HALF YEARLY REPORT - Clarence Property Group · Jim is a licensed real estate agent and chartered accountant with wide ranging experience in the property, ... In November 2017, the

Westlawn Property Trust

ARSN 095 611 804

HALF YEARLY REPORT

31 December 2017

Clarence Property Corporation Limited

ACN 094 710 942, AFSL 230212

As Responsible Entity for

WESTLAWN PROPERTY TRUST

FINANCIAL REPORT

For the half year ended 31 December 2017

CONTENTS PAGE

Directors' report 2

Auditors' Independence Declaration 8

statement of profit or loss and other comprehensive income 9

statement of financial position 10

statement of changes in equity 11

statement of cash flows 12

Notes to the financial statements 13

Directors' declaration 35

Auditors' Report 36

DIRECTORY

Responsible Entity and Manager Auditor for the Trust

Clarence Property Corporation Limited WCA Audit & Assurance Services Pty Ltd

ACN 094 710 942 62 Woodlark Street

AFSL 230212 Lismore NSW 2480

Registered Office Solicitors

2/75 Tamar Street McCullough Robertson

Ballina NSW 2478 Level 11, Central Plaza Two

Phone: 02 6686 4122 66 Eagle Street

Fax : 02 6686 5122 Brisbane QLD 4000

Email: [email protected]

Auditor for the Manager

Registry WCA Audit & Assurance Services Pty Ltd

PO Box 1478 62 Woodlark Street

Ballina NSW 2478 Lismore NSW 2480

Page 1


DIRECTORS' REPORT


1 Directors and officers

i) Directors

Jim Dougherty

Chairman of Directors (Non- Executive)

Age 64 years

Peter Fahey

Managing Director (Executive)

Age 54 years

Geoff Shepherd

Director (Non-Executive)

Age 69 years

Tony Tippett

Director (Non-Executive)

Age 54 years

Tony has been actively involved in the property industry for the last 27 years, from project conception, feasibility,

financing, marketing, to sales and delivery for a range of residential, commercial and retail projects up to $350

million. He is a director of the Robina Group of Companies, an associate member of the Institute of Chartered

Accountants in Australia, a fellow of the Governance Institute of Australia, a member of the Australian Institute of

Company Directors, a licenced Real Estate Agent and holds a Bachelor of Economics from the University of New

England.

The directors of Clarence Property Corporation Ltd ("Responsible Entity"), the responsible entity of Westlawn Property

Trust (the "Trust"), submit these statements in accordance with a resolution of the directors with respect to the results of

the Trust for the half year ended 31 December 2017 (the reporting period) and the state of the Trust's affairs at that date.

The following persons were directors of the Responsible Entity during the reporting period and up to the date of this

report, unless otherwise stated:

Jim is a licensed real estate agent and chartered accountant with wide ranging experience in the property,

accounting and finance industries. He holds a Bachelor of Economics and a Diploma of Financial Management,

both from the University of New England, and also holds a Certificate IV in Financial Sevices (Finance/Mortgage

Broking). He was awarded the Order of Australia Medal in 2014 for services to the community and surf lifesaving.

He has been an executive director of Westlawn Finance Limited since 1994 and has been chairman of directors of

Clarence Property Corporation Limited since 2000.

Peter has been involved in the property industry for more than 30 years, commencing as a valuer with the State

Bank of NSW, working across various locations in NSW assessing security properties for the banks credit.

Following this were roles in commercial property sales, leasing and management at LJ Hooker Grafton. He became

involved in funds management in 1994 as the founder of Westlawn Property Trust, and subsequently numerous

other syndicates. He has been managing director of Clarence Property Corporation Limited since 2000.

Geoff has 34 years experience in public accounting and auditing, and is a former partner of Grafton based firm

Hudson Shepherd Pty Ltd. He is a Fellow of the Institute of Chartered Accountants in Australia. Geoff has over 20

years experience in Funds Management and Property Investment, and has been an adviser to or director of

Clarence Property Corporation Limited throughout that time. He is Chairman of Clarence Village Limited, an aged

care accommodation and service provider in the Clarence Valley.

Page 2


DIRECTORS' REPORT


1 Directors and officers (continued)

ii) Company Secretary

Paul James Rippon

Age 60 years

iii) Directors meetings

Six directors meetings were held in the period 1 July 2017 to 31 December 2017 and attendances were:

James William Dougherty 6

Peter Nicholas Fahey 6

Geoffrey Rex Shepherd 6

Anthony John Tippett 4

2 Principal activity

3 Review of operations

The following is a summary of key outcomes during the reporting period:

i) Operating results

ii) Property acquisitions

The comprehensive income of the Trust after income tax for the reporting period amounted to $3,399,640

(December 2016: $6,469,230).

In August 2017 the Trust settled the purchase of a logistics and distribution complex at 48 Bell-Are Avenue,

Northgate in Brisbane for $8,475,000. The purchase was funded from existing undrawn finance facilities.

