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P-‐REIT
FINANCIAL
REPORT
FOR
THE
YEAR
ENDED
30
JUNE
2011
CONTENTS
CONTENTS
Directors’
Report
Corporate
Governance
Directors’
Declaration
Auditor’s
Independence
Declaration
Independent
Auditor’s
Report
Consolidated
Statement
of
Comprehensive
Income
Consolidated
Statement
of
Financial
Position
Statement
of
Changes
in
Net
Assets
Attributable
to
Unitholders
Consolidated
Cash
Flow
Statements
Notes
to
the
Financial
Statements
PAGE
3
8
13
14
15
17
18
19
20
21
P-REIT
2
Annual Report - For The Year Ended 30 June 2011
DIRECTORS’ REPORT
DIRECTORS
REPORT
The
Directors
of
RFML
Limited
(“the
Responsible
Entity”),
the
responsible
entity
of
the
P-‐REIT
(“the
Trust”,
formerly
RP
Trust),
present
their
report
together
with
the
report
of
the
Trust
and
its
controlled
entity
for
the
year
ended
30
June
2011
and
the
auditor’s
report
thereon.
DIRECTORS
OF
THE
RESPONSIBLE
ENTITY
The
Directors
of
the
Responsible
Entity
at
any
time
during
or
since
the
end
of
the
financial
year
unless
otherwise
stated
are:
Seph
Glew
Seph
has
worked
in
the
commercial
property
industry
in
NZ,
the
USA
and
Australia.
Seph
has
driven
large
scale
property
development
and
financial
structuring
for
over
30
years.
In
addition,
since
the
early
1990s
Seph
has
run
many
“turn-‐around”
processes
in
relation
to
distressed
properties
and
property
structures
for
both
private
and
institutional
property
owners.
Seph
holds
a
Bachelor
of
Commerce
Degree,
and
while
working
for
the
Housing
Corporation
of
New
Zealand
and
then
AMP,
Seph
qualified
as
a
registered
valuer.
In
the
1980s
he
served
as
an
executive
director
with
New
Zealand
based
property
group
Chase
Corporation
and
as
a
non-‐executive
director
with
a
number
of
other
listed
companies
in
New
Zealand
and
Australia.
Seph
is
also
the
Executive
Chairman
of
Pelorus
Stuart
Brown
Stuart
has
been
involved
in
property
investment
for
over
15
years.
Stuart
has
run
debt
and
equity
raising
in
relation
to
listed
and
unlisted
real
estate
structures
with
assets
valued
at
over
half
a
billion
dollars.
Stuart
has
worked
in
each
of
BlackWall
Funds’
business
units
with
responsibilities
across
funds
management,
property
services
and
finance.
Stuart
oversees
all
aspects
of
BlackWall
Funds’
operations.
Previously,
Stuart
was
Managing
Director
of
formerly
ASX
listed
Pelorus
Property
Group.
In
his
earlier
career,
Stuart
practised
as
a
solicitor
in
the
areas
of
real
estate,
mergers
and
acquisitions
and
corporate
advisory
with
Mallesons
and
Gilbert
+
Tobin.
Stuart
is
also
a
director
of
Pelorus
Private
Equity
Limited.
Tim
Brown,
appointed
30
June
2011
Tim
is
the
Chief
Financial
Officer
for
BlackWall
and
its
Funds.
Tim
is
responsible
for
all
aspects
of
groups
financial
reporting,
debt
management
and
accounting
operations.
He
has
a
Bachelor
of
Commerce
from
the
University
of
New
South
Wales,
is
a
member
of
the
Institute
of
Chartered
Accountants
of
Australia
and
has
a
Graduate
Diploma
from
the
Financial
Services
Institute
of
Australasia.
He
spent
4
years
with
Deloitte
in
their
middle
market
audit
division
working
on
a
wide
variety
of
SMEs.
In
2002
he
joined
Lend
Lease
Corporation
and
held
a
number
of
finance
roles
across
the
Lend
Lease
portfolio
from
development
and
retail
financial
management
to
corporate
treasury,
including
Treasury
Manager
for
Lend
Lease's
European
operations
based
in
London.
Paul
Tresidder
resigned
as
a
director
on
31
August
2010
and
Judith
Ryan
resigned
as
a
director
on
30
June
2011.
P-REIT
Annual Report - For The Year Ended 30 June 2011
3
DIRECTORS’ REPORT continued
DIRECTORS
REPORT
continued
David
Sellin
was
Company
Secretary
prior
to
Alex
Breen
being
appointed
from
20
October
2010
until
12
January
2011
when
Don
Bayly
was
appointed.
Don
has
over
20
years
compliance
management
experience.
MEETING
ATTENDANCES
Attendance
at
the
Responsible
Entity’s
board
meetings
held
during
the
financial
year
are
Director
detailed
below:
Board
Meetings
Meetings
Held
Seph
Glew
Stuart
Brown
Paul
Tresidder
Judith
Ryan
Tim
Brown
(including
as
alternate
for
Judith
Ryan)
DIRECTORS’
RELEVANT
INTERESTS
10
10
10
0
6
4
As
at
the
date
of
this
report
the
Directors’
relevant
interests
in
units
in
the
Trust
are:
Director
Units
Units
(%)
Shares
(%)
Seph
Glew
Stuart
Brown
Tim
Brown
PRINCIPAL
ACTIVITIES
47,359,345
853,650
0
22.82%
0.41%
0%
The
Trust
is
a
registered
managed
investment
scheme
incorporated
and
domiciled
in
Australia.
The
principal
activity
of
the
Trust
and
its
controlled
entity
during
the
financial
year
was
investing
in
income-‐producing
properties.
There
were
no
significant
changes
in
the
principal
activity
during
the
financial
year.
OPERATING
RESULTS
The
net
result
of
the
Trust
for
the
financial
period
ended
30
June
2011
was
a
profit
of
$1.596
million
(2010:
loss
of
$10.947
million).
This
result
is
net
of
property
revaluation
increment
of
$1.2
million
offset
by
write-‐downs
in
the
value
of
the
Trust’s
financial
assets
by
$1.046
million
(2010:
write
down
of
$12.4
million).
The
underlying
performance
of
the
properties
continues
to
be
strong
with
properties
fully
leased
across
the
portfolio.
There
was
no
requirement
to
provide
for
income
tax
as
the
Trust
fully
distributes
its
taxable
income
to
unitholders.
P-REIT
4
Annual Report - For The Year Ended 30 June 2011
DIRECTORS’ REPORT continued
DIRECTORS
REPORT
continued
DISTRIBUTIONS
TO
UNITHOLDERS
No
taxable
distributions
were
paid
during
the
year
(2010:
Nil).
On
20
May
2011,
the
Trust
acquired
$3
million
in
the
shares
of
BlackWall
Property
Funds
Limited
(“BlackWall’,
related
party
of
the
Responsible
Entity)
and
distributed
the
shares
to
unitholders
as
a
return
of
capital.
SIGNIFICANT
CHANGES
IN
STATE
OF
AFFAIRS
During
the
year
the
Trust
acquired
$30
million
Bakehouse
Bonds.
These
bonds
are
transferable,
indexed
to
CPI
and
mature
in
2020.
The
acquisitions
were
settled
by
the
issue
of
100
million
units
in
the
Trust.
The
Trust’s
total
bank
debt
as
at
30
June
2011
was
$57.88
million
(2010:
$58.672
million).
Repayments
totalling
$792,300
were
made
during
the
year
in
accordance
with
the
requirements
of
the
new
loan
facility
agreement
with
the
lender.
Details
of
the
new
loan
facility
agreement
can
be
found
in
Note
13.
Gearing
at
year
end,
measured
as
a
ratio
of
total
interest
bearing
liabilities
over
total
assets
was
48.1%
(2010:
70.3%).
Other
than
the
above,
there
was
no
significant
change
in
the
state
of
affairs
of
the
consolidated
entity
during
the
financial
year.
GOING
CONCERN
This
financial
report
has
been
prepared
on
a
going
concern
basis,
which
contemplates
continuity
of
normal
business
activities
and
the
realisation
of
assets
and
settlement
of
liabilities
in
the
ordinary
course
of
business.
The
Trust’s
profit
for
the
year
was
$1.596
million
(2010:
$10.947
million
loss).
The
significant
losses
in
previous
periods
were
due
mainly
to
the
unrealised
impairment
losses
recognised
over
investment
properties.
Previous
impairments
of
investment
properties
are
not
seen
to
be
reflective
of
the
Trust’s
profitability
or
ability
to
continue
as
a
going
concern
in
the
future.
During
the
year
the
Trust
received
approval
for
a
24-‐month
extension
of
the
Trust’s
bank
bill
facilities.
Consequently,
the
financier’s
loans
that
are
not
due
within
12
months
of
balance
date
have
now
been
classified
as
non-‐current
liabilities.
The
extension
of
the
Trust’s
debt
facility
is
on
the
following
terms:
-‐
Total
facility
to
be
extended
until
30
April
2013;
-‐
Facilities
are
to
incur
a
facility
fee
of
2.25%
p.a.
charged
either
monthly
or
quarterly;
-‐
Amortisation
of
$1,100,000
due
30
September
2011,
and
then
amortisation
of
$600,000
quarterly
from
31
December
2011
until
expiry;
and,
-‐
LVR
of
65%
to
be
achieved
by
30
September
2011.
P-REIT
Annual Report - For The Year Ended 30 June 2011
5
DIRECTORS’ REPORT continued
P-REIT
6
Annual Report - For The Year Ended 30 June 2011
DIRECTORS’ REPORT continued
DIRECTORS
REPORT
continued
EVENTS
SUBSEQUENT
TO
BALANCE
DATE
AND
LIKELY
DEVELOPMENTS
The
Trust
has
lodged
an
application
to
be
admitted
to
the
official
list
of
the
Australian
Securities
Exchange.
Other
than
as
disclosed
above
and
to
the
knowledge
of
Directors,
there
has
been
no
other
matter
or
circumstance
that
has
arisen
since
the
end
of
the
financial
year
that
has
or
may
affect
the
Trust’s
operations
in
future
financial
years,
the
results
of
those
operations
or
the
Trust’s
state
of
affairs
in
future
financial
years.
INDEMNITIES
AND
INSURANCE
PREMIUMS
FOR
OFFICERS
OR
AUDITORS
During
the
financial
year
the
Responsible
Entity
has
paid
premiums
to
insure
each
of
the
Directors
named
in
this
report
along
with
officers
of
that
company
against
all
liabilities
for
costs
and
expenses
incurred
by
them
in
defending
any
legal
proceedings
arising
out
of
their
conduct
while
acting
in
the
capacity
of
Director
or
officer
of
the
company,
other
than
conduct
involving
a
wilful
breach
of
duty
in
relation
to
the
Responsible
Entity.
The
Trust
has
not
indemnified
any
officer
or
auditor
of
the
Trust.
AUDITOR’S
INDEPENDENCE
DECLARATION
The
lead
auditor’s
Independence
Declaration
is
set
out
on
page
14
and
forms
part
of
the
Directors’
Report
for
the
year
ended
30
June
2011.
ROUNDING
The
amounts
contained
in
this
report
and
in
the
annual
financial
report
have
been
rounded
to
the
nearest
$1,000
(where
rounding
is
applicable)
under
the
option
available
to
the
Trust
under
ASIC
Class
Order
98/100
dated
10
July
1998.
The
Trust
is
an
entity
to
which
the
Class
Order
applies.
