BlackWall Property Trust
Annual Report 2015

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!! ASX'Release' BlackWall'Property'Trust'I'BWR' 30'June'2015'–'Full'Year'Results' ! Key'Details' ! ! 17!August!2015! • A'final'distribution'of'6'cents'per'unit'declared,!to!be!paid! on!6!November!2015.! ! • The!full!year!distribution!of!11.5!cents!per!unit!(5.5!cents!paid! in!April!2015).! ! • NTA!of!$1.40!per!unit!with!gearing!of!43%.! Distributions* The! Trust! has! carried! forward! revenue! losses! of! over! $20! million! and! capital! losses! of! approximately!$17!million.!!As!a!consequence,!for!a!significant!period!all!distributions!will! be!tax!deferred.* Property*Portfolio* The! Trust’s! $87.4! million! property! portfolio! is! stable! with! less! than! 5%! vacancy! and! a! weighted! average! lease! expiry! of! 6.3! years.! At! 30! June! the! property! portfolio! is! held! at! a! weighted!average!capitalisation!rate!of!9.1%.! Bakehouse*Bonds* The!Trust!holds!$21.7!million!of!Bakehouse!Bonds.!!The!bonds!are!subordinated!debt!notes! secured!against!a!large!mixedXuse!development!known!as!the!Bakehouse!Quarter.!! During!the!2015!financial!year!the!Bakehouse!Quarter!was!formally!marketed!for!sale!as!a! result!of!a!number!of!unsolicited!approaches!to!purchase.!Through!the!marketing!process! an!offer! of!$270!million!was!received!but!was!rejected!by!the! Directors.!Subsequently!an! offer!(from!a!different!party)!of!$300!million!was!declined!as!it!was!subject!to!unacceptable! conditions.! Specifically,! completion! may! not! have! occurred! until! 2020! (at! the! purchaser’s! election)!and!the!proposed!upfront!payment!of!$20!million!was!insufficient.!! The! Bakehouse! Quarter! has! $108! million! of! bank! debt,! which! ranks! in! priority! to! $27.1! million! worth! of! Bakehouse! Bonds! ($21.7! million! held! by! BWR! and! $5.4! million! held! by! BlackWall! Property! Funds! Limited! –! BWF).! The! bonds! pay! a! coupon! of! 5.5%! per! annum! and! their! face! value! is! indexed! to! CPI! annually. Total! debt! (bank! and! Bakehouse! Bonds)! secured! against! the! project! is! just! over! $135! million.! Depending! on! the! value! of! the! BLACKWALL'FUND'SERVICES'LIMITED'!ABN!39!079!608!825! Level!1,!50!Yeo!Street,!Neutral!Bay,!Sydney!NSW!2089!Australia'|'PO!Box!612,!Neutral!Bay,!Sydney! NSW!2089!Australia'|'Tel!+61!2!9033!8611'|'Fax!+61!2!9033!8600'|'www.blackwallfunds.com.au! ! ! ! property! adopted! Bakehouse! Bonds! are! protected! by! an! equity! buffer! of! between! $134! million!and!$165!million.!Should!an!opportunity!present!the!Trust!will!look!to!convert!its! interest!in!the!Bakehouse!Bonds!to!ordinary!equity!in!the!Bakehouse!Quarter.! The! Bakehouse! has! approximately! 40,000! sqm! of! commercial,! entertainment! and! retail! premises! generating! significant! cash! flow.! In! addition,! it! has! close! to! 20,000! sqm! of! developable! land.! It! is! anticipated! that! this! land! would! be! suitable! for! substantial! residential!development.! While!the!site!is!no!longer!being!actively!marketed!for!sale!there!are!a!number!of!parties! conducting! due! diligence! and! revised! offers! will! be! assessed! if! received.! BlackWall! has! resolved!to!make!an!application!for!a!rezoning!of!the!site!and!either:! • sell!the!individual!residential!development!sites;!or! • joint!venture!a!residential!development.! If!the!Bakehouse!were!to!be!sold!in!one!line!the!Bakehouse!Bonds!would!be!redeemed!for! cash.! ! A! partial! sale! or! residential! development! would! likely! result! in! the! bonds! being! redeemed!in!part!or!in!full!for!cash.! ! The!financial!statements!for!the!full!year!to!30!June!2015!together!with!the!Appendix!4E! are! attached! to! this! release.! For! more! information! contact! Stuart! Brown! (Chief! Executive! Officer)!or!Tim!Brown!(Chief!Financial!Officer)!on!+612!9033!8611.! ' ' X2-! Managed By Consolidated Annual Financial Report Year Ended 30 June 2015 CONTENTS Financial Statements Directors’ Report Auditor’s Independence Declaration ASX Additional Information Trust Details Consolidated Statement of Profit or Loss and Other Comprehensive Income Consolidated Statement of Financial Position Consolidated Statement of Changes in Net Assets Attributable to Unitholders Consolidated Statement of Cash Flows Notes to the Financial Statements Directors’ Declaration Independent Auditor’s Report Contents – Notes to the Financial Statements Glossary * Front cover pictures: Top – Chancellor Homemaker Centre Bottom Left – 55 Pyrmont Bridge Road Bottom Right – WOTSO WorkSpace Silver @ The Exchange Page 3 Page 9 Page 10 Page 12 Page 13 Page 14 Page 15 Page 16 Page 17 Page 36 Page 37 Page 39 Page 40 2 2 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 Directors’ Report The BlackWall Property Trust is an ASX(cid:486)listed real estate investment trust (cid:523)ASX(cid:483) BWR(cid:524) with commercial(cid:481) retail and industrial property interests(cid:484) BWR has (cid:836)120 million of gross assets with (cid:836)50 million of bank debt giving rise to net tangible assets of (cid:836)64 million or (cid:836)1(cid:484)40 per unit(cid:484) The Trust has 46 million units(cid:484) A final distribution of 6 cents per unit was declared on the date of this report with a payment date of 6 November 2015(cid:484) This brings the full year distribution to 11(cid:484)5 cents per unit (cid:523)an interim distribution of 5(cid:484)5 cents per unit paid in April 2015(cid:524)(cid:484) The Trust has carried forward revenue losses of over (cid:836)20 million and capital losses of approximately (cid:836)17 million(cid:484) As a conse(cid:147)uence for a significant period all distributions will be 100(cid:936) tax deferred(cid:484) BlackWall Fund Services Limited is BWR’s Responsible Entity and wholly(cid:486)owned by ASX(cid:486)listed BlackWall Property Funds Limited (cid:523)ASX(cid:483) BWF(cid:524)(cid:484) BlackWall is a vertically integrated property management(cid:481) funds management and investment business(cid:484) It provides property and asset management services to a range of property syndicates including BWR(cid:484) BlackWall holds 7(cid:484)5 million (cid:523)16(cid:936)(cid:524) units in the Trust(cid:484) Review of Operations Recently BWR announced and commenced an on market unit buy(cid:486)back scheme(cid:484) At the date of this report 150(cid:481)515 units have been bought back under this scheme(cid:484) The Trust’s (cid:836)(cid:890)7(cid:484)4 million property portfolio is stable with less than 5(cid:936) vacancy and a weighted average lease expiry of 6(cid:484)3 years(cid:484) At 30 (cid:13)une the property portfolio is held at a weighted average capitalisation rate of 9(cid:484)1(cid:936)(cid:484) APN (cid:28)andina Chancellor Homemaker Centre Silver @ The Exchange Canberra Eye Hospital Toowoomba Coolum Bald Rock Hotel (cid:535) (cid:535) Contracts exchanged Value $’000 24(cid:481)750 22(cid:481)000 1(cid:890)(cid:481)500 (cid:890)(cid:481)500 6(cid:481)100 4(cid:481)000 3(cid:481)500 (cid:890)7(cid:481)350 Implied Cap Rate 10(cid:484)0(cid:936) (cid:890)(cid:484)3(cid:936) (cid:890)(cid:484)5(cid:936) (cid:890)(cid:484)5(cid:936) 9(cid:484)(cid:890)(cid:936) 10(cid:484)5(cid:936) N(cid:512)A NLA sqm 9(cid:481)100 9(cid:481)500 5(cid:481)100 2(cid:481)600 4(cid:481)100 2(cid:481)900 N(cid:512)A As foreshadowed in the 2014 Annual Report the Trust’s property portfolio had a number of lease expiries in the 2015 financial year(cid:484) Specifically(cid:483) (cid:120) Silver @ The Exchange on the Gold Coast had 4(cid:481)300 s(cid:147)m of vacant space with the expiry of the Gold Coast City Council lease(cid:484) BlackWall has leased all but 500 s(cid:147)m of this space(cid:484) Significantly(cid:481) the GCCC space has been split amongst four new tenants spreading future leasing risk and increasing flexibility(cid:484) One of these tenants is a gym and health operator which adds amenity to the building for existing and prospective tenants(cid:484) BlackWall’s serviced office business has established an operation at Silver and has expanded on the back of strong take up(cid:484) Negotiations are underway with respect to the balance of the vacant space(cid:484) The let up period and incentives have had an impact on the rental income for the 2015 financial year(cid:484) The ma(cid:140)ority of the incentives have now run off(cid:484) (cid:120) A potential vacancy arose at Chancellor Homemaker Centre with the failure of Retail Adventure Group and subse(cid:147)uently DSG Holdings(cid:484) A short term replacement tenant was secured and 3 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 3 BlackWall has negotiated for this tenant to take up a long term lease of part of the premises(cid:484) This will leave a vacancy of 1(cid:481)200 s(cid:147)m(cid:484) In November 2013 BWR made an investment in a BlackWall syndicate known as the Bald Rock Fund(cid:484) The Trust holds 39(cid:936) of the fund and(cid:481) as a conse(cid:147)uence(cid:481) it was consolidated onto the Trust’s balance sheet(cid:484) Contracts for the sale of the Bald Rock Hotel were recently exchanged and the asset has now been reclassified as current(cid:484) Completion of this transaction is scheduled for 30 September 2015(cid:484) At completion BWR’s investment of (cid:836)390(cid:481)000 will be returned along with a profit of (cid:836)210(cid:481)000(cid:484) The Trust’s rental and distribution income for the 2015 financial year has decreased by (cid:836)2(cid:484)2 million(cid:484) This decrease was caused by(cid:483) (cid:120) one(cid:486)off let up and lease incentives with respect to the leasing transactions explained above(cid:482) and (cid:120) a reduction in distributions from Bakehouse Bonds following the redemption of 10 million Bakehouse Bonds which in part discharged the Trust’s litigation liability in (cid:13)une 2014(cid:484) In (cid:13)une 2015 agents were appointed to market the Chancellor Homemaker Centre for sale with the instructions that the asset would only sell at a significant premium to its carrying value with the aim of redeploying the capital into a more active asset(cid:484) The property has been revalued to (cid:836)22 million which reflects the best unconditional offer received(cid:484) The Directors resolved that this was not a sufficient premium to warrant selling and the property will be retained(cid:484) Bakehouse Bonds The Trust holds (cid:836)21(cid:484)7 million of Bakehouse Bonds(cid:484) The bonds are subordinated debt notes secured against a large mixed(cid:486)use development known as the Bakehouse (cid:20)uarter(cid:484) During the 2015 financial year the Bakehouse (cid:20)uarter was formally marketed for sale as a result of a number of unsolicited approaches to purchase(cid:484) Through the marketing process an offer of (cid:836)270 million was received but was re(cid:140)ected by the Directors(cid:484) Subse(cid:147)uently an offer (cid:523)from a different party(cid:524) of (cid:836)300 million was declined as it was sub(cid:140)ect to unacceptable conditions(cid:484) Specifically(cid:481) completion may not have occurred until 2020 (cid:523)at the purchaser’s election(cid:524) and the proposed upfront payment of (cid:836)20 million was insufficient(cid:484) The Bakehouse (cid:20)uarter has (cid:836)10(cid:890) million of bank debt(cid:481) which ranks in priority to (cid:836)27(cid:484)1 million worth of Bakehouse Bonds (cid:523)(cid:836)21(cid:484)7 million held by BWR and (cid:836)5(cid:484)4 million held by BlackWall Property Funds Limited – BWF(cid:524)(cid:484) The bonds pay a coupon of 5(cid:484)5(cid:936) per annum and their face value is indexed to CPI annually(cid:484) Total debt (cid:523)bank and Bakehouse Bonds(cid:524) secured against the pro(cid:140)ect is (cid:140)ust over (cid:836)135 million(cid:484) Depending on the value of the property adopted Bakehouse Bonds are protected by an e(cid:147)uity buffer of between (cid:836)134 million and (cid:836)165 million(cid:484) Should an opportunity present itself(cid:481) the Trust will look to convert its interest in the Bakehouse Bonds to ordinary e(cid:147)uity in the Bakehouse (cid:20)uarter(cid:484) The Bakehouse has