In September 2017 the Trust settled the purchase of a commercial office building at 201 Leichhardt St, Spring Hill in

Brisbane for $14,272,562. The purchase was funded from a new finance facility with ING using the Murarrie, Varsity

Lakes and Northgate properties as security.

In December 2017 the Trust acquired a commercial office building at 9 Hercules St, Hamilton in Brisbane for

$11,983,594. The purchase was funded from existing undrawn finance facilities and a new finance facility with ING

using the Spring Hill property as security.

Paul has been involved in the property and funds management industry for the past 10 years, and prior to that had a

31 year career in public accounting. He holds a Bachelor of Business in Accounting & Business Law from the New

South Wales Institute of Technology. Paul is a member of the Institute of Chartered Accountants in Australia.

The principal activity of the Trust during the reporting period was to offer individual investors the opportunity to

combine their funds with the funds of other investors to collectively, within the Trust, invest in income producing

commercial, retail and industrial property. There was no significant change in the nature of this activity during this

period, other than as stated in these statements.

Page 3


DIRECTORS' REPORT


3 Review of operations (continued)

iii) Property sales

iv) Investment property revaluations

No properties were independently valued during the period.

v) Property development

During the period the Trust continued the development of "Epiq" Lennox.

i)

ii)

iii)

iv)

v)

vi)

vi) Other investments

vii) Capital raising

In November 2017, the Trust entered into a contract for the sale of its residential property located at 12 Casurina

Close, Yamba for $378,000. The sale settled on 20 December 2017, with the net proceeds being used to reduce

borrowings.

Pursuant to the Distribution Reinvestment Plan, 1,202,517 units were issued during the period (1,019,326 at $0.72

per unit and 183,191 at $0.79 per unit).

The Trust continues to hold 1,425,000 units in the Robina Quays Unit Trust.

The capital raising pursuant to the PDS No.5 dated 9 December 2015 was closed on 11 August 2017.

Approximately $33.8 million was raised.

On 1 December 2017, the Trust issued a PDS No. 6. At the date of this report $2,415,684 had been raised.

Stage 1B gained practical completion during December 2017, with the Sub-Division Certificate obtained from

Council in February 2018;

Stage 4 development approval was received in September 2017 with construction certificate approval

received in January 2018. The 6 months civil works program is expected to commence in April 2018. 15 lots

have been released to the market for sale with 6 lots so far exchanged under unconditional contracts;

Stage 2 civil works are nearing completion, with settlement of the 82 unconditionally exchanged contracts

expected by mid-2018;

Stage 3 construction certificate was obtained in September 2017, and the 14 month civil works program has

commenced;

The shopping centre development application was submitted to Council in August 2017. A construction

certificate for the bulk earth works was obtained in November 2017, with that 6 months civil works program

well under way.

Stage 5 development application was submitted to Council in October 2017; and

Page 4


DIRECTORS' REPORT


3 Review of operations (continued)

4 Significant changes in the state of affairs of the Trust

5 Matters arising since the period end

i) the operations of the Trust;

ii) the results of those operations; or

iii) the state of affairs of the Trust in subsequent financial years.

6 Likely developments in the operations of the Trust

7 Environmental issues

8 Distributions to fund members

9 Options on units

There are no options over any units in the Trust.

The Trust will continue with a similar level of activity for the year ending 30 June 2018 as in the past. The Manager

will continue to ensure the long term growth of the Trust by identifying profitable long term property opportunities in

Australia, and will continue to carefully manage existing properties.

Property acquisition

A contract for the purchase of a large format retail property at 1-17 Compton Road, Underwood in Brisbane (known

as "The Zone, Underwood") was signed in December 2017 for $31,250,000. Settlement is due to take place during

April 2018. The purchase is expected to be funded by a new finance facility secured by the property itself and the

currently unencumbered Hamilton property, together with proceeds from the current capital raising.

The Trust's operations are not subject to any particular or significant environmental regulation under a law of the

Commonwealth, State or Territory. The Trust is, however, a party to a Conservation Zone Management Plan relating

to its "Epiq" Lennox development

In the opinion of the Directors there were no significant changes in the state of affairs of the Trust during the period

During the half year ended 31 December 2017 fund members received or were entitled to receive cash distributions

of $5,326,431 (2016: $4,158,354). The average annualised rate of normal cash distributions for the financial period

was 6.5 cents per unit (2016: 6.5 cents per unit).

No matter or circumstance, other than as mentioned above, has arisen since the end of the reporting period that has

significantly affected or may significantly affect:

Page 5


DIRECTORS' REPORT


10 Responsible Entity fees

Further details of fees paid to the manager are disclosed in Note 25 on Page 30 of the financial statements.

11 Indemnifying officers or auditor

12 Interests in the Trust

The details of the Trust for the half year ended 31 December 2017 were:

i) Units as at 1 July 2017 153,478,307

Units issued during the period 13,539,137

Units redeemed during the period -

Units as at 31 December 2017 167,017,444

ii)

iii) The value of the Trust's assets at 31 December 2017 was $261,469,968.