Signed
in
accordance
with
a
resolution
of
the
Board
of
Directors
of
RFML
Limited,
the
Responsible
Entity
of
P-‐REIT.
Stuart
Brown
______________________________
Chief
Executive
Officer
Sydney,
28
September
2011
P-REIT
Annual Report - For The Year Ended 30 June 2011
7
CORPORATE
GOVERNANCE
ASX
Corporate
Governance
Principles
and
Recommendations
The
Board
of
Directors
of
the
Responsible
Entity
is
responsible
for
the
corporate
governance
of
the
company.
Given
that
P-‐REIT
has
applied
to
be
listed,
outlined
below
are
the
Responsible
Entity’s
corporate
governance
practices
for
the
financial
year
addressing
the
ASX
Corporate
Governance
Council’s
Principles
and
Recommendations.
Principle
1:
Lay
solid
foundations
for
management
and
oversight
The
Responsible
Entity
RFML
Limited
has
appointed
BlackWall
Property
Funds
Limited
(BlackWall)
as
the
investment
manager
for
the
purpose
of
managing
the
Assets.
RFML
Limited
has
appointed
a
Compliance
Committee
but
for
the
purposes
of
corporate
governance
has
largely
adopted
BlackWall’s
policies
and
procedures.
The
Responsible
Entity
and
BlackWall
operate
with
a
flat
management
structure.
The
chief
executive
officer
and
chief
financial
officer
are
involved
in
the
day-‐to-‐day
operations
of
the
business.
Decisions
at
the
Board
level
and
the
assessment
of
executive
performance
are
based
on
reports
received
from
the
chief
executive
officer
and
the
consideration
of
issues
by
executive
and
non-‐executive
directors
at
Board
meetings.
The
Remuneration
Committee
(or
full
Board
in
absence
of
Remuneration
Committee)
will
oversee
the
performance
evaluation
of
the
executive
team.
This
will
be
based
on
specific
criteria,
including
the
business
performance
of
the
company,
whether
strategic
objectives
are
being
achieved
and
the
development
of
management
and
personnel.
Performance
reviews
of
senior
executives
have
taken
place
during
the
reporting
period
and
they
were
in
accordance
with
the
process
above.
Principle
2:
Structure
the
Board
to
add
value
The
Directors
monitor
the
business
affairs
of
the
Responsible
Entity
and
BlackWall
on
behalf
of
the
unitholders
with
a
specific
focus
on
the
profitability
of
business
activities
and
the
efficiency
of
its
managers.
In
keeping
with
this
consideration,
Board
positions
are
held
by
a
majority
of
members
who
are
significant
unitholders
and
its
Chairman
is
a
significant
unitholder.
The
Responsible
Entity
and
BlackWall
have
not
therefore
adopted
recommendations
2.1
and
2.2
of
the
ASX
Corporate
Governance
Council.
The
Board’s
primary
focus
is
on
driving
returns
to
unitholders
by
growing
Net
Tangible
Assets
and
earnings
per
unit
over
the
long
term.
The
Board
considers
risk
management
and
the
ethical
conduct
of
business.
The
Board
is
structured
with
a
combination
of
skills
and
experiences
outlined
in
the
“Directors
of
Responsible
Entity”
section.
The
Board
members’
skills
and
experience
are
consistent
with
the
business
operations
that
the
Responsible
Entity
undertakes
including:
•
•
•
Structured
finance
and
fund
management
Property
management
and
leasing
Property
development.
The
Responsible
Entity
does
not
foresee
the
Board
composition
changing
in
the
near
future
and
therefore
has
not
established
a
nomination
committee.
The
Board
considers
that
the
independence
of
a
Director
is
not
compromised
simply
by
the
fact
that
the
Director
is
a
significant
investor
in
P-‐REIT.
P-REIT
8
Annual Report - For The Year Ended 30 June 2011
Principle
3:
Promote
ethical
and
responsible
decision
making
The
Responsible
Entity
and
BlackWall
have
a
number
of
work
groups
that
meet
either
weekly,
fortnightly
or
monthly.
Director
and
employee
conduct
and
decision
making
is
discussed
at
these
meetings.
The
Responsible
Entity
and
BlackWall
have
adopted
a
Code
of
Conduct,
which
can
be
accessed
at
BlackWall’s
website
when
it
lists.
Directors
and
employees
are
encouraged
to
report
any
suspected
unethical
or
irresponsible
behavior
to
the
chief
executive
officer.
The
Responsible
Entity
and
BlackWall
have
adopted
a
Diversity
Policy
which
can
be
accessed
on
the
Responsible
Entity
and
BlackWall’s
website
when
it
lists.
Women
Board
Members
Senior
Executives
Whole
Organisation
0%
30%
50%
The
Responsible
Entity
and
BlackWall
have
adopted
a
Share
Trading
Policy.
The
Responsible
Entity
imposes
restrictions
on
its
Directors
and
employees
trading
in
P-‐
REIT
securities
when
they
are
in
possession
of
price-‐sensitive
information
that
has
not
been
published
or
made
available
to
the
general
public.
Principle
4:
Safeguard
integrity
in
financial
reporting
Financial
reports
are
prepared
by
the
chief
financial
officer
in
collaboration
with
senior
management
and
the
chief
executive
officer.
The
Board
has
established
an
audit
committee
and
adopted
an
Audit
Charter.
The
Audit
Committee
consists
of
the
independent
members
of
the
Compliance
Committee.
Given
the
composition
of
the
Board
and
the
size
of
the
company,
ASX
Recommendation
4.2
is
not
complied
with
in
all
respects.
While
the
members
are
arguably
if
not
technically
independent
they
possess
the
necessary
experience
for
the
position.
The
Board
takes
the
view
that
the
committee
as
constituted
can
discharge
its
role
effectively
without
the
undue
expense
of
appointing
three
members
and
an
independent
chairman.
The
committee
reviews
the
auditing
process
for
half-‐yearly
and
annual
reports
and
meets
prior
to,
during
and
post
the
audit
to
discuss.
During
meetings
the
committee
minutes
its
roles
and
responsibilities
in
regards
to
the
audit
addressing
the
need
for
a
formal
charter.
The
committee
has
direct
access
to
the
auditor
during
the
auditing
period
and
the
auditor
attends
the
committee
meetings.
The
committee
may
make
recommendations
to
the
Board.
Principle
5:
Make
timely
and
balanced
disclosures
The
Responsible
Entity
undertakes
timely
market
disclosures.
The
chief
executive
officer
in
consultation
with
the
Board
will
manage
investor
relations
and
the
release
of
market
sensitive
information.
Information
is
not
published
without
at
least
two
directors
reviewing
the
disclosure
or
announcement.
All
relevant
information
will
be
published
on
the
ASX
and
the
Responsible
Entity
and
BlackWall’s
website
and
any
financial
results
released
include
commentary
from
directors.
The
Responsible
Entity
will
maintain
a
timetable
for
its
compliance
and
periodic
disclosure
requirements.
P-REIT
Annual Report - For The Year Ended 30 June 2011
9
Principle
6:
Respect
the
rights
of
unitholders
•
•
•
•
•
•
The
Responsible
Entity
undertakes
a
number
of
measures
to
ensure
its
unitholders
are
informed
of
its
operations
including:
The
executive
director
is
available
to
meet
or
speak
to
unitholders;
The
non
executive
chairman
and
chief
executive
officer
make
themselves
available
to
independent
research
houses,
brokers
and
other
participants
in
the
financial
markets;
Maintaining
an
“Investor
Key
Dates”
section
on
its
website
and
updating
the
website
continually;
Making
available
P-‐REIT’s
annual
and
half-‐yearly
reports
electronically
via
email
and
website;
Enabling
access
to
P-‐REIT’s
external
auditor
at
the
Annual
General
Meeting;
and
Placing
on
its
website
all
releases
to
the
ASX
and
the
media,
and
full
notices
of
all
meetings
and
company
information
on
its
website
including
access
to
archived
information.
Principle
7:
Recognising
and
managing
risk
The
Responsible
Entity
and
BlackWall
have
adopted
a
Risk
Management
Policy.
This
policy
outlines
the
key
material
risks
faced
by
P-‐REIT.
The
Responsible
Entity
and
BlackWall
identify
and
manage
risk
through
a
framework
managed
by
the
executive
director.
Risks
are
reported
to
the
Board
by
management
at
each
Board
meeting
and
the
Chairman
may
call
an
extraordinary
meeting
when
circumstances
require.
The
Board
has
received
confirmation
from
the
chief
executive
officer
that
the
declaration
provided
in
accordance
with
section
295A
of
the
Corporations
Act
is
founded
on
a
sound
system
of
risk
management
and
internal
control.
Principle
8:
Remunerate
fairly
and
responsibly
The
Responsible
Entity
does
not
directly
employ
executives
or
staff.
P-REIT
10
Annual Report - For The Year Ended 30 June 2011
UNITHOLDERS
As
at
30
September
2011
the
Trust’s
top
20
unitholdings
were:
Investor
Units
(‘000)
Units
%
1
2
3
4
5
6
7
8
Kirela
Pty
Ltd
ATF
Kirela
Development
Unit
Trust
Pelorus
Private
Equity
Ltd
Sandhurst
Trustees
Ltd
ACF
MacarthurCook
PSF
A/C
Australian
Executor
Trustees
Ltd
(Tankstream
Property
Investments
Fund)
Pelorus
Private
Equity
Ltd
ATF
Pelorus
PIPES
Trust
No
5
BlackWall
Property
Funds
Ltd
Jagar
Property
Consultants
Pty
Ltd
JP
Morgan
Nominees
Australia
Limited
ACO
Multiplex
Income
UPT
Domestic
Investments
Trust
TFML
Limited
9
10
Trust
Company
of
Australia
Ltd
ACF
Diversified
Property
Fund
Trust
Company
Superannuation
Services
Ltd
11
12
Trust
Company
Limited
ACF
Recap
Enhanced
Income
Fund
Seno
Management
Pty
Ltd
13
14
Harmareed
Pty
Ltd
ATF
The
Reed
Superannuation
Fund
Midhurst
Associates
Pty
Ltd
ATF
Midhurst
Superannuation
Fund
15
16
Netwealth
Investments
Ltd
(WRAP
Services)
17
Netwealth
Investments
Ltd
(Super
Services)
18
Mr
Andrew
Craig
Irvine
&
Mrs
Beverle
Frances
Irvine
Frogstorm
Pty
Ltd
Eric,
Gillian,
Grant
and
Kim
Joblin
ATF
The
Joblin
Family
Superannuation
Fund
19
20
38,375
23,801
22,582
19,238
11,440
9,573
6,540
5,515
5,000
4,842
3,880
3,770
2,444
2,160
1,817
1,774
1,380
18%
11%
11%
9%
6%
5%
3%
3%
2%
2%
2%
2%
1%
1%
1%
1%
1%
1,151
854
1%
0.4%
800
0.4%
As
at
30
September
2011
the
distribution
of
unitholders
by
size
of
holding
was:
Category
No.
of
Holders
1-‐1,000
1,001-‐5,000
5,001-‐10,000
10,001-‐100,000
Total
number
of
unitholders
100,001
and
over
1
64
142
537
846
102
P-‐REIT
has
100
unitholders
of
less
than
a
marketable
parcel.
The
Trust
has
207,524,039
ordinary
units
on
issue
as
at
30
September
2011.
All
units
carry
one
vote
per
unit
without
restrictions.
P-‐REIT
has
made
an
application
to
list
on
the
ASX.