approximately 40(cid:481)000 s(cid:147)m of commercial(cid:481) entertainment and retail premises generating significant cash flow(cid:484) In addition(cid:481) it has close to 20(cid:481)000 s(cid:147)m of developable land(cid:484) It is anticipated that this land would be suitable for substantial residential development(cid:484) While the site is no longer being actively marketed for sale there are a number of parties conducting due diligence and revised offers will be assessed if received(cid:484) BlackWall has resolved to make an application for a re(cid:156)oning of the site and either(cid:483) (cid:120) (cid:120) sell the individual residential development sites(cid:482) or (cid:140)oint venture a residential development(cid:484) If the Bakehouse were to be sold in one line the Bakehouse Bonds would be redeemed for cash(cid:484) A partial sale or residential development would likely result in the bonds being redeemed in part or in full for cash(cid:484) 4 4 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 Events Subsequent to Reporting Date and Likely Developments To the best of the Directors’ knowledge(cid:481) since the end of the financial year there have been no matters or circumstances that have materially affected the Trust’s operations or may materially affect its operations(cid:481) state of affairs or the results of operations in future financial years(cid:484) Information on Officeholders of the Responsible Entity The Responsible Entity is a wholly owned subsidiary of BlackWall Property Funds Limited(cid:484) BlackWall’s Officeholders comprise the board of the Responsible Entity(cid:484) The Officeholders of the Responsible Entity during or since the end of the year are set out below(cid:484) Unless otherwise stated(cid:481) Officeholders have been in office since the beginning of the financial year(cid:484) Name and Position Richard Hill Non(cid:486)Executive Director and Independent Chairman (cid:13)oseph (cid:523)Seph(cid:524) Glew Non(cid:486)Executive Director Special Experience Richard Hill has extensive investment banking experience and was the founding partner of the corporate advisory firm Hill (cid:28)oung (cid:428) Associates(cid:484) Richard has invested in BlackWall’s pro(cid:140)ects since the early 1990s(cid:484) Prior to forming Hill (cid:28)oung(cid:481) Richard held a number of Senior Executive positions in Hong (cid:14)ong and New (cid:28)ork with HSBC(cid:484) He was admitted as an attorney in New (cid:28)ork State and was registered by the US Securities (cid:428) Exchange Commission and the Ontario Securities Commission(cid:484) He is the Chairman of Sirtex (cid:16)edical Limited (cid:523)listed on the ASX(cid:524)(cid:484) In addition Richard is Chairman of the Westmead (cid:16)illennium Institute for (cid:16)edical Research(cid:484) Seph has worked in the commercial property industry in New (cid:29)ealand(cid:481) the USA and Australia(cid:484) Seph has driven large scale property development and financial structuring for real estate for over 30 years(cid:484) In addition(cid:481) since the early 1990s Seph has run many (cid:498)turn(cid:486)around(cid:499) processes in relation to distressed properties and property structures for both private and institutional property owners(cid:484) While working for the Housing Corporation of New (cid:29)ealand and then A(cid:16)P(cid:481) Seph (cid:147)ualified as a registered valuer and holds a Bachelor of Commerce(cid:484) In the 19(cid:890)0s he served as an Executive Director with New (cid:29)ealand based property group Chase Corporation and as a Non(cid:486)Executive Director with a number of other listed companies in New (cid:29)ealand and Australia(cid:484) 5 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 5 Robin Tedder Non(cid:486)Executive Director Robin has around 40 years’ experience in investment and financial markets(cid:484) He has been an investor in BlackWall’s pro(cid:140)ects since 1997(cid:484) Robin is the Chairman of (cid:25)intage Capital Pty Ltd(cid:481) an investment company with interests in property(cid:481) wealth management(cid:481) logistics and healthcare(cid:484) He is a former member of the ASX and has served on the boards of several investment banks in Australia and overseas(cid:484) He is a Director of Probiotec Ltd (cid:523)a pharmaceutical manufacturing company listed on the ASX(cid:524)(cid:484) Robin is also a Fellow of the Financial Services Institute of Australasia(cid:484) Stuart Brown Executive Director and Chief Executive Officer Stuart has been involved in property investment for over 17 years(cid:484) Stuart has run debt and e(cid:147)uity raising in relation to listed and unlisted real estate structures with over a half a billion dollars in value(cid:484) In his earlier career(cid:481) Stuart practised as a solicitor in the areas of real estate(cid:481) mergers and ac(cid:147)uisitions and corporate advisory with (cid:16)allesons and Gilbert (cid:938) Tobin(cid:484) Stuart is an independent Director of Coogee Boys’ Preparatory School(cid:484) Caroline Raw Company Secretary from 1(cid:890) February 2015 (cid:523)Don Bayly Company Secretary until 1(cid:890) February 2015(cid:524) Caroline Raw (cid:140)oined the BlackWall team in 2013 and is responsible for executing corporate and fund transactions across the BlackWall Group(cid:484) Caroline has been practising as a solicitor in NSW since 2005 and has worked predominantly on IPOs(cid:481) public and private capital raisings(cid:481) funds management(cid:481) corporate advisory(cid:481) takeovers and mergers and ac(cid:147)uisitions(cid:484) Caroline holds a Bachelor of Commerce(cid:481) Bachelor of Laws and Graduate Diploma in Applied Corporate Governance(cid:484) Caroline is also a Chartered Secretary and Associate (cid:16)ember of the Governance Institute of Australia(cid:484) Meeting Attendances Director Richard Hill Seph Glew Robin Tedder Stuart Brown No. of Board Meetings Held 10 10 10 10 Board Meeting Attendance 10 10 10 10 Key Management Personnel’s Relevant Interests (cid:14)(cid:16)P include all Directors and the Chief Financial Officer (cid:523)Tim Brown(cid:524)(cid:484) Their current relevant interests in the Trust and at the release of the 2014 Annual Report are shown below(cid:484) For ease of comparison the 2014 numbers have been restated as if the 10(cid:483)1 unit consolidation completed in (cid:16)arch 2015 had occurred(cid:483) Richard Hill Seph Glew Robin Tedder Stuart Brown Tim Brown Total 26 August 2014 394(cid:481)215 3(cid:481)595(cid:481)437 5(cid:481)0(cid:890)5(cid:481)915 412(cid:481)297 2(cid:890)(cid:481)(cid:890)44 9,516,708 Net change 0 539(cid:481)066 55(cid:481)050 55(cid:481)049 0 649,165 12 August 2015 394(cid:481)215 4(cid:481)134(cid:481)503 5(cid:481)140(cid:481)965 467(cid:481)346 2(cid:890)(cid:481)(cid:890)44 10,165,873 No salary(cid:481) cash bonus or monetary benefit was paid out of the Trust’s assets to any key management personnel during the year(cid:484) 6 6 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 Options There were no options granted during the year ended 30 (cid:13)une 2015(cid:484) There are no options on issue as at the date of this report(cid:484) Responsible Entity and Custodian Remuneration The Responsible Entity’s remuneration details can be found under the Related Party Transactions note of the financial statements(cid:484) The Custodian is Perpetual Limited(cid:484) The custody fee is calculated at the greater of (cid:836)15(cid:481)000 p(cid:484)a(cid:484) or 0(cid:484)025(cid:936) p(cid:484)a(cid:484) of the gross asset value (cid:523)up to (cid:836)100 million then 0(cid:484)015(cid:936) for gross assets value between (cid:836)100(cid:486)(cid:836)500 million(cid:524) of the Trust(cid:481) plus GST(cid:484) In addition(cid:481) the Custodian is entitled to be paid any out(cid:486)of(cid:486)pocket expenses incurred in the performance of its duties(cid:484) Interests in the Trust The number of units on issue at 30 (cid:13)une 2015 was 45(cid:481)977(cid:481)273 (cid:523)excluding 716(cid:481)057 units BWR holds in itself(cid:524)(cid:484) As at 30 (cid:13)une 2015 and the date of this report(cid:481) the Responsible Entity and its associates held 7(cid:484)5 million units in the Trust(cid:484) Subse(cid:147)uent to 30 (cid:13)une 2015(cid:481) the Trust purchased 150(cid:481)515 ordinary units on(cid:486)market as part of The Trust’s buy(cid:486)back(cid:484) The Trust currently has 45(cid:481)(cid:890)26(cid:481)75(cid:890) units on issue(cid:484) Value of the Trust’s Assets At 30 (cid:13)une 2015(cid:481) the Trust’s assets were valued at (cid:836)119(cid:481)946(cid:481)000 as set out in the Trust’s Consolidated Statement of Financial Position(cid:484) Refer to the Financial Assets and Investment Properties notes for valuation details(cid:484) Environmental Regulation The Trust and its controlled entity’s operations are not regulated by any significant environmental law or regulation under either Commonwealth or State legislation(cid:484) However(cid:481) the Responsible Entity believes that the Trust and its controlled entity have ade(cid:147)uate systems in place for the management of its environmental re(cid:147)uirements and is not aware of any instances of non(cid:486)compliance of those environmental re(cid:147)uirements as they apply to the Trust(cid:484) Indemnities of Officers During the financial year the Responsible Entity has paid premiums to insure each of the Directors named in this report along with Officers of the Responsible Entity 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 Responsible Entity(cid:481) other than conduct involving a wilful breach of duty(cid:484) The insurance policy prohibits disclosure of the nature of the liability(cid:481) the amount of the premium and the limit of liability(cid:484) No indemnities have been given or insurance premiums paid(cid:481) during or since the end of the financial year(cid:481) for any person who is or has been an auditor to the Trust(cid:484) Corporate Governance Statement A description of the Trust’s current corporate governance practices is set out in the Trust’s corporate governance statement which can be viewed at http(cid:483)(cid:512)(cid:512)www(cid:484)blackwallfunds(cid:484)com(cid:484)au(cid:512)about(cid:486)us(cid:484)html(cid:484) 7 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 7 Auditor and Non(cid:486)audit Services (cid:836)12(cid:481)17(cid:890) was paid to the auditor for non(cid:486)audit services during the year (cid:523)2014(cid:483) (cid:836)9(cid:481)547(cid:524) as detailed in the Auditor’s Remuneration note of the financial statements(cid:484) The Directors are satisfied that the provision of non(cid:486)audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001(cid:484) The nature and scope of each type of non(cid:486)audit service provided means that auditor independence was not compromised(cid:484) A copy of the auditor’s independence declaration as re(cid:147)uired under Section 307C of the Corporations Act 2001 is set out in these financial statements(cid:484) ES(cid:25) continues in office in accordance with section 327 of the Corporations Act 2001(cid:484) Rounding of Amounts The Trust is a group of the kind referred to in ASIC Class Order 9(cid:890)(cid:512)100 and in accordance with that Class Order(cid:481) amounts in the Directors’ Report and the financial statements are rounded off to the nearest thousand dollars(cid:481) unless otherwise indicated(cid:484) Signed in accordance with a resolution of the Board of Directors(cid:484) Stuart Brown Director Sydney(cid:481) 17 August 2015 (cid:890) 8 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 Auditor’s Independence Declaration Under Section 307C of the Corporations Act 2001 As auditor for the audit of Blackwall Property Trust and its Controlled Entities for the year ended 30 June 2015, I declare that, to the best of my knowledge and belief, there have been: (i) no contraventions of the auditor’s independence requirements as set out in the Corporations Act 2001 in relation to the audit; and (ii) no contraventions of any applicable code of professional conduct in relation to the audit. Dated