Assets were valued at cost or fair value.

13 Proceedings on behalf of the Trust

The Responsible Entity has been paid or is due fees of $1,739,992 for the half year ended 31 December 2017

(December 2016: $1,297,453) in accordance with the Constitution of the Trust.

No person has applied for leave of Court to bring proceedings on behalf of the Trust or intervene in any proceedings

to which the Trust is a party for the purpose of taking responsibility on behalf of the Trust for all or any part of those

proceedings.

During the reporting period the Responsible Entity acquired 25,089 units through the Distribution

Reinvestment Plan. The Responsible Entity holds 583,088 units as at 31 December 2017.

The Responsible Entity was not a party to any such proceedings during the period.

During or since the end of the reporting period the Responsible Entity has not given an indemnity or entered an

agreement to indemnify any officer or auditor in respect of the operations of the Trust.

The Responsible Entity pays premiums to insure each of the directors against liabilities for costs and expenses

incurred by them in defending any legal proceedings arising out of their conduct while acting in the capacity of

director of the Responsible Entity, other than conduct involving a wilful breach of duty in relation to the Responsible

Entity.

Page 6


STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME


31 December 31 December

Note 2017 2016

$ $

Revenue and other income

Interest revenue 10,719 29,535

Property revenue 9,113,325 8,311,259

Sale of inventories - 11,434,025

Profit on disposal of assets 44,695 -

Other income 2 7,676 -

Fair value gain from investment property 12 2,500,374 1,709,026

Fair value gain on derivative financial instruments 489,584 1,643,102

Total revenue 12,166,373 23,126,947

Expenses

Financing costs 3 (1,983,142) (2,354,356)

Property expenses and outgoings (3,399,137) (2,609,825)

Bad and doubtful debts expense 2,196 (4,322)

Inventory sales costs (287,800) (676,464)

Cost of inventories sold - (7,527,517)

Responsible entity fees 25 (669,150) (561,959)

Other expenses (989,650) (150,747)

Total expenses (7,326,683) (13,885,190)

Net profit before income tax expense 4,839,690 9,241,757

Income tax expense 5 (1,440,050) (2,772,527)

Profit after income tax expense attributable to unitholders 3,399,640 6,469,230

Other comprehensive income - -

Total comprehensive income attributable to unitholders 3,399,640 6,469,230

The above statement of profit or loss and other comprehensive income should be read in conjuction with the

accompanying notes.

Page 9


STATEMENT OF FINANCIAL POSITION

As at 31 December 2017

31 December 30 June

Note 2017 2017

$ $

ASSETS

Current assets

Cash and cash equivalents 6 3,061,319 8,040,203

Trade and other receivables 7 286,853 186,924

Inventory 9 36,758,076 29,763,586

Other assets 11 1,539,244 1,160,372

Total current assets 41,645,492 39,151,085

Non-current assets

Financial assets 8 1,425,000 1,425,000

Investment property 12 214,953,298 173,978,898

Deferred tax assets 10 3,376,218 4,035,137

Other assets 11 69,960 4,866

Total non-current assets 219,824,476 179,443,901

Total assets 261,469,968 218,594,986

LIABILITIES

Current liabilities

Trade and other payables 13 2,026,827 1,451,767

Income tax 14 101,743 -

Other liabilities 15 2,459,445 8,122,950

Financial liabilities 17 19,815,000 4,195,309

Total current liabilities 24,403,015 13,770,026

Non-current liabilities

Deferred tax liabilities 16 12,787,905 12,108,517

Other liabilities 15 - -

Financial liabilities 17 93,586,197 70,231,783

Derivative financial instruments 18 1,869,053 2,358,637

Total non-current liabilities 108,243,155 84,698,937

Total liabilities 132,646,170 98,468,963

Net assets 128,823,798 120,126,023

EQUITY

Unitholders' equity

Issued capital 154,871,858 144,247,292

Undistributed income (26,048,060) (24,121,269)

Total unitholders' equity 128,823,798 120,126,023

The above statement of financial position should be read in conjuction with the accompanying notes.

Page 10


STATEMENT OF CHANGES IN EQUITY


No. of units

on issue Issued capital

Undistributed

income Total

$ $ $

Balance at 1 July 2017 153,478,307 144,247,292 (24,121,269) 120,126,023

- - 3,399,640 3,399,640

153,478,307 144,247,292 (20,721,629) 123,525,663

Distributions paid/payable - - (5,326,431) (5,326,431)

Units issued 13,539,137 10,624,566 - 10,624,566

Units redeemed - - - -

Balance at 31 December 2017 167,017,444 154,871,858 (26,048,060) 128,823,798

No. of units

on issue Issued capital

Undistributed

income Total

$ $ $

Balance at 1 July 2016 125,134,632 121,974,060 (32,806,084) 89,167,976

- - 6,469,230 6,469,230

125,134,632 121,974,060 (26,336,854) 95,637,206

Distributions paid/payable - - (4,158,354) (4,158,354)

Units issued 10,132,553 7,811,815 - 7,811,815

Units redeemed - - - -

Balance at 31 December 2016 135,267,185 129,785,875 (30,495,208) 99,290,667

The above statement of changes in equity should be read in conjuction with the accompanying notes.