P-REIT
Annual Report - For The Year Ended 30 June 2011 11
P-‐REIT
DETAILS
The
Responsible
Entity’s
details
are
as
follows:
Registered
Office
Principal
Place
of
Business
Telephone
Fax
Website
Registry
Storey
Blackwood,
Level
4,
222
Clarence
Street,
Sydney
NSW
2000
Suite
3,
194
Varsity
Parade,
Varsity
Lakes
QLD
4227
02
9033
8611
02
9033
8600
www.blackwallfunds.com.au
Computershare
Investor
Services
Pty
Limited
Yarra
Falls,
452
Johnson
Street,
Abbotsford,
Victoria
3067
www.computershare.com.au
P-REIT
12
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
DIRECTOR’S
DECLARATION
FOR
THE
YEAR
ENDED
30
JUNE
2011
In
the
opinion
of
the
Directors
of
RFML
Limited,
the
Responsible
Entity
of
P-‐REIT:
(a)
the
financial
statements
and
notes
set
out
on
pages
17
to
44
are
in
accordance
with
the
Corporations
Act
2001,
including:
(i)
giving
a
true
and
fair
view
of
the
consolidated
entity’s
financial
position
as
at
30
June
2011
and
of
its
performance,
for
the
financial
year
ended
on
that
date;
and
(ii)
complying
with
Australian
Accounting
Standards,
Regulations
2001
requirements.
and
other
mandatory
professional
the
Corporations
reporting
(b)
The
financial
statements
comply
with
International
Financial
Reporting
Standards
as
disclosed
in
Note
2.
(c)
There
are
reasonable
grounds
to
believe
that
the
Trust
will
be
able
to
pay
its
debts
as
and
when
they
become
due
and
payable.
(d)
the
directors
of
the
Responsible
Entity
have
been
given
the
declarations
required
by
Section
295A
of
the
Corporations
Act
2001
from
the
chief
executive
officer
and
the
chief
financial
officer
for
the
financial
year
ended
30
June
2011.
Signed
in
accordance
with
a
resolution
of
the
Board
of
Directors
of
the
Responsible
Entity.
Stuart
Brown
Chief
Executive
Officer
Sydney,
28
September
2011
P-REIT
Annual Report - For The Year Ended 30 June 2011 13
P-REIT
14
Annual Report - For The Year Ended 30 June 2011
P-REIT
Annual Report - For The Year Ended 30 June 2011 15
P-REIT
16
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
CONSOLIDATED
STATEMENT
OF
COMPREHENSIVE
INCOME
FOR
THE
YEAR
ENDED
30
JUNE
2011
REVENUE
Rent
Dividends
&
distributions
Total
Revenue
Interest
income
EXPENSES
Property
outgoings
Custodian
fees
Finance
costs
Administration
expenses
Other
operating
expenses
Loss
on
disposal
of
assets
Gain/(loss)
on
revaluation
of
properties
Loss
on
revaluation
of
financial
assets
through
profit
and
loss
Operating
expenses
Loss
on
revaluation
of
derivative
financial
instruments
Profit
/(loss)
for
the
year
Other
comprehensive
income:
Consolidated
2011
$’000
2010
$’000
Note
9,604
443
41
10,088
13,103
-‐
33
13,136
4
(1,887)
(20)
(5,163)
(967)
(640)
-‐
1,231
(1,898)
(15)
(6,640)
(1,059)
(594)
(1,458)
(12,419)
(917)
(129)
(8,492)
1,596
-‐
-‐
(24,083)
(10,947)
Gains
on
revaluation
of
available-‐for-‐sale
financial
assets
Total
comprehensive
income
for
the
year
353
1,949
-‐
(10,947)
The
accompanying
notes
form
part
of
the
Consolidated
Statement
of
Comprehensive
Income.
P-REIT
Annual Report - For The Year Ended 30 June 2011 17
P-‐REIT
CONSOLIDATED
STATEMENT
OF
FINANCIAL
POSITION
FOR
THE
YEAR
ENDED
30
JUNE
2011
CURRENT
ASSETS
Cash
and
cash
equivalents
Trade
and
other
receivables
TOTAL
CURRENT
ASSETS
Other
assets
NON-‐CURRENT
ASSETS
Note
14a
5
6
Available-‐for-‐sale
financial
assets
Financial
assets
at
fair
value
through
profit
and
loss
TOTAL
NON-‐CURRENT
ASSETS
Investment
properties
TOTAL
ASSETS
7
8
9
CURRENT
LIABILITIES
Trade
and
other
payables
Other
current
liabilities
TOTAL
CURRENT
LIABILITIES
Borrowings
NON-‐CURRENT
LIABILITIES
Derivative
financial
instruments
TOTAL
NON-‐CURRENT
LIABILITIES
Long-‐term
borrowings
TOTAL
LIABILITIES
(excluding
net
assets
attributable
to
unitholders)
10
11
13(a)
12
13(b)
Consolidated
2011
$’000
2010
$’000
450
75
512
1,037
1,067
121
504
1,692
38,309
2,522
78,375
120,243
119,206
5,000
-‐
76,775
83,467
81,775
411
71
2,900
3,382
129
54,980
55,109
603
52
58,672
59,327
-‐
-‐
-‐
58,491
59,327
Net
assets
attributable
to
unitholders
TOTAL
LIABILITIES
61,752
120,243
24,140
83,467
The
accompanying
notes
form
part
of
the
Consolidated
Statement
of
Financial
Position.
P-REIT
18
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
STATEMENT
OF
CHANGES
IN
NET
ASSETS
ATTRIBUTABLE
TO
UNITHOLDERS
FOR
THE
YEAR
ENDED
30
JUNE
2011
2011
Number
of
units
on
issue
‘000
Accumu-‐
lated
losses
$’000
Asset
revalua-‐
tion
reserve
Issued
capital
$’000
Total
$’000
Balance
1
July
2010
Issue
of
units
Issue
costs
Return
of
capital
Sub-‐total
Comprehensive
income:
Net
profit/(loss)
for
the
year
Fair
value
adjustment
of
available-‐for-‐sale
financial
assets
Distributions
paid
Balance
at
30
June
2011
79,123
128,401
-‐
-‐
207,524
-‐
-‐
-‐
(46,203)
-‐
-‐
-‐
(46,203)
1,596
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
353
-‐
70,343
38,695
(32)
(3,000)
106,006
-‐
-‐
-‐
24,140
38,695
(32)
(3,000)
59,803
1,596
353
-‐
207,524
(44,607)
353
106,006
61,752
2010
Number
of
units
on
issue
‘000
Accumu-‐
lated
losses
$’000
Asset
revalua-‐
tion
reserve
Issued
capital
$’000
Total
$’000
Balance
1
July
2009
Issue
of
units
Sub-‐total
Comprehensive
income:
Net
profit/(loss)
for
the
year
Distributions
paid
Balance
at
30
June
2010
66,691
12,432
(35,256)
-‐
79,123
(35,256)
-‐
-‐
(10,947)
-‐
79,123
(46,203)
-‐
-‐
-‐
-‐
-‐
-‐
65,343
5,000
30,087
5,000
70,343
35,087
-‐
-‐
(10,947)
-‐
70,343
24,140
The
accompanying
notes
form
part
of
the
Statement
of
Changes
in
Net
Assets
Attributable
to
Unitholders.
P-REIT
Annual Report - For The Year Ended 30 June 2011 19
P-‐REIT
CONSOLIDATED
STATEMENT
OF
CASH
FLOWS
FOR
THE
YEAR
ENDED
30
JUNE
2011
CASH
FLOWS
FROM
OPERATING
ACTIVITIES
Consolidated
2010
$’000
2011
$’000
Note
Receipts
from
customers
Distributions
received
Interest
received
Payments
to
suppliers
and
employees
Finance
costs
NET
CASH
FROM
OPERATING
ACTIVITIES
10,290
373
41
(4,693)
(5,074)
13,079
-‐
33
(4,703)
(6,945
CASH
FLOWS
FROM
INVESTING
ACTIVITIES
14(b)
937
1,464
Proceeds
from
sale
of
investments
Purchase
of
investments
in
securities
Payments
for
investments
in
properties
NET
CASH
FROM/(USED
IN)
INVESTING
ACTIVITIES
CASH
FLOWS
FROM
FINANCING
ACTIVITIES
Issue
costs
Repayment
of
borrowings
NET
CASH
USED
IN
FINANCING
ACTIVITIES
-‐
(700)
(30)
52,070
-‐
-‐
(730)
52,070
(32)
(792)
-‐
(54,397)
(824)
(54,397)
Net
increase/(decrease)
in
cash
and
cash
equivalents
(617)
(863)
Cash
and
cash
equivalents
at
the
beginning
of
the
year
1,067
1,930
CASH
AND
CASH
EQUIVALENTS
AT
END
OF
THE
YEAR
14(a)
450
1,067
The
accompanying
notes
form
part
of
the
Consolidated
Statement
of
Cash
Flows.
P-REIT
20
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
1
–
GENERAL
INFORMATION
The
P-‐REIT
is
a
registered
managed
investment
scheme
incorporated
under
the
Corporations
Act
2001
in
Australia.
The
consolidated
financial
report
as
at
the
year
ended
30
June
2011
comprises
the
P-‐REIT
and
its
subsidiary
the
Yandina
Sub-‐trust,
a
discretionary
trust
established
and
domiciled
in
Australia
(together
referred
to
as
the
“Trust”).
RFML
Limited
is
the
Responsible
Entity
and
TFML
Limited
is
the
investment
manager
of
the
Trust.
Trust
Company
Limited
is
the
Custodian
of
the
Trust
(the
Custodian).
The
relationship
of
these
parties
with
the
Trust
is
governed
by
the
terms
and
conditions
specified
in
the
Constitution.
The
financial
report
for
the
year
ended
30
June
2011
was
authorised
for
issue
in
accordance
with
a
resolution
of
the
board
of
directors
of
the
Responsible
Entity
on
28
September
2011.
NOTE
2
–
SIGNIFICANT
ACCOUNTING
POLICIES
The
following
is
a
summary
of
the
material
accounting
policies
adopted
by
the
Trust
in
the
preparation
of
the
financial
report.
The
accounting
policies
have
been
consistently
applied,
unless
otherwise
stated.
Statement
of
Compliance
The
financial
statements
are
general
purpose
financial
statements
which
have
been
prepared
in
accordance
with
the
Corporations
Act
2001,
Accounting
Standards
and
Interpretations,
and
comply
with
other
requirements
of
the
law.
The
financial
report
of
the
Trust
complies
with
Australian
Accounting
Standards
and
International
Financial
Reporting
Standards
(IFRS)
as
issued
by
the
International
Accounting
Standards
Board.
Basis
of
preparation
Reporting
basis
and
conventions
The
financial
report
has
been
prepared
on
an
accruals
basis
and
is
based
on
historical
costs
modified
by
the
revaluation
of
selected
non-‐current
assets
and
financial
assets
and
liabilities
for
which
the
fair
value
basis
of
accounting
has
been
applied.
Going
concern
This
financial
report
has
been
prepared
on
a
going
concern
basis,
which
contemplates
continuity
of
normal
business
activities
and
the
realisation
of
assets
and
settlement
of
liabilities
in
the
ordinary
course
of
business.
P-REIT
Annual Report - For The Year Ended 30 June 2011 21
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
2
–
SIGNIFICANT
ACCOUNTING
POLICIES
continued
Going
concern
continued
The
Trust’s
profit
for
the
year
was
$1.596
million
(2010:
$10.947
million
loss).
