BlackWall Property Trust
Annual Report 2016

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! ! ASX'Release' BWR'Produces'26%'Total'Return' ! Key$Details$ • A' final' distribution' of' 4' cents' per' unit! to! be! paid! on! 9! November! 2016! –! 100%! taxR deferred.!! • 26%'total'return!for!the!12!months!ended! 30!June!2016.! • Gross!assets!up!16%!to!$139!million.!! Units'on'Issue! Gross'Assets! Debt! NTA! EPU! About$the$Trust$ ! ! ! 24!August!2016! 57.8!million! $139!million! 45%!LVR!' $73!million!R!$1.27!pu! 19!cpu! BlackWall!Property!Trust!is!a!totalOreturn'real'estate'investment'trust.'It!generates!and!distributes!income! returns!from!assets!held!in!its!Income'Portfolio!and!takes!on!special!situations!or!development!properties!to! generate!above!average!NTA!gains!R!the!Growth'Portfolio.!!Once!assets!in!the!Growth!Portfolio!stabilise!or! mature,! they! move! to! the! Income! Portfolio! to! grow! distributions.! The! Trust! either! purchases! real! estate! directly!or!holds!positions!in!property!joint!ventures.!! As! at! 30! June! 2016! the! Trust! had! $15! million! of! carried! forward! revenue! losses! and! approximately! $17! million!of!capital!losses.!As!a!consequence!for!a!significant!period!all!distributions!will!be!100%!taxRdeferred.!$ The!Trust’s!Income'Portfolio!has!a!WALE!of!just!under!5!years!and!is!carried!on!a!weighted!average!passing! yield!of!9%.!!! “The! Trust! holds! two! small! industrial! properties! which! are! legacy! assets! acquired! under! previous! management”! said! Jess! Glew,! BlackWall’s! Head! of! Property.! “We! have! listed! them! for! sale! and! if! our! price! expectation!is!reached!their!sale!will!add!over!$10!million!of!capacity!to!the!balance!sheet.”!! The! Trust’s! Growth' Portfolio! is! invested! in! the! recently! acquired! WOTSO! House! in! the! ACT,! 55! Pyrmont! Bridge!Road!in!Sydney!and!the!Bakehouse!Quarter!in!North!Strathfield.!! The! Bakehouse! Quarter! has! significant! residential! development! potential! in! addition! to! the! existing! 40,000! sqm!of!commercial,!retail!and!development!uses.!A!master!plan!approval!has!been!lodged!seeking!increased! density!and!scale!to!accommodate!the!construction!of!up!to!1,000!apartments.!The!aim!is!to!secure!the!town! planning!and!then!joint!venture!the!residential!development!opportunities!or!sell!the!development!sites.!! WOTSO!House!and!55!Pyrmont!Bridge!Road!are!leasing!turnaround!projects!that!are!both!gaining!traction.!At! WOTSO! House! just! over! 4,400! sqm! of! the! available! 8,000! sqm! is! occupied.! At! Pyrmont! BlackWall! recently! completed!a!1,600!sqm!office!transaction!with!an!ASX!200!company.!! BlackWall! expects! all! three! projects! to! contribute! significantly! to! both! NTA! and! income! growth! over! the! coming!years.!! For!more!information!contact!Stuart!Brown,!Chief!Executive!Officer!or!Tim!Brown!(Chief!Financial!Officer)!on! +!612!9033!8611.! ! BLACKWALL'PROPERTY'TRUST'ABN!68!450!446!602' BLACKWALL'FUND'SERVICES'LIMITED!(Responsible!Entity)!ABN!39!079!608!825!(AFSL!No.!220242)! Level! 1,! 50! Yeo! Street,! Neutral! Bay,! Sydney! NSW! 2089! Australia | PO! Box! 612,! Neutral! Bay,! NSW! ' 2089!|'Tel!+61!2!9033!8611 |'Fax!+61!2!9033!8600 |'www.blackwall.com.au! ' ' ' BLACKWALLPROPERRTYTUSTANNUAL REPORT | JUNE 2016 BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 20162CONTENTS 2 Financial Statements Directors’ Report (Part 1) Page 3 Consolidated Statement of Profit or Loss and Other Comprehensive Income Page 7 Consolidated Statement of Financial Position Page 8 Consolidated Statement of Changes in Net Assets Attributable to Unitholders Page 9 Consolidated Statement of Cash Flows Page 10 Notes to the Financial Statements Page 11 Directors’ Report (Part 2) Page 28 Auditor’s Independence Declaration Page 32 Directors’ Declaration Page 33 ASX Additional Information Page 34 Trust Details Page 36 Independent Auditor’s Report Page 37 Contents – Notes to the Financial Statements Page 39 Glossary Page 40 BLACKWALLPROPERRTYTUST3BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016DIRECTORS’ REPORT (Part 1) 3 Key Details (cid:120) A final distribution of 4 cents per unit to be paid on 9 November 2016 – 100(cid:936) ta(cid:154)(cid:486)deferred(cid:484) (cid:120) 26% total return for the 12 months ended 30 (cid:13)une 2016(cid:484) (cid:120) Gross assets up 16(cid:936) to (cid:836)139 million(cid:484) About BWR (cid:5)lac(cid:141)(cid:26)all Property Trust is a total(cid:486)return real estate investment trust(cid:484) It generates and distributes income returns from assets held in its Income Portfolio and ta(cid:141)es on special situations or development properties to generate above average NTA gains (cid:486) the Growth Portfolio(cid:484) Once assets in the Growth Portfolio stabilise or mature(cid:481) they move to the Income Portfolio to grow distributions(cid:484) The Trust either purchases real estate directly or holds positions in property (cid:140)oint ventures (P(cid:13)(cid:25))(cid:484) As at 30 (cid:13)une 2016 the Trust had (cid:836)1(cid:887) million of carried forward revenue losses and appro(cid:154)imately (cid:836)17 million of capital losses(cid:484) As a conse(cid:147)uence for a significant period all distributions will be 100(cid:936) ta(cid:154)(cid:486)deferred(cid:484) Income Portfolio The Trust’s Income Portfolio has a (cid:26)AL(cid:8) of (cid:140)ust under (cid:887) years and is carried on a weighted average passing yield of 9(cid:936)(cid:484) The Coolum and Toowoomba industrial assets are legacy investments which are small and not consistent with (cid:5)lac(cid:141)(cid:26)all’s strategy for the Trust(cid:484) Accordingly(cid:481) they are being mar(cid:141)eted for sale and will be sold if offers are received at a sufficient premium to the Trust’s carrying cost(cid:484) If the sale process is successful it could add over (cid:836)10 million of capacity to the balance sheet(cid:484) These properties have been reclassified from investment properties to current assets in these financial statements(cid:484) Property Ownership Type Asset Value Chancellor (cid:11)omema(cid:141)er Centre(cid:481) (cid:20)ueensland Direct Retail (cid:836)26(cid:484)2 million (cid:28)andina(cid:481) (cid:20)ueensland Direct Industrial (cid:836)24(cid:484)7 million Silver (cid:823) The (cid:8)(cid:154)change(cid:481) (cid:20)ueensland Direct Commercial (cid:836)18(cid:484)0 million The (cid:26)oods Action Centre (cid:535) P(cid:13)(cid:25) (cid:8)ntertainment (cid:836)16(cid:484)(cid:887) million Industrials (Coolum and Toowoomba) Direct Industrial (cid:836)9(cid:484)9 million Canberra (cid:8)ye (cid:11)ospital(cid:481) ACT Direct Commercial (cid:836)8(cid:484)0 million * Director’s valuation(cid:484) Units on Issue (cid:887)7(cid:484)8 million Income Portfolio (cid:836)88 million Growth Portfolio (cid:836)48 million Gross Assets (cid:836)139 million Debt 4(cid:887)(cid:936) L(cid:25)R NTA (cid:836)73 million (cid:486) (cid:836)1(cid:484)27 pu EPU 19 cpu Revenue Contribution (cid:486) By Tenant News Corp (cid:535) (cid:836)2(cid:481)7(cid:887)0(cid:481)000 26(cid:936) (cid:13)oyce (cid:16)ayne (cid:836)7(cid:887)0(cid:481)000 7(cid:936) A(cid:16)F (cid:836)7(cid:887)0(cid:481)000 7(cid:936) (cid:26)OTSO (cid:836)7(cid:887)0(cid:481)000 7(cid:936) Coral (cid:11)omes (cid:836)700(cid:481)000 7(cid:936) 30 Other Tenants (cid:836)4(cid:481)800(cid:481)000 46(cid:936) * Subject to regulatory approval to a purchase by News Corporation of the APN News and Media regional newspaper business. Income Contribution (cid:486) By Asset WALE (cid:28)andina 26(cid:936) 10 years Chancellor (cid:11)omema(cid:141)er Centre 22(cid:936) 4 years Silver (cid:823) The (cid:8)(cid:154)change 20(cid:936) 3 years 3 Other Assets 32(cid:936) 2 years * BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 20164DIRECTORS’ REPORT (Part 1) Growth Portfolio The Trust’s growth investments include(cid:483) Holding Value Asset Value Ownership (cid:26)OTSO (cid:11)ouse (cid:486) ACT (cid:836)2(cid:887)(cid:484)0 million (cid:836)2(cid:887) million Direct The (cid:5)a(cid:141)ehouse (cid:20)uarter(cid:481) North Strathfield (cid:836)20(cid:484)1 million (cid:836)270 million P(cid:13)(cid:25) (cid:887)(cid:887) Pyrmont (cid:5)ridge Road(cid:481) Sydney (cid:836)2(cid:484)8 million (cid:836)80 million P(cid:13)(cid:25) WOTSO House is a 7(cid:481)000 s(cid:147)m office building with 180 car spaces located on Northbourne Avenue in Dic(cid:141)son(cid:481) ACT(cid:484) The property is ad(cid:140)acent to the Dic(cid:141)son retail precinct and along the planned route of the Canberra (cid:16)etro light rail(cid:484) Until recently the building was leased to Telstra Corporation Limited(cid:484) Telstra vacated the building moving its staff to a new purpose built regional head office in Canberra(cid:484) (cid:26)ith appro(cid:154)imately three years remaining on the lease(cid:481) Telstra sub(cid:486)leased a total of 2(cid:481)720 s(cid:147)m to the ACT Government and Sensis(cid:484) Recently(cid:481) Telstra agreed to surrender its head lease and pay out the remainder of its lease commitment for (cid:836)(cid:887) million(cid:484) The sub(cid:486)leases remain in place and (cid:5)lac(cid:141)(cid:26)all is progressively leasing the vacant space(cid:484) (cid:5)lac(cid:141)(cid:26)all has leased (cid:140)ust over 1(cid:481)2(cid:887)0 s(cid:147)m since (cid:13)uly 2016(cid:484) (cid:5)(cid:26)R gained control of this property through a scrip for scrip ta(cid:141)eover of an unlisted property investment structure in (cid:13)une 2016(cid:484) As such the debt facility secured against (cid:26)OTSO (cid:11)ouse is standalone and is not cross(cid:486)collateralised with (cid:5)(cid:26)R’s main debt facility(cid:484) The ma(cid:140)ority of the proceeds from the Telstra lease payout was applied to debt repayment so that debt of (cid:836)12 million is secured against the carrying value of (cid:836)2(cid:887) million(cid:484) (cid:5)lac(cid:141)(cid:26)all