at Sydney the 14th day of August 2015. ESV Accounting and Business Advisors Tim Valtwies Partner ASX Additional Information Additional information re(cid:147)uired by the Australian Securities Exchange and not shown elsewhere in this report is as follows(cid:484) The unitholder information set out below was current as at 12 August 2015(cid:484) 1. Unitholders The Trust’s top 20 largest unitholdings were(cid:483) Investor Pelorus Private E(cid:147)uity Limited Sandhurst Trustees Ltd (cid:948)AI(cid:16)S PSF A(cid:512)C(cid:949) Blackwall Property Funds Limited (cid:25)intage Capital Pty Limited Seno (cid:16)anagement Pty Ltd BlackWall Fund Services Limited Lymkeesh Pty Ltd (cid:948)Employers Super Fund A(cid:512)C(cid:949) BlackWall Fund Services Limited (cid:948)B(cid:20)T A(cid:512)C(cid:949) 1 2 3 4 5 6 7 (cid:890) 9 (cid:14)oonta Pty Ltd (cid:948)(cid:14)oonta Super Fund A(cid:512)C(cid:949) 10 Seno (cid:16)anagement Pty Ltd (cid:948)Seno Super Fund A(cid:512)C(cid:949) 11 Stanbox Pty Limited (cid:948)The Salem Family Account(cid:949) 12 Pinnatus Pty Ltd 13 Stanbox No 2 Pty Ltd 14 I P R Nominees Pty Ltd (cid:948)1965 Irvin Peter Rockman A(cid:512)C(cid:949) 15 (cid:14)oonta Pty Ltd (cid:948)The Tedder Family A(cid:512)C(cid:949) 16 Sao Investments Pty Ltd 17 (cid:13) P (cid:16)organ Nominees Australia Limited 1(cid:890) Lymkeesh Pty Ltd 19 Castlebay Pty Limited 20 (cid:16)ethuselah Capital (cid:16)anagement Pty Ltd Units (No.) Units (%) 7(cid:481)400(cid:481)000 5(cid:481)(cid:890)47(cid:481)669 5(cid:481)400(cid:481)000 3(cid:481)557(cid:481)505 2(cid:481)735(cid:481)000 2(cid:481)100(cid:481)000 1(cid:481)41(cid:890)(cid:481)717 1(cid:481)225(cid:481)776 1(cid:481)0(cid:890)1(cid:481)4(cid:890)9 500(cid:481)000 500(cid:481)000 476(cid:481)501 430(cid:481)000 422(cid:481)639 415(cid:481)435 410(cid:481)9(cid:890)2 402(cid:481)003 373(cid:481)103 370(cid:481)047 222(cid:481)070 16(cid:484)15 12(cid:484)76 11(cid:484)7(cid:890) 7(cid:484)76 5(cid:484)97 4(cid:484)5(cid:890) 3(cid:484)10 2(cid:484)67 2(cid:484)36 1(cid:484)09 1(cid:484)09 1(cid:484)04 0(cid:484)94 0(cid:484)92 0(cid:484)91 0(cid:484)90 0(cid:484)(cid:890)(cid:890) 0(cid:484)(cid:890)1 0(cid:484)(cid:890)1 0(cid:484)4(cid:890) 10 10 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 2. Distribution of Unitholders The distribution of unitholders by si(cid:156)e of holding was(cid:483) Category 1(cid:486)1(cid:481)000 1(cid:481)001(cid:486)5(cid:481)000 5(cid:481)001(cid:486)10(cid:481)000 10(cid:481)001(cid:486)100(cid:481)000 100(cid:481)001 and over Total number of unitholders No. of Holders 203 519 170 1(cid:890)4 39 1,115 The Trust has 53 holders of less than a marketable parcel(cid:484) The Trust has 45(cid:481)(cid:890)26(cid:481)75(cid:890) units on issue after 150(cid:481)515 buy(cid:486)back and 716(cid:481)057 units of which BWR holds in itself(cid:484) All units carry one vote per unit without restrictions(cid:484) All units are (cid:147)uoted on the Australian Securities Exchange (cid:523)ASX(cid:483) BWR(cid:524)(cid:484) 3. Substantial Unitholders The Trust’s substantial unitholders are set out below(cid:483) Investor BlackWall Property Funds Ltd Pelorus Private E(cid:147)uity Ltd Sandhurst Trustees Ltd (cid:948)AI(cid:16)S PSF A(cid:512)C(cid:949) Robin Tedder (cid:13)oseph (cid:523)Seph(cid:524) Glew Paul Tresidder Units (No.) Units (%) 7(cid:481)500(cid:481)000 7(cid:481)400(cid:481)000 5(cid:481)(cid:890)47(cid:481)669 5(cid:481)140(cid:481)965 4(cid:481)134(cid:481)503 2(cid:481)(cid:890)(cid:890)6(cid:481)296 16(cid:484)37 16(cid:484)15 12(cid:484)76 11(cid:484)22 9(cid:484)02 6(cid:484)30 11 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 11 Trust Details The Responsible Entity’s details are as follows(cid:483) Registered office and principal place of business BlackWall Fund Services Limited Level 1(cid:481) 50 (cid:28)eo Street Neutral Bay NSW 20(cid:890)9 Telephone Fax Website Registry (cid:938)612 9033 (cid:890)611 (cid:938)612 9033 (cid:890)600 www(cid:484)blackwallfunds(cid:484)com(cid:484)au Computershare Investor Services Pty Limited GPO Box 2975 (cid:16)elbourne (cid:25)IC 3001 www(cid:484)computershare(cid:484)com(cid:484)au Telephone(cid:483) (cid:938)613 9415 4329 12 12 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 BlackWall Property Trust ARSN 109 684 773 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2015 Revenue Rental income Property securities distribution income Interest income Net unrealised gain on revaluation Revenue From Ordinary Activities Reversal of prior years’ litigation provision Total Revenue Property outgoings Depreciation expense Administration expenses Finance costs Loss on sale of investments Other expenses Litigation expenses Profit For the Year Total Comprehensive Income For the Year Profit Attributable To: Owners of the Trust Outside e(cid:147)uity interests Total Comprehensive Income Attributable To: Owners of the Trust Outside e(cid:147)uity interests Note 2(cid:523)b(cid:524) 2(cid:523)a(cid:524) 3 3 3 2015 $’000 9(cid:481)094 1(cid:481)316 24(cid:890) 4(cid:481)073 14,731 (cid:486) 14,731 (cid:523)2(cid:481)319(cid:524) (cid:523)2(cid:481)176(cid:524) (cid:523)1(cid:481)200(cid:524) (cid:523)2(cid:481)4(cid:890)6(cid:524) (cid:523)35(cid:524) (cid:523)24(cid:524) (cid:486) 6,491 6,491 6(cid:481)336 155 6,491 6(cid:481)336 155 6,491 2014 $’000 10(cid:481)604 2(cid:481)031 106 2(cid:481)067 14,808 2(cid:481)790 17,598 (cid:523)2(cid:481)137(cid:524) (cid:523)2(cid:481)253(cid:524) (cid:523)1(cid:481)170(cid:524) (cid:523)3(cid:481)215(cid:524) (cid:523)2(cid:481)254(cid:524) (cid:486) (cid:523)165(cid:524) 6,404 6,404 6(cid:481)150 254 6,404 6(cid:481)150 254 6,404 Earnings Per Unit Basic and diluted earnings per unit 14 (cid:836)0(cid:484)14 (cid:836)0(cid:484)03 The accompanying notes form part of these financial statements(cid:484) The accompanying notes form part of these (cid:976)inancial statements(cid:484) 13 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 13 BlackWall Property Trust ARSN 109 684 773 Consolidated Statement of Financial Position As at 30 June 2015 ASSETS Current Assets Cash and cash e(cid:147)uivalents Trade and other receivables Other assets Bald Rock Hotel Total Current Assets Non(cid:486)current Assets Financial assets Investment properties Total Non(cid:486)current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Other liabilities Borrowings Interest rate hedges Total Current Liabilities Non(cid:486)current Liabilities Borrowings Interest rate hedges Total Non(cid:486)current Liabilities TOTAL LIABILITIES (EXCLUDING NET ASSETS) NET ASSETS Attributable to owners of the parent Outside e(cid:147)uity interests TOTAL NET ASSETS Note 4 5 6 (cid:890) 7 (cid:890) 9 10 11 12 11 12 19 2015 $’000 316 3(cid:890)(cid:890) 12(cid:890) 3(cid:481)500 4(cid:481)332 2014 $’000 230 1(cid:481)(cid:890)59 159 (cid:486) 2(cid:481)24(cid:890) 31(cid:481)764 (cid:890)3(cid:481)(cid:890)50 115(cid:481)614 119,946 29(cid:481)404 (cid:890)3(cid:481)950 113(cid:481)354 115,602 90(cid:890) 1(cid:481)96(cid:890) 50(cid:481)000 (cid:486) 52(cid:481)(cid:890)76 (cid:486) 5(cid:890)0 5(cid:890)0 53,456 63(cid:481)457 3(cid:481)033 66,490 1(cid:481)042 3 (cid:486) 47 1(cid:481)092 51(cid:481)721 (cid:486) 51(cid:481)721 52,813 61(cid:481)975 (cid:890)14 62,789 TOTAL LIABILITIES (cid:523)INCLUDING NET ASSETS(cid:524) 119(cid:481)946 115(cid:481)602 BlackWall Property Trust ARSN 109 684 773 Consolidated Statement of Changes in Net Assets Attributable to Unitholders For the Year Ended 30 June 2015 Units on Issue No.’000 466,929 (cid:523)420(cid:481)236(cid:524) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) 46,693 (cid:523)716(cid:524) 45,977 (cid:523)151(cid:524) 45,826 113,364 (cid:523)652(cid:524) 112,712 (cid:523)1(cid:890)5(cid:524) 112,527 259(cid:481)405 (cid:486) (cid:486) 7(cid:481)7(cid:890)2 (cid:523)376(cid:524) Retained Earnings / Attributable Issued (Accumulated to Owners of Units $’000 Losses) $’000 the Parent $’000 Outside Equity Interests $’000 113,364 (51,389) 61,975 6(cid:481)336 (cid:523)4(cid:481)202(cid:524) (49,255) (49,255) (55,983) 6(cid:481)150 (cid:523)1(cid:481)556(cid:524) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) 6(cid:481)336 (cid:523)4(cid:481)202(cid:524) 64,109 (cid:523)652(cid:524) 63,457 49,975 6(cid:481)150 (cid:523)1(cid:481)556(cid:524) 7(cid:481)7(cid:890)2 (cid:523)376(cid:524) 61,975 Total $’000 62,789 (cid:486) 6(cid:481)491 (cid:523)4(cid:481)245(cid:524) 2(cid:481)107 67,142 (cid:523)652(cid:524) 66,490 49,975 6(cid:481)404 (cid:523)1(cid:481)592(cid:524) (cid:890)(cid:481)392 (cid:523)390(cid:524) 62,789 814 (cid:486) 155 (cid:523)43(cid:524) 2(cid:481)107 3,033 (cid:486) 3,033 (cid:486) 254 (cid:523)36(cid:524) 610 (cid:523)14(cid:524) 814 Balance at 1 July 2014 Unit consolidation (cid:535) Profit for the year Distributions paid Consolidation of BOF (cid:535)(cid:535) Balance BWR Holdings in itself Balance at 30 June 2015 Buy(cid:486)back to 13 August 2015 Balance at signing date Profit for the year Distributions paid Issue of units Transaction costs Balance at 1 July 2013 207,524 105,958 Balance at 30 June 2014 466,929 113,364 (51,389) (cid:535) Represents a 10 to 1 unit consolidation in (cid:16)arch 2015(cid:484) (cid:535)(cid:535) In (cid:13)une 2015(cid:481) the Trust ac(cid:147)uired a controlling interest in BlackWall Opportunities Fund(cid:484) As a result(cid:481) BOF has been consolidated onto the Trust’s accounts(cid:484) 15 14 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 14 BlackWall Property Trust ARSN 109 684 773 Consolidated Statement of Changes in Net Assets Attributable to Unitholders For the Year Ended 30 June 2015 Units on Issue No.’000 466,929 (cid:523)420(cid:481)236(cid:524) (cid:486) (cid:486) (cid:486) 46,693 (cid:523)716(cid:524) 45,977 (cid:523)151(cid:524) 45,826 207,524 (cid:486) (cid:486) 259(cid:481)405 (cid:486) 466,929 Issued Units $’000 113,364 (cid:486) (cid:486) (cid:486) (cid:486) 113,364 (cid:523)652(cid:524) 112,712 (cid:523)1(cid:890)5(cid:524) 112,527 105,958 (cid:486) (cid:486) 7(cid:481)7(cid:890)2 (cid:523)376(cid:524) 113,364 Retained Earnings / (Accumulated Losses) $’000 Attributable to Owners of the Parent $’000 Outside Equity Interests $’000 (51,389) (cid:486) 6(cid:481)336 (cid:523)4(cid:481)202(cid:524) (cid:486) (49,255) (cid:486) (49,255) (55,983) 6(cid:481)150 (cid:523)1(cid:481)556(cid:524) (cid:486) (cid:486) (51,389) 61,975 (cid:486) 6(cid:481)336 (cid:523)4(cid:481)202(cid:524) (cid:486) 64,109 (cid:523)652(cid:524) 63,457 49,975 6(cid:481)150 (cid:523)1(cid:481)556(cid:524) 7(cid:481)7(cid:890)2 (cid:523)376(cid:524) 61,975 814 (cid:486) 155 (cid:523)43(cid:524) 2(cid:481)107 3,033 (cid:486) 3,033 (cid:486) 254 (cid:523)36(cid:524) 610 (cid:523)14(cid:524) 814 Total $’000 62,789 (cid:486) 6(cid:481)491 (cid:523)4(cid:481)245(cid:524) 2(cid:481)107 67,142 (cid:523)652(cid:524) 66,490 49,975 6(cid:481)404 (cid:523)1(cid:481)592(cid:524) (cid:890)(cid:481)392 (cid:523)390(cid:524) 62,789 Balance at 1 July 2014 Unit consolidation (cid:535) Profit for the year Distributions paid Consolidation of BOF (cid:535)(cid:535) Balance BWR Holdings in itself Balance at 30 June 2015 Buy(cid:486)back to 13 August 2015 Balance at signing date Balance at 1 July 2013 Profit for the year Distributions paid Issue of units Transaction costs Balance at 30 June 2014 (cid:535) Represents a 10 to 1 unit consolidation in (cid:16)arch 2015(cid:484) (cid:535)(cid:535) In (cid:13)une 2015(cid:481) the Trust ac(cid:147)uired a controlling interest in BlackWall Opportunities Fund(cid:484) As a result(cid:481) BOF has been consolidated onto the Trust’s accounts(cid:484) 15 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 15 BlackWall Property Trust ARSN 109 684 773 Consolidated Statement of Cash Flows For the Year Ended 30 June 2015 Cash Flows From Operating Activities Receipts from customers Payments to suppliers Property securities distributions received Interest received Interest paid Litigation related legal expenses Net Cash Flows From Operating Activities Cash Flows From Investing Activities Proceeds from disposal of financial assets Payments for purchase of financial