Total comprehensive profit attributable to

unitholders

Transactions with unitholders

recorded directly in equity:

Total comprehensive profit attributable to

unitholders

Transactions with unitholders

recorded directly in equity:

Page 11


STATEMENT OF CASH FLOWS



Note 2017 2016

$ $

Cash flows from operating activities

Receipts from operations (including GST) 4,388,417 10,787,450

Interest received 10,719 29,535

Trust distributions received 7,676 -

Proceeds on sale of inventories - 11,434,025

Payment to suppliers (6,366,906) (4,985,132)

Payment for inventory (6,994,490) (3,971,822)

Goods & services tax received (paid) 115,490 (773,764)

Borrowing costs paid (2,159,388) (2,269,016)

Income taxes received (paid) 174,665 -

Net cash provided by/(used in) operating activities 23 (10,823,817) 10,251,276

Cash flows from investing activities

Proceeds from sale of non-current assets 310,560 -

Payment for property (38,737,867) (12,350,732)

Net cash used in investing activities (38,427,307) (12,350,732)

Cash flows from financing activities

Proceeds from issue of units 10,624,566 7,811,816

Proceeds from borrowings 52,596,031 16,350,412

Repayment of borrowings (13,621,926) (17,469,299)

Distribution paid (5,326,431) (4,158,355)

Net cash provided by financing activities 44,272,240 2,534,574

Net increase (decrease) in cash held (4,978,884) 435,118

Cash at beginning of financial year 8,040,203 1,215,571

Cash at the end of the financial period 6, 23 3,061,319 1,650,689

The above statement of cash flows should be read in conjuction with the accompanying notes.

Page 12


NOTES TO THE FINANCIAL STATEMENTS


1 Summary of significant accounting policies

Basis of preparation

Statement of compliance

a) Investment property

Land & Buildings (including integral plant and equipment) which comprise the investment property are not

depreciated. The carrying amount of investment properties includes components relating to lease incentives,

leasing costs and receivables on rental income that have been recorded on a straight line basis

The financial statements cover Westlawn Property Trust (the "Trust") as an individual entity. The Trust is a registered

managed investment scheme in accordance with the Corporations Act 2001 and is domiciled in Australia.

The reported fair value of investment property reflects market conditions at the end of the reporting period. While

this represents the best estimate as at the reporting date, actual sale prices achieved may be higher or lower than

the most recent valuation. This is particularly relevant in periods of market illiquidity or uncertainty.

The financial statements are general purpose financial statements prepared in accordance with Australian Accounting

Standards (including Australian Accounting Interpretations) of the Australian Accounting Standards Board.

Australian Accounting Standards set out accounting policies the AASB has concluded would result in financial

statements containing relevant and reliable information about transactions, events and conditions. Compliance with

Australian Accounting Standards ensures the financial statements and notes also comply with International Financial

Reporting Standards. Material accounting policies adopted in the preparation of the financial statements are

presented below and have been consistently applied unless otherwise stated.

The financial statements have been prepared on an accruals basis and are based on historical costs modified, where

applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities.

The financial statements are presented in Australian dollars which is the Trust's functional and presentational

currency.

Investment property comprises investment interests in land and buildings (including integral plant and equipment)

held for the purpose of letting to produce rental income or for capital appreciation or both. Initially, investment

property is measured at cost including transaction costs. Subsequent to initial recognition, investment property is

then stated at fair value at each balance date with any gain or loss arising from a change in fair value of

investment property recognised in the statement of profit or loss and other comprehensive income in the period in

which it arises. Fair values are based on market values, being the estimated amount for which a property could be

exchanged on the date of valuation between a willing buyer and a willing seller in an arm's length transaction after

proper marketing wherein the parties have each acted knowledgeably, prudently and without compulsion.

External independent valuations are commissioned at least once every three years or when the directors are of

the opinion there has been a material movement in the market. Internal valuations are also undertaken by suitably

experienced and qualified appraisers for those properties not externally valued at each balance date.

A number of new standards, amendments to standards and interpretations are available for early adoption but have

not been applied in preparing these financial statements. The potential impact of the new standards, amendments to

standards and interpretations has been considered and they are not expected to have a significant effect on the

financial statements.