estimates that the vacant space will be filled over the coming 12 to 18 months(cid:484) Fully let(cid:481) the property will generate cash above debt(cid:481) management and holding costs of (cid:140)ust under (cid:836)2 million per annum or roughly 3 cents per unit(cid:484) The repositioning of the asset should add as much as 12 cents per unit to (cid:5)(cid:26)R’s NTA over the ne(cid:154)t 24 months(cid:484) BLACKWALLPROPERRTYTUST5BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016DIRECTORS’ REPORT (Part 1) The Bakehouse Quarter is a large(cid:486)scale(cid:481) mi(cid:154)ed(cid:486)use development in Sydney’s Inner (cid:26)est with appro(cid:154)imately 40(cid:481)000 s(cid:147)m of commercial(cid:481) entertainment and retail premises generating significant cash flow(cid:484) (cid:5)(cid:26)R holds 13(cid:936) of the wholesale investment trust that owns the pro(cid:140)ect(cid:484) The property is held at a carrying value of (cid:836)270 million against which (cid:836)12(cid:887) million of senior debt is secured(cid:484) In addition to the income producing elements of the site(cid:481) the (cid:5)a(cid:141)ehouse (cid:20)uarter has appro(cid:154)imately 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) The site already offers significant social infrastructure through the e(cid:154)isting restaurant(cid:481) retail(cid:481) entertainment and commercial office precinct(cid:484) The (cid:5)a(cid:141)ehouse (cid:20)uarter benefits from the substantial State and Federal Government funded infrastructure pro(cid:140)ects in Sydney’s (cid:26)estern suburbs such as (cid:26)estconne(cid:154) and the Parramatta Light Rail(cid:484) Consultants have been engaged to ma(cid:141)e an application for a re(cid:156)oning to ma(cid:154)imise the residential development potential of the site(cid:484) (cid:26)ith a successful re(cid:156)oning the development sites will either be sold or developed in (cid:140)oint venture with suitable residential development partners(cid:484) During the 201(cid:887) financial year the (cid:5)a(cid:141)ehouse (cid:20)uarter was formally mar(cid:141)eted for sale as a result of a number of unsolicited approaches to purchase(cid:484) Through the mar(cid:141)eting 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 (from a different party) of (cid:836)300 million was declined as it was sub(cid:140)ect to unacceptable conditions(cid:484) (cid:26)hilst a number of parties continue to engage with respect to a partial or complete purchase of the asset(cid:481) in the absence of an offer e(cid:147)uating to a significant premium to those put forward in 201(cid:887) the preferred position is to hold the asset for the long term(cid:484) Bakehouse Quarter Town Centre EvolutionExisting Bakehouse QuarterProposed Bakehouse Quarter Town Centre(cid:887) 55 Pyrmont Bridge Road is a 1(cid:887)(cid:481)000 s(cid:147)m technology and media hub located in Pyrmont on the (cid:26)estern fringe of Sydney’s C(cid:5)D(cid:484) The property houses a number of media and technology tenants including (cid:25)eri(cid:156)on(cid:481) Fairfa(cid:154) (cid:16)edia(cid:481) Digital Pacific and (cid:5)lac(cid:141)(cid:26)all’s short(cid:486)term office and wor(cid:141)space business(cid:481) (cid:26)OTSO (cid:26)or(cid:141)Space(cid:484) The Trust’s interest in the pro(cid:140)ect was ac(cid:147)uired through a scrip for scrip offer to the members of an unlisted managed investment scheme(cid:484) Given the significant number of acceptances of this offer(cid:481) the relevant trust ((cid:141)nown as the (cid:5)lac(cid:141)(cid:26)all Opportunities Fund) has been consolidated onto the Trust’s balance sheet(cid:484) (cid:5)(cid:26)R intends to increase its e(cid:154)posure to (cid:887)(cid:887) Pyrmont (cid:5)ridge Road(cid:484) BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 20166DIRECTORS’ REPORT (Part 1) Li(cid:141)e (cid:26)OTSO (cid:11)ouse in the ACT(cid:481) Pyrmont (cid:5)ridge Road is being repositioned following its ma(cid:140)or tenants vacating over 6(cid:481)000 s(cid:147)m of space prior to (cid:5)lac(cid:141)(cid:26)all ta(cid:141)ing control(cid:484) Over the past 18 months (cid:5)lac(cid:141)(cid:26)all has completed (cid:887)(cid:481)000 s(cid:147)m of leasing(cid:481) the most recent of which was 1(cid:481)600 s(cid:147)m with an ASX 200 financial services business(cid:484) Subsequent Events To the best of the Directors’ (cid:141)nowledge(cid:481) since the end of the financial year there have been no matters or circumstances e(cid:154)cept for the comments above(cid:481) 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) Directors’ Report (Part 2) continues on pages 28 to 31(cid:484) Signed in accordance with a resolution of the (cid:5)oard of Directors(cid:484) Stuart Brown Director Sydney(cid:481) 24 August 2016 BLACKWALLPROPERRTYTUST7BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Consolidated Statement of Profit or Loss and Other Comprehensive Income For the Year Ended 30 June 2016 The accompanying notes form part of these financial statements(cid:484) 7 Note 2016 $’000 2015 $’000 Revenue Rental income 9(cid:481)187 8(cid:481)87(cid:887) Telstra lease payout (cid:887)(cid:481)000 (cid:486) Net unrealised gain on revaluation 2(b) 4(cid:481)387 3(cid:481)673 Property (cid:140)oint ventures income 69(cid:887) 1(cid:481)316 Interest income 113 248 Total Revenue 2(a) 19,382 14,112 Property outgoings 3 (2(cid:481)126) (2(cid:481)2(cid:887)7) Depreciation e(cid:154)pense (2(cid:481)138) (2(cid:481)176) Finance costs (2(cid:481)260) (2(cid:481)390) Administration e(cid:154)penses 3 (1(cid:481)103) (1(cid:481)1(cid:887)6) Transaction e(cid:154)penses (700) (cid:486) Loss on sale of investments (90) (3(cid:887)) Profit From Continuing Operations 10,965 6,098 Profit (cid:512) (Loss) From Discontinued Operations 6 (121) 393 Profit For The Year 10,844 6,491 Total Comprehensive Income For the Year 10,844 6,491 Profit Attributable To: Owners of the Trust 10(cid:481)909 6(cid:481)336 Outside e(cid:147)uity interests (6(cid:887)) 1(cid:887)(cid:887) 10,844 6,491 Total Comprehensive Income Attributable To: Owners of the Trust 10(cid:481)909 6(cid:481)336 Outside e(cid:147)uity interests (6(cid:887)) 1(cid:887)(cid:887) 10,844 6,491 Earnings Per Unit (cid:5)asic and diluted earnings per unit 1(cid:887) 23(cid:484)4 cents 13(cid:484)6 cents The accompanying notes form part of these (cid:976)inancial statements(cid:484) BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 20168BlackWall Property Trust ARSN 109 684 773 Consolidated Statement of Financial Position As at 30 June 2016 Note 2016 $’000 2015 $’000 ASSETS Current Assets Cash and cash e(cid:147)uivalents 4 2(cid:481)1(cid:887)4 316 Trade and other receivables (cid:887) 2(cid:887)6 388 Other assets 6 1(cid:887)1 3(cid:481)628 (cid:11)eld for sale properties 7 9(cid:481)900 (cid:486) Total Current Assets 12(cid:481)461 4(cid:481)332 Non(cid:486)current Assets Investment properties 8 101(cid:481)900 83(cid:481)8(cid:887)0 Property (cid:140)oint ventures 9 24(cid:481)397 31(cid:481)764 Total Non(cid:486)current Assets 126(cid:481)297 11(cid:887)(cid:481)614 TOTAL ASSETS 138,758 119,946 LIABILITIES Current Liabilities Trade and other payables 10 3(cid:481)2(cid:887)2 908 Other liabilities 11 248 1(cid:481)968 (cid:5)orrowings 12 62(cid:481)000 (cid:887)0(cid:481)000 Interest rate hedges 13 47 (cid:486) Total Current Liabilities 6(cid:887)(cid:481)(cid:887)47 (cid:887)2(cid:481)876 Non(cid:486)current Liabilities Interest rate hedges 14 1(cid:481)397 (cid:887)80 Total Non(cid:486)current Liabilities 1(cid:481)397 (cid:887)80 TOTAL LIABILITIES (EXCLUDING NET ASSETS) 66,944 53,456 NET ASSETS Attributable to owners of the parent 71(cid:481)174 63(cid:481)4(cid:887)7 Outside e(cid:147)uity interests 20 640 3(cid:481)033 TOTAL NET ASSETS 71,814 66,490 TOTAL LIA(cid:5)ILITI(cid:8)S (INCLUDING N(cid:8)T ASS(cid:8)TS) 138(cid:481)7(cid:887)8 119(cid:481)946 FINANCIAL STATEMENTS BLACKWALLPROPERRTYTUST9BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016 BlackWall Property Trust ARSN 109 684 773 Consolidated Statement of Changes in Net Assets Attributable to Unitholders For the Year Ended 30 June 2016 9 Units No.’000 Units $’000 Retained Earnings / (Accumulated Losses) $’000 Attributable to Owners of the Parent $’000 Outside Equity Interests $’000 Total $’000 Restated balance at 1 July 2015 (1) 46,693 113,364 (49,255) 64,109 3,033 67,142 Issue of units (2) 12(cid:481)477 14(cid:481)469 (4(cid:481)940) 9(cid:481)(cid:887)29 (1(cid:481)608) 7(cid:481)921 On(cid:486)mar(cid:141)et buy(cid:486)bac(cid:141) (1(cid:481)332) (1(cid:481)617) (cid:486) (1(cid:481)617) (cid:486) (1(cid:481)617) Profit for the year (cid:486) (cid:486) 10(cid:481)909 10(cid:481)909 (6(cid:887)) 10(cid:481)844 Distributions paid (3) (cid:486) (cid:486) (11(cid:481)7(cid:887)6) (11(cid:481)7(cid:887)6) (cid:486) (11(cid:481)7(cid:887)6) Disposal of (cid:5)ald Roc(cid:141) Fund (cid:486) (cid:486) (cid:486) (cid:486) (720) (720) Balance at 30 June 2016 57,838 126,216 (55,042) 71,174 640 71,814 (cid:5)uy(cid:486)bac(cid:141) since 30 (cid:13)une (9) (11) Balance at signing date 57,829 126,205 Restated balance at 1 July 2014 (4) 46,693 113,364 (51,389) 61,975 814 62,789 Profit for the year (cid:486) (cid:486) 6(cid:481)336 6(cid:481)336 1(cid:887)(cid:887) 6(cid:481)491 Distributions paid (cid:486) (cid:486) (4(cid:481)202) (4(cid:481)202) (43) (4(cid:481)24(cid:887)) Consolidation of (cid:5)OF (cid:486) (cid:486) (cid:486) (cid:486) 2(cid:481)107 2(cid:481)107 Restated balance at 30 June 2015 (1) 46,693 113,364 (49,255) 64,109 3,033 67,142 (1) 201(cid:887) balances were restated to include 716(cid:481)0(cid:887)7 (cid:5)(cid:26)R holdings in itself (cost (cid:836)6(cid:887)2(cid:481)000) as they were e(cid:154)changed with (cid:5)OF unitholders during the period (see 2)(cid:484) The balances reconciled to the balance sheet as at 30 (cid:13)une 201(cid:887) are as follows(cid:483) Units on issue