assets Payments for capital expenditure Deposit received for Bald Rock Hotel Returns of capital from financial assets Payments for (cid:13)udgment Debt Payments for purchase of Bald Rock Hotel (cid:523)net(cid:524) Net Cash Flows From / (Used in) Investing Activities Cash Flows From Financing Activities Net proceeds (cid:512)(cid:523)repayment(cid:524) of borrowings Distributions paid Proceeds from issue of units Transaction costs for issue of units Net Cash Flows From / (Used in) Financing Activities Note 17 Net Increase in Cash Held Cash and cash e(cid:147)uivalents at the beginning of the year Cash and Cash Equivalents at End of the Year 4 2015 $’000 9(cid:481)136 (cid:523)4(cid:481)677(cid:524) 1(cid:481)331 196 (cid:523)2(cid:481)49(cid:890)(cid:524) (cid:486) 3,488 2(cid:481)(cid:890)(cid:890)4 (cid:523)1(cid:481)751(cid:524) (cid:523)645(cid:524) 150 177 (cid:486) (cid:486) 815 (cid:523)15(cid:524) (cid:523)4(cid:481)202(cid:524) (cid:486) (cid:486) (4,217) 86 230 316 16 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 2014 $’000 11(cid:481)439 (cid:523)4(cid:481)410(cid:524) 2(cid:481)1(cid:890)2 106 (cid:523)3(cid:481)174(cid:524) (cid:523)165(cid:524) 5,978 7(cid:481)109 (cid:523)2(cid:481)377(cid:524) (cid:523)13(cid:524) (cid:486) (cid:486) (cid:523)16(cid:481)761(cid:524) (cid:523)2(cid:481)734(cid:524) (14,776) 2(cid:481)221 (cid:523)1(cid:481)5(cid:890)5(cid:524) (cid:890)(cid:481)392 (cid:523)39(cid:524) 8,989 191 39 230 16 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 1. Segment Information AASB (cid:890) re(cid:147)uires operating segments to be identified on the basis of internal reports about components of the Trust that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance(cid:484) The Trust’s primary format for segment reporting is based on business segments(cid:484) The business segments are determined based on the Trust management and internal reporting structure(cid:484) There is only one geographical segment being Australia(cid:484) Segment results(cid:481) assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis(cid:484) The operating businesses are organised and managed separately according to the nature of the products and services provided(cid:481) with each segment representing a strategic business unit that offers different products and serves different markets(cid:484) The Trust has adopted three reporting segments(cid:481) Direct Property(cid:481) Other Investments and Unallocated(cid:484) The Direct Property segment includes the ownership and leasing out of commercial(cid:481) industrial and retail properties in Australian Capital Territory(cid:481) New South Wales and (cid:20)ueensland(cid:484) Income is derived from rent and property revaluations(cid:484) The Other Investments segment includes interests in debt instruments and property related securities such as units in unlisted unit trusts(cid:484) It generates income from dividends(cid:481) distributions(cid:481) and interest(cid:484) The Unallocated segment covers general functions(cid:484) The segment information for the year ended 30 (cid:13)une is as follows(cid:483) Direct Property $’000 Other Investments $’000 Unallocated $’000 Consolidated Total $’000 30 June 2015 Revenue from ordinary activities Net unrealised gain on revaluation Total segment revenue Segment operating profit Finance costs Profit Segment assets Segment liabilities 30 June 2014 Revenue from ordinary activities Reversal of prior years’ litigation provision Net unrealised gain(cid:512)(cid:523)loss(cid:524) on revaluation Total segment revenue Segment operating profit Finance costs Litigation expenses Profit 9(cid:481)094 3(cid:481)44(cid:890) 12(cid:481)542 7(cid:481)006 (cid:523)2(cid:481)4(cid:890)6(cid:524) 4,520 1(cid:481)564 625 2(cid:481)1(cid:890)9 1(cid:481)971 (cid:486) 1,971 (cid:890)7(cid:481)541 (cid:523)53(cid:481)456(cid:524) 32(cid:481)405 (cid:486) 10(cid:481)604 (cid:486) 2(cid:481)373 12(cid:481)977 7(cid:481)636 (cid:523)3(cid:481)215(cid:524) (cid:486) 4,421 2(cid:481)137 (cid:486) (cid:523)306(cid:524) 1(cid:481)(cid:890)31 1(cid:481)35(cid:890) (cid:486) (cid:486) 1,358 Segment assets Segment liabilities (cid:890)5(cid:481)672 (cid:523)52(cid:481)663(cid:524) 29(cid:481)930 (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) 2(cid:481)790 (cid:486) 2(cid:481)790 790 (cid:486) (cid:523)165(cid:524) 625 (cid:486) (cid:523)150(cid:524) 10(cid:481)65(cid:890) 4(cid:481)073 14(cid:481)731 (cid:890)(cid:481)977 (cid:523)2(cid:481)4(cid:890)6(cid:524) 6,491 119(cid:481)946 (cid:523)53(cid:481)456(cid:524) 12(cid:481)741 2(cid:481)790 2(cid:481)067 17(cid:481)59(cid:890) 9(cid:481)7(cid:890)4 (cid:523)3(cid:481)215(cid:524) (cid:523)165(cid:524) 6,404 115(cid:481)602 (cid:523)52(cid:481)(cid:890)13(cid:524) 17 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 17 Note 2(cid:523)b(cid:524) BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 2. Revenue (a) Revenue Rent(cid:483) (cid:486) Rental income (cid:486) Straight(cid:486)line rental income Investment income(cid:483) (cid:486) Property securities distribution income (cid:486) Interest income Net unrealised gain on revaluation Reversal of prior years’ litigation provision Total revenue (b) Net unrealised gain on revaluation Unrealised gain(cid:512)(cid:523)loss(cid:524) on financial assets Unrealised gain on investment properties Unrealised gain(cid:512)(cid:523)loss(cid:524) on interest rate hedges Net unrealised gain 3. Expenses Property outgoings(cid:483) (cid:486) Leasing fees (cid:486) Property outgoings Administration expenses(cid:483) (cid:486) Responsible entity fees (cid:486) Compliance expenses (cid:523)listing(cid:481) registry etc(cid:524) (cid:486) Other fund expenses Loss on sale of investments(cid:483) (cid:486) Bakehouse Bonds (cid:486) Other financial assets 4. Current Assets (cid:486) Cash and Cash Equivalents Cash at bank Total Cash at bank earns interest at floating rates based on daily bank deposit rates(cid:484) 2015 $’000 (cid:890)(cid:481)757 337 9(cid:481)094 1(cid:481)316 24(cid:890) 1(cid:481)564 4(cid:481)073 (cid:486) 14,731 625 3(cid:481)9(cid:890)1 (cid:523)533(cid:524) 4,073 2015 $’000 230 2(cid:481)0(cid:890)9 2(cid:481)319 7(cid:890)5 231 1(cid:890)4 1(cid:481)200 (cid:486) 35 35 2015 $’000 316 316 2014 $’000 10(cid:481)226 37(cid:890) 10(cid:481)604 2(cid:481)031 106 2(cid:481)137 2(cid:481)067 2(cid:481)790 17,598 (cid:523)306(cid:524) 1(cid:481)727 646 2,067 2014 $’000 101 2(cid:481)036 2(cid:481)137 (cid:890)05 202 163 1(cid:481)170 2(cid:481)000 254 2(cid:481)254 2014 $’000 230 230 1(cid:890) 18 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 5. Current Assets (cid:486) Trade and Other Receivables Trade and other receivables (cid:486) Related parties (cid:486) Other parties Total 2015 $’000 3(cid:890)1 7 388 2014 $’000 1(cid:481)625 234 1,859 Further information on receivables from related parties is set out in the Related Party Transactions note(cid:484) (cid:836)43(cid:481)000 of Bald Rock Hotel’s debtors have been provided for as at 30 (cid:13)une 2015 (cid:523)2014(cid:483) Nil(cid:524)(cid:484) 6. Current Assets (cid:486) Other Assets Prepayments Total 7. Non(cid:486)current Assets (cid:486) Financial Assets Financial assets at F(cid:25)TPL Total (a) Financial assets at FVTPL Investment in unlisted related entities(cid:483) (cid:486) Bakehouse Bonds (cid:486) Pyrmont Bridge Trust (cid:486) Pelathon Pub Group (cid:486) Planloc Preference Shares (cid:486) BlackWall Penrith Fund No(cid:484)3 (cid:486) WR(cid:25) Unit Trust (cid:486) BlackWall Telstra House Trust (cid:486) BlackWall Opportunities Fund (cid:523)BOF(cid:524) Investment in unlisted other entities Total 2015 $’000 12(cid:890) 128 2015 $’000 31(cid:481)764 31,764 21(cid:481)670 2(cid:481)(cid:890)00 2(cid:481)(cid:890)7(cid:890) 1(cid:481)900 541 1(cid:481)400 4 (cid:486) 31(cid:481)193 571 31,764 2014 $’000 159 159 2014 $’000 29(cid:481)404 29,404 21(cid:481)350 (cid:486) 2(cid:481)15(cid:890) 1(cid:481)9(cid:890)5 (cid:486) 900 3 1(cid:481)1(cid:890)5 27(cid:481)5(cid:890)1 1(cid:481)(cid:890)23 29,404 Note 7(cid:523)a(cid:524) 7(cid:523)b(cid:524) 7(cid:523)c(cid:524) 7(cid:523)d(cid:524) 7(cid:523)e(cid:524) 7(cid:523)e(cid:524) 7(cid:523)f(cid:524) 7(cid:523)g(cid:524) (b) Bakehouse Bonds The Bakehouse Bonds are CPI linked debt instruments secured against a large scale mixed use property known as the Bakehouse (cid:20)uarter in North Strathfield(cid:481) Sydney(cid:484) The Bonds’ face value of (cid:836)20 million is indexed to CPI annually (cid:523)sub(cid:140)ect to impairment assessment(cid:524) and the current value is (cid:836)21(cid:484)7 million(cid:484) The Bonds will mature on 30 (cid:13)une 2020(cid:484) In addition(cid:481) a coupon of 5(cid:484)5(cid:936) per annum is paid (cid:147)uarterly in arrears(cid:484) Investment in unlisted other entities represents investments in various managed investment schemes(cid:484) (c) Pyrmont Bridge Trust In December 2014(cid:481) BlackWall completed an (cid:836)(cid:890)0 million debt ac(cid:147)uisition with NAB(cid:484) PBT controls an office(cid:481) media and technology hub on the Western fringe of Sydney CBD’s known as 55 Pyrmont Bridge Road(cid:481) Pyrmont(cid:484) BOF subscribed for 2(cid:481)(cid:890)00(cid:481)000 units in PBT(cid:481) of which BlackWall is the Responsible Entity(cid:484) BOF is now consolidated into the Trust(cid:484) 19 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 19 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 (d) Pelathon Pub Group The Trust owns the following Pub Group units(cid:484) The Preferred units are now fully paid to 6 cents per unit (cid:523)the second instalment of 3(cid:484)6 cents per unit totalling (cid:836)4(cid:890)0(cid:481)000 was paid in (cid:13)une 2015(cid:524)(cid:484) 26(cid:481)641(cid:481)640 Ordinary Units 13(cid:481)333(cid:481)333 Preferred Units Total 2015 $’000 1(cid:481)91(cid:890) 960 2(cid:481)(cid:890)7(cid:890) 2014 $’000 1(cid:481)75(cid:890) 400 2(cid:481)15(cid:890) (e) Planloc and BlackWall Penrith Fund No.3 Both investments are property investment securities with an interest in a big box retail property located on (cid:16)ulgoa Road(cid:481) Penrith(cid:484) The Planloc Preference Shares are preferred e(cid:147)uity securities issued by an unlisted company(cid:481) Planloc Pty Ltd(cid:484) Planloc’s sole asset is the (cid:16)ulgoa Road property(cid:484) The Planloc Preference Shares rank in priority to ordinary shares but are subordinated to secured debt(cid:484) These securities earn a coupon of 10(cid:936) per annum and share in any value increase in the real estate held by the issuer(cid:484) BlackWall Penrith Fund No(cid:484)3 is the third investment syndicate structure over the (cid:16)ulgoa Road property since 2002 and pays (cid:147)uarterly interest at a rate of 9(cid:936) per annum(cid:484) That fund also has an interest in any increase in the property value(cid:484) (f) WRV Unit Trust WR(cid:25) Unit Trust is a single asset unit trust with an interest in The Woods Action Centre(cid:481) (cid:25)illawood(cid:484) The property’s key tenants are A(cid:16)F Bowling(cid:481) Chipmunks Playland(cid:481) Sydney Indoor Climbing Gym and (cid:14)artatak Raceway(cid:484) (g) BlackWall Opportunities Fund (BOF) In (cid:13)une 2015(cid:481) the Trust ac(cid:147)uired a further 4(cid:484)1 million units in BOF which has resulted in a controlling interest in BOF(cid:484) The Trust has now consolidated BOF in its accounts therefore the investment in BOF has been eliminated(cid:484) Refer to the Controlled Entities note for further details(cid:484) Further information relating to related party investments is set out in the Related Party Transactions note(cid:484) 8. Current and Non(cid:486)current Assets (cid:486) Investment Properties Balance at the beginning of the financial year Revaluation Capital improvements Lease incentives Straight(cid:486)line rental income Depreciation Purchase of Bald Rock Hotel (cid:523)net(cid:524) Balance at the end of the financial year 2015 $’000 (cid:890)3(cid:481)950 3(cid:481)9(cid:890)1 646 612 337 (cid:523)2(cid:481)176(cid:524) (cid:486) 87,350 2014 $’000 (cid:890)1(cid:481)350 