Page 13




1 Summary of significant accounting policies (continued)

a) Investment property (continued)

b) Operating leases - investment property

c) Inventories

Where a property or asset is acquired for the purpose of undergoing redevelopment and subsequent resale or is

in the process of production for such sale, it is treated as inventories. Inventories is stated at the lower of cost and

net realisable value. Cost includes acquisition, development and holding costs such as borrowing costs, rates and

taxes. Holding costs incurred after the completion of the development are expensed. Net realisable value is the

estimated selling price in the ordinary course of business, less estimated costs of completion and selling

expenses.

Transfers are made from inventories to investment property when, and only when, there is a change in use

evidenced by commencement of an operating lease to another party. For a transfer from inventories to investment

property, any difference between the fair value of the property at that date and its previous carrying amount is

recognised in the statement of profit or loss and other comprehensive income in the period in which the transfer

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are

charged as expenses on a straight-line basis over the lease term.

Lease incentives under operating leases may take the form of cash, rent-free periods, contributions to certain

lessee costs, relocation costs and lessee or lessor owned fit-outs and improvements. These incentives are

capitalised as part of the carrying value of the investment property and amortised on a straight-line basis over the

term of the lease as a reduction of rental income. The carrying amount of the lease incentives is reflected in the

fair value of investment property.

Investment property is derecognised when disposed of or when the investment property is permanently withdrawn

from use and no future benefit is expected from its disposal. Any gain or loss on derecognition of an investment

property is recognised in the statement of profit or loss and other comprehensive income in the period of

Investment property also includes property under construction for future use as investment property. These are

carried at fair value, or at cost where fair value cannot be reliably determined and the construction is incomplete.

The minimum rental revenue of operating leases with fixed rental increases, where the lessor effectively retains

substantially all the risks and benefits of ownership of the leased item, is recognised on a straight-line basis.

Revenue from other leases is recognised in accordance with the lease agreement, which is considered to best

represent the pattern of service rendered through the provision of the leased asset.

Transfers are made from investment property to inventories when, and only when, there is a change in use as

evidenced by commencement of development with a view to sale. When an investment property is disposed of

without development, it continues to be treated as an investment property until it is derecognised and does not

treat it as inventory.

Page 14





d) Financial assets and liabilities

Initial recognition and measurement

Classification and subsequent measurement

i) Financial assets at fair value through profit or loss

ii) Loans and receivables

iii) Financial liabilities

Financial instruments are initially measured at fair value plus transaction costs except where the instrument is

classified ‘at fair value through profit or loss’ in which case transaction costs are expensed to the statement of

profit or loss and other comprehensive income immediately.

The effective interest rate method is used to allocate interest income or interest expense over the relevant period

and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees,

transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably

predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or

financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying value

with a consequential recognition of an income or expense in the statement of profit or loss and other

Non-derivative financial liabilities (excluding financial guarantees) are subsequently measured at amortised

cost.

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not

quoted in an active market and are subsequently measured at amortised cost. Loans and receivables are

included in current assets, except those which are not expected to mature within 12 months after the end of

the reporting period, which are classified as non-current assets.

Financial assets are classified at 'fair value through profit or loss' when they are either held for trading for the

purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as

such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets

is managed by key management personnel on a fair value basis in accordance with a documented risk

management or investment strategy. Such assets are subsequently measured at fair value with changes in

carrying value being included in the statement of profit or loss and other comprehensive income.

Financial instruments are subsequently measured at either fair value, amortised cost using the effective interest

rate method or cost. Fair value represents the amount for which an asset could be exchanged or a liability settled,

between knowledgeable, willing parties. Where available, quoted prices in an active market are used to determine

fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as:

- the amount at which the financial asset or financial liability is measured at initial recognition;

- less principal repayments;

- plus or minus the cumulative amortisation of the difference, if any, between the amount initially

recognised and the maturity amount calculated using the effective interest rate method; and

- less any reduction for impairment.

Financial assets and financial liabilities are recognised when the Trust becomes a party to the contractual

provisions to the instrument. For financial assets, this is equivalent to the date the Trust commits itself to either

purchase or sell the asset (i.e. trade date accounting is adopted).

Page 15





d) Financial assets and liabilities (continued)

Fair value

Impairment

Derecognition

e) Derivative financial instruments

f) Impairment of assets

The Trust is exposed to changes in interest rates and enters into interest rate swap agreements to convert certain

variable interest rate borrowings to fixed interest rates.

The swaps are entered into with the objective of hedging the risk of adverse interest rate fluctuations. While the

Manager has determined that these arrangements are economically effective, they have not satisfied the

documentation, designation and effectiveness tests required by Australian Accounting Standards and therefore do

not qualify for hedge accounting.

Derivative financial instruments are initially recognised at fair value on the date on which a derivative contract is

entered into and are subsequently remeasured to fair value at each reporting date. Gains or losses arising from

changes in fair value are recognised immediately in the Statement of Comprehensive Income. Fair value at

reporting date is calculated to be the present value of the estimated future cash flows of these instruments. The

two key variables used in the valuation are the forward price curve and discount rates. Each instrument is

discounted at the market interest rate appropriate to the instrument.