No(cid:484) (cid:494)000 Issued Units(cid:836)’000Retained (cid:8)arnings (cid:512) (Accumulated Losses) (cid:836)’000 Attributable toOwners of theParent(cid:836)’000(cid:5)alance at 30 (cid:13)une 201(cid:887) 4(cid:887)(cid:481)977 112(cid:481)712(49(cid:481)2(cid:887)(cid:887)) 63(cid:481)4(cid:887)7(cid:5)(cid:26)R (cid:11)oldings in itself issued to (cid:5)OF unitholders 716 6(cid:887)2(cid:486) 6(cid:887)2Restated (cid:5)alance 30 (cid:13)une 201(cid:887) 46(cid:481)693 113(cid:481)364(49(cid:481)2(cid:887)(cid:887)) 64(cid:481)109 (2) The Trust made the following offers during the year(cid:483) (cid:120) (cid:5)OF (cid:486) the Trust transferred 716(cid:481)0(cid:887)7 (cid:5)(cid:26)R units it held in itself and issued an additional 190(cid:481)106 new (cid:5)(cid:26)R units to (cid:5)OF unitholders(cid:484) Refer to the Controlled (cid:8)ntities note for details(cid:484) (cid:120) (cid:5)T(cid:11)T (cid:486) the Trust issued 7(cid:484)4 million new (cid:5)(cid:26)R units to (cid:5)T(cid:11)T unitholders(cid:484) (cid:5)T(cid:11)T has now been consolidated onto the Trust’s accounts(cid:484) Refer to the Property (cid:13)oint (cid:25)enture note for details(cid:484) (cid:120) Pub Group – the Trust issued 4(cid:484)8 million new (cid:5)(cid:26)R units to (cid:5)lac(cid:141)(cid:26)all and Pelorus in e(cid:154)change for their Pub Group units(cid:484) (3) Apart from two distribution payments paid by the Trust during the year(cid:481) the Trust has also completed an in(cid:486)specie distribution of 2(cid:484)48 Pub Group units for each (cid:5)(cid:26)R unit held(cid:484) Refer to the Distributions note for details(cid:484) (4) 2014 balances were restated based on a 10 to 1 unit consolidation in (cid:16)arch 201(cid:887)(cid:484) FINANCIAL STATEMENTS BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201610FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Consolidated Statement of Cash Flows For the Year Ended 30 June 2016 10 Note 2016 $’000 2015 $’000 Cash Flows From Operating Activities Receipts from tenants 9(cid:481)991 9(cid:481)136 Receipts from Telstra lease payout (cid:887)(cid:481)(cid:887)00 (cid:486) Payments to suppliers ((cid:887)(cid:481)4(cid:887)2) (4(cid:481)677) Property (cid:140)oint ventures distributions received 1(cid:481)002 1(cid:481)331 Interest received 113 196 Interest paid (2(cid:481)294) (2(cid:481)498) Net Cash Flows From Operating Activities 18 8,860 3,488 Cash Flows From Investing Activities Net proceeds from redemption of (cid:5)a(cid:141)ehouse (cid:5)onds (CPI inde(cid:154)ation) 1(cid:481)680 (cid:486) Net proceeds from sale of (cid:5)ald Roc(cid:141) (cid:11)otel 8(cid:887)(cid:887) 1(cid:887)0 Proceeds from disposal of related property (cid:140)oint ventures 1(cid:481)409 1(cid:481)711 Proceeds from disposal of other property (cid:140)oint ventures 300 1(cid:481)173 Returns of capital from property (cid:140)oint ventures 627 177 Payment for related property (cid:140)oint ventures (331) (1(cid:481)7(cid:887)1) Payment for capital e(cid:154)penditure (160) (64(cid:887)) Net Cash Flows From Investing Activities 4,380 815 Cash Flows From Financing Activities Repayment of (cid:5)T(cid:11)T borrowings (4(cid:481)200) (cid:486) Payment for buy(cid:486)bac(cid:141) of units (1(cid:481)611) (cid:486) Distributions paid ((cid:887)(cid:481)(cid:887)91) (4(cid:481)202) Net borrowings to related parties (cid:486) (1(cid:887)) Net Cash Flows Used in Financing Activities (11,402) (4,217) Net Increase in Cash Held 1,838 86 Cash and cash e(cid:147)uivalents at the beginning of the year 316 230 Cash and Cash Equivalents at End of the Year 4 2,154 316 BLACKWALLPROPERRTYTUST11BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 11 1. Segment Information The Trust currently operates in one business segment being property investments in Australia(cid:484) 2. Revenue (a) Revenue Note 2016 $’000 2015 $’000 Rent(cid:483) (cid:486) Rental income 8(cid:481)884 8(cid:481)(cid:887)38 (cid:486) Straight(cid:486)line rental income 303 337 9(cid:481)187 8(cid:481)87(cid:887) Telstra lease payout (cid:887)(cid:481)000 (cid:486) Investment income(cid:483) (cid:486) Property (cid:140)oint ventures distribution income 69(cid:887) 1(cid:481)316 (cid:486) Interest income 113 248 808 1(cid:481)(cid:887)64 Net unrealised gain on revaluation 2(b) 4(cid:481)387 3(cid:481)673 Total revenue 19,382 14,112 Telstra lease payout represents (cid:836)(cid:887) million prepayment of Telstra’s remaining lease at the newly ac(cid:147)uired (cid:26)OTSO (cid:11)ouse(cid:484) (b) Net unrealised gain on revaluation 2016 $’000 2015 $’000 Unrealised gain on property (cid:140)oint ventures (cid:887)80 62(cid:887) Unrealised gain on investment properties 4(cid:481)62(cid:887) 3(cid:481)(cid:887)81 Unrealised loss on interest rate hedges (818) ((cid:887)33) Net unrealised gain 4,387 3,673 3. Expenses 2016 $’000 2015 $’000 Property outgoings(cid:483) (cid:486) Leasing and valuation fees 1(cid:887)1 230 (cid:486) Property outgoings 1(cid:481)97(cid:887) 2(cid:481)027 2(cid:481)126 2(cid:481)2(cid:887)7 Transaction fees(cid:483) (cid:486) Telstra ac(cid:147)uisition and in(cid:486)specie pub units distribution 700 (cid:486) Administration e(cid:154)penses(cid:483) (cid:486) Responsible entity fees 77(cid:887) 76(cid:887) (cid:486) Compliance e(cid:154)penses (listing(cid:481) registry etc) 1(cid:887)9 226 (cid:486) Other fund e(cid:154)penses 169 16(cid:887) 1(cid:481)103 1(cid:481)1(cid:887)6 BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201612BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 4. Current Assets (cid:486) Cash and Cash Equivalents 2016 $’000 2015 $’000 Cash at ban(cid:141) 2(cid:481)1(cid:887)4 316 Total 2,154 316 Cash at ban(cid:141) earns interest at floating rates based on daily ban(cid:141) deposit rates(cid:484) 5. Current Assets (cid:486) Trade and Other Receivables 2016 $’000 2015 $’000 Trade and other receivables (cid:486) Related parties (cid:887)1 381 (cid:486) Other parties 20(cid:887) 7 Total 256 388 Further information on receivables from related parties is set out in the Related Party Transactions note(cid:484) None of the debtors have been provided for as at 30 (cid:13)une 2016 (201(cid:887)(cid:483) (cid:836)43(cid:481)000)(cid:484) 6. Current Assets (cid:486) Other Assets 2016 $’000 2015 $’000 Prepayments 1(cid:887)1 128 (cid:5)ald Roc(cid:141) (cid:11)otel (cid:486) 3(cid:481)(cid:887)00 Total 151 3,628 The (cid:5)ald Roc(cid:141) (cid:11)otel was sold in September 201(cid:887) for (cid:836)3(cid:484)(cid:887) million(cid:484) 7. Current Assets – Held for Sale Properties 2016 $’000 2015 $’000 (cid:11)eld for sale properties 9(cid:481)900 (cid:486) Total 9,900 (cid:486) The Trust holds two legacy industrial assets which are small and not consistent with (cid:5)lac(cid:141)(cid:26)all’s strategy for the Trust(cid:484) Accordingly they are being mar(cid:141)eted for sale and will be sold if offers are received at a sufficient premium to the Trust’s carrying cost(cid:484) These properties have been reclassified from Investment Properties to Current Assets in these financial statements(cid:484) FINANCIAL STATEMENTS BLACKWALLPROPERRTYTUST13BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016BlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 13 8. Non(cid:486)current Assets (cid:486) Investment Properties 2016 $’000 2015 $’000 (cid:5)alance at the beginning of the financial year 83(cid:481)8(cid:887)0 83(cid:481)9(cid:887)0 (cid:26)OTSO (cid:11)ouse ac(cid:147)uisition 2(cid:887)(cid:481)000 (cid:486) Revaluation of investment properties 4(cid:481)62(cid:887) 3(cid:481)981 Straight(cid:486)line rental income 303 337 Capital improvements 160 646 Depreciation (2(cid:481)138) (2(cid:481)176) Reclassify to held for sale properties (9(cid:481)900) (cid:486) Lease incentives (cid:486) 612 Reclassify (cid:5)ald Roc(cid:141) (cid:11)otel to other assets (cid:486) (3(cid:481)(cid:887)00) Balance at the end of the financial year 101,900 83,850 Chancellor (cid:11)omema(cid:141)er Centre 26(cid:481)200 22(cid:481)000 (cid:26)OTSO (cid:11)ouse 2(cid:887)(cid:481)000 (cid:486) (cid:28)andina 24(cid:481)700 24(cid:481)7(cid:887)0 Silver (cid:823) The (cid:8)(cid:154)change 18(cid:481)000 18(cid:481)(cid:887)00 Canberra (cid:8)ye (cid:11)ospital 8(cid:481)000 8(cid:481)(cid:887)00 Small Industrials (cid:486) 10(cid:481)100 Total 101,900 83,850 Two industial properties are reclassified as Current Assets(cid:484) Refer to the (cid:11)eld for Sale Properties note for details(cid:484) In (cid:13)une 2016(cid:481) the Trust obtained new independent valuations for all properties(cid:481) e(cid:154)cept for (cid:26)OTSO (cid:11)ouse(cid:481) which was based on the Directors’ assessment(cid:484) The current holding values generate the following capitalisation rates(cid:483) Value $’000 Passing Yield Market Yield Valuation Chancellor (cid:11)omema(cid:141)er Centre 26(cid:481)200 8(cid:484)00(cid:936) 8(cid:484)(cid:887)0(cid:936) Independent (cid:26)OTSO (cid:11)ouse 2(cid:887)(cid:481)000 (cid:887)(cid:484)2(cid:887)(cid:936) 9(cid:484)00(cid:936) Directors (cid:28)andina 24(cid:481)700 10(cid:484)20(cid:936) 7(cid:484)7(cid:887)(cid:936) Independent Silver (cid:823) The (cid:8)(cid:154)change 18(cid:481)000 7(cid:484)7(cid:887)(cid:936) 8(cid:484)(cid:887)0(cid:936) Independent Canberra (cid:8)ye (cid:11)ospital 8(cid:481)000 8(cid:484)90(cid:936) 8(cid:484)(cid:887)0(cid:936) Independent 9. Non(cid:486)current Assets – Property Joint Ventures The Trust owns interests in various property (cid:140)oint venture structures which own the following properties(cid:483) 2016 $’000 2015 $’000 (cid:5)a(cid:141)ehouse (cid:20)uarter 20(cid:481)100 (cid:486) (cid:887)(cid:887) Pyrmont (cid:5)ridge Road 2(cid:481)800 2(cid:481)800 The (cid:26)oods Action Centre 1(cid:481)497 1(cid:481)400 Pelathon Pub Group (cid:486) 2(cid:481)878 (cid:5)a(cid:141)ehouse (cid:5)onds (cid:486) 21(cid:481)670 (cid:26)OTSO (cid:11)ouse (cid:486) 4 Penrith (cid:486) 2(cid:481)441 24(cid:481)397 31(cid:481)193 Investment in unlisted other entities (cid:486) (cid:887)71 Total 24,397 31,764 FINANCIAL STATEMENTS BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201614FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 14 Bakehouse Quarter (Kirela Development Unit Trust / Bakehouse Bonds) In December 201(cid:887) the Trust’s (cid:836)20m of (cid:5)a(cid:141)ehouse (cid:5)onds (debt instruments) were redeemed in e(cid:154)change for e(cid:147)uity in the (cid:14)irela Development Unit Trust(cid:481) which owns the (cid:5)a(cid:141)ehouse (cid:20)uarter(cid:484) A further (cid:836)1(cid:484)68 million was paid in cash being the CPI inde(cid:154)ation accrued to the date of redemption(cid:484) The Trust now holds 13(cid:936) of the ordinary e(cid:147)uity of the (cid:5)a(cid:141)ehouse (cid:20)uarter(cid:484) The (cid:5)a(cid:141)ehouse (cid:20)uarter is valued at (cid:836)270 million(cid:484) 55 Pyrmont Bridge Road (Pyrmont Bridge Trust) P(cid:5)T controls an office(cid:481) media and technology hub on the (cid:26)estern fringe of Sydney’s C(cid:5)D (cid:141)nown as (cid:887)(cid:887) Pyrmont (cid:5)ridge Road(cid:481) Pyrmont(cid:484) The Trust holds 18(cid:936) of P(cid:5)T(cid:484) The Woods Action Centre (WRV Unit Trust) (cid:26)R(cid:25) Unit Trust is a unit trust that owns The (cid:26)oods Action Centre(cid:481) (cid:25)illawood in Sydney(cid:484) The Trust now holds 37(cid:936) of the property(cid:484) WOTSO House In (cid:13)une 2016 the Trust completed the ac(cid:147)uisition of the (cid:5)lac(cid:141)(cid:26)all Telstra (cid:11)ouse Trust therefore it was consolidated onto the Trust’s accounts and is now disclosed as an Investment Property(cid:484) Refer to the Statement of Significant Accounting Policies note on definition of property (cid:140)oint ventures(cid:484) Further information relating to related party investments is set out in the Related Party Transactions note(cid:484) 10. Current Liabilities (cid:486) Trade and Other Payables 2016 $’000 2015 $’000 Trade payables(cid:483) (cid:486) Related parties 16(cid:887) 41 (cid:486) Other parties 2(cid:481)890 (cid:887)62 3(cid:481)0(cid:887)(cid:887) 603 Tenant deposits (201(cid:887)(cid:483) (cid:836)1(cid:887)0(cid:481)000 (cid:5)ald Roc(cid:141) sale deposit) 197 30(cid:887) Total 3,252 908 Other liabilities included (cid:836)1(cid:484)9 million payable in relation to the ac(cid:147)uisition of (cid:5)T(cid:11)T which has been paid(cid:484) Further information relating to related parties is set out in the Related Party Transactions note(cid:484) 11. Current Liabilities (cid:486) Other Liabilities 2016 $’000 2015 $’000 Rental income received in advance 248 262 (cid:5)ald Roc(cid:141) facility (cid:486) 1(cid:481)2(cid:887)6 Loan from (cid:5)lac(cid:141)(cid:26)all to (cid:5)ald Roc(cid:141) Fund (cid:486) 4(cid:887)0 Total 248 1,968 12. Current and Non(cid:486)current Liabilities (cid:486) Borrowings 2016 $’000 2015 $’000 Current NA(cid:5) bill facilities 62(cid:481)000 (cid:887)0(cid:481)000 Total 62,000 50,000 BLACKWALLPROPERRTYTUST15BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 1(cid:887) The facilities are secured by registered first mortgages over the freehold land and buildings ((cid:836)12 million over (cid:26)OTSO (cid:11)ouse and (cid:836)(cid:887)0 million over other (cid:5)(cid:26)R properties)(cid:484) (cid:16)anagement is currently in discussion with the ban(cid:141) to renew the facilities and has no reason to believe they will not be renewed(cid:484) Given the ban(cid:141)ing mar(cid:141)et it is li(cid:141)ely that on renewal the ban(cid:141) margin could increase but up to 2(cid:887) basis points not withstanding that the loan to value ratio has decreased(cid:484) Interest rate details are as follows(cid:483) (cid:486) (cid:836)(cid:887)0 million is sub(cid:140)ect to a margin of 1(cid:484)9(cid:887)(cid:936) p(cid:484)a(cid:484) ((cid:13)une 201(cid:887)(cid:483) 1(cid:484)9(cid:887)(cid:936) p(cid:484)a(cid:484)) over (cid:5)(cid:5)S(cid:28)(cid:482) (cid:486) (cid:836)12 million is sub(cid:140)ect to a margin of 1(cid:484)8(cid:887)(cid:936) p(cid:484)a(cid:484) over (cid:5)(cid:5)S(cid:28)(cid:484) Refer to the Interest Rate (cid:11)edges and Financial Ris(cid:141) (cid:16)anagement notes below for further details(cid:484) 13. Current and Non(cid:486)current Liabilities – Interest Rate Hedges 2016 $’000 2015 $’000 Current Interest rate hedges 47 (cid:486) Non(cid:486)current Interest rate hedges 1(cid:481)397 (cid:887)80 Total 1,444 580 Details of the terms are as follows(cid:483) (cid:486) (cid:836)9(cid:484)(cid:887) million ((cid:26)OTSO (cid:11)ouse) swap at 4(cid:484)97(cid:936) which has e(cid:154)pired(cid:484) (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)(cid:887)(cid:887)(cid:936) p(cid:484)a(cid:484) The collar will e(cid:154)pire 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 e(cid:154)pire 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 increase or decrease by 1(cid:936)(cid:481) interest e(cid:154)pense on (cid:836)12 million borrowings would move by (cid:836)120(cid:481)000(cid:484) There is no material impact on the (cid:836)(cid:887)0 million borrowings based on 1(cid:936) movement in interest rates(cid:484) 14. Distributions 2016 $’000 2015 $’000 201(cid:887) final distribution 6 cents paid in November 201(cid:887) (2014(cid:483) 3(cid:484)(cid:887) cents (cid:535)) 2(cid:481)749 1(cid:481)634 2016 interim distribution 6 cents paid in April 2016 (201(cid:887)(cid:483) (cid:887)(cid:484)(cid:887) cents) 2(cid:481)790 2(cid:481)(cid:887)68 2016 in(cid:486)specie distribution of Pelathon Pub Group units in (cid:13)une 2016 (cid:535)(cid:535) 6(cid:481)217 (cid:486) Total 11,756 4,202 In addition(cid:481) the (cid:5)oard has declared a final distribution of 4 cents per unit to be paid on 9 November 2016(cid:484) (cid:535) In (cid:16)arch 201(cid:887)(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) (cid:535)(cid:535) Refer to the Consolidated Statement of Changes in Net Assets Attributable to Unitholders for details(cid:484) BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201616FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 16 15. Earnings Per Unit 2016 2015 (cid:5)asic and diluted (cid:8)PU 23(cid:484)4 cents 13(cid:484)6 cents Calculated as follows(cid:483) Profit for the year (cid:836)10(cid:481)909(cid:481)000 (cid:836)6(cid:481)336(cid:481)000 (cid:26)eighted average number of units for (cid:8)PU 46(cid:481)(cid:887)90(cid:481)966 46(cid:481)693(cid:481)330 16. Auditor’s Remuneration 2016 $’000 2015 $’000 Remuneration of (cid:8)S(cid:25) for(cid:483) (cid:486) Audit and assurance services (cid:887)(cid:887) 43 (cid:486) Ta(cid:154)ation services 12 12 Total 67 55 (cid:5)OF was consolidated onto the Trust’s balance sheet in (cid:13)une 201(cid:887)(cid:481) therefore its audit fees were not included in the 201(cid:887) balance(cid:484) 17. Commitments and Contingencies Future minimum rent receivable under non(cid:486)cancellable operating leases as at 30 (cid:13)une are as follows(cid:483) 2016 $’000 2015 $’000 Receivable within 1 year 8(cid:481)(cid:887)90 7(cid:481)(cid:887)(cid:887)9 Receivable within 2 – (cid:887) years 27(cid:481)473 24(cid:481)371 Receivable for more than (cid:887) years 1(cid:887)(cid:481)644 18(cid:481)998 Total 51,707 50,928 There were no operating leases(cid:481) capital commitments or contingencies as at 30 (cid:13)une 2016 (201(cid:887)(cid:483) Nil)(cid:484) 18. Reconciliation of Operating Cash Flows 2016 $’000 2015 $’000 Profit for the year 10(cid:481)844 6(cid:481)491 Non(cid:486)cash flows in profit(cid:483) (cid:486) Unrealised gain on revaluation (4(cid:481)387) (4(cid:481)073) (cid:486) Depreciation 2(cid:481)138 2(cid:481)176 (cid:486) Straight(cid:486)line rental income (303) (337) (cid:486) Loss on sale of property (cid:140)oint ventures 90 3(cid:887) Changes in assets and liabilities(cid:483) (Increase) (cid:512) decrease in trade and other receivables 131 (1(cid:887)4) Increase in other assets (23) ((cid:887)81) Increase (cid:512) (decrease) in trade and other payables 499 (329) Increase (cid:512) (decrease) in other liabilities (129) 260 Net cash flows from operating activities 8,860 3,488 BLACKWALLPROPERRTYTUST17BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 17 19. Subsequent Events Apart from subse(cid:147)uent events disclosed in the Directors’ report(cid:481) to the best of the Directors’ (cid:141)nowledge(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) 20. Controlled Entities Name Country of incorporation Percentage Owned Parent entity: 2016 2015 (cid:5)lac(cid:141)(cid:26)all Property Trust Australia 100(cid:936) 100(cid:936) Controlled entity of parent entity: (cid:28)andina Sub(cid:486)trust Australia 100(cid:936) 100(cid:936) (cid:5)lac(cid:141)(cid:26)all Telstra (cid:11)ouse Trust Australia 100(cid:936) 0(cid:484)03(cid:936) (cid:5)lac(cid:141)(cid:26)all Opportunities Fund Australia 76(cid:484)(cid:887)9(cid:936) 29(cid:484)79(cid:936) (cid:5)ald Roc(cid:141) Fund Australia (cid:486) 39(cid:936) During the year(cid:481) the Trust ac(cid:147)uired a further 14(cid:484)6 million units in (cid:5)OF increasing its interest to 23(cid:481)863(cid:481)36(cid:887) units (201(cid:887)(cid:483) 9(cid:481)280(cid:481)(cid:887)28 (cid:5)OF units)(cid:484) In (cid:13)une 2016(cid:481) the Trust ac(cid:147)uired 100(cid:936) ownership in (cid:5)T(cid:11)T ( 201(cid:887)(cid:483) 3(cid:481)(cid:887)(cid:887)(cid:887) (cid:5)T(cid:11)T units)(cid:484) 21. 