1(cid:481)727 13 (cid:486) 37(cid:890) (cid:523)2(cid:481)253(cid:524) 2(cid:481)735 83,950 20 20 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 APN (cid:28)andina Chancellor Homemaker Centre Silver @ The Exchange Canberra Eye Hospital Toowoomba Coolum Bald Rock Hotel (cid:523)held as current asset(cid:524) Total 2015 $’000 24(cid:481)750 22(cid:481)000 1(cid:890)(cid:481)500 (cid:890)(cid:481)500 6(cid:481)100 4(cid:481)000 (cid:890)3(cid:481)(cid:890)50 3(cid:481)500 87,350 2014 $’000 24(cid:481)100 20(cid:481)500 1(cid:890)(cid:481)250 7(cid:481)900 6(cid:481)100 4(cid:481)000 (cid:890)0(cid:481)(cid:890)50 3(cid:481)100 83,950 The Bald Rock Hotel was sold in August 2015 for (cid:836)3(cid:484)5 million with completion scheduled for September 2015(cid:484) The Trust obtained a new independent valuation for APN (cid:28)andina in October 2014(cid:484) The valuation was performed by registered independent valuers by reference to recent market sales of similar properties and common valuation methodologies including capitalisation of income pro(cid:140)ections and discounted cash flow pro(cid:140)ections(cid:484) For the year ended 30 (cid:13)une 2015(cid:481) the Directors have updated their assessment of the fair value of the properties(cid:484) Chancellor Homemaker Centre has been revalued to the highest offer made in the recent sale process(cid:484) The offer was not accepted by the Responsible Entity(cid:484) The current holding values generate the following initial capitalisation rates(cid:483) APN (cid:28)andina Chancellor Homemaker Centre Silver @ The Exchange Canberra Eye Hospital Toowoomba Coolum Value $’000 24(cid:481)750 22(cid:481)000 1(cid:890)(cid:481)500 (cid:890)(cid:481)500 6(cid:481)100 4(cid:481)000 9. Current Liabilities (cid:486) Trade and Other Payables Trade payables(cid:483) (cid:486) Related parties (cid:486) Other parties Sundry payables and accrued expenses Deposit received for Bald Rock Hotel Total Cap Rate 10(cid:484)0(cid:936) (cid:890)(cid:484)3(cid:936) (cid:890)(cid:484)5(cid:936) (cid:890)(cid:484)5(cid:936) 9(cid:484)(cid:890)(cid:936) 10(cid:484)5(cid:936) 2014 $’000 311 524 (cid:890)35 207 (cid:486) 1,042 2015 $’000 41 524 565 193 150 908 Further information relating to trade payables from related parties is set out in the Related Party Transactions note(cid:484) 21 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 21 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 10. Current Liabilities (cid:486) Other liabilities Rental income received in advance Bald Rock facility Loan from BlackWall to Bald Rock Fund Total 2015 $’000 262 1(cid:481)256 450 1,968 2014 $’000 3 (cid:486) (cid:486) 3 The Bald Rock (cid:523)CBA(cid:524) facility of (cid:836)1(cid:481)256(cid:481)000 is secured over the Bald Rock Hotel(cid:484) Both the facility and the loan from BlackWall will be fully repaid from the proceeds of the sale of the Bald Rock Hotel(cid:484) 11. Current and Non(cid:486)current Liabilities (cid:486) Borrowings Current (2014: held as Non(cid:486)current) NAB bill facility Bald Rock facility Loan from BlackWall to Bald Rock Fund Total Note 11(cid:523)a(cid:524) 2015 $’000 50(cid:481)000 (cid:486) (cid:486) 50,000 2014 $’000 50(cid:481)000 1(cid:481)256 465 51,721 (a) NAB bill facility The facility is secured by registered first mortgages over the freehold land and buildings (cid:523)refer to the Investment Properties note excluding the Bald Rock Hotel(cid:524)(cid:484) The borrowings will mature in (cid:16)ay 2016 and therefore are classified as a current liability(cid:484) They are sub(cid:140)ect to a margin of 1(cid:484)95(cid:936) p(cid:484)a(cid:484) (cid:523)(cid:13)une 2014(cid:483) 1(cid:484)95(cid:936) p(cid:484)a(cid:484)(cid:524) over BBS(cid:28)(cid:484) Refer to the Interest Rate Hedges and Financial Risk (cid:16)anagement notes below for further details(cid:484) 12. Current and Non(cid:486)current Liabilities – Interest Rate Hedges Interest rate hedges (cid:523)current(cid:524) Interest rate hedges (cid:523)non(cid:486)current(cid:524) Total 2015 $’000 (cid:486) 5(cid:890)0 580 2014 $’000 47 (cid:486) 47 Details of the terms are as follows(cid:483) (cid:486) (cid:836)20 million collar with a floor rate of 2(cid:484)72(cid:936) p(cid:484)a(cid:484) and a cap rate of 4(cid:484)55(cid:936) p(cid:484)a(cid:484) The collar will expire in (cid:13)uly 2019(cid:484) (cid:486) (cid:836)30 million collar with a floor rate of 2(cid:484)24(cid:936) p(cid:484)a(cid:484) and a cap rate of 3(cid:484)24(cid:936) p(cid:484)a(cid:484) The collar will expire in (cid:13)anuary 2020(cid:484) The gain or loss from remeasuring the interest rate collar at fair value is recognised in profit and loss(cid:484) As the current interest rate is below the floor rates(cid:481) any further interest rate reduction will not have a profit and loss impact(cid:484) If interest rates were to move above 4(cid:484)55(cid:936) the maximum increase in interest expenses as a result would be (cid:836)666(cid:481)000(cid:484) 22 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 22 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 13. Distributions Parent 2014 final distribution 3(cid:484)5 cents paid in October 2014 (cid:523)2013(cid:483) nil(cid:524) 2015 interim distribution 5(cid:484)5 cents paid in April 2015 (cid:523)2014(cid:483) 7(cid:484)5 cents(cid:524) Total 2015 $’000 1(cid:481)634 2(cid:481)56(cid:890) 4,202 2014 $’000 (cid:486) 1(cid:481)556 1,556 In (cid:16)arch 2015(cid:481) units on issue were consolidated on a 10 to 1 basis(cid:484) Pre(cid:486)consolidation distributions have been restated on this basis(cid:484) In addition(cid:481) the Board has declared a final distribution of 6 cents per unit to be paid on 6 November 2015(cid:484) 14. Earnings Per Unit Basic and diluted EPU Calculated as follows(cid:483) Profit for the year Weighted average number of units for EPU Weighted average number of units for EPU (cid:523)less BWR holdings in itself(cid:524) 2015 (cid:836)0(cid:484)14 2014 (cid:836)0(cid:484)03 (cid:836)6(cid:481)336(cid:481)000 46(cid:481)693(cid:481)330 46(cid:481)646(cid:481)247 (cid:836)6(cid:481)150(cid:481)000 210(cid:481)366(cid:481)(cid:890)35 210(cid:481)366(cid:481)(cid:890)35 (cid:16)ovements in the number of units from 2014 to 2015 relate to a rights issue and unit consolidation during the (cid:13)une 2014 and (cid:16)arch 2015 periods respectively(cid:484) Profit for (cid:13)une 2014 included the reversal of a litigation provision of (cid:836)2(cid:484)(cid:890) million and litigation related expenses of (cid:836)2(cid:484)2 million (cid:523)(cid:836)2 million loss on sale of Bakehouse Bonds and (cid:836)165(cid:481)000 for litigation expenses(cid:524)(cid:484) 15. Auditor’s Remuneration Remuneration of ES(cid:25) for(cid:483) (cid:486) Audit and assurance services (cid:486) Taxation services Total 16. Commitments and Contingencies 2015 $’000 43 12 55 2014 $’000 45 10 55 Future minimum rental receivable under non(cid:486)cancellable operating leases as at 30 (cid:13)une are as follows(cid:483) Receivable within 1 year Receivable within 2 – 5 years Receivable more than 5 years Total 2015 $’000 7(cid:481)559 24(cid:481)371 1(cid:890)(cid:481)99(cid:890) 50,928 2014 $’000 7(cid:481)55(cid:890) 23(cid:481)905 22(cid:481)1(cid:890)2 53,645 There are no operating lease or other capital commitments as at 30 (cid:13)une 2015 (cid:523)2014(cid:483) Nil(cid:524)(cid:484) There are no contingencies as at 30 (cid:13)une 2015 (cid:523)2014(cid:483) (cid:836)nil(cid:524)(cid:484) 23 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 23 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 17. Reconciliation of Operating Cash Flows Profit for the year Non(cid:486)cash flows in profit(cid:483) (cid:486) Unrealised gain on revaluation (cid:486) Depreciation (cid:486) Straight(cid:486)line rental income (cid:486) Loss on sale of financial assets (cid:486) Litigation provisions Changes in assets and liabilities(cid:483) (cid:523)Increase(cid:524) (cid:512) decrease in trade and other receivables Increase in other assets Decrease in trade and other payables Increase (cid:512) (cid:523)decrease(cid:524) in other liabilities Net cash flows from operating activities 18. Subsequent Events 2015 $’000 6(cid:481)491 (cid:523)4(cid:481)073(cid:524) 2(cid:481)176 (cid:523)337(cid:524) 35 (cid:486) (cid:523)154(cid:524) (cid:523)5(cid:890)1(cid:524) (cid:523)329(cid:524) 260 3,488 2014 $’000 6(cid:481)404 (cid:523)2(cid:481)067(cid:524) 2(cid:481)253 (cid:523)37(cid:890)(cid:524) 2(cid:481)254 (cid:523)2(cid:481)790(cid:524) 624 (cid:486) (cid:523)266(cid:524) (cid:523)56(cid:524) 5,978 Since 30 (cid:13)une 2015(cid:481) the Trust purchased 150(cid:481)515 ordinary units on(cid:486)market as part of the Trust’s buy(cid:486)back (cid:523)commenced on 7 (cid:13)uly 2015(cid:524)(cid:484) A total cost of (cid:836)1(cid:890)5(cid:481)000 was deducted from issued units(cid:484) To the best of the Directors’ knowledge(cid:481) since the end of the financial year there have been no other matters or circumstances that have materially affected the Trust’s operations or may materially affect its operations(cid:481) state of affairs or the results of operations in future financial years(cid:484) 19. Controlled Entities Name Country of incorporation Percentage Owned Parent entity: BlackWall Property Trust Controlled entity of parent entity: (cid:28)andina Sub(cid:486)trust Bald Rock Fund BlackWall Opportunities Fund Australia Australia Australia Australia 2015 100(cid:936) 100(cid:936) 39(cid:936) 29(cid:484)79(cid:936) 2014 100(cid:936) 100(cid:936) 39(cid:936) 16(cid:484)54(cid:936) On 30 (cid:13)une 2015(cid:481) the Trust ac(cid:147)uired a further 4(cid:484)1 million units in BOF that has resulted in a controlling interest in BOF (cid:523)9(cid:481)2(cid:890)0(cid:481)52(cid:890) BOF units(cid:524)(cid:484) Outside e(cid:147)uity interests represent non(cid:486)BWR interests in the Bald Rock Fund and BOF(cid:484) 20. Related Party Transactions (a) Related Entities In these financial statements(cid:481) related parties are parties as defined by AASB 124 Related Party Disclosures rather than the definition of related parties under the Corporations Act 2001 and ASX Listing Rules(cid:484) 24 24 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 (b) Interests in Related Parties As at year end the Trust owned units in the following funds(cid:484) The funds and the Trust have a common Responsible Entity or are related entities of BlackWall(cid:483) Entity Holdings (No.’000) Bakehouse Bonds Pyrmont Bridge Trust Pelathon Pub Group (cid:523)Ordinary(cid:524) Pelathon Pub Group (cid:523)Preferred(cid:524) Planloc Preference Shares BlackWall Penrith Fund No(cid:484) 3 WR(cid:25) Unit Trust BlackWall Telstra House Trust BlackWall Opportunities Fund BlackWall Penrith Fund No(cid:484) 2 2015 20(cid:481)000 2(cid:481)(cid:890)00 26(cid:481)642 13(cid:481)333 1(cid:481)900 541 1(cid:481)400 4 9(cid:481)2(cid:890)1 (cid:486) 2014 20(cid:481)000 (cid:486) 26(cid:481)642 13(cid:481)333 1(cid:481)9(cid:890)5 (cid:486) 900 3 5(cid:481)154 (cid:486) Distribution Received ($’000) 2014 1(cid:481)513 (cid:486) (cid:486) (cid:486) (cid:890)(cid:890) (cid:486) (cid:486) (cid:486) (cid:486) 56 1,657 2015 1(cid:481)100 (cid:486) (cid:486) (cid:486) 199 55 52 (cid:486) (cid:486) (cid:486) 1,406 For further details refer to the Financial Assets note(cid:484) All interests in BOF were eliminated as the Trust has now consolidated BOF in its accounts(cid:484) Income received from WR(cid:25) was in the form of returns of capital(cid:484) (c) Related Entity Transactions In accordance with the terms of the Trust Constitution and the Information (cid:16)emorandum(cid:481) the Responsible Entity is entitled to receive a management fee based on 0(cid:484)65(cid:936) p(cid:484)a(cid:484) of the value of the Trust’s assets and the recovery of other administrative costs(cid:484) All transactions with related parties were made on normal commercial terms and conditions and at market rates(cid:481) and were approved by the Board(cid:484) Related party transactions that occurred during the year are as follows(cid:483) Expenses