The
significant
losses
in
previous
periods
were
due
mainly
to
the
unrealised
impairment
losses
recognised
over
investment
properties.
Previous
impairments
of
investment
properties
are
not
seen
to
be
reflective
of
the
Trust’s
profitability
or
ability
to
continue
as
a
going
concern
in
the
future.
During
the
year
the
Trust
received
approval
for
a
24-‐month
extension
of
the
Trust’s
bank
bill
facilities.
Consequently,
the
financier’s
loans
that
are
not
due
within
12
months
of
balance
date
have
now
been
classified
as
non-‐current
liabilities.
The
extension
of
the
Trust’s
debt
facility
is
on
the
following
terms:
-‐
Total
facility
to
be
extended
until
30
April
2013;
-‐
Facilities
are
to
incur
a
facility
fee
of
2.25%
p.a.
charged
either
monthly
or
quarterly;
-‐
Amortisation
of
$1,100,000
due
30
September
2011,
and
then
amortisation
of
$600,000
quarterly
from
31
December
2011
until
expiry;
and,
-‐
LVR
of
65%
to
be
achieved
by
30
September
2011.
Should
the
Trust
not
meet
the
LVR
covenants
of
the
facility
a
review
event
may
be
triggered.
Should
this
occur,
the
Trust’s
ability
to
continue
as
a
going
concern
becomes
dependent
upon
the
continued
support
of
its
financiers.
It
should
be
noted,
however
that
the
Trust
does
have
positive
net
assets
of
$61.8m
and
as
a
result
directors
are
confident
of
the
Trust’s
ability
to
continue
as
a
going
concern.
The
Trust
has
a
deficiency
in
total
current
assets
of
$1.037
million
(2010:
$1.692
million)
over
total
current
liabilities
of
$3.382
million
(2010:
$59.327
million).
The
Directors
believe
that
through
the
ability
of
the
Trust
to
generate
sufficient
future
operating
cashflows
and
the
Trust
raising
funds
through
asset
sales
if
necessary
it
is
appropriate
the
financial
report
be
prepared
on
a
going
concern
basis.
Notwithstanding
the
above,
management
has
prepared
the
financial
report
on
a
going
concern
basis
as
they
regularly
monitor
the
Trust’s
cash
position
and
consider
a
number
of
strategic
and
operational
plans
and
initiatives
currently
in
place
will
ensure
that
adequate
funding
continues
to
be
available
to
the
Trust
to
meet
its
objectives
and
financial
obligations.
Comparative
figures
When
required
by
Accounting
Standards,
comparative
figures
have
been
adjusted
to
conform
to
changes
in
presentation
for
the
current
financial
year.
Any
change
of
presentation
has
been
made
in
order
to
make
the
financial
statements
more
relevant
and
useful
to
the
user.
Principles
of
consolidation
Controlled
entity
The
consolidated
financial
statements
comprise
the
financial
statements
of
P-‐REIT
and
its
subsidiary
as
at
30
June
2011.
Details
of
the
controlled
entity
are
contained
in
Note
17
to
the
financial
statements.
The
controlled
entity
has
a
June
financial
year-‐end
and
uses
consistent
accounting
policies.
P-REIT
22
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
2
–
SIGNIFICANT
ACCOUNTING
POLICIES
continued
Principles
of
consolidation
continued
Where
controlled
entities
have
entered
or
left
the
economic
entity
during
the
year,
their
operating
results
have
been
included
from
the
date
control
was
obtained
or
until
the
date
control
ceased.
A
controlled
entity
is
an
entity
P-‐REIT
has
the
power
to
control
the
financial
and
operating
policies
of
so
as
to
obtain
benefits
from
its
activities.
Inter-‐company
balances
All
inter-‐company
balances
and
transactions
between
entities
in
the
Group,
including
any
unrealised
profits
or
losses,
have
been
eliminated
on
consolidation.
Accounting
policies
of
subsidiaries
have
been
changed
where
necessary
to
ensure
consistencies
with
those
policies
applied
by
the
parent
entity.
Critical
accounting
estimates
and
judgments
General
The
directors
evaluate
estimates
and
judgments
incorporated
into
the
financial
report
based
on
historical
knowledge
and
best
available
current
information.
Estimates
assume
a
reasonable
expectation
of
future
events
and
are
based
on
current
trends
and
economic
data,
obtained
both
externally
and
within
the
group.
Key
estimates
–
impairment
The
Group
assesses
impairment
at
each
reporting
date
by
evaluating
conditions
specific
to
the
group
that
may
lead
to
impairment
of
assets.
Available-‐for-‐sale
financial
assets
The
Trust’s
investments
in
unlisted
managed
investment
schemes
are
classified
as
available-‐
for-‐sale
financial
assets
except
for
the
Trust’s
investments
in
the
BlackWall
Pub
Group,
refer
below.
Subsequent
to
initial
recognition
at
cost,
available-‐for-‐sale
financial
assets
are
measured
at
fair
value
and
changes
therein
are
recognised
in
Asset
Revaluation
Reserve
in
net
assets
attributable
to
unitholders.
When
an
investment
is
derecognised,
the
cumulative
gain
or
loss
in
the
Asset
Revaluation
Reserve
is
transferred
to
the
Statement
of
Comprehensive
Income
as
a
realised
gain
or
loss.
For
investments
held
by
the
Trust
in
unlisted
managed
investment
schemes,
fair
value
is
determined
by
reference
to
the
published
redemption
price
of
those
unlisted
managed
investment
schemes
at
the
reporting
date.
P-REIT
Annual Report - For The Year Ended 30 June 2011 23
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
2
–
SIGNIFICANT
ACCOUNTING
POLICIES
continued
Financial
assets
at
fair
value
through
profit
and
loss
Investments
in
financial
assets
at
fair
value
through
profit
and
loss
are
initially
and
in
subsequent
periods
carried
at
fair
value.
Gains
or
losses
arising
from
changes
in
the
fair
value
are
presented
in
the
statement
of
comprehensive
income
in
the
period
in
which
they
arise.
Distribution
income
from
financial
assets
accounted
at
fair
value
through
the
profit
and
loss
is
recognised
in
the
statement
of
comprehensive
income
as
part
of
revenue.
Investment
properties
Investment
properties
are
measured
initially
at
cost,
including
transaction
costs.
The
carrying
amount
includes
the
cost
of
replacing
part
of
an
existing
investment
property
at
the
time
that
cost
is
incurred
if
the
recognition
criteria
are
met,
and
excludes
the
costs
of
day-‐to-‐day
servicing
of
an
investment
property.
Subsequent
to
initial
recognition,
investment
properties
are
stated
at
fair
value,
which
is
based
on
active
market
prices,
adjusted
if
necessary,
for
any
difference
in
the
nature,
location
or
condition
of
the
specific
asset
at
the
balance
sheet
date.
Gains
or
losses
arising
from
changes
in
the
fair
values
of
investment
properties
are
recognised
in
profit
or
loss
in
the
year
in
which
they
arise.
Included
in
the
value
measurement
are
adjustments
for
straight
lining
of
lease
income.
Impairment
of
asset
At
each
reporting
date
the
Trust
reviews
the
carrying
values
of
its
tangible
and
intangible
assets
to
determine
whether
there
is
any
indication
that
these
assets
have
been
impaired.
If
such
an
indication
exists,
the
recoverable
amount
of
the
asset,
being
the
higher
of
the
asset’s
fair
value
less
cost
to
sell
at
value-‐in-‐use,
is
compared
to
the
asset’s
carrying
value.
In
assessing
value
in
use,
either
the
estimated
future
cash
flows
are
discounted
to
their
present
value
using
a
pre-‐tax
discount
rate
that
reflects
current
market
assessments
of
the
time
value
of
money
and
the
risks
specific
to
the
asset
or
the
income
of
the
asset
is
capitalised
at
its
relevant
capitalisation
rate.
An
impairment
loss
is
recognised
if
the
carrying
value
of
an
asset
exceeds
its
recoverable
amount.
Impairment
losses
are
expensed
to
the
income
statement.
Impairment
losses
recognised
in
prior
periods
are
assessed
at
each
reporting
date
for
any
indication
that
the
loss
has
decreased
or
no
longer
exists.
An
impairment
loss
is
reversed
if
there
has
been
a
change
in
the
estimates
used
to
determine
the
recoverable
amount.
An
impairment
loss
is
reversed
only
to
the
extent
that
the
asset's
carrying
amount
does
not
exceed
the
carrying
amount
that
would
have
been
determined,
net
of
depreciation
or
amortisation,
if
no
impairment
loss
has
been
recognised.
P-REIT
24
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
2
–
SIGNIFICANT
ACCOUNTING
POLICIES
continued
Financial
instruments
Non-‐derivative
financial
instruments
Non-‐derivative
financial
instruments
comprise
investments
in
equity
and
debt
securities,
trade
and
other
receivables,
cash
and
cash
equivalents,
loans
and
borrowings,
and
trade
and
other
payables.
Non-‐derivative
financial
instruments
are
recognised
at
fair
value
plus,
for
instruments
not
at
fair
value
through
profit
or
loss,
any
directly
attributable
transaction
costs.
Subsequent
to
initial
recognition
non-‐derivative
financial
instruments
are
measured
as
described
below.
Recognition
A
financial
instrument
is
recognised
if
the
Trust
becomes
a
party
to
the
contractual
provisions
of
the
instrument.
Financial
assets
are
derecognised
if
the
Trust's
contractual
rights
to
the
cash
flow
from
the
financial
assets
expire
or
if
the
Trust
transfers
the
financial
assets
to
another
party
without
retaining
control
or
substantially
all
risks
and
rewards
of
the
asset.
Purchases
and
sales
of
financial
assets
are
accounted
for
at
trade
date,
i.e.
the
date
that
the
Trust
commits
itself
to
purchase
or
sell
the
asset.
Financial
liabilities
are
derecognised
if
the
Trust's
obligations
specified
in
the
contract
expire
or
are
discharged
or
cancelled.
Loans
and
receivables
Loans
and
receivables
including
loans
to
related
entities
are
non-‐derivative
financial
assets
with
fixed
or
determinable
payments
that
are
not
quoted
in
an
active
market
and
are
stated
at
amortised
cost
using
the
effective
interest
rate
method.
Gains
and
losses
are
recognised
in
profit
and
loss
when
the
loans
and
receivables
are
derecognised
or
impaired,
as
well
as
through
the
amortisation
process.
Financial
liabilities
Non-‐derivative
financial
liabilities
are
recognised
at
amortised
cost,
comprising
original
debt
less
principal
payments
and
amortisation.
Fair
value
The
fair
values
of
investments
that
are
actively
traded
in
organised
financial
markets
are
determined
by
reference
to
quoted
market
bid
prices
at
the
close
of
business
on
the
balance
date.
For
investments
in
related
party
unlisted
unit
trusts,
fair
values
are
determined
by
reference
to
published
unit
prices
of
these
investments
which
are
based
on
the
net
tangible
assets
of
each
of
the
investments.
P-REIT
Annual Report - For The Year Ended 30 June 2011 25
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
2
–
SIGNIFICANT
ACCOUNTING
POLICIES
continued
Financial
instruments
continued
Impairment
At
each
reporting
date,
the
Group
assesses
whether
there
is
objective
evidence
that
a
financial
instrument
has
been
impaired.
A
financial
instrument
is
considered
to
be
impaired
if
objective
evidence
indicates
that
one
or
more
events
have
had
a
negative
effect
on
the
estimated
future
cash
flows
of
that
asset.