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) (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 (cid:8)ntity or are related entities of (cid:5)lac(cid:141)(cid:26)all(cid:483) Unlisted Funds / Entities Holdings (No.’000) Distribution / ROC Received ($’000) 2016 2015 2016 2015 (cid:14)irela Unit Trust 74 (cid:486) 112 (cid:486) Pyrmont (cid:5)ridge Trust 2(cid:481)800 2(cid:481)800 (cid:486) (cid:486) (cid:26)R(cid:25) Unit Trust 1(cid:481)497 1(cid:481)400 140 (cid:887)2 (cid:5)a(cid:141)ehouse (cid:5)onds (cid:486) 20(cid:481)000 (cid:887)(cid:887)0 1(cid:481)100 Pelathon Pub Group (cid:486) 39(cid:481)97(cid:887) (cid:486) (cid:486) (cid:26)oods PIP(cid:8)S Fund (cid:486) 80 (cid:486) (cid:5)lac(cid:141)(cid:26)all Telstra (cid:11)ouse Trust (cid:486) 4 1 (cid:486) Planloc Preference Shares (cid:486) 1(cid:481)900 92 199 (cid:5)lac(cid:141)(cid:26)all Penrith Fund No(cid:484) 3 (cid:486) (cid:887)41 24 (cid:887)(cid:887) 999 1,406 For further details refer to the Property (cid:13)oint (cid:25)entures note(cid:484) Income received from (cid:14)irela and (cid:26)R(cid:25) were in the form of returns of capital(cid:484) BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201618FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 18 (c) Related Entity Transactions In accordance with the terms of the Trust Constitution and the Information (cid:16)emorandum(cid:481) the Responsible (cid:8)ntity is entitled to receive a management fee based on 0(cid:484)6(cid:887)(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(cid:481) at mar(cid:141)et rates and were approved by the (cid:5)oard(cid:484) Related party transactions that occurred during the year are as follows(cid:483) 2016 $’000 2015 $’000 Expenses Remuneration paid to Responsible (cid:8)ntity 867 78(cid:887) Property management(cid:481) leasing fees and accounting fees (cid:887)08 411 Transaction fees 691 (cid:486) Interest paid (cid:486) 2(cid:887) 2,066 1,221 (cid:5)OF was consolidated onto the Trust’s accounts in (cid:13)une 201(cid:887)(cid:481) therefore related party fees were not included in the 201(cid:887) balance(cid:484) Refer to Directors’ Report for (cid:14)(cid:16)P’s relevant interests in the Trust(cid:484) Outstanding Balances with Related Parties 2016 $’000 2015 $’000 Receivables from related parties (cid:486) current (cid:887)1 381 Payables to related parties (cid:486) current 16(cid:887) 41 Loan from related parties –current (cid:486) 4(cid:887)0 22. Parent Entity Disclosures The following summarises the financial information of the Trust’s parent entity(cid:481) (cid:5)lac(cid:141)(cid:26)all Property Trust(cid:481) as at and for the year ended 30 (cid:13)une(cid:484) 2016 $’000 2015 $’000 Profit for the year 11(cid:481)141 6(cid:481)479 Total comprehensive income for the year 11,141 6,479 Financial position: Current assets 2(cid:481)321 779 Non(cid:486)current assets 120(cid:481)472 11(cid:887)(cid:481)0(cid:887)2 Total assets 122,793 115,831 Current liabilities (48(cid:481)610) ((cid:887)0(cid:481)34(cid:887)) Non(cid:486)current liabilities (1(cid:481)397) ((cid:887)80) Total liabilities (50,007) (50,925) Net assets 72,786 64,906 The parent entity had no contingencies at 30 (cid:13)une 2016 (201(cid:887)(cid:483) Nil)(cid:484) The parent entity has not entered into any capital commitments as at 30 (cid:13)une 2016 (201(cid:887)(cid:483) Nil)(cid:484) BLACKWALLPROPERRTYTUST19BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 19 23. Financial Risk Management (a) Financial risk management The main ris(cid:141)s the Trust is e(cid:154)posed to through its financial instruments are mar(cid:141)et ris(cid:141) (including interest rate ris(cid:141) and price ris(cid:141))(cid:481) credit ris(cid:141) and li(cid:147)uidity ris(cid:141)(cid:484) The Trust(cid:821)s principal financial instruments are property (cid:140)oint ventures and borrowings (including interest rate swaps)(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 e(cid:154)posure to each of the above ris(cid:141)s(cid:481) their ob(cid:140)ectives(cid:481) policies and processes for measuring and managing ris(cid:141)(cid:481) and the management of capital(cid:484) The (cid:5)oard of Directors of the Responsible (cid:8)ntity has overall responsibility for the establishment and overseeing of the ris(cid:141) management framewor(cid:141)(cid:484) The (cid:5)oard monitors the Trust’s ris(cid:141) e(cid:154)posure by regularly reviewing finance and property mar(cid:141)ets(cid:484) (cid:16)a(cid:140)or financial instruments held by the Trust which are sub(cid:140)ect to financial ris(cid:141) analysis are as follows(cid:483) 2016 $’000 2015 $’000 Financial assets Property (cid:140)oint ventures 24(cid:481)397 31(cid:481)764 Financial liabilities (cid:5)orrowings 62(cid:481)000 (cid:887)0(cid:481)000 (b) Sensitivity analysis The Trust is not e(cid:154)posed to any material price or credit ris(cid:141)s(cid:484) For interest rate ris(cid:141)(cid:481) (cid:836)(cid:887)0 million borrowings (out of (cid:836)62 million) are hedged as follows(cid:483) (cid:120) 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)(cid:887)(cid:887)(cid:936) p(cid:484)a(cid:484)(cid:482) and (cid:120) 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) The (cid:836)(cid:887)0 million hedges will e(cid:154)pire in late 2019(cid:484) See the Interest Rate (cid:11)edges note for sensitivity analysis(cid:484) (c) Capital management The Trust’s ob(cid:140)ectives when managing capital are to(cid:483) (cid:120) safeguard its ability to continue as a going concern(cid:481) so that it can continue to provide returns for unitholders and benefits for other sta(cid:141)eholders(cid:481) and (cid:120) maintain an optimal capital structure to reduce the cost of capital(cid:484) In order to maintain or ad(cid:140)ust the capital structure(cid:481) the Trust may ad(cid:140)ust the amount of return of capital paid to unitholders(cid:481) issue new units(cid:481) buy(cid:486)bac(cid:141) units(cid:481) purchase or sell assets(cid:484) The Trust complies with the current loans to values ratio (6(cid:887)(cid:936))(cid:484) (d) Liquidity risk The ma(cid:140)or li(cid:147)uidity ris(cid:141) faced by the Trust is its ability to realise assets(cid:484) The Trust has borrowings of (cid:836)62 million and total gross assets of (cid:836)139 million(cid:481) of which (cid:836)112 million are income producing real estate BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201620FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 20 assets for which there is a deep and active mar(cid:141)et(cid:484) At the end of the reporting period(cid:481) the Trust held the following financial arrangements(cid:483) Maturing within 1 year $’000 Maturing 2 – 5 years $’000 Maturing over 5 years $’000 Total $’000 At 30 June 2016 Financial assets Cash and cash e(cid:147)uivalents 2(cid:481)1(cid:887)4 (cid:486) (cid:486) 2(cid:481)1(cid:887)4 Trade and other receivables 2(cid:887)6 (cid:486) (cid:486) 2(cid:887)6 Property (cid:140)oint ventures (cid:486) 24(cid:481)397 (cid:486) 24(cid:481)397 2,410 24,397 (cid:486) 26,807 Financial liabilities Trade and other payables 3(cid:481)2(cid:887)2 (cid:486) (cid:486) 3(cid:481)2(cid:887)2 Other liabilities 248 (cid:486) (cid:486) 248 (cid:5)orrowings 62(cid:481)000 (cid:486) (cid:486) 62(cid:481)000 Interest rate hedges 47 1(cid:481)397 (cid:486) 1(cid:481)444 65,547 1,397 (cid:486) 66,944 At 30 June 2015 Financial assets Cash and cash e(cid:147)uivalents 316 (cid:486) (cid:486) 316 Trade and other receivables 388 (cid:486) (cid:486) 388 Property (cid:140)oint ventures (cid:486) 31(cid:481)764 (cid:486) 31(cid:481)764 704 31,764 (cid:486) 32,468 Financial liabilities Trade and other payables 908 (cid:486) (cid:486) 908 Other liabilities 1(cid:481)968 (cid:486) (cid:486) 1(cid:481)968 (cid:5)orrowings (cid:887)0(cid:481)000 (cid:486) (cid:486) (cid:887)0(cid:481)000 Interest rate hedges (cid:486) 4(cid:887)7 123 (cid:887)80 52,876 457 123 53,456 (e) Fair value measurements (i) Fair value hierarchy 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 (unad(cid:140)usted) in active mar(cid:141)ets for identical assets or liabilities(cid:482) (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 (as prices) or indirectly (derived from prices)(cid:482) and (cid:120) Level 3 (cid:486) Inputs for the asset that are not based on observable mar(cid:141)et data (unobservable inputs)(cid:484) The Trust currently does not have any assets or liabilities that are traded in an active mar(cid:141)et(cid:484) The fair value of property (cid:140)oint ventures and financial liabilities that are not traded in an active mar(cid:141)et is 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 property (cid:140)oint ventures and financial liabilities measured at fair value as at 30 (cid:13)une(cid:484) Refer to the Critical Accounting (cid:8)stimates and (cid:13)udgment note for further details of BLACKWALLPROPERRTYTUST21BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 21 assumptions used and how fair values are measured(cid:484) Level 1 $’000 Level 2 $’000 Level 3 $’000 Total $’000 At 30 June 2016 Property (cid:140)oint ventures (cid:486) (cid:486) 24(cid:481)397 24(cid:481)397 Interest rate hedges (cid:486) (1(cid:481)444) (cid:486) (1(cid:481)444) At 30 June 2015 Property (cid:140)oint ventures (cid:486) (cid:8)(cid:147)uities (cid:486) (cid:486) 10(cid:481)174 10(cid:481)174 (cid:486) Debt instruments (cid:486) (cid:486) 21(cid:481)(cid:887)90 21(cid:481)(cid:887)90 (cid:486) (cid:486) 31(cid:481)764 31(cid:481)764 Interest rate hedges (cid:486) ((cid:887)80) (cid:486) ((cid:887)80) (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) 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 property (cid:140)oint ventures classified as Level 3 for the year ended 30 (cid:13)une(cid:483) At 30 June 2016 $’000 (cid:5)alance at the beginning of the year 31(cid:481)764 Purchases 22(cid:481)332 Disposals(cid:512)returns of capital (30(cid:481)(cid:887)06) Fair value movement 807 (cid:5)alance at the end of the year 24,397 At 30 June 2015 $’000 (cid:5)alance at the beginning of the year 29(cid:481)404 Purchases 4(cid:481)626 Disposals(cid:512)returns of capital (1(cid:481)706) Fair value movement 62(cid:887) Consolidation of (cid:5)OF (eliminate investment) (1(cid:481)18(cid:887)) (cid:5)alance at the end of the year 31,764 There