Derivative financial instruments are classified as assets when their fair value is positive and as liabilities when their

fair value is negative.

Fair value is determined based on current bid price for all quoted investments. Valuation techniques are applied to

determine the fair value for all unlisted securities including recent arm’s length transactions, reference to similar

instruments or option pricing models.

At the end of each reporting period, the Trust assesses whether there is objective evidence that a financial

instrument has been impaired. Impairment losses are recognised by transferring all valuation decrements

recognised in equity relating to a particular investment to the statement of profit or loss and other comprehensive

Financial assets are derecognised where the contractual right to receipt of cash flows expires or the asset is

transferred to another party whereby the Trust no longer has any significant continuing involvement in the risks

and benefits associated with the asset. Financial liabilities are derecognised where the related obligations are

either discharged, cancelled or expire. The difference between the carrying value of the financial liability

extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-

cash assets or liabilities assumed, is recognised in the statement of profit or loss and other comprehensive

At the end of each reporting period, the Trust assesses whether there is any indication an asset may be impaired.

The assessment includes considering external and internal sources of information. If such an indication exists, an

impairment test is carried out on the asset by comparing the recoverable amount of the asset (being the higher of

the asset’s fair value less costs to sell or value in use) to the asset’s carrying value. Any excess of the asset’s

carrying value over its recoverable amount is expensed to the statement of profit or loss and other comprehensive

Where it is not possible to estimate the recoverable amount of an individual asset, the Trust estimates the

recoverable amount of the cash-generating unit to which the asset belongs.

Page 16





g) Provisions

h) Cash and cash equivalents

i) Revenue and other income

j) Trade and other payables

k) Borrowing costs

Interest revenue is recognised using the effective interest rate method, which for floating rate financial assets is

the rate inherent in the instrument. Dividend & trust distribution revenue is recognised when the right to receive a

dividend or trust distribution has been established.

Investment property revenue is recognised on a straight-line basis over the period of the lease term so as to

reflect a constant periodic rate of return on the net investment (refer to note 1b).

Trade and other payables represent the liability outstanding at the end of the reporting period for goods and

services received by the Trust during the reporting period, which remain unpaid. The balance is recognised as a

current liability with the amounts normally paid within 30 days of recognition of the liability.

Cash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid

investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown

within short-term borrowings in current liabilities on the statement of financial position.

Provisions are recognised when the Trust has a legal or constructive obligation, as a result of past events, for

which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the

reporting period.

Borrowing costs, except loan establishment costs, are recognised in the statement of profit or loss and other

comprehensive income in the period in which they are incurred.

Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a

substantial period of time to prepare for their intended use or sale are added to the cost of those assets, until such

time as the assets are substantially ready for their intended use or sale.

Loan establishment costs are capitalised and amortised over the term of the facility to which they relate, or five

years, whichever is shorter.

Page 17





l) Taxation

i) Income Tax

ii) Goods and services tax (GST)

The income tax expense or benefit for the period is the tax payable on that period's taxable income based on the

applicable income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities

attributable to temporary differences and unused tax losses and the adjustment recognised for prior periods,

where applicable.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply

when the assets are recovered or liabilities are settled, based on those tax rates that are enacted or substantively

enacted, except for:

- When the deferred income tax asset or liability arises from the initial recognition of goodwill or an asset or

liability in a transaction that is not a business combination and that, at the time of the transaction, affects

neither the accounting nor taxable profits; or

- When the taxable temporary difference is associated with investments in subsidiaries, associates or

interests in joint ventures, and the timing of the reversal can be controlled and it is probable that the

temporary difference will not reverse in the foreseeable future.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is

probable that future taxable amounts will be available to utilise those temporary differences and losses.

The carrying amount of recognised and unrecognised deferred tax assets are reviewed each reporting date.

Deferred tax assets recognised are reduced to the extent that it is no longer probable that future taxable profits will

be available for the carrying amount to be recovered. Previously unrecognised deferred tax assets are recognised

to the extent that it is probable that there are future taxable profits available to recover the asset.

Deferred tax assets and liabilities are offset only where there is a legally enforceable right to offset current tax

assets against current tax liabilities and deferred tax assets against deferred tax liabilities, and they relate to the

same taxable authority on either the same taxable entity or different taxable entities which intend to settle

simultaneously.

Revenues, expenses and assets are recognised net of the amount of GST, except where the GST incurred on a

purchase of goods and services is not recoverable from the Tax Office. In these circumstances, the GST is

recognised as part of the cost of acquisition of the asset or as part of the expense.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from

or payable to the Tax Office is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the statement of cash flows on a gross basis and the GST component of cash flows

arising from investing and financing activities, which is recoverable from or payable to the Tax Office, is classified

as operating cash flows.

Under current Australian income tax legislation, the Trust is liable to income tax as it is classified as a Public

Trading Trust.

Page 18





m) Critical accounting estimates and judgements

Key Estimates

Key judgements

Note 12 - Investment property.