In
the
case
of
available-‐for-‐sale
financial
instruments,
a
prolonged
decline
in
the
value
of
the
instrument
is
considered
to
determine
whether
an
impairment
has
arisen.
An
impairment
loss
in
respect
of
a
financial
instrument
measured
at
amortised
cost
is
calculated
as
the
difference
between
its
carrying
amount,
and
the
present
value
of
the
estimated
future
cash
flows
discounted
at
the
original
effective
interest
rate.
An
impairment
loss
in
respect
of
an
available-‐for-‐sale
financial
asset
is
calculated
by
reference
to
its
fair
value.
Individually
significant
financial
instruments
are
tested
for
impairment
on
an
individual
basis.
The
remaining
financial
assets
are
assessed
collectively
in
groups
that
share
similar
credit
risk
characteristics.
Impairment
losses
are
recognised
in
the
income
statement.
An
impairment
loss
is
reversed
if
the
reversal
can
be
related
objectively
to
an
event
occurring
after
the
impairment
loss
was
recognised.
For
financial
instruments
measured
at
amortised
cost,
the
reversal
is
recognised
in
profit
and
loss.
Cash
and
cash
equivalents
Cash
and
cash
equivalents
include
cash
on
hand,
deposits
held
at
call
with
banks,
other
short-‐
term
highly
liquid
investment
with
original
maturities
of
three
months
or
less,
and
bank
overdrafts.
Trade
and
other
receivables
Trade
receivables
are
recognised
and
carried
at
original
invoice
amount
less
a
provision
for
any
uncollectible
debts.
An
estimate
for
doubtful
debts
is
made
when
there
is
objective
evidence
that
the
Group
will
not
be
able
to
collect
the
receivable.
Financial
difficulties
of
the
debtor
and
default
payments
are
considered
objective
evidence
of
impairment.
Bad
debts
are
written
off
when
identified
as
uncollectible.
Trade
and
other
payables
Liabilities
for
trade
creditors
are
carried
at
cost
which
is
the
fair
value
of
the
consideration
to
be
paid
in
the
future
for
goods
or
services
received,
whether
or
not
billed
to
the
Trust
at
balance
date.
The
amounts
are
unsecured
and
are
usually
paid
within
30
days
of
recognition.
P-REIT
26
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
2
–
SIGNIFICANT
ACCOUNTING
POLICIES
continued
Interest-‐bearing
liabilities
Interest-‐bearing
liabilities
are
initially
recognised
at
fair
value
less
any
related
transaction
costs.
Subsequent
to
initial
recognition,
interest-‐bearing
borrowings
are
stated
at
amortised
cost.
Provisions
Provisions
are
recognised
when
the
Trust
has
a
legal
or
constructive
obligation,
as
a
result
of
past
events,
for
which
it
is
probable
that
an
outflow
of
economic
benefits
will
result
and
that
outflow
can
be
reliably
measured.
Where
the
Trust
expects
some
or
all
of
a
provision
to
be
reimbursed,
for
example
under
an
insurance
contract,
the
reimbursement
is
recognised
as
a
separate
asset
but
only
when
the
reimbursement
is
virtually
certain.
The
expense
relating
to
any
provision
is
presented
in
the
income
statement
net
of
any
reimbursement.
Revenue
Property
income
Property
income
comprises
rental
and
recovery
of
outgoings
from
property
tenants.
Rental
income
from
investment
properties
is
accounted
for
on
a
straight-‐line
basis
over
the
lease
term.
Lease
incentives
granted
are
recognised
as
an
integral
part
of
the
total
rental
income.
Investment
income
Finance
income
comprises
interest
on
funds
invested,
gains
on
the
disposal
of
available-‐for-‐sale
financial
assets
and
changes
in
the
fair
value
of
financial
assets
at
fair
value
through
profit
and
loss.
Interest
revenue
is
recognised
on
a
proportional
basis
taking
into
account
the
interest
rates
applicable
to
the
financial
assets.
Dividend
revenue
is
recognised
when
the
right
to
receive
a
dividend
has
been
established,
which
in
the
case
of
quoted
securities
is
the
ex-‐dividend
date.
All
revenue
is
stated
net
of
the
amount
of
goods
and
services
tax
(GST).
Goods
and
services
tax
Revenues,
expenses,
and
assets
are
recognised
net
of
the
amount
of
GST,
except
where
the
amount
of
GST
incurred
is
not
recoverable
from
the
Australian
Tax
Offices
(ATO).
In
these
circumstances
the
GST
is
recognised
as
part
of
the
cost
of
acquisition
of
the
asset
or
as
part
of
an
item
of
the
expense.
Receivables
and
payables
in
the
statement
of
financial
position
are
shown
inclusive
of
GST.
Cash
flows
are
presented
in
the
Cash
flow
Statement
on
a
gross
basis
except
for
the
GST
component
of
investing
and
financing
activities,
which
are
disclosed
as
operating
cash
flows.
P-REIT
Annual Report - For The Year Ended 30 June 2011 27
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
2
–
SIGNIFICANT
ACCOUNTING
POLICIES
continued
Property
operating
expenses
Property
expenses
such
as
rates,
taxes,
and
other
property
outgoings
in
relation
to
investment
property
are
recognised
on
an
accrual
basis
when
incurred.
Income
tax
Under
current
income
tax
legislation
the
Trust
is
not
liable
for
taxation
where
the
taxable
income
is
distributed
in
full
to
unitholders.
Tax
allowances
for
building
and
plant
and
equipment
depreciation
are
distributed
to
unitholders
in
the
form
of
tax
deferred
components
of
distributions.
Application
of
new
and
revised
Accounting
Standards
The
Trust
has
adopted
all
of
the
new,
revised
or
amending
Accounting
Standards
and
Interpretations
issued
by
the
Australian
Accounting
Standards
Board
('AASB')
that
are
mandatory
for
the
current
reporting
period.
Any
new,
revised
or
amending
Accounting
Standards
or
Interpretations
that
are
not
yet
mandatory
have
not
been
early
adopted.
Any
significant
impact
on
the
accounting
policies
of
the
Trust
from
the
adoption
of
these
Accounting
Standards
and
Interpretations
are
disclosed
in
the
relevant
accounting
policy.
The
adoption
of
these
Accounting
Standards
and
Interpretations
did
not
have
any
impact
on
the
financial
performance
or
position
of
the
Trust.
The
following
Accounting
Standards
and
Interpretations
are
most
relevant
to
the
Trust:
AASB
2009-‐5
Amendments
to
Australian
Accounting
Standards
arising
from
the
Annual
Improvements
Project
The
Trust
has
applied
AASB
2009-‐5
amendments
from
1
July
2010.
The
amendments
result
in
some
accounting
changes
for
presentation,
recognition
or
measurement
purposes,
while
some
amendments
that
relate
to
terminology
and
editorial
changes
had
no
or
minimal
effect
on
accounting.
The
main
changes
were:
AASB
101
'Presentation
of
Financial
Statements'
-‐
classification
is
not
affected
by
the
terms
of
a
liability
that
could
be
settled
by
the
issuance
of
equity
instruments
at
the
option
of
the
counterparty;
AASB
107
'Statement
of
Cash
Flows'
-‐
only
expenditure
that
results
in
a
recognised
asset
can
be
classified
as
a
cash
flow
from
investing
activities;
AASB
117
'Leases'
-‐
removal
of
specific
guidance
on
classifying
land
as
a
lease;
AASB
118
'Revenue'
-‐
provides
additional
guidance
to
determine
whether
an
entity
is
acting
as
a
principal
or
agent;
and
AASB
136
'Impairment
of
Assets'
-‐
clarifies
that
the
largest
unit
permitted
for
allocating
goodwill,
acquired
in
a
business
combination,
is
the
operating
segment
as
defined
in
AASB
8
'Operating
Segments'
before
aggregation
for
reporting
purposes.
P-REIT
28
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
2
–
SIGNIFICANT
ACCOUNTING
POLICIES
continued
New
Accounting
Standards
and
Interpretations
not
yet
mandatory
or
early
adopted
Australian
Accounting
Standards
and
Interpretations
that
have
recently
been
issued
or
amended
but
are
not
yet
mandatory,
have
not
been
early
adopted
by
the
Trust
for
the
annual
reporting
period
ended
30
June
2011.
The
Trust's
assessment
of
the
impact
of
these
new
or
amended
Accounting
Standards
and
Interpretations,
most
relevant
to
the
Trust,
are
set
out
below.
AASB
9
Financial
Instruments,
2009-‐11
Amendments
to
Australian
Accounting
Standards
arising
from
AASB
9
and
2010-‐7
Amendments
to
Australian
Accounting
Standards
arising
from
AASB
9
This
standard
and
its
consequential
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
January
2013
and
completes
phase
I
of
the
IASB's
project
to
replace
IAS
39
(being
the
international
equivalent
to
AASB
139
'Financial
Instruments:
Recognition
and
Measurement').
This
standard
introduces
new
classification
and
measurement
models
for
financial
assets,
using
a
single
approach
to
determine
whether
a
financial
asset
is
measured
at
amortised
cost
or
fair
value.
To
be
classified
and
measured
at
amortised
cost,
assets
must
satisfy
the
business
model
test
for
managing
the
financial
assets
and
have
certain
contractual
cash
flow
characteristics.
All
other
financial
instrument
assets
are
to
be
classified
and
measured
at
fair
value.
This
standard
allows
an
irrevocable
election
on
initial
recognition
to
present
gains
and
losses
on
equity
instruments
(that
are
not
held-‐for-‐trading)
in
other
comprehensive
income,
with
dividends
as
a
return
on
these
investments
being
recognised
in
profit
or
loss.
In
addition,
those
equity
instruments
measured
at
fair
value
through
other
comprehensive
income
would
no
longer
have
to
apply
any
impairment
requirements
nor
would
there
be
any
‘recycling’
of
gains
or
losses
through
profit
or
loss
on
disposal.
The
accounting
for
financial
liabilities
continues
to
be
classified
and
measured
in
accordance
with
AASB
139,
with
one
exception,
being
that
the
portion
of
a
change
of
fair
value
relating
to
the
entity’s
own
credit
risk
is
to
be
presented
in
other
comprehensive
income
unless
it
would
create
an
accounting
mismatch.
The
Trust
will
adopt
this
standard
from
1
July
2013
but
the
impact
of
its
adoption
is
yet
to
be
assessed
by
the
Trust.
AASB
2010-‐4
Further
Amendments
to
Australian
Accounting
Standards
arising
from
the
Annual
Improvements
Project
These
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
January
2011.
These
amendments
are
a
consequence
of
the
annual
improvements
project
and
make
numerous
non-‐urgent
but
necessary
amendments
to
a
range
of
Australian
Accounting
Standards
and
Interpretations.
The
amendments
provide
clarification
of
disclosures
in
AASB
7
'Financial
Instruments:
Disclosures',
in
particular
emphasis
of
the
interaction
between
quantitative
and
qualitative
disclosures
and
the
nature
and
extent
of
risks
associated
with
financial
instrument;
clarifies
that
an
entity
can
present
an
analysis
of
other
comprehensive
income
for
each
component
of
equity,
either
in
the
statement
of
changes
in
equity
or
in
the
notes
in
accordance
with
AASB
101
'Presentation
of
Financial
Instruments';
and
provides
guidance
on
the
disclosure
of
significant
events
and
transactions
in
AASB
134
'Interim
Financial
Reporting'.