were no transfers between Level 1(cid:481) 2 and 3 financial instruments during the year(cid:484) For all other property (cid:140)oint ventures and financial liabilities carrying value is an appro(cid:154)imation of fair value(cid:484) 24. Critical Accounting Estimates and Judgments The Directors of the Responsible (cid:8)ntity evaluate estimates and (cid:140)udgments incorporated into the financial statements based on historical (cid:141)nowledge and best available current information(cid:484) (cid:8)stimates assume a reasonable e(cid:154)pectation of future events and are based on current trends and economic data(cid:481) obtained both e(cid:154)ternally and within the Trust(cid:484) BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201622FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 22 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) Key estimates – property joint ventures All financial assets at F(cid:25)TPL have been classified as property (cid:140)oint ventures(cid:481) which have the same meaning as financial assets at F(cid:25)TPL with gains and losses recognised as 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) 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 (cid:8)ntity update their assessment of the fair value of each property(cid:481) ta(cid:141)ing into account the most recent independent valuations(cid:484) The (cid:141)ey assumptions used in this determination are set out in Investment Properties note(cid:484) If there are any material changes in the (cid:141)ey 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) 25. Statement of Significant Accounting Policies The financial statements cover (cid:5)lac(cid:141)(cid:26)all Property Trust and its controlled entities (refer Controlled (cid:8)ntities note)(cid:484) (cid:5)lac(cid:141)(cid:26)all Property Trust is a managed investment scheme registered in Australia(cid:484) All controlled funds are established and domiciled in Australia(cid:484) The financial statements for the Trust were authorised for issue in accordance with a resolution of the Directors of the Responsible (cid:8)ntity 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 (cid:5)oard and the Corporations Act 2001(cid:484) The financial statements of the Trust also comply with IFRS as issued by the International Accounting Standards (cid:5)oard(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 (cid:141)ind referred to in ASIC Class Order 2016(cid:512)191 and(cid:481) 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) 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 current reporting period(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) BLACKWALLPROPERRTYTUST23BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 23 Going concern The Trust has a current asset deficiency as at 30 (cid:13)une 2016 as ban(cid:141) borrowings were classified as current liabilities(cid:484) Given the Trust generates normalised operating cashflow of around (cid:836)3(cid:484)4 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 (cid:26)hen 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 ma(cid:141)e the financial statements more relevant and useful to the user(cid:484) Segment Reporting AAS(cid:5) 8 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 ma(cid:141)er 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 mar(cid:141)ets(cid:484) The Trust has adopted one reporting segment(cid:481) Property Investments(cid:484) The Property Investments segment includes the ownership and leasing out of commercial(cid:481) industrial and retail properties in the Australian Capital Territory(cid:481) New South (cid:26)ales and (cid:20)ueensland(cid:484) Income is derived from rent(cid:481) property revaluations and property (cid:140)oint ventures distributions(cid:484) Presentation currency (cid:5)oth 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 (refer to the Controlled (cid:8)ntities note)(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 (refer to the Parent (cid:8)ntity Disclosures note)(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 e(cid:154)posed 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) BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201624FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 24 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 e(cid:154)ists(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)ta(cid:154) discount rate that reflects current mar(cid:141)et assessments of the time value of money and the ris(cid:141)s 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 e(cid:154)ceeds its recoverable amount(cid:484) Impairment losses are e(cid:154)pensed to the income statement(cid:484) Impairment losses recognised in prior periods are assessed at each reporting date for any indication that the loss has decreased or no longer e(cid:154)ists(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 e(cid:154)tent that the asset’s carrying amount does not e(cid:154)ceed 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 Interest rate hedges The Trust uses derivative financial instruments such as interest rate swaps to hedge its ris(cid:141)s 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 net fair value is positive and as liabilities when their net fair value is negative(cid:484) The fair values of interest rate swap and collar are determined by reference to mar(cid:141)et values for similar instruments(cid:484) Any gains or losses arising from changes in the fair value of derivatives are ta(cid:141)en directly to profit or loss for the year(cid:484) Non(cid:486)derivative financial instruments Non(cid:486)derivative financial instruments comprise financial assets (including property (cid:140)oint ventures)(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 e(cid:154)pire or if the Trust transfers the financial assets to another party without retaining control or substantially all ris(cid:141)s and rewards of the asset(cid:484) Purchases and sales of financial assets are BLACKWALLPROPERRTYTUST25BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 2(cid:887) 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 e(cid:154)pire or are discharged or cancelled(cid:484) Loans and receivables Loans and receivables including loans to related entities(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 For investments in 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) 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) 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 ris(cid:141) characteristics(cid:484) Impairment losses are recognised in the statement of profit or loss and other comprehensive income(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) Property joint ventures All financial assets at F(cid:25)TPL have been classified as property (cid:140)oint ventures in these financial statements(cid:481) which have the same meaning as financial assets at F(cid:25)TPL with gains and losses recognised in profit or loss(cid:484) 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 (cid:5)a(cid:141)ehouse (cid:5)onds were classified as a debt investment at fair value through profit or loss(cid:484) The (cid:5)onds were redeemed during the year(cid:484) (ii) Equity investments All e(cid:147)uity investments are measured at fair value(cid:484) (cid:8)(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 e(cid:154)pensed in profit or loss(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) BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201626FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 26 Held for Sale Properties Properties 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 e(cid:154)isting investment property at the time that cost is incurred if the recognition criteria are met and e(cid:154)cludes 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 mar(cid:141)et 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 ban(cid:141)s(cid:481) other short term highly li(cid:147)uid investments with original maturities of three months or less(cid:481) and ban(cid:141) 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) (cid:5)ad 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) BLACKWALLPROPERRTYTUST27BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016FINANCIAL STATEMENTSBlackWall Property Trust ARSN 109 684 773 Notes to the Financial Statements For the Year Ended 30 June 2016 27 Investment income Interest income is recognised as interest accrues using the effective interest method(cid:484) Property (cid:140)oint ventures income is recognised when the right to receive distribution has been established(cid:484) For ta(cid:154) deferred distributions (returns of capital) earned from any trusts that have significant carried forward ta(cid:154) losses(cid:481) such distributions are brought on to the balance sheet by an ad(cid:140)ustment in the carrying value of the relevant investment and then reflected in the profit and loss as an unrealised gain(cid:484) Income Tax Under current income ta(cid:154) legislation the Trust is not liable to Australian income ta(cid:154) provided the unitholders are presently entitled to the ta(cid:154)able income of the Trust(cid:484) The Trust has over (cid:836)1(cid:887) million of carried forward revenue ta(cid:154) losses and appro(cid:154)imately (cid:836)17 million in capital losses(cid:484) GST Revenues(cid:481) e(cid:154)penses and assets are recognised net of the amount of GST(cid:481) e(cid:154)cept where the amount of GST incurred is not recoverable from the Australian Ta(cid:154)ation 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 e(cid:154)pense(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 for the operating cash flows only(cid:484) EPU The Trust presents basic and diluted (cid:8)PU(cid:484) (cid:5)asic (cid:8)PU 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 (cid:8)PU 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 AAS(cid:5) 9 early on 1 (cid:13)anuary 2013 e(cid:154)cept for