Information about significant areas of estimation, uncertainty and critical judgements in applying accounting

policies that have the most significant effect on the amount recognised in the financial statements is described in

the following note:

The Trust assesses impairment at the end of each reporting period by evaluation of conditions and events specific

to the Trust that may be indicative of impairment triggers. Recoverable amounts of relevant assets are reassessed

using value-in-use calculations, which incorporate various key assumptions.

The Responsible Entity evaluates estimates and judgements incorporated into the financial statements based on

historical knowledge and best available current information. Estimates assume a reasonable expectation of future

events and are based on current trends and economic data, obtained both externally and within the Trust.

Page 19





2017 2016

2 Revenue and other income $ $

Other income comprises:

Trust distributions 7,676 -

7,676 -

3 Profit

Net profit before income tax expense has been determined after:

Financing costs

Interest expense 1,947,796 2,269,015

Borrowing costs 35,346 85,341

1,983,142 2,354,356

4 Auditors' remuneration

Detail of remuneration of auditor is set out below:

Auditing or reviewing the financial statements 33,380 21,330

33,380 21,330

5 Income tax expense

Income tax expense

Current tax 101,743 1,207,802

Adjustment recognised for prior periods (7,025) -

Deferred tax expense/(income) 1,345,332 1,564,725

1,440,050 2,772,527

Numerical reconciliation of income tax expense and tax at the statutory rate

Profit before income tax expense 4,839,690 9,241,757

Tax at the statutory tax rate of 30% 1,451,907 2,772,527

Tax effect amounts which are not deductible/(taxable) in calculating taxable income:

Capital gain on disposal of assets (4,916) -

Sundry items 84 -

1,447,075 2,772,527

Adjustment recognised for prior periods (7,025) -

Income tax expense 1,440,050 2,772,527

Page 20




31 December 30 June

2017 2017

6 Cash and cash equivalents $ $

Security deposits 3,700 3,700

Cash held in trust 1,755,050 191,808

Cash at bank 1,302,569 7,844,695

3,061,319 8,040,203

7 Trade and other receivables

Current

Trade and other debtors 95,944 128,026

Less provision for doubtful debts - (2,416)

GST receivable 190,909 61,314

Total trade and other receivables 286,853 186,924

Future minimum lease receivables

Within one year 16,210,776 12,795,431

Later than one year but not later than five years 36,239,320 26,792,954

Later than five years 11,701,260 12,011,998

64,151,356 51,600,383

The movement in provision for doubtful debts during the period was as follows:

Opening balance 2,416 14,498

Provision for doubtful receivables - 12,557

Receivables written off during the year - (21,139)

Reversals of amounts provided (2,416) (3,500)

Closing balance - 2,416

Future minimum lease payments receivable from non-cancellable

operating leases:

The Trust, as lessor, typically enters into operating leases with tenants for periods of 3 years to 10 years with option

periods. The lease agreements provide for either rental increases as specified in the agreement or CPI increases.

Page 21




31 December 30 June

2017 2017

8 Financial assets $ $

Non-current

Financial assets at fair value through profit or loss

Units in unlisted unit trusts 1,425,000 1,425,000

1,425,000 1,425,000

1,425,000 1,425,000

9 Inventory

Current

At cost

Land held for resale 859,014 850,000

Land under development 36,129,062 29,143,586

36,988,076 29,993,586

At net realisable value

Land held for resale (i) 629,014 620,000

Land under development (ii) 36,129,062 29,143,586

36,758,076 29,763,586

(ii) Stage 2 of "Epiq" Lennox was independently valued in March 2017 by Taylor Byrne Valuations at $6,150,000.

Since that date further development activity has been undertaken. The balance of the land was independently valued

in September 2017 by Taylor Byrne Valuations at $34,350,000. The combined valuations total $40,500,000.

(i) The land at 9 Treelands Drive, Yamba was independently valued in September 2015 by Opteon Property Group at

$620,000.

Page 22




31 December 30 June

2017 2017

10 Deferred tax assets $ $

Deferred tax assets comprises temporary differences attributable to:

Provision for doubtful debts - 725

Accrued expenses 8,964 14,955

Capital raising costs 69,216 68,366

Derivative financial instruments 560,716 707,591

Investment properties 2,737,322 3,243,500

Total deferred tax assets 3,376,218 4,035,137

11 Other assets

Current

Prepayments 649,921 390,070

Other assets 889,323 595,637

Prepaid income tax - 174,665

1,539,244 1,160,372

Non-current


69,960 4,866

Total other assets 1,609,204 1,165,238

Page 23




31 December 30 June

Amount Date Firm 2017 2017

12 Investment property $ $ $

Investment property (at fair value)

Commercial

100 Blundell Boulevard, Tweed Heads 8,700,000 Oct-15 CB Richard Ellis 8,700,000 8,700,000

29 Molesworth Street, Lismore 16,400,000 Apr-17 CB Richard Ellis 16,000,000 16,400,000

The Rocket, Robina (Note 1) 35,025,000 Jul-15 Jones Lang Lasalle 35,025,000 35,025,000