Remuneration paid to Responsible Entity Property management(cid:481) leasing fees and accounting fees Underwriting fees Interest paid Outstanding Balances with Related Parties Receivables from related parties (cid:486) current Payables to related parties (cid:486) current Loan from related parties –current (cid:523)2014(cid:483) non(cid:486)current(cid:524) 2015 $’000 7(cid:890)5 411 (cid:486) 25 1,221 3(cid:890)1 41 450 2014 $’000 (cid:890)05 394 156 14 1,369 1(cid:481)625 311 465 25 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 25 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 21. Parent Entity Disclosures The following summarises the financial information of the Trust’s parent entity(cid:481) BlackWall Property Trust(cid:481) as at and for the year ended 30 (cid:13)une(cid:484) Profit for the year Total comprehensive income for the year Financial position: Current assets Non(cid:486)current assets Total assets Current liabilities Non(cid:486)current liabilities Total liabilities Net assets attributable to unitholders 2015 $’000 6(cid:481)479 6,479 779 115(cid:481)052 115,831 (cid:523)50(cid:481)345(cid:524) (cid:523)5(cid:890)0(cid:524) (50,925) 64,906 2014 $’000 6(cid:481)127 6,127 2(cid:481)034 112(cid:481)19(cid:890) 114,232 (cid:523)951(cid:524) (cid:523)50(cid:481)000(cid:524) (50,951) 63,281 The parent entity had no contingencies at 30 (cid:13)une 2015 (cid:523)2014(cid:483) Nil(cid:524)(cid:484) The parent entity has not entered into any capital commitments as at 30 (cid:13)une 2015 (cid:523)2014(cid:483) Nil(cid:524)(cid:484) 22. Financial Risk Management (a) Financial risk management The main risks the Trust is exposed to through its financial instruments are market risk (cid:523)including interest rate risk and price risk(cid:524)(cid:481) credit risk and li(cid:147)uidity risk(cid:484) The Trust(cid:821)s principal financial instruments are financial assets and borrowings (cid:523)including interest rate swaps(cid:524)(cid:484) Additionally(cid:481) the Trust has various other financial instruments such as cash(cid:481) trade debtors and trade creditors(cid:481) which arise directly from its operations(cid:484) This note presents information about the Trust(cid:821)s exposure to each of the above risks(cid:481) their ob(cid:140)ectives(cid:481) policies and processes for measuring and managing risk(cid:481) and the management of capital(cid:484) The Board of Directors of the Responsible Entity has overall responsibility for the establishment and oversight of the risk management framework(cid:484) The Board monitors the Trust’s risk exposure by regularly reviewing finance and property markets(cid:484) (cid:16)a(cid:140)or financial instruments held by the Trust which are sub(cid:140)ect to financial risk analysis are as follows(cid:483) Financial assets Financial assets at F(cid:25)TPL Financial liabilities Borrowings (b) Market risk (i) Interest rate risk (cid:3) 2015 $’000 31(cid:481)764 50(cid:481)000 2014 $’000 29(cid:481)404 51(cid:481)721 The Trust has exposure to market risk for changes in variable interest rates on borrowings(cid:484) This risk is managed by the Trust by entering into interest rate swap contracts with financial institutions to protect part of the borrowings (cid:523)(cid:836)50 million(cid:524) as detailed in Borrowings note(cid:484) The ma(cid:140)or financial 26 26 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 asset (cid:486) the Trust’s interest in Bakehouse Bonds is sub(cid:140)ect to a fixed coupon rate of 5(cid:484)5(cid:936) p(cid:484)a(cid:484) and as a result is not directly exposed to the interest rate risk(cid:484) However(cid:481) the Bonds’ value is linked to inflation and therefore affected by the inflation rate(cid:484) The Trust’s exposure to interest rate risk(cid:481) which is the risk that a financial instrument’s value will fluctuate as a result of changes in market interest rates(cid:481) and the current interest rates on borrowings are as follows(cid:483) Borrowings – unhedged portion 2015 2014 Interest rate % p.a. (cid:486) Balance $’000 (cid:486) Interest rate % p.a. 4(cid:484)49 Balance $’000 (cid:523)42(cid:481)721(cid:524) During the year the Trust entered into a (cid:836)20 million collar with a floor rate of 2(cid:484)72(cid:936) p(cid:484)a(cid:484) and a cap rate of 4(cid:484)55(cid:936) p(cid:484)a(cid:484) and a (cid:836)30 million collar with a floor rate of 2(cid:484)24(cid:936) p(cid:484)a(cid:484) and a cap rate of 3(cid:484)24(cid:936) p(cid:484)a(cid:484) Both have 5 year terms (cid:523)2014(cid:483) 4(cid:484)22(cid:936) p(cid:484)a(cid:484) for one hedge (cid:836)9 million(cid:524)(cid:484) See the Interest Rate Hedges note for a sensitivity analysis(cid:484) (ii) Price risk The Trust is not exposed to any ma(cid:140)or price risk except for a material change in the property valuation of the Bakehouse (cid:20)uarter(cid:481) which could potentially lead to a decrease in the Bakehouse Bonds’ value on their maturity(cid:484) (c) Credit risk The Trust is not exposed to any ma(cid:140)or credit risk except for the Bakehouse Bonds(cid:484) The credit risk for the Bakehouse Bonds is of the same nature as the price risk described above(cid:484) (d) Liquidity risk The ma(cid:140)or li(cid:147)uidity risks faced by the Trust is its ability to realise assets(cid:484) The Trust has borrowings of (cid:836)52 million and total gross assets of (cid:836)120 million(cid:481) of which (cid:836)(cid:890)4 million are income producing real estate for which there is a deep and active market(cid:484) At the end of the reporting period(cid:481) the Trust held the following financial arrangements(cid:483) At 30 June 2015 Financial assets Cash and cash e(cid:147)uivalents Trade and other receivables Financial assets at F(cid:25)TPL Financial liabilities Trade and other payables Borrowings Interest rate hedges Maturing within 1 year $’000 Maturing 1 – 5 years $’000 Maturing over 5 years $’000 316 3(cid:890)(cid:890) (cid:486) 704 90(cid:890) 50(cid:481)000 (cid:486) 50,908 (cid:486) (cid:486) 31(cid:481)764 31,764 (cid:486) (cid:486) 457 457 (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) 123 123 Total $’000 316 3(cid:890)(cid:890) 31(cid:481)764 32,468 90(cid:890) 50(cid:481)000 5(cid:890)0 51,488 27 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 27 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 At 30 June 2014 Financial assets Cash and cash e(cid:147)uivalents Trade and other receivables Financial assets at F(cid:25)TPL Financial liabilities Trade and other payables Interest rate hedges Borrowings (e) Fair value measurements (i) Fair value hierarchy Maturing within 1 year $’000 Maturing 1 – 5 years $’000 Maturing over 5 years $’000 230 1(cid:481)(cid:890)59 (cid:486) 2,089 1(cid:481)042 47 (cid:486) 1,089 (cid:486) (cid:486) (cid:890)(cid:481)054 8,054 (cid:486) (cid:486) 51(cid:481)721 51,721 (cid:486) (cid:486) 21(cid:481)350 21,350 (cid:486) (cid:486) (cid:486) (cid:486) Total $’000 230 1(cid:481)(cid:890)59 29(cid:481)404 31,493 1(cid:481)042 47 51(cid:481)721 52,810 AASB 7 Financial Instruments: Disclosures re(cid:147)uires disclosure of fair value measurements by level of the following fair value measurement hierarchy(cid:483) (cid:120) Level 1 (cid:486) (cid:20)uoted prices (cid:523)unad(cid:140)usted(cid:524) in active markets for identical assets or liabilities(cid:481) (cid:120) Level 2 (cid:486) Inputs other than (cid:147)uoted prices included within Level 1 that are observable for the asset(cid:481) either directly (cid:523)as prices(cid:524) or indirectly (cid:523)derived from prices(cid:524)(cid:481) and (cid:120) Level 3 (cid:486) Inputs for the asset that are not based on observable market data (cid:523)unobservable inputs(cid:524)(cid:484) The fair value of financial assets and liabilities traded in active markets is subse(cid:147)uently based on their (cid:147)uoted market prices at the end of the reporting period without any deduction for estimated future selling costs(cid:484) The (cid:147)uoted market price used for financial assets held by the Trust is the current bid price and the (cid:147)uoted market price for financial liabilities is the current asking price(cid:484) The fair value of financial assets and liabilities that are not traded in an active market are determined using valuation techni(cid:147)ues(cid:484) For investments in related party unlisted unit trusts(cid:481) fair values are determined by reference to published unit prices of these investments which are based on the net tangible assets of the investments(cid:484) The following table presents the Trust’s financial assets and liabilities measured at fair value as at 30 (cid:13)une(cid:484) Refer to the Critical Accounting Estimates and (cid:13)udgment note for further details of assumptions used and how fair values are measured(cid:484) At 30 June 2015 Financial assets at F(cid:25)TPL (cid:486) E(cid:147)uities (cid:486) Debt instruments Interest rate hedges Level 1 $’000 Level 2 $’000 Level 3 $’000 Total balance $’000 (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:523)5(cid:890)0(cid:524) 10(cid:481)174 21(cid:481)590 31(cid:481)764 (cid:486) 10(cid:481)174 21(cid:481)590 31(cid:481)764 (cid:523)5(cid:890)0(cid:524) 2(cid:890) 28 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 At 30 June 2014 Financial assets at F(cid:25)TPL (cid:486) E(cid:147)uities (cid:486) Debt instruments Interest rate hedges Level 1 $’000 Level 2 $’000 Level 3 $’000 Total balance $’000 (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:486) (cid:523)47(cid:524) (cid:890)(cid:481)054 21(cid:481)350 29(cid:481)404 (cid:486) (cid:890)(cid:481)054 21(cid:481)350 29(cid:481)404 (cid:523)47(cid:524) (ii) Valuation techniques used to derive Level 3 fair values The fair value of the unlisted securities is determined by reference to the net assets of the underlying entities(cid:484) The fair value of the Bakehouse Bonds is measured by its face value ad(cid:140)usted for annual CPI movements(cid:481) sub(cid:140)ect to recoverability assessment(cid:484) All these instruments are included in Level 3(cid:484) (iii) Fair value measurements using significant observable inputs (Level 3) The following table is a reconciliation of the movements in financial assets classified as Level 3 for the year ended 30 (cid:13)une(cid:483) At 30 June 2015 Balance at the beginning of the year Purchases Disposals(cid:512)returns of capital Fair value movement Consolidation of BOF (cid:523)eliminate investment(cid:524) Balance at the end of the year At 30 June 2014 Balance at the beginning of the year Purchases Disposals(cid:512)returns of capital Fair value movement Balance at the end of the year $’000 29(cid:481)404 4(cid:481)626 (cid:523)1(cid:481)706(cid:524) 625 (cid:523)1(cid:481)1(cid:890)5(cid:524) 31,764 $’000 3(cid:890)(cid:481)323 4(cid:481)367 (cid:523)12(cid:481)9(cid:890)0(cid:524) (cid:523)306(cid:524) 29,404 The fair value of financial assets at F(cid:25)TPL is determined by reference to the net assets of the underlying entities(cid:484) All these instruments are included in Level 3(cid:484) There were no transfers between Level 1(cid:481) 2 and 3 financial instruments during the year(cid:484) For all other financial assets and liabilities carrying value is an approximation of fair value(cid:484) 23. Critical Accounting Estimates and Judgments The Directors of the Responsible Entity evaluate estimates and (cid:140)udgments incorporated into the financial statements based on historical knowledge and best available current information(cid:484) Estimates assume a reasonable expectation of future events and are based on current trends and economic data(cid:481) obtained both externally and within the Trust(cid:484) Key estimates – impairment The Trust assesses impairment at each reporting date by evaluating conditions specific to the Trust that may lead to impairment of assets(cid:484) Refer to Trade and Other Receivables note for impairment details(cid:484) 29 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 29 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 Key estimates – financial assets All investments have been classified as financial