the new hedging rules which should not have any material effects to the Trust’s financial statements(cid:484) AASB 15 Revenue from Contracts with Customers (effective for annual reporting periods beginning on or after 1 January 2018) The new standard is based on the principle that revenue is recognised when control of a good or service transfers to a customer(cid:484) The Trust is currently assessing the effects of applying the new standard on the financial statements and has not identified any material changes(cid:484) BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201628DIRECTORS’ REPORT (Part 2) This Part 2 continues from Directors’ Report (Part 1) from pages 3 to 6(cid:484) Information on Officeholders of the Responsible Entity The Responsible (cid:8)ntity is a wholly owned subsidiary of (cid:5)lac(cid:141)(cid:26)all Limited(cid:484) (cid:5)lac(cid:141)(cid:26)all’s Officeholders comprise the board of the Responsible (cid:8)ntity(cid:484) The Officeholders of the Responsible (cid:8)ntity 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 Special Experience Richard (cid:11)ill Non(cid:486)(cid:8)(cid:154)ecutive Director and Independent Chairman Richard (cid:11)ill has e(cid:154)tensive investment ban(cid:141)ing e(cid:154)perience and was the founding partner of the corporate advisory firm (cid:11)ill (cid:28)oung (cid:428) Associates(cid:484) Richard has invested in (cid:5)lac(cid:141)(cid:26)all’s pro(cid:140)ects since the early 1990s(cid:484) Prior to forming (cid:11)ill (cid:28)oung(cid:481) Richard held a number of Senior (cid:8)(cid:154)ecutive positions in (cid:11)ong (cid:14)ong and New (cid:28)or(cid:141) with (cid:11)S(cid:5)C(cid:484) (cid:11)e was admitted as an attorney in New (cid:28)or(cid:141) State and was registered by the US Securities (cid:428) (cid:8)(cid:154)change Commission and the Ontario Securities Commission(cid:484) (cid:11)e is the Chairman of Sirte(cid:154) (cid:16)edical Limited (listed on the ASX)(cid:484) In addition Richard is Chairman of the (cid:26)estmead (cid:16)illennium Institute for (cid:16)edical Research(cid:484) (cid:13)oseph (Seph) Glew Non(cid:486)(cid:8)(cid:154)ecutive Director Seph has wor(cid:141)ed 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) (cid:26)hile wor(cid:141)ing for the (cid:11)ousing 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 (cid:5)achelor of Commerce(cid:484) In the 1980s he served as an (cid:8)(cid:154)ecutive Director with New (cid:29)ealand based property group Chase Corporation and as a Non(cid:486)(cid:8)(cid:154)ecutive Director with a number of other listed companies in New (cid:29)ealand and Australia(cid:484) Robin Tedder Non(cid:486)(cid:8)(cid:154)ecutive Director Robin has wor(cid:141)ed in finance and investment since 1976 during which time he has served as the C(cid:8)O of an investment ban(cid:141) and as non e(cid:154)ecutive director on the boards of public and private companies in ban(cid:141)ing(cid:481) insurance(cid:481) funds management(cid:481) property(cid:481) healthcare(cid:481) retail and wine(cid:484) (cid:11)e was a member of ASX for many years(cid:484) (cid:11)e is the Chairman of investment company (cid:25)intage Capital and has been an investor in (cid:5)lac(cid:141)(cid:26)all Group pro(cid:140)ects since 1997(cid:484) Robin is also the Chairman of the (cid:5)lac(cid:141)(cid:26)all (cid:5)oard Audit Committee(cid:484) BLACKWALLPROPERRTYTUST29BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016DIRECTORS’ REPORT (Part 2) Stuart (cid:5)rown (cid:8)(cid:154)ecutive Director and Chief (cid:8)(cid:154)ecutive Officer Stuart has been involved in property investment for over 18 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 (cid:5)oys’ Preparatory School and Randwic(cid:141) District Rugby Union Football Club(cid:484) Caroline Raw Company Secretary Caroline Raw (cid:140)oined the (cid:5)lac(cid:141)(cid:26)all team in 2013 and is responsible for e(cid:154)ecuting corporate and fund transactions across the (cid:5)lac(cid:141)(cid:26)all Group(cid:484) Caroline has been practising as a solicitor in NS(cid:26) since 200(cid:887) and has wor(cid:141)ed predominantly on IPOs(cid:481) public and private capital raisings(cid:481) funds management(cid:481) corporate advisory(cid:481) ta(cid:141)eovers and mergers and ac(cid:147)uisitions(cid:484) Caroline holds a (cid:5)achelor of Commerce(cid:481) (cid:5)achelor 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 No. of Board Meetings Held Board Meeting Attendance Richard (cid:11)ill 10 10 Seph Glew 10 10 Robin Tedder 10 10 Stuart (cid:5)rown 10 10 Key Management Personnel’s Relevant Interests (cid:14)(cid:16)P include all Directors and the Chief Financial Officer (Tim (cid:5)rown)(cid:484) Their current relevant interests in the Trust are shown below(cid:484) 12 August 2015 Net change 15 August 2016 Richard (cid:11)ill 394(cid:481)21(cid:887) 123(cid:481)600 (cid:887)17(cid:481)81(cid:887) Seph Glew 4(cid:481)134(cid:481)(cid:887)03 1(cid:481)768(cid:481)932 (cid:887)(cid:481)903(cid:481)43(cid:887) Robin Tedder (cid:887)(cid:481)140(cid:481)96(cid:887) (3(cid:481)(cid:887)19(cid:481)(cid:887)0(cid:887)) 1(cid:481)621(cid:481)460 Stuart (cid:5)rown 467(cid:481)346 13(cid:481)993 481(cid:481)339 Tim (cid:5)rown 28(cid:481)844 13(cid:481)02(cid:887) 41(cid:481)869 Total 10,165,873 (1,599,955) 8,565,918 No salary(cid:481) cash bonus or monetary benefit was paid out of the Trust’s assets to any (cid:14)(cid:16)P during the year(cid:484) Options There were no options granted during the year ended 30 (cid:13)une 2016(cid:484) There are no options on issue as at the date of this report(cid:484) BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201630DIRECTORS’ REPORT (Part 2) Responsible Entity and Custodian Remuneration The Responsible (cid:8)ntity’s remuneration details can be found under the Related Party Transactions note of the financial statements(cid:484) The Custodian is The Trust Company Limited(cid:484) The custody fee is calculated at the greater of (cid:836)1(cid:887)(cid:481)000 p(cid:484)a(cid:484) or 0(cid:484)02(cid:887)(cid:936) p(cid:484)a(cid:484) of the gross asset value up to (cid:836)100 million then 0(cid:484)01(cid:887)(cid:936) for gross assets value between (cid:836)100(cid:486)(cid:836)(cid:887)00 million 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)poc(cid:141)et e(cid:154)penses incurred in the performance of its duties(cid:484) Interests in the Trust At the date of this report(cid:481) the Trust has (cid:887)7(cid:481)828(cid:481)889 units on issue after 1(cid:481)341(cid:481)(cid:887)09 buy(cid:486)bac(cid:141) and issue of 12(cid:481)477(cid:481)068 new (cid:5)(cid:26)R units ((cid:13)une 2016(cid:483) (cid:887)7(cid:481)837(cid:481)613 units on issue)(cid:484) The Responsible (cid:8)ntity and its associates held 9(cid:484)4 million units in the Trust(cid:484) Value of the Trust’s Assets At 30 (cid:13)une 2016(cid:481) the Trust’s assets value is set out in the Trust’s Consolidated Statement of Financial Position(cid:484) Refer to the Investment Properties and Property (cid:13)oint (cid:25)entures 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) (cid:11)owever(cid:481) the Responsible (cid:8)ntity 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 (cid:8)ntity has paid premiums to insure each of the Directors named in this report along with Officers of the Responsible (cid:8)ntity against all liabilities for costs and e(cid:154)penses 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 (cid:8)ntity(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)blac(cid:141)wall(cid:484)com(cid:484)au(cid:512)about(cid:486)us(cid:484)html(cid:484) Auditor and Non(cid:486)audit Services (cid:836)12(cid:481)000 was paid to the auditor for non(cid:486)audit services during the year (201(cid:887)(cid:483) (cid:836)12(cid:481)178) 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) BLACKWALLPROPERRTYTUST31BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016DIRECTORS’ REPORT (Part 2) 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) (cid:8)S(cid:25) continues in office in accordance with section 327 of the Corporations Act 2001(cid:484) Rounding of Amounts The Company is of a (cid:141)ind referred to in ASIC Legislative Instrument 2016(cid:512)191(cid:481) and in accordance with that legislative instrument 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 (cid:5)oard of Directors(cid:484) Stuart Brown Director Sydney(cid:481) 24 August 2016 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 2016, 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 23rd day of August 2016. ESV Accounting and Business Advisors Tim Valtwies Partner BLACKWALLPROPERRTYTUST33BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016DIRECTORS’ DECLARATION In the opinion of the Directors of (cid:5)lac(cid:141)(cid:26)all Fund Services Limited(cid:481) the Responsible (cid:8)ntity of (cid:5)lac(cid:141)(cid:26)all Property Trust(cid:483) (a) the financial statements and notes are in accordance with the Corporations Act 2001(cid:481) including(cid:483) (i) complying with Accounting Standards(cid:481) the Corporations Regulations 2001 and other mandatory professional reporting re(cid:147)uirements(cid:482) and (ii) giving a true and fair view of the Trust’s financial position as at 30 (cid:13)une 2016 and of its performance for the financial year ended on that date(cid:482) and (b) 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 (cid:5)oard(cid:484) The Directors of the Responsible (cid:8)ntity have been given the declarations by the Chief (cid:8)(cid:154)ecutive Officer and Chief Financial Officer re(cid:147)uired by section 29(cid:887)A of the Corporations Act 2001(cid:484) This declaration is made in accordance with a resolution of the (cid:5)oard of Directors of the Responsible (cid:8)ntity(cid:484) Stuart Brown Director Sydney(cid:481) 24 August 2016 BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201634 