The
adoption
of
these
amendments
from
1
July
2011
will
not
have
a
material
impact
on
the
Trust.
P-REIT
Annual Report - For The Year Ended 30 June 2011 29
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
2
–
SIGNIFICANT
ACCOUNTING
POLICIES
continued
New
Accounting
Standards
and
Interpretations
not
yet
mandatory
or
early
adopted
continued
AASB
2010-‐5
Amendments
to
Australian
Accounting
Standards
These
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
January
2011.
These
amendments
makes
numerous
editorial
amendments
to
a
range
of
Australian
Accounting
Standards
and
Interpretations,
including
amendments
to
reflect
changes
made
to
the
text
of
International
Financial
Reporting
Standards
by
the
International
Accounting
Standards
Board.
The
adoption
of
these
amendments
from
1
July
2011
will
not
have
a
material
impact
on
the
Trust.
ASB
124
Related
Party
Disclosures
(December
2009)
This
revised
standard
is
applicable
to
annual
reporting
periods
beginning
on
or
after
1
January
2011.
This
revised
standard
simplifies
the
definition
of
a
related
party
by
clarifying
its
intended
meaning
and
eliminating
inconsistencies
from
the
definition.
The
definition
now
identifies
a
subsidiary
and
an
associate
with
the
same
investor
as
related
parties
of
each
other;
entities
significantly
influenced
by
one
person
and
entities
significantly
influenced
by
a
close
member
of
the
family
of
that
person
are
no
longer
related
parties
of
each
other;
and
whenever
a
person
or
entity
has
both
joint
control
over
a
second
entity
and
joint
control
or
significant
influence
over
a
third
party,
the
second
and
third
entities
are
related
to
each
other.
This
revised
standard
introduces
a
partial
exemption
of
disclosure
requirement
for
government-‐related
entities.
The
adoption
of
this
standard
from
1
July
2011
will
not
have
a
material
impact
on
the
Trust.
AASB
2010-‐6
Amendments
to
Australian
Accounting
Standards
-‐
Disclosures
on
Transfers
of
Financial
Assets
These
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
July
2011.
These
amendments
add
and
amend
disclosure
requirements
in
AASB
7
about
transfer
of
financial
assets,
including
the
nature
of
the
financial
assets
involved
and
the
risks
associated
with
them.
The
adoption
of
these
amendments
from
1
July
2011
will
increase
the
disclosure
requirements
on
the
Trust
when
an
asset
is
transferred
but
is
not
derecognised
and
new
disclosure
required
when
assets
are
derecognised
but
the
Trust
continues
to
have
a
continuing
exposure
to
the
asset
after
the
sale.
AASB
2010-‐8
Amendments
to
Australian
Accounting
Standards-‐
Deferred
Tax:
Recovery
of
Underlying
Assets
These
amendments
are
applicable
to
annual
reporting
periods
beginning
on
or
after
1
January
2012
and
a
practical
approach
for
the
measurement
of
deferred
tax
relating
to
investment
properties
measured
at
fair
value,
property,
plant
and
equipment
and
intangible
assets
measured
using
the
revaluation
model.
The
measurement
of
deferred
tax
for
these
specified
assets
is
based
on
the
presumption
that
the
carrying
amount
of
the
underlying
asset
will
be
recovered
entirely
through
sale,
unless
the
entity
has
clear
evidence
that
economic
benefits
of
the
underlying
asset
will
be
consumed
during
its
economic
life.
The
Trust
is
yet
to
quantify
the
tax
effect
of
adopting
these
amendments
from
1
July
2012.
P-REIT
30
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
3
-‐
SEGMENT
REPORTING
The
Trust
has
identified
its
operating
segments
based
on
the
internal
reports
that
are
reviewed
and
used
by
the
executive
management
team
in
assessing
performance
and
in
determining
the
allocation
of
resources.
The
Trust
‘s
reportable
segments
under
AASB
8
are
therefore
as
follows:
Direct
Property
–
ownership
and
leasing
out
of
commercial
and
retail
properties
in
New
South
Wales
and
Queensland.
Other
Investments
–
investments
in
property-‐related
securities
and
debt
instruments
for
the
purpose
of
earning
income
through
distributions
and
capital
growth.
Segment
information
The
following
is
an
analysis
of
the
Trust’s
revenue
and
results
from
operations,
assets,
and
liabilities
by
reportable
segment:
30
June
2011
Revenue
Revenue
from
external
customers
Total
segment
revenue
Segment
operating
profit
Fair
value
adjustments
-‐
investments
Fair
value
adjustments
–
derivatives
Finance
costs
Net
profit
Segment
assets
Segment
liabilities
30
June
2010
Revenue
Revenue
from
external
customers
Total
segment
revenue
Segment
operating
profit
Decrease
in
fair
value
of
investments
Loss
on
sale
of
investments
Finance
costs
Net
profit
Segment
assets
Segment
liabilities
Direct
Property
$’000
Other
Investments
$’000
Unallo-‐
cated
$’000
9,604
9,604
6,160
1,231
(129)
(5,107)
2,155
79,343
58,457
443
443
373
(917)
-‐
(56)
(600)
40,900
34
41
41
41
-‐
-‐
-‐
41
-‐
-‐
Direct
Property
$’000
Other
Investments
$’000
Unallo-‐
cated
$’000
-‐
-‐
(146)
-‐
-‐
-‐
(146)
5,000
-‐
33
33
33
-‐
-‐
-‐
33
-‐
-‐
13,103
13,103
9,537
(12,419)
(1,312)
(6,640)
(10,834)
78,467
59,327
P-REIT
Total
$’000
10,088
10,088
6,574
314
(129)
(5,163)
1,596
120,243
58,491
Total
$’000
13,136
13,136
9,424
(12,419)
(1,312)
(6,640)
(10,947)
83,467
59,327
Annual Report - For The Year Ended 30 June 2011 31
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
4
-‐
REVENUE
Operating
activities
Rent
Dividends
and
distributions
Interest
Total
revenue
NOTE
5
-‐
TRADE
AND
OTHER
RECEIVABLES
Trade
receivables
Distribution
receivable
NOTE
6
-‐
OTHER
ASSETS
Consolidated
2011
$’000
2010
$’000
9,604
443
41
10,088
13,103
-‐
33
13,136
6
69
75
121
-‐
121
Prepayments
NOTE
7
–
AVAILABLE
FOR
SALE
FINANCIAL
ASSETS
512
504
Investments
in
unlisted
managed
investment
schemes
Debt
instruments
-‐
Bakehouse
CPI
indexed
transferable
bonds
(i)
8,309
30,000
38,309
5,000
-‐
5,000
(i)
The
bonds
acquired
during
the
year
expire
in
2020
and
pay
a
5.5%
per
annum
coupon
on
the
original
$30
million
principal.
The
principal
is
to
be
indexed
to
CPI.
The
bonds
are
secured
against
and
are
recoursed
to
a
second
mortgage
over
income
producing
property
known
as
the
Bakehouse
Quarter
located
at
North
Strathfield,
NSW.
Interest
will
be
accrued
from
1
July
2011
in
accordance
with
the
terms
of
the
bond
issue.
Consolidated
2011
$’000
2010
$’000
NOTE
8
–
FINANCIAL
ASSETS
AT
FAIR
VALUE
THROUGH
PROFIT
AND
LOSS
Investments
–
BlackWall
Pub
Group
(i)
(i)
2,522
-‐
The
Trust
holds
a
36.8%
interest
in
the
BlackWall
Pub
Group,
a
related
entity.
P-REIT
32
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
9
-‐
INVESTMENT
PROPERTIES
Chancellor
Homemaker
Centre
Silver
@
The
Exchange
APN
Yandina
BlueScope
Coolum
Eye
Hospital
ACT
Total
APN
Toowoomba
Movements
in
investment
properties
Balance
at
the
beginning
of
the
financial
year
Additions
during
the
year
Disposals
during
the
year:
-‐
Noosa
Gateway
*
-‐
Telstra
House
-‐
Chancellor
Village
Convenience
Centre
Balance
at
the
end
of
the
financial
year
Revaluation
of
investment
properties
Consolidated
2011
$’000
2010
$’000
19,900
18,000
23,100
4,375
7,300
78,375
5,700
76,775
369
-‐
-‐
-‐
78,375
1,231
19,900
16,400
23,100
4,375
7,300
76,775
5,700
137,610
-‐
(10,850)
(32,000)
(5,800)
76,775
(12,185)
*
The
Trust
disposed
of
the
economic
interest
in
the
Telstra
House
property
but
retains
legal
title.
Investment
properties
are
carried
at
fair
value
based
on
independent
valuations.
Directors’
valuations
are
prepared
at
each
balance
date
where
an
independent
valuation
has
not
been
obtained.
All
investment
properties
were
independently
valued
in
June
2010.
Valuations
are
performed
by
registered
independent
valuers
based
on
an
active
market
and
with
reference
to
the
purchase
price
plus
acquisition
costs
such
as
stamp
duty,
legal
and
professional
costs,
and
capital
expenditures
since
acquisition.
The
valuations
are
also
based
on
common
valuation
methodologies
including
capitalisation
rate
and
discounted
cash
flow
approaches
while
active
market
was
arrived
at
by
reference
to
recent
market
sales
of
similar
properties
around
the
•
area.
Capitalisation
rate
(initial
yield)
used
per
property
follows:
Chancellor
Homemaker
Silver
@
The
Exchange
Canberra
Eye
Hospital
APN
Yandina
Coolum
APN
Toowoomba
9.00%
10.5%
8.75%
9.25%
8.50%
9.00%
For
the
current
financial
year,
the
directors
believe
that
the
carrying
value
of
the
investment
properties
approximates
their
market
value
and
hence
have
adopted
the
latest
independent
valuation
except
for
Silver
@
The
Exchange.
Silver
@
The
Exchange
was
revalued
by
the
directors
based
on
a
new
lease
with
a
major
tenant
at
a
much
improved
lease
rental
rate
than
was
assumed
in
the
independent
valuation.
The
same
capitalisation
rate
has
been
adopted
as
was
used
in
the
independent
valuation.
P-REIT
Annual Report - For The Year Ended 30 June 2011 33
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
10
-‐
TRADE
AND
OTHER
PAYABLES
Trade
and
other
creditors
Accrued
expenses
NOTE
11
–
OTHER
CURRENT
LIABILITIES
Unearned
income
NOTE
12
–
DERIVATIVE
FINANCIAL
INSTRUMENTS
Interest
rate
swap
contracts
–
at
fair
value
Details
of
the
swaps
are
shown
in
Note
13.
NOTE
13
–
INTEREST-‐BEARING
LIABILITIES
(a)
Current
Secured
bank
bill
facilities
(b)
Non-‐current
Secured
bank
bill
facilities
(i)
(i)
Consolidated
2011
$’000
2010
$’000
275
136
411
71
129
511
92
603
52
-‐
2,900
58,672
54,980
-‐
The
borrowings
are
secured
by
a
charge
over
the
investment
properties
described
in
Note
8.
During
the
financial
year
$792,300
of
debt
has
been
repaid
to
the
Trust’s
lenders.
Average
interest
rate
on
the
loans
for
the
year
was
7.81%.
During
the
year
the
responsible
entity
negotiated
the
extension
of
the
Trust’s
debt
facility
on
the
following
terms:
-‐
Total
facility
to
be
extended
until
30
April
2013
-‐
Facilities
are
to
incur
a
facility
fee
of
2.25%
p.a.
charged
either
monthly
or
quarterly
-‐
Amortisation
of
$1,100,000
due
30
September
2011,
and
then
amortization
of
$600,000
quarterly
from
31
December
2011
until
expiry.