assets at F(cid:25)TPL with gains and losses recognised in profit or loss(cid:484) The fair value of the unlisted securities is determined by reference to the net assets of the underlying entities(cid:484) The fair value of the Bakehouse Bonds is measured by its face value ad(cid:140)usted for annual CPI movements and is sub(cid:140)ect to impairment(cid:484) Key estimates – fair values of investment properties The Trust carries its investment properties at fair value with changes in the fair values recognised in profit or loss(cid:484) At the end of each reporting period(cid:481) the Directors of the Responsible Entity update their assessment of the fair value of each property(cid:481) taking into account the most recent independent valuations(cid:484) The key assumptions used in this determination are set out in Investment Properties note(cid:484) If there are any material changes in the key assumptions due to changes in economic conditions(cid:481) the fair value of the investment properties may differ and may need to be re(cid:486)estimated(cid:484) 24. Statement of Significant Accounting Policies The financial statements cover BlackWall Property Trust and its controlled entities(cid:481) the (cid:28)andina Sub(cid:486)trust(cid:481) Bald Rock Fund and BlackWall Opportunities Fund(cid:484) BlackWall Property Trust is a managed investment scheme registered in Australia(cid:484) The (cid:28)andina Sub(cid:486)trust is a discretionary trust established and domiciled in Australia(cid:484) Bald Rock Fund was established on 17 September 2013(cid:484) BlackWall Opportunities Fund is a registered managed investment scheme and has been consolidated into the Trust’s accounts on 30 (cid:13)une 2015(cid:484) The financial statements for the Trust were authorised for issue in accordance with a resolution of the Directors of the Responsible Entity on the date they were issued(cid:484) Basis of Preparation These financial statements are general purpose financial statements that have been prepared in accordance with Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board and the Corporations Act 2001(cid:484) The financial statements of the Trust also comply with IFRS as issued by the International Accounting Standards Board(cid:484) The financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non(cid:486)current assets(cid:481) financial assets and financial liabilities for which the fair value basis of accounting has been applied(cid:484) The Trust is a group of the kind referred to in ASIC Class Order 9(cid:890)(cid:512)100(cid:481) dated 10 (cid:13)uly 199(cid:890)(cid:481) and in accordance with that Class Order amounts in the Directors’ Report and the financial statements are rounded off to the nearest thousand dollars(cid:481) unless otherwise indicated(cid:484) The following is a summary of the material accounting policies adopted by the Trust in the preparation of the financial statements(cid:484) The accounting policies have been consistently applied(cid:481) unless otherwise stated(cid:484) New and amended standards adopted The Trust has not elected to adopt any accounting standards or amendments to standards or interpretations issued prior to the date of this report where application is not mandatory for the year ended 30 (cid:13)une 2015(cid:484) (cid:16)anagement has considered the accounting standards that have been issued but are not yet effective and do not anticipate any having a significant impact on the financial statements(cid:484) 30 30 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 Going concern The Trust has a current asset deficiency as at 30 (cid:13)une 2015 as bank borrowings were classified as current liabilities(cid:484) Given the Trust generates operating cashflow of around (cid:836)3(cid:484)5 million per annum(cid:481) the Directors do not consider there to be a going concern issue(cid:484) These financial statements have been prepared on a going concern basis(cid:481) which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business(cid:484) Comparative figures When re(cid:147)uired by Accounting Standards(cid:481) comparative figures have been ad(cid:140)usted to conform to changes in presentation for the current financial year(cid:484) Any change of presentation has been made in order to make the financial statements more relevant and useful to the user(cid:484) Presentation currency Both the functional and presentation currency of the Trust is Australian dollars(cid:484) Principles of Consolidation Controlled entities The consolidated financial statements comprise the financial statements of the Trust (cid:523)refer to Controlled Entities note(cid:524)(cid:484) The controlled entity has a (cid:13)une financial year end and uses consistent accounting policies(cid:484) Investments in the controlled entity held by the parent entity are accounted for at cost less any impairment charges (cid:523)refer to Parent Entity Disclosures note(cid:524)(cid:484) Subsidiaries are all those entities over which the consolidated entity has control(cid:484) The consolidated entity controls an entity when the consolidated entity is exposed to(cid:481) or has rights to(cid:481) variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity(cid:484) Subsidiaries are fully consolidated from the date on which control is transferred to the consolidated entity(cid:484) They are de(cid:486)consolidated from the date that control ceases(cid:484) Inter(cid:486)entity balances All inter(cid:486)entity balances and transactions between entities in the Trust(cid:481) including any unrealised profits or losses(cid:481) have been eliminated on consolidation(cid:484) Accounting policies of the controlled entity have been changed where necessary to ensure consistencies with those policies applied by the parent entity(cid:484) Impairment of assets At each reporting date(cid:481) the Trust reviews the carrying values of its assets to determine whether there is any indication that those assets have been impaired(cid:484) If such an indication exists(cid:481) the recoverable amount of the asset(cid:481) being the higher of the asset’s fair value less costs to sell and value in use(cid:481) is compared to the asset’s carrying value(cid:484) In assessing value in use(cid:481) either the estimated future cash flows are discounted to their present value using a pre(cid:486)tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset(cid:481) or the income of the asset is capitalised at its relevant capitalisation rate(cid:484) An impairment loss is recognised if the carrying value of an asset exceeds its recoverable amount(cid:484) Impairment losses are expensed to the income statement(cid:484) 31 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 31 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 Impairment losses recognised in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer exists(cid:484) An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount(cid:484) 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(cid:481) net of depreciation or amortisation(cid:481) if no impairment loss has been recognised(cid:484) Financial Instruments Derivatives (Interest rate hedges) The Trust uses derivative financial instruments such as interest rate swaps to hedge its risks associated with interest rates(cid:484) Such derivative financial instruments are initially recognised at fair value on the date the derivative contract is entered into and are subse(cid:147)uently remeasured to fair value(cid:484) Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative(cid:484) The fair values of interest rate swap and collar are determined by reference to market values for similar instruments(cid:484) Any gains or losses arising from changes in the fair value of derivatives are taken directly to profit or loss for the year(cid:484) Non(cid:486)derivative financial instruments Non(cid:486)derivative financial instruments comprise investments in e(cid:147)uity and debt instruments(cid:481) trade and other receivables(cid:481) cash and cash e(cid:147)uivalents(cid:481) loans and borrowings(cid:481) and trade and other payables(cid:484) Non(cid:486)derivative financial instruments are recognised at fair value plus(cid:481) for instruments not at fair value through profit or loss(cid:481) any directly attributable transaction costs(cid:484) Subse(cid:147)uent to initial recognition non(cid:486) derivative financial instruments are measured as described below(cid:484) Recognition A financial instrument is recognised if the Trust becomes a party to the contractual provisions of the instrument(cid:484) Financial assets are recognised 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(cid:484) Purchases and sales of financial assets are accounted for at trade date(cid:481) i(cid:484)e(cid:484) the date that the Trust commits itself to purchase or sell the asset(cid:484) Financial liabilities are derecognised if the Trust’s obligations specified in the contract expire or are discharged or cancelled(cid:484) Loans and receivables Loans and receivables including loans to related entities and to key management personnel are non(cid:486) derivative financial assets with fixed or determinable payments that are not (cid:147)uoted in an active market and are stated at amortised cost using the effective interest rate method(cid:484) Gains and losses are recognised in profit and loss when the loans and receivables are derecognised or impaired(cid:481) as well as through the amortisation process(cid:484) Fair value The fair values of investments that are actively traded in organised financial markets are determined by reference to (cid:147)uoted market bid prices at the close of business on the balance date(cid:484) For investments in related party unlisted unit trusts(cid:481) 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(cid:484) 32 32 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 Impairment At each reporting date(cid:481) the Trust assesses whether there is ob(cid:140)ective evidence that a financial instrument has been impaired(cid:484) A financial instrument is considered to be impaired if ob(cid:140)ective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset(cid:484) In the case of available(cid:486)for(cid:486)sale financial instruments(cid:481) a prolonged decline in the value of the instrument is considered to determine whether an impairment has arisen(cid:484) An impairment loss in respect of a financial instrument measured at amortised cost is calculated as the difference between its carrying amount(cid:481) and the present value of the estimated future cash flows discounted at the original effective interest rate(cid:484) An impairment loss in respect of an available(cid:486)for(cid:486)sale financial asset is calculated by reference to its fair value(cid:484) Individually significant financial instruments are tested for impairment on an individual basis(cid:484) The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics(cid:484) Impairment losses are recognised in the statement of profit or loss and other comprehensive income(cid:484) An impairment loss is reversed if the reversal can be related ob(cid:140)ectively to an event occurring after the impairment loss was recognised(cid:484) For financial instruments measured at amortised cost(cid:481) the reversal is recognised in profit and loss(cid:484) Financial liabilities Non(cid:486)derivative financial liabilities are recognised at amortised cost(cid:481) comprising original debt less principal payments and unrealised movements(cid:484) Financial assets The Trust classifies its financial assets in the following measurement categories(cid:483) those to be measured subse(cid:147)uently at fair value and those to be measured at amortised cost(cid:484) The classification depends on the Trust’s business model for managing the financial assets and the contractual terms of the cash flows(cid:484) (i) Debt investments – at fair value through profit or loss The Bakehouse Bonds are classified as a debt investment at fair value through profit or loss(cid:484) (ii) Equity investments All e(cid:147)uity investments are measured at fair value(cid:484) E(cid:147)uity investments