstanding tenant discussions.
Other than those mentioned above, there has not been any other matter or circumstance occurring subsequent to the end
of the financial year that has significantly affected, or may significantly affect, the operations of the Group, the results of the
Group, or the state of affairs of the Group in future financial years.
54 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
NOTES TO THE FINANCIAL STATEMENTS
23. Adoption of new and revised accounting standards
23.1 New and revised AASBs affecting amounts reported and/or disclosures in consolidated the
financial statements
The Group has adopted all of the new and revised Standards and Interpretations issued by the Australian Accounting
Standards Board (the AASB) that are relevant to its operations and effective for the current year. These include:
Standard / Interpretation
Impact on financial statements
AASB 16 Leases
(“AASB 16”)
(applying to annual periods
beginning on or 1 January
2019)
AASB 16 Leases, applying to annual periods beginning on or after 1 January 2019,
introduces a comprehensive model for the identification, recognition and measurement
of lease arrangements for lessors and lessees. For lessees, AASB 16 replaces the
existing recognition and measurement requirements for operating leases (off balance
sheet commitment and an expense, recognised on a straight-line basis over the
lease term) with both a right-of-use (“ROU”) asset and a corresponding liability in
the statement of financial position for all qualifying leases. Under this new treatment,
the initial measurement of both the asset and liability equates to the net present
value (“NPV”) of the unavoidable lease payments (inclusive of incentives and costs).
Subsequently the asset value recognised is expensed as depreciation over the term
of the lease and an interest expense is recognised as part of extinguishing the lease
liability (reflecting the unwinding of the NPV of the unavoidable lease payments).
For the year ended 30 June 2020, the Group has not identified any contracts for which
it is a lessee. The Group is a lessor by virtue of the lease arrangements associated with
its investment properties. As AASB 16 does not significantly alter lessor accounting,
there is no impact to the Group.
23.2 Standards and Interpretations on issue but not yet effective
At the date of authorisation of the financial statements, the following IASB Standards and IFRIC Interpretations were also on
issue but not yet effective, although Australian equivalent Standards and Interpretations have not yet been issued.
Standard / Interpretation
AASB 2019-5 Amendments to Australian Accounting Standards – Disclosure of
the Effect of New IFRS Standards Not Yet Issued in Australia
The Amending Standard requires entities that intend to be compliant with IFRS
standards to disclose information required by AASB 108 Accounting Policies,
Changes in Accounting Estimates and Errors for the potential effect of each IFRS
pronouncement that has not yet been issued by the AASB.
Effective for annual reporting
periods beginning on or after
1 January 2020
APN CONVENIENCE RETAIL REIT 55
SUMMARY OF SECURITYHOLDERS
Twenty largest holders of quoted equity securities as at 3 August 2020
Rank
Name
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED
NATIONAL NOMINEES LIMITED
PERPETUAL CORPORATE TRUST LTD
J P MORGAN NOMINEES AUSTRALIA PTY LIMITED
CITICORP NOMINEES PTY LIMITED
THE TRUST COMPANY (AUSTRALIA) LIMITED
APN FUNDS MANAGEMENT LTD
BNP PARIBAS NOMS PTY LTD
SCJ PTY LIMITED
HOLUS NOMINEES PTY LTD
MR STEPHEN CRAIG JERMYN
THE CASS FOUNDATION LIMITED
ONE MANAGED INVESTMENT FUNDS LIMITED
NETWEALTH INVESTMENTS LIMITED
JAN HOLDINGS PTY LTD
FZIC PTY LTD
MR MICHAEL KENNETH HANSEN & MRS ALISON BETTY HANSEN