Additional information re(cid:147)uired by the Australian Securities (cid:8)(cid:154)change and not shown elsewhere in this report is as follows(cid:484) The unitholder information set out below was current as at 1(cid:887) August 2016(cid:484) 1. Unitholders The Trust’s top 20 largest unitholdings were(cid:483) Investor Units (No.) Units (%) 1 Pelorus Private (cid:8)(cid:147)uity Limited 9(cid:481)921(cid:481)999 17(cid:484)16 2 (cid:5)lac(cid:141)(cid:26)all Limited 6(cid:481)083(cid:481)781 10(cid:484)(cid:887)2 3 Sandhurst Trustees Ltd (cid:948)AI(cid:16)S PSF A(cid:512)C(cid:949) (cid:887)(cid:481)847(cid:481)669 10(cid:484)11 4 Australia Opportunity Fund 1 4(cid:481)320(cid:481)000 7(cid:484)47 (cid:887) (cid:16)r Archibald Geoffrey Loudon 3(cid:481)688(cid:481)20(cid:887) 6(cid:484)38 6 (cid:5)lac(cid:141)(cid:26)all Fund Services Limited 3(cid:481)329(cid:481)2(cid:887)4 (cid:887)(cid:484)76 7 Seno (cid:16)anagement Pty Ltd (cid:948)Taipa A(cid:512)C(cid:949) 2(cid:481)73(cid:887)(cid:481)000 4(cid:484)73 8 Lym(cid:141)eesh Pty Ltd (cid:948)(cid:8)mployees Super Fund A(cid:512)C(cid:949) 1(cid:481)4(cid:887)9(cid:481)917 2(cid:484)(cid:887)2 9 Aleri(cid:141) Pty Limited (cid:948)The Aleri(cid:141) Unit A(cid:512)C(cid:949) 1(cid:481)078(cid:481)016 1(cid:484)86 10 (cid:14)oonta Pty Ltd (cid:948)(cid:14)oonta Super Fund A(cid:512)C(cid:949) 781(cid:481)489 1(cid:484)3(cid:887) 11 (cid:14)oonta Pty Ltd (cid:948)The Tedder Family A(cid:512)C(cid:949) 7(cid:887)3(cid:481)43(cid:887) 1(cid:484)30 12 Seno (cid:16)anagement Pty Ltd (cid:948)Seno Super Fund A(cid:512)C(cid:949) 730(cid:481)000 1(cid:484)26 13 Glenahilty Ltd (cid:887)79(cid:481)06(cid:887) 1(cid:484)00 14 SAO Investments Pty Ltd (cid:887)7(cid:887)(cid:481)782 1(cid:484)00 1(cid:887) Pinnatus Pty Ltd 476(cid:481)(cid:887)01 0(cid:484)82 16 I P R Nominees Pty Ltd (cid:948)196(cid:887) Irvin Peter Roc(cid:141)man A(cid:512)C(cid:949) 422(cid:481)639 0(cid:484)73 17 Lym(cid:141)eesh Pty Ltd 373(cid:481)103 0(cid:484)6(cid:887) 18 Castle (cid:5)ay Pty Limited 370(cid:481)047 0(cid:484)64 19 (cid:16)r Richard (cid:11)ill (cid:428) (cid:16)rs (cid:8)velyn (cid:11)ill (cid:948)Richard (cid:11)ill Super Fund A(cid:512)C(cid:949) 33(cid:887)(cid:481)184 0(cid:484)(cid:887)8 20 (cid:13)PS Properties Pty Ltd 280(cid:481)000 0(cid:484)48 ASX ADDITIONAL INFORMATION BLACKWALLPROPERRTYTUST35BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016ASX ADDITIONAL INFORMATION 2. Distribution of Unitholders The distribution of unitholders by si(cid:156)e of holding was(cid:483) Category No. of Holders 1(cid:486)1(cid:481)000 227 1(cid:481)001(cid:486)(cid:887)(cid:481)000 (cid:887)01 (cid:887)(cid:481)001(cid:486)10(cid:481)000 181 10(cid:481)001(cid:486)100(cid:481)000 234 100(cid:481)001 and over 4(cid:887) Total number of unitholders 1,188 The Trust has (cid:887)6 holders of less than a mar(cid:141)etable parcel(cid:484) The Trust has (cid:887)7(cid:481)828(cid:481)889 units on issue after 1(cid:481)341(cid:481)(cid:887)09 buy(cid:486)bac(cid:141) and issue of 12(cid:481)477(cid:481)068 new (cid:5)(cid:26)R units(cid:484) All units carry one vote per unit without restrictions(cid:484) All units are (cid:147)uoted on the Australian Securities (cid:8)(cid:154)change (ASX(cid:483) (cid:5)(cid:26)R)(cid:484) 3. Substantial Unitholders The Trust’s substantial unitholders are set out below(cid:483) Investor Units (No.) Units (%) Pelorus Private (cid:8)(cid:147)uity Limited 9(cid:481)921(cid:481)999 17(cid:484)16 (cid:5)lac(cid:141)(cid:26)all Limited 9(cid:481)413(cid:481)03(cid:887) 16(cid:484)28 Seph Glew (cid:887)(cid:481)903(cid:481)43(cid:887) 10(cid:484)21 Sandhurst Trustees Ltd (cid:948)AI(cid:16)S PSF A(cid:512)C(cid:949) (cid:887)(cid:481)847(cid:481)669 10(cid:484)11 Australia Opportunity Fund 1 4(cid:481)320(cid:481)000 7(cid:484)47 Archibald Geoffrey Loudon 4(cid:481)267(cid:481)270 7(cid:484)38 Paul Tresidder 3(cid:481)991(cid:481)4(cid:887)(cid:887) 6(cid:484)90 BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201636TRUST DETAILS The Responsible (cid:8)ntity’s details are as follows(cid:483) Registered office and principal place of business (cid:5)lac(cid:141)(cid:26)all Fund Services Limited Level 1(cid:481) (cid:887)0 (cid:28)eo Street Neutral (cid:5)ay NS(cid:26) 2089 Telephone (cid:938)612 9033 8611 Fa(cid:154) (cid:938)612 9033 8600 (cid:26)ebsite www(cid:484)blac(cid:141)wall(cid:484)com(cid:484)au Registry Computershare Investor Services Pty Limited GPO (cid:5)o(cid:154) 297(cid:887) (cid:16)elbourne (cid:25)IC 3001 www(cid:484)computershare(cid:484)com(cid:484)au Telephone(cid:483) (cid:938)613 941(cid:887) 4329 INDEPENDENT AUDITOR’S REPORT TO THE (cid:48)E(cid:48)(cid:37)ERS OF (cid:37)LAC(cid:46)(cid:58)ALL PROPERT(cid:60) 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 consolidated statement of financial position as at 30 June income, the 2016, the consolidated statement of profit or consolidated statement of changes in net assets attributable to unit holders and the consolidated statement of cash flows for the year then ended, notes comprising a summary of significant accounting policies and other explanatory information, and the directors’ dec(cid:142)aration of the Trust and the entities it controlled at 30 June 2016 year end. loss and other comprehensive 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 25, 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 disc(cid:142)osures in the financia(cid:142) report(cid:484) (cid:23)he procedures se(cid:142)ected depend on the auditor’s (cid:140)ud(cid:137)ement(cid:481) 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 financia(cid:142) report that (cid:137)ives a true and fair vie(cid:153) in order to desi(cid:137)n audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Trust’s interna(cid:142) contro(cid:142)(cid:484) (cid:4)n audit a(cid:142)so inc(cid:142)udes eva(cid:142)uatin(cid:137) 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(cid:481) (cid:153)ou(cid:142)d (cid:132)e in the same terms if (cid:137)iven to the directors as at the time of this auditor’s report(cid:484) INDEPENDENT AUDITOR’S REPORT TO THE INVESTORS OF BLACKWALL PROPERTY TRUST AND CONTROLLED ENTITIES We have given the directors of the (cid:21)esponsi(cid:132)(cid:142)e (cid:8)ntit(cid:155) an (cid:4)uditor’s (cid:12)ndependence (cid:7)eclaration, a copy which is included in the financial report. 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 (cid:23)rust’s financial position as at 30 June 2016 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 25. Dated at Sydney the 24th day of August 2016. ESV Accounting and Business Advisors Tim Valtwies Partner BLACKWALLPROPERRTYTUST39BlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 2016 Notes to the Financial Statements 1(cid:484)Segment Information Page 11 CONTENTS 1(cid:484) Segment Information Page 11 2(cid:484) Revenue Page 11 3(cid:484) (cid:8)(cid:154)penses Page 11 4(cid:484) Current Assets (cid:486) Cash and cash e(cid:147)uivalents Page 12 (cid:887)(cid:484) Current Assets (cid:486) Trade and other receivables Page 12 6(cid:484) Current Assets (cid:486) Other assets Page 12 7(cid:484) Current Assets – (cid:11)eld for sale properties Page 12 8(cid:484) Non(cid:486)current Assets (cid:486) Investment properties Page 13 9(cid:484) Non(cid:486)current Assets – Property (cid:140)oint ventures Page 13 10(cid:484) Current Liabilities (cid:486) Trade and other payables Page 14 11(cid:484) Current Liabilities (cid:486) Other liabilities Page 14 12(cid:484) Current and Non(cid:486)current Liabilities (cid:486) (cid:5)orrowings Page 14 13(cid:484) Current and Non(cid:486)current Liabilities – Interest rate hedges Page 1(cid:887) 14(cid:484) Distributions Page 1(cid:887) 1(cid:887)(cid:484) (cid:8)arnings Per Unit Page 16 16(cid:484) Auditor’s Remuneration Page 16 17(cid:484) Commitments and Contingencies Page 16 18(cid:484) Reconciliation of Operating Cash Flows Page 16 19(cid:484) Subse(cid:147)uent (cid:8)vents Page 17 20(cid:484) Controlled (cid:8)ntities Page 17 21(cid:484) Related Party Transactions Page 17 22(cid:484) Parent (cid:8)ntity Disclosures Page 18 23(cid:484) Financial Ris(cid:141) (cid:16)anagement Page 19 24(cid:484) Critical Accounting (cid:8)stimates and (cid:13)udgments Page 21 2(cid:887)(cid:484) Statement of Significant Accounting Policies Page 22 BLACKWALLPROPERRTYTUSTBlackWall Property Trust - Consolidated Annual Financial Report For The Year Ended 30 June 201640GLOSSARY (cid:5)(cid:26)R (cid:512) Trust (cid:5)lac(cid:141)(cid:26)all Property Trust (cid:5)lac(cid:141)(cid:26)all (cid:5)lac(cid:141)(cid:26)all Limited (formerly (cid:141)nown as (cid:5)lac(cid:141)(cid:26)all Property Funds Limited) and(cid:481) where applicable(cid:481) its subsidiaries (including (cid:5)lac(cid:141)(cid:26)all Fund Services Limited) (cid:5)OF (cid:5)lac(cid:141)(cid:26)all Opportunities Fund (cid:5)T(cid:11)T (cid:5)lac(cid:141)(cid:26)all Telstra (cid:11)ouse Trust Consolidated annual financial report Financial statements Custodian The Trust Company Limited (cid:8)PU (cid:8)arnings per unit F(cid:25)TPL Fair value through profit and loss GST Goods and services ta(cid:154) IFRS International Financial Reporting Standards (cid:14)(cid:16)P (cid:14)ey management personnel Outside e(cid:147)uity interests Non(cid:486)controlling interests p(cid:484)a(cid:484) Per annum P(cid:5)T Pyrmont (cid:5)ridge Trust Property (cid:140)oint ventures Financial assets at F(cid:25)TPL Pub Group Pelathon Pub Group Responsible (cid:8)ntity (cid:5)lac(cid:141)(cid:26)all Fund Services Limited ROC Returns of Capital (cid:26)OTSO (cid:11)ouse Formerly (cid:141)nown as Telstra (cid:11)ouse GLOSSARY Consolidated Annual Financial ReportYear Ended 30 June 2016Level 1, 50 Yeo Street Neutral Bay, NSW 2089Responsible Entity: BlackWall Fund Services LimitedABN 39 079 608 825www(cid:484)blac(cid:141)wall(cid:484)com(cid:484)au

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