-‐
LVR
of
65%
to
be
achieved
by
30
September
2011
The
following
hedges
are
in
place
over
the
facility:
-‐
$10m
fixed
at
6.53%
to
October
2011
-‐
$7.08m
fixed
at
6.65%
to
October
2011
-‐
$17m
capped
at
6.5%
to
October
2012,
$47k
cap
premium
payable
quarterly
to
Oct
2012
-‐
$10m
swapped
at
5.26%
to
June
2014
-‐
$10m
swapped
at
5.22%
to
June
2014
P-REIT
34
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
14
–
CASH
FLOW
INFORMATION
Consolidated
2011
$’000
2010
$’000
(a)
Reconciliation
of
cash
Cash
at
the
end
of
the
financial
year
as
shown
in
the
Statement
of
Cash
Flows
is
reconciled
to
items
in
the
balance
sheet
as
follows:
Cash
and
cash
equivalents
450
1,067
(b)
Reconciliation
of
cash
flow
from
operations
with
profit/(loss)
after
income
tax
Profit/(loss)
after
income
tax
Non-‐cash
items
1,596
(10,947)
Unrealised
(gain)/loss
on
investments
Straightlined
rental
income
Amortisation
of
borrowing
costs
Changes
in
assets
and
liabilities
(Increase)/decrease
in
assets:
Trade
and
other
receivables
Prepayments
Increase/(decrease)
in
liabilities:
Trade
and
other
payables
Unearned
income
Net
cash
from
operating
activities
NOTE
15
–
AUDITOR’S
REMUNERATION
ESV
Chartered
Accountants
-‐
Audit
services
-‐
Other
services
Total
(185)
(339)
-‐
38
-‐
(191)
19
937
$
12,419
(234)
-‐
136
(281)
436
(65)
1,464
$
45,668
14,900
60,568
41,811
2,670
44,481
P-REIT
Annual Report - For The Year Ended 30 June 2011 35
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
16
–
RELATED
PARTY
DISCLOSURES
Related
parties
The
Trust
is
managed
by
RFML
Limited
as
responsible
entity
and
TFML
Limited
as
investment
manager.
The
Directors
of
RFML
Limited
and
TFML
Limited
are
key
management
personnel
of
this
entity.
The
names
of
persons
holding
position
of
Directors
of
RFML
Limited
during
the
year
until
the
signing
of
this
report
unless
otherwise
stated
are:
Joseph
Glew
Stuart
Brown
Paul
Tresidder,
resigned
31
August
2010
Judith
Ryan,
appointed
31
August
2010,
resigned
30
June
2011
Tim
Brown,
appointed
30
June
2011
The
names
of
persons
holding
position
of
Directors
of
TFML
Limited
during
the
year
until
the
signing
of
this
report
unless
otherwise
stated
are:
Seph
Glew
Stuart
Brown
Robin
Tedder,
appointed
18
August
2010
Richard
Hill,
appointed
18
August
2010
Paul
Tresidder,
appointed
18
August
2010,
resigned
31
January
2011
Guy
Wynn,
appointed
18
August
2010,
resigned
31
January
2011
Director
related
transactions
During
the
year
the
Trust
acquired
units
in
the
following
funds.
The
responsible
entity
and/or
investment
manager
of
the
funds
and
of
the
Trust
have
common
directors.
Fund
Responsible
entity/
Investment
manager
Unitholdings
Distributions
received
($)
BlackWall
Storage
Fund
BlackWall
Pub
Group
TFML
Limited
TFML
Limited
260,000
22,923,810
17,875
-‐
BlackWall
Penrith
Fund
No
2
TFML
Limited
1,000,000
93,350
WRV
Unit
Trust
TFML
Limited
125,000
24,308,810
-‐
111,225
The
Trust
also
acquired
Bakehouse
bonds
held
at
$30
million.
TFML
Limited
is
the
manager
of
the
bonds.
Further
details
can
be
found
in
Note
7.
On
20
May
2011,
the
Trust
acquired
$3
million
shares
in
BlackWall
Property
Funds
Limited
(BlackWall)
and
distributed
the
shares
to
its
unitholders
as
a
return
of
capital.
BlackWall
and
RFML
Limited
have
common
directors.
P-REIT
36
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
16
–
RELATED
PARTY
DISCLOSURES
continued
The
direct,
indirect
and
beneficial
holdings
of
director-‐related
entities
in
the
units
of
the
Trust
are:
Fund
Common
directors
Unitholdings
2011
2010
Pelorus
Private
Equity
Ltd
BlackWall
Property
Funds
Ltd
Tankstream
Property
Investments
Fund
Kirela
Pty
Ltd
ATF
Kirela
Development
Unit
Trust
TFML
Limited
Pelorus
Pipes
Trust
No
5
Frogstorm
Pty
Ltd
Lymkeesh
Pty
Ltd
Jagar
Property
Consultants
Seno
Management
Pty
Ltd
Related
party
transactions
J
Glew,
P
Tresidder,
S
Brown,
G
Wynn,
R
Tedder,
R
Hill
24,226,324
J
Glew,
S
Brown,
R
Tedder,
R
Hill
9,573,489
J
Glew,
S
Brown,
R
Tedder,
R
Hill
19,238,234
-‐
-‐
-‐
J
Glew,
P
Tresidder
J
Glew,
S
Brown,
R
Tedder,
R
Hill
Stuart
Brown
Paul
Tresidder
J
Glew,
P
Tresidder
J
Glew
38,375,281
5,000,000
12,672,507
853,650
493,611
6,539,664
2,471,560
119,444,320
-‐
-‐
12,431,626
-‐
-‐
-‐
-‐
12,431,626
Responsible
entity/investment
manager
remuneration
In
accordance
with
the
terms
of
the
Trust
Constitution
and
the
product
disclosure
statement,
the
responsible
entity
or
investment
manager
is
entitled
to
receive
a
management
fee
based
on
a
specified
percentage
of
the
value
of
the
Trust’s
assets.
Total
management
fees
paid
during
the
year
were
$696,074
(2010:
$817,934).
Custodian
remuneration
The
Custodian
is
Trust
Company
Limited.
Custody
fee
is
based
on
0.025%
of
the
gross
asset
value
of
the
Trust,
with
a
minimum
of
$15,000.
During
the
year,
the
custodian
was
paid
$19,838
(2010:
$15,018)
in
the
including
custody
fees
and
out-‐of-‐pocket
expenses
performance
of
its
duties.
Other
related
party
remuneration
incurred
The
property
manager,
BlackWall
Property
Management
Services
Pty
Ltd,
received
$308,361
(2010:
$430,618)
in
property
management
fees,
leasing
and
property
accounting
fees.
TFML
Limited
was
paid
$56,250
(2010:
$125,000)
in
capital
raising
fees
and
$319,000
in
arranging
the
extension
of
the
Trust’s
loan
facilities.
WTSO
Pty
Ltd
(formerly
DDT
Projects
Ltd),
a
related
party
of
the
asset
manager,
provided
architectural
services
to
the
Trust
and
was
paid
$8,663
(2010:
$3,895).
Director’s
remuneration
–
Executive
Directors
No
salary,
cash
bonus
or
monetary
benefit
was
paid
out
of
the
Trust’s
assets
to
the
Directors
of
the
Responsibility
Entity
during
the
period.
P-REIT
Annual Report - For The Year Ended 30 June 2011 37
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
16
-‐
PARENT
ENTITY
DISCLOSURES
As
at
and
for
the
year
ended
30
June
2011
the
parent
entity
of
the
Trust
was
P-‐REIT.
Results
of
the
parent
entity
Profit/(loss)
for
the
year
Other
comprehensive
income
Total
comprehensive
income
for
the
year
Financial
position
of
the
parent
entity
Current
assets
Total
assets
Current
liabilities
Total
liabilities
Parent
2011
$’000
1,596
353
1,949
991
122,659
3,326
59,587
2010
$’000
(10,947)
-‐
(10,947)
1,610
85,847
60,386
60,386
Net
assets
attributable
to
unitholders
Parent
entity
contingencies
63,072
25,460
Other
than
as
disclosed
in
Note
19,
the
parent
entity
has
no
other
contingencies
as
at
30
June
2011
(2010:
nil).
Parent
entity
capital
commitments
The
parent
entity
has
not
entered
into
any
capital
commitments
as
at
30
June
2011
(2010:
nil).
Country
of
NOTE
17
–
CONTROLLED
ENTITY
Incorporation
Percentage
Owned
(%)
2011
2010
Subsidiary
of
P-‐REIT:
Yandina
Sub-‐Trust
NOTE
18
-‐
EVENTS
SUBSEQUENT
TO
BALANCE
DATE
Australia
100%
100%
See
Directors’
report.
Other
than
as
disclosed
above
and
to
the
knowledge
of
Directors,
there
has
been
no
other
matter
or
circumstance
that
has
arisen
since
the
end
of
the
financial
year
that
has
or
may
affect
the
Trust’s
operations
in
future
financial
years,
the
results
of
those
operations
or
the
Trust’s
state
of
affairs
in
future
financial
years.
P-REIT
38
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
19
–
CONTINGENT
ASSETS/LIABILITIES
MacarthurCook
Property
Securities
Fund
(MPS)
As
disclosed
to
the
market
on
14
May
2010,
one
of
the
Investors
in
the
Trust,
MacarthurCook
Fund
Management
Limited
in
its
capacity
as
responsible
entity
of
the
ASX-‐listed
MacarthurCook
Property
Securities
Fund
(MPS),
commenced
legal
proceedings
against
RFML
Limited
both
in
its
capacity
as
the
Responsible
Entity
of
the
Trust
and
in
its
personal
capacity.
MPS
is
claiming
a
right
to
redeem
15
million
of
the
22.6
million
units
it
holds
in
the
Trust
in
priority
to
all
other
unitholders
at
a
price
of
$1
per
unit.
MPS’s
claim
relates
to
a
series
of
contracts
entered
into
from
October
2006
(prior
to
the
current
management’s
involvement
in
the
Trust)
with
respect
to
MPS’s
investment
in
the
Trust.
Current
management
disputes
the
claim
and
is
defending
the
action.
P-‐REIT
is
in
the
process
of
filing
its
evidence
and
the
matter
is
expected
to
be
set
down
for
hearing
within
the
next
six
months.
If
MPS
is
successful
in
its
action
the
Trust
will
be
forced
to
sell
assets
to
satisfy
MPS’s
claim
and
the
costs
of
the
court
proceedings.
In
this
circumstance
the
net
tangible
asset
value
of
units
in
the
Trust
may
reduce
in
value
and
any
income
distributions
may
also
reduce
or
need
to
be
suspended.
The
total
value
of
MPS’s
claim
exceeds
$18
million.
Management
is
of
the
view
that
the
claim
has
little
prospect
of
success,
however
should
the
legal
proceedings
be
pursued
to
their
fullest
extent,
significant
non-‐recoverable
legal
costs
will
be
incurred
by
the
Trust.
The
Trust
has
incurred
$276,319
in
legal
costs
pursuing
this
matter.
Other
In
early
2010
the
Trust
received
notification
of
a
potential
claim
by
the
vendor
of
a
Trust
asset.
The
claim
relates
to
certain
performance
hurdles
in
the
contract
for
the
sale
of
land
under
which
the
asset
was
acquired.