NEWECONOMY COM AU NOMINEES PTY LIMITED
STRATEGIC VALUE PTY LTD
BNP PARIBAS NOMINEES PTY LTD HUB24 CUSTODIAL SERV LTD
No. of
fully paid
ordinary
shares
12,018,644
9,618,358
8,289,157
7,904,811
5,522,526
2,772,059
2,402,816
2,267,545
1,109,538
1,048,423
1,009,538
1,000,000
975,000
843,040
650,000
633,000
604,917
560,253
524,552
479,222
%IC
10.63
8.51
7.33
6.99
4.88
2.45
2.13
2.01
0.98
0.93
0.89
0.88
0.86
0.75
0.57
0.56
0.53
0.50
0.46
0.42
Total
60,233,399
53.27
56 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
SUMMARY OF SECURITYHOLDERS
Distribution of holders of equity securities as at 3 August 2020
Range
100,001 and Over
10,001 to 100,000
5,001 to 10,000
1,001 to 5,000
1 to 1,000
Total
Unmarketable Parcels
Securities
68,147,368
34,941,437
7,236,748
2,677,776
67,477
113,070,806
1,595
No. of
holders
60
1,504
983
828
213
3,588
81
Substantial Holder Notices as at 3 August 2020
Name
Moelis Australia Limited and entities
APN Property Group and Holus Nominees Pty Limited and
Lauren Investments Pty Limited and related entities
Date of
Notice (ASX)
Number of
securities
23 June 2020
6,420,422
26 June 2020
18,958,130
On-market buy back
There were no on-market buy-backs during the year.
%
60.27
30.90
6.40
2.37
0.06
100.00
0.00
%
5.85
17.28
APN CONVENIENCE RETAIL REIT 57
CORPORATE DIRECTORY
APN Convenience Retail REIT
Convenience Retail REIT No. 1 ARSN 101 227 614
Convenience Retail REIT No. 2 ARSN 619 527 829
Convenience Retail REIT No. 3 ARSN 619 527 856
Responsible Entity
APN Funds Management Limited
ACN 080 674 479
AFS Licence No: 237500
Directors
Geoff Brunsdon AM, Independent Chairman
Howard Brenchley, Independent Director
Michael Johnstone, Independent Director
Jennifer Horrigan, Independent Director
Michael Groth, Alternate Director for Howard Brenchley
(Resigned in September 2019)
Joseph De Rango, Alternate Director for Howard Brenchley
Company Secretary
Chantal Churchill
Manager
Convenience Retail Management Pty Ltd
PO Box 18011
Collins Street East
Melbourne VIC 8003
T +61 3 8656 1000
F +61 3 8656 1010
W www.apngroup.com.au
Registered Office
Level 30, 101 Collins Street
Melbourne VIC 3000
T +61 3 8656 1000
F +61 3 8656 1010
W www.apngroup.com.au
E apnpg@apngroup.com.au
Share Registry
Link Market Services Limited
Locked Bag A14
Sydney South NSW 1235
T 1300 554 474 (local call cost)
F +61 2 9287 0303
E registrars@linkmarketservices.com.au
Stock Exchange Listing
APN Convenience Retail REIT stapled securities are listed
on the Australian Securities Exchange (ASX: AQR)
58 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
58 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
APN CONVENIENCE RETAIL REIT 59
60 APN CONVENIENCE RETAIL REIT ANNUAL REPORT 2020
APN CONVENIENCE RETAIL REIT 61
Responsible Entity
APN Funds Management Limited
ACN 080 674 479 AFSL No 237500
Level 30, 101 Collins Street
Melbourne Victoria 3000 Australia
T +61 (3) 8656 1000
F +61 (3) 8656 1010
W apngroup.com.au
Convenience Retail REIT
Information contained in this report is current as at the date of preparation. This report is provided for information purposes only and has been prepared without taking account of
any particular reader’s financial situation, objectives or needs. Nothing contained in this report constitutes investment, legal, tax or other advice. Accordingly, readers should, before
acting on any information in this report, consider its appropriateness, having regard to their objectives, financial situation and needs, and seek the assistance of their financial or
other licensed professional adviser before making any investment decision. This report does not constitute an offer, invitation, solicitation or recommendation with respect to the
subscription for, purchase or sale of any security, nor does it form the basis of any contract or commitment.