that are held for trading are measured at fair value through profit or loss(cid:484) Measurement At initial recognition(cid:481) the Trust measures a financial asset at its fair value(cid:484) Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss(cid:484) A gain or loss on a debt investment that is subse(cid:147)uently measured at fair value and is not part of a hedging relationship is recognised in profit or loss and presented net in the profit or loss within other income or other expenses in the period in which it arises(cid:484) The Trust subse(cid:147)uently measures all e(cid:147)uity investments at fair value(cid:484) Changes in the fair value of financial assets at fair value through profit or loss are recognised in profit or loss as applicable(cid:484) 33 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 33 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 Assets Classified as Held for Sale Assets are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather through continuing use and a sale is considered highly probable(cid:484) They are measured at their carrying amount(cid:484) Any subse(cid:147)uent increases or decreases in carrying amount is recognised in the profit and loss(cid:484) Investment Properties Investment properties are measured initially at cost(cid:481) including transaction costs(cid:484) 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(cid:486)to(cid:486)day servicing of an investment property(cid:484) Subse(cid:147)uent to initial recognition(cid:481) investment properties are stated at fair value(cid:481) which is based on active market prices(cid:481) ad(cid:140)usted if necessary(cid:481) for any difference in the nature(cid:481) location or condition of the specific asset at the balance sheet date(cid:484) 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(cid:484) Included in the value measurement are ad(cid:140)ustments for straightlining of lease income(cid:484) Cash and Cash Equivalents Cash and cash e(cid:147)uivalents include cash on hand(cid:481) deposits held at call with banks(cid:481) other short term highly li(cid:147)uid investments with original maturities of three months or less(cid:481) and bank overdrafts(cid:484) Trade and Other Receivables Trade receivables are recognised and carried at original invoice amount less a provision for any uncollectable debts(cid:484) An estimate for doubtful debts is made when there is ob(cid:140)ective evidence that the Trust will not be able to collect the receivable(cid:484) Financial difficulties of the debtor and default payments are considered ob(cid:140)ective evidence of impairment(cid:484) Bad debts are written off when identified as uncollectable(cid:484) 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(cid:481) whether or not billed to the Trust at balance date(cid:484) The amounts are unsecured and are usually paid within 30 days of recognition(cid:484) Interest Bearing Borrowings Interest bearing borrowings are initially recognised at fair value less any related transaction costs(cid:484) Subse(cid:147)uent to initial recognition(cid:481) interest bearing borrowings are stated at amortised cost(cid:484) Revenue Rent Rent comprises rental and recovery of outgoings from property tenants(cid:484) Rental income from investment properties is accounted for on a straight(cid:486)line basis over the lease term(cid:484) Lease incentives Rent free incentives granted are recognised as an integral part of total rental income(cid:484) Cash incentives paid or payable to tenants are capitalised as part of investment properties(cid:484) 34 34 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2015 Investment income Interest income is recognised as interest accrues using the effective interest method(cid:484) Dividend and distribution revenue is recognised when the right to receive income has been established(cid:484) All revenue is stated net of the amount of GST(cid:484) Income Tax Under current income tax legislation the Trust is not liable to Australian income tax provided the unitholders are presently entitled to the taxable income of the Trust(cid:484) The Trust has over (cid:836)20 million of carried forward revenue tax losses and approximately (cid:836)17 million in capital losses(cid:484) GST Revenues(cid:481) expenses and assets are recognised net of the amount of GST(cid:481) except where the amount of GST incurred is not recoverable from the Australian Taxation Office(cid:484) In these circumstances the GST is recognised as part of the cost of ac(cid:147)uisition of the asset or as part of an item of the expense(cid:484) Receivables and payables in the balance sheet are shown inclusive of GST(cid:484) Cash flows are presented in the cash flow statement on a gross basis(cid:481) except for the GST component of investing and financing activities(cid:481) which are disclosed as operating cash flows(cid:484) EPU The Trust presents basic and diluted EPU(cid:484) Basic EPU is calculated by dividing the profit or loss attributable to ordinary unitholders of the Trust by the weighted average number of units outstanding during the period(cid:484) Diluted EPU is determined by ad(cid:140)usting the profit or loss attributable to ordinary unitholders and the weighted average number of units outstanding for the effects of all dilutive potential units(cid:484) New Accounting Standards and Interpretations Certain new accounting standards and interpretations have been published that are not mandatory for the current reporting period(cid:484) The Trust’s assessment of the impact of these new standards and interpretations is set out below(cid:484) AASB 9 Financial Instruments (effective for annual reporting periods beginning on or after 1 January 2018) The Trust has adopted AASB 9 early on 1 (cid:13)anuary 2013 except for the new hedging rules which should not have any material changes to the Trust’s financial statements(cid:484) 35 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 35 Directors’ Declaration In the opinion of the Directors of BlackWall Fund Services Limited(cid:481) the Responsible Entity of BlackWall Property Trust(cid:483) (cid:523)a(cid:524) the financial statements and notes are in accordance with the Corporations Act 2001(cid:481) including(cid:483) (cid:523)i(cid:524) complying with Accounting Standards(cid:481) the Corporations Regulations 2001 and other mandatory professional reporting re(cid:147)uirements(cid:482) and (cid:523)ii(cid:524) giving a true and fair view of the Trust’s financial position as at 30 (cid:13)une 2015 and of its performance for the financial year ended on that date(cid:482) and (cid:523)b(cid:524) there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become due and payable(cid:484) Statement of Significant Accounting Policies confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board(cid:484) The Directors of the Responsible Entity have been given the declarations by the Chief Executive Officer and Chief Financial Officer re(cid:147)uired by section 295A of the Corporations Act 2001(cid:484) This declaration is made in accordance with a resolution of the Board of Directors of the Responsible Entity(cid:484) Stuart Brown Director Sydney(cid:481) 17 August 2015 36 36 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 Independent Audit Report to the Investors of Blackwall Property Trust and Controlled Entities Report on the Financial Report We have audited the accompanying financial report of Blackwall Property Trust and Controlled Entities ("the Trust"), which comprises the statement of financial position as at 30 June 2015, the statement of profit or loss and other comprehensive income, the statement of changes in net assets attributable to unit holders and the statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ declaration of the Trust and the entities it controlled at 30 June 2015 year end. Directors' Responsibility for the Financial Report The directors of Blackwall Fund Services Limited, the Responsible Entity of the Trust, 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 Note 24, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor's Responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. Those standards require that we comply with relevant ethical requirements relating to audit engagements, and plan and perform the audit to obtain reasonable assurance about whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Trust’s preparation of the financial report that gives a true and fair view 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 Trust’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by the directors, as well as evaluating the overall presentation of the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the directors of Blackwall Fund Services Limited, the Responsible Entity of the Trust, would be in the same terms if given to the directors as at the time of this auditor’s report. We have given the directors of the Responsible Entity an Auditor’s Independence Declaration, a copy which is included in the financial report. Independent Audit Report to the Investors of Blackwall Property Trust and Controlled Entities Opinion In our opinion: (a) the financial report of Blackwall Property Trust and its Controlled Entities is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Trust’s financial position as at 30 June 2015 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards and the Corporations Regulations 2001. and (b) the financial report also complies with International Financial Reporting Standards as disclosed in Note 24. Dated at Sydney the 17th day of August 2015. ESV Accounting and Business Advisors Tim Valtwies Partner CONTENTS Notes to the Financial Statements 1(cid:484) Segment Information 2(cid:484) Revenue 3(cid:484) Expenses 4(cid:484) Current Assets (cid:486) Cash and cash e(cid:147)uivalents 5(cid:484) Current Assets (cid:486) Trade and other receivables 6(cid:484) Current Assets (cid:486) Other assets 7(cid:484) Non(cid:486)current Assets (cid:486) Financial assets (cid:890)(cid:484) Current and Non(cid:486)current Assets (cid:486) Investment properties 9(cid:484) Current Liabilities (cid:486) Trade and other payables 10(cid:484) Current Liabilities (cid:486) Other liabilities 11(cid:484) Current and Non(cid:486)current Liabilities (cid:486) Borrowings 12(cid:484) Current and Non(cid:486)current Liabilities – Interest rate hedges 13(cid:484) Distributions 14(cid:484) Earnings Per Unit 15(cid:484) Auditor’s Remuneration 16(cid:484) Commitments and Contingencies 17(cid:484) Reconciliation of Operating Cash Flows 1(cid:890)(cid:484) Subse(cid:147)uent Events 19(cid:484) Controlled Entities 20(cid:484) Related Party Transactions 21(cid:484) Parent Entity Disclosures 22(cid:484) Financial Risk (cid:16)anagement 23(cid:484) Critical Accounting Estimates and (cid:13)udgments 24(cid:484) Statement of Significant Accounting Policies Page 17 Page 1(cid:890) Page 1(cid:890) Page 1(cid:890) Page 19 Page 19 Page 19 Page 20 Page 21 Page 22 Page 22 Page 22 Page 23 Page 23 Page 23 Page 23 Page 24 Page 24 Page 24 Page 24 Page 25 Page 25 Page 29 Page 30 39 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 39 GLOSSARY BWR (cid:512) Trust BlackWall BOF BlackWall Property Trust BlackWall Property Funds Limited and(cid:481) where applicable(cid:481) its subsidiaries (cid:523)including BlackWall Fund Services Limited(cid:524) BlackWall Opportunities Fund Consolidated annual financial report Financial statements Custodian EPU F(cid:25)TPL GST IFRS (cid:14)(cid:16)P Perpetual Limited Earnings per unit Fair value through profit and loss Goods and services tax International Financial Reporting Standards (cid:14)ey management personnel Outside e(cid:147)uity interests Non(cid:486)controlling interests p(cid:484)a(cid:484) PBT Planloc Per annum Pyrmont Bridge Trust Planloc Pty Ltd Responsible Entity BlackWall Fund Services Limited 40 40 BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2015 Consolidated Annual Financial ReportYear Ended 30 June 2015Managed By:Level 1, 50 Yeo Street Neutral Bay, NSW 2089Responsible Entity: BlackWall Fund Services LimitedABN 39 079 608 825

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