The
Trust
disputes
the
claim
but,
in
an
effort
to
have
the
matter
resolved
at
minimum
cost,
the
Trust
lodged
an
amount
of
$301,000
with
its
solicitor’s
trust
account
pending
a
mediation
of
the
issue.
The
claimant
has
refused
to
enter
into
an
arrangement
for
mediation
within
a
reasonable
time
and
as
a
consequence
the
Trust
has
lodged
a
statement
of
claim
in
the
District
Court
of
NSW
for
the
return
of
the
money
held
in
trust.
The
maximum
liability
of
the
Trust
should
the
claimant’s
claim
be
proved
is
less
than
$301,000.
There
are
no
other
contingent
liabilities
or
contingent
assets
as
at
30
June
2011
which
require
disclosure
in
the
financial
statements.
P-REIT
Annual Report - For The Year Ended 30 June 2011 39
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
20
–
FINANCIAL
INSTRUMENTS
Financial
Risk
Management
The
main
risks
the
Trust
is
exposed
to
through
its
financial
instruments
are
liquidity
risk,
interest
rate
risk,
and
credit
risk.
The
Trust's
principal
financial
instruments
are
cash
and
other
financial
instruments
such
as
trade
debtors
and
trade
creditors,
which
arise
directly
from
its
operations.
This
note
presents
information
about
the
Trust’s
exposure
to
each
of
the
above
risks,
their
objectives,
policies,
and
processes
for
measuring
and
managing
risk,
and
the
management
of
capital.
The
Board
of
Directors
of
the
Responsible
Entity
has
overall
responsibility
for
the
establishment
and
oversight
of
the
risk
management
framework.
The
Board
of
Directors
and
senior
management
set
appropriate
risk
limits
and
controls,
and
monitor
risks
and
adherence
to
limits.
Through
training
and
management
standards
and
procedures,
they
aim
to
develop
a
disciplined
and
constructive
control
environment
in
which
all
employees
understand
their
roles
and
obligations.
Changes
in
market
conditions
and
the
Trust’s
activities
are
monitored
with
respect
to
the
Trust’s
risk
profile.
Liquidity
risk
Vigilant
liquidity
risk
management
requires
the
trust
to
maintain
sufficient
liquid
assets
(mainly
cash
and
cash
equivalents)
and
available
borrowing
facilities
to
be
able
to
pay
debts
as
and
when
they
become
due
and
payable.
The
trust
manages
liquidity
risk
by
maintaining
adequate
cash
reserves
and
available
borrowing
facilities
by
continuously
monitoring
actual
and
forecast
cash
flows
and
matching
the
maturity
profiles
of
financial
assets
and
liabilities.
Liquidity
risk
is
managed
on
a
daily
basis
by
the
Responsible
Entity
in
accordance
with
their
policies
and
procedures.
The
Trust’s
constitution
provides
for
redemption
of
units
and
is
therefore
exposed
to
liquidity
risk
of
meeting
redemptions.
The
RE
has
suspended
redemptions
at
this
time
in
response
to
this
risk.
Interest
rate
risk
The
Trust
has
exposure
to
market
risk
for
changes
in
interest
rates
on
long-‐term
borrowings.
Borrowings
at
variable
rate
expose
the
Trust
to
cash
flow
interest
rate
risk.
This
risk
is
managed
by
the
Trust
by
entering
into
hedging
transactions
with
financial
institutions
as
detailed
in
Note
13.
Credit
risk
The
maximum
exposure
to
credit
risk,
excluding
the
value
of
any
collateral
or
other
security,
at
balance
date
to
recognised
financial
assets,
is
the
carrying
amount,
net
of
any
provisions
for
impairment
of
those
assets,
as
disclosed
in
the
balance
sheet
and
notes
to
the
financial
statements.
Credit
risk
for
financial
instruments
arises
from
the
potential
failure
by
counter-‐parties
to
the
contract
to
meet
their
obligations.
P-REIT
40
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
20
–
FINANCIAL
INSTRUMENTS
continued
Interest
rate
risk
The
Trust's
exposure
to
interest
rate
risk,
which
is
the
risk
that
a
financial
instruments
value
will
fluctuate
as
a
result
of
changes
in
market
interest
rates
and
the
effective
weighted
average
interest
rates
on
classes
of
financial
assets
and
financial
liabilities,
is
as
follows:
Weighted
average
effective
interest
rate
2011
%
2010
%
Floating
interest
rate
Fixed
interest
rate
Non-‐interest
bearing
Total
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2011
$’000
2010
$’000
Financial
assets:
Cash
and
cash
equivalents
Trade
and
other
receivables
Investments
in
equity
&
debt
instruments
Total
financial
assets
Financial
liabilities:
Trade
and
other
payables
Other
liabilities
Hedge
liabilities
Bank
borrowings
Total
financial
liabilities
4.75%
4.35%
450
1,067
-‐
5.5%
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
30,000
450
1,067
30,000
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
7.81%
8.38%
23,800
4,592
34,080
54,080
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
75
-‐
450
1,067
121
75
121
10,831
5,000
40,831
5,000
10,906
5,121
41,356
6,188
411
71
129
-‐
603
52
-‐
411
71
129
603
52
-‐
-‐
57,880
58,672
23,800
4,592
34,080
54,080
611
655
58,491
59,327
Maturing
within
1
year
Maturing
within
1-‐5
years
Maturing
over
5
years
Total
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2011
$’000
2010
$’000
2011
$’000
2010
$’000
Financial
assets:
Cash
and
cash
equivalents
Trade
and
other
receivables
Total
financial
assets
Investments
in
equity
&
debt
instruments
Financial
liabilities:
450
1,067
121
75
-‐
5,000
10,831
525
6,188
10,831
-‐
-‐
Trade
and
other
payables
411
603
Other
liabilities
Hedge
liabilities
71
-‐
52
-‐
-‐
-‐
129
Interest
bearing
loans
and
borrowings
Total
financial
liabilities
2,900
58,672
54,980
3,382
59,327
55,109
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
30,000
30,000
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
450
1,067
75
121
40,831
5,000
41,356
6,188
411
603
71
129
52
-‐
57,880
58,672
58,491
59,327
P-REIT
Annual Report - For The Year Ended 30 June 2011 41
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
20
–
FINANCIAL
INSTRUMENTS
continued
Exposure
to
credit
risk
The
carrying
amount
of
the
Trust's
financial
assets
represents
the
maximum
credit
exposure.
The
Group's
maximum
exposure
to
credit
risk
at
the
reporting
date
was:
Consolidated
Financial
assets
Cash
and
cash
equivalents
Trade
and
other
receivables
Total
financial
assets
Investments
in
equity
and
debt
instruments
Sensitivity
analysis
2011
$’000
2010
$’000
450
75
40,831
41,356
1,067
121
5,000
6,188
The
following
sensitivity
analysis
is
based
on
the
interest
rate
risk
exposures
in
existence
at
the
balance
sheet
date.
At
30
June
2011,
if
interest
rates
had
moved,
as
illustrated
in
the
table
below,
with
all
other
variables
held
constant,
profit
would
have
been
affected
as
follows:
Consolidated
Net
Profit
Higher
/
(Lower)
Movement
in
interest
rates
+1.0%
-‐
0.5%
Fair
value
2011
$’000
2010
$’000
(579)
289
(587)
293
The
Group
has
adopted
the
AASB
7
amendments,
which
require
disclosure
of
how
the
following
fair
value
measurements
fit
within
the
fair
value
measurement
hierarchy:
•
Quoted
prices
(unadjusted)
in
active
markets
for
identical
assets
or
liabilities
(Level
1).
•
Inputs
other
than
quoted
prices
included
within
level
1
that
are
observable
for
the
asset
or
liability,
either
directly
(ie.
as
prices)
or
indirectly
(ie.
derived
from
prices)
(Level
2).
•
Inputs
for
the
asset
or
liability
that
are
not
based
on
observable
market
data
(Level
3).
P-REIT
42
Annual Report - For The Year Ended 30 June 2011
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
20
–
FINANCIAL
INSTRUMENTS
continued
Fair
value
continued
The
following
table
presents
the
Group’s
financial
assets
and
liabilities
measured
at
fair
value
at
30
June:
2011
Financial
assets
at
FVTPL
Available-‐for-‐sale
financial
assets
Unquoted
equities
Total
Debt
instruments
Total
Derivative
financial
liabilities
2010
Available-‐for-‐sale
financial
assets
Unquoted
equities
Level
1
$’000
-‐
Level
2
$’000
-‐
Level
3
$’000
2,522
Total
$’000
2,522
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
-‐
8,309
40,831
30,000
8,309
40,831
30,000
129
129
129
129
Level
1
$’000
-‐
Level
2
$’000
-‐
Level
3
$’000
5,000
Total
$’000
5,000
The
Trust
had
no
derivative
financial
liabilities
at
30
June
2010.
The
following
table
is
a
reconciliation
of
the
movements
in
financial
assets
classified
as
level
3
for
the
year
ended
30
June
2011:
Financial
assets
at
FVTPL
$’000
-‐
3,439
-‐
-‐
2,522
(917)
Available-‐
for-‐sale
financial
assets
$’000
5,000
36,956
(4,000)
-‐
38,309
353
Level
3
Total
$’000
5,000
40,395
(4,000)
-‐
40,831
(564)
Opening
balance
as
at
30
June
2010
Purchases
Disposals
Return
of
investments
Balance
at
30
June
2011
Fair
value
movement
Level
3
financial
instruments
Determination
of
fair
value
The
fair
value
of
financial
assets
at
FVTPL
and
available-‐for-‐sale
financial
assets
is
determined
by
reference
to
the
net
assets
of
the
underlying
entities.
The
fair
value
of
interest
rate
swaps
is
calculated
as
the
present
value
of
the
estimated
future
cash
flows.
P-REIT
Annual Report - For The Year Ended 30 June 2011 43
P-‐REIT
NOTES
TO
THE
FINANCIAL
STATEMENTS
FOR
THE
YEAR
ENDED
30
JUNE
2011
NOTE
20
–
FINANCIAL
INSTRUMENTS
continued
Fair
value
continued
Sensitivity
of
Level
3
Sensitivities
to
reasonable
possible
changes
in
non-‐market
observable
valuation
assumptions
would
not
have
a
material
impact
on
the
Trust’s
reported
results.
There
were
no
transfers
between
Level
1,
2
and
3
financial
instruments
during
the
year.
For
all
other
financial
assets
&
liabilities
carrying
value
is
an
approximation
of
fair
value.
NOTE
21
–
LEASE
COMMITMENTS
RECEIVABLE
Future
minimum
rentals
receivable
under
non-‐cancellable
operating
leases
as
at
30
June
are
as
follows:
Receivable
within
1
year
Receivable
within
1-‐5
years
Total
Receivable
more
than
5
years
NOTE
22
–
TRUST
DETAILS
2011
$’000
2010
$’000
7,740
7,356
24,929
65,287
32,618
21,671
60,665
31,638
The
Responsible
Entity’s
details
are
as
follows:
Registered
Office
Principal
Place
of
Business
Storey
Blackwood,
Level
4,
222
Clarence
Street,
Sydney
NSW
2000
Suite
3,
194
Varsity
Parade,
Varsity
Lakes
QLD
4227
P-REIT
44
Annual Report - For The Year Ended 30 June 2011
Annual Report June 2011
Managed By:
Level 1, 50 Yeo Street
Neutral Bay, NSW 2089
ABN 33 107 352 821