183 Varsity Parade, Varsity Lakes 11,800,000 Feb-17 CB Richard Ellis 11,800,000 11,800,000

201 Leichhardt Street, Spring Hill (Note 2) 14,300,000 Nov-17 Savills 14,300,000 -

9 Hercules Street, Hamilton (Note 3) 11,983,594 Nov-17 Jones Lang Lasalle 12,000,000 -

Retail

Yamba Fair 32,500,000 Jun-17 Jones Lang Lasalle 32,500,000 32,500,000

Yamba residential properties (Note 4) 635,000 May-15 Taylor Byrne 635,000 945,000

Byron Fair 9,500,000 Oct-15 CB Richard Ellis 11,500,000 9,500,000

Easy T Shopping Centre, Robina 30,000,000 Oct-15 CB Richard Ellis 34,000,000 30,000,000

Tamar Village Shopping Centre, Ballina 3,200,000 Aug-15 Taylor Byrne 3,200,000 3,200,000

Proposed Yamba Fuel Station (Note 5) 1,050,000 Jan-16 Opteon Property Group 1,268,298 1,258,898

Bell Central Shopping Centre, Mudgeeraba 13,500,000 Aug-15 M3 Property 14,400,000 13,500,000

Logistics/Distribution

45 Alexandra Place, Murarrie 11,150,000 Mar-17 Jones Lang Lasalle 11,150,000 11,150,000

48 Bell-Are Avenue, Northgate (Note 6) 8,475,000 Jul-17 Jones Lang Lasalle 8,475,000 -

208,218,594 214,953,298 173,978,898

Valuation basis

Movement in investment properties

Opening balance 173,978,898 159,000,678

Additions at cost

Acquisition price 34,731,156 22,099,800

Transaction costs 3,171,376 1,843,275

Improvements 705,667 1,078,532

Disposals (312,500) (16,154,219)

Net fair value adjustment 2,500,374 5,872,302

Lease incentives and leasing fees deferred 129,668 474,243

Amortisation of lease incentives and leasing fees (94,616) (178,588)

Movement in straight-lining rental income asset 143,275 (57,125)

Closing balance 214,953,298 173,978,898

Note 2 - The property was acquired in September 2017.

Independent Valuation

The fair value model is applied to all investment property. External independent valuations are commissioned at least once every three years or

when the directors are of the opinion there has been a material movement (particularly downwards) in the market. Internal valuations are

undertaken by suitably experienced and qualified appraisers for those properties not externally valued at each balance date.

Note 5 - The amounts represent acquisition and minor development planning costs relating to the purchase of two residential properties in

February 2016 on which the Trust proposes to build a fuel station.

Note 3 - The property was acquired in December 2017.

Note 4 - These properties adjoin the Trust's Yamba Fair property and are held for future development of the centre. One property was disposed in

December 2017.

Note 1 - The amounts quoted represent the Trust's 50% ownership in the property.

Note 6 - The property was acquired in August 2017.

Page 24




31 December 30 June

2017 2017

13 Trade and other payables $ $

Current

Other creditors 2,026,827 1,451,767

2,026,827 1,451,767

Other creditors 395,459 -

395,459 -

14 Income tax

Current

Provision for income tax 101,743 -

101,743 -

15 Other liabilities

Current

Rent received in advance 1,339,839 782,682

Units to be issued 506,621 6,888,235

Provision for rental guarantees - 46,635

Other liabilities 612,985 405,398

2,459,445 8,122,950

Non-Current

Provision for rental guarantees - -

- -

2,459,445 8,122,950

The movement in provision for rental guarantees during the period was as follows:

Opening balance 46,635 143,506

Increase in provision for rental guarantees - -

Rental guarantees paid during the period (46,635) (96,871)

Reversals of amounts provided - -

Closing balance - 46,635

Included in the above are amounts due to related parties:

As part of the sale of the Trust's Rocks Shopping Fair property in February 2016, the Trust provided a two year rental

guarantee to the purchaser over the three vacant shops within the property.

Page 25




31 December 30 June

2017 2017

16 Deferred tax liabilities $ $

Deferred tax liabilities comprises temporary differences attributable to:


Lease receivable debtor 380,357 337,375

Inventory 53,664 53,664

Investment property 12,145,303 11,519,413

Total deferred tax liabilities 12,787,905 12,108,517

17 Financial liabilities

Current

Loans - financial institutions 19,815,000 4,195,309

19,815,000 4,195,309

Non-current

Loans - financial institutions 93,586,197 70,231,783

93,586,197 70,231,783

113,401,197 74,427,092

Details of the Trust's financial liabilities at balance date are as follows:

Facility Utilised Facility Utilised

31 December 31 December 30 June 30 June

2017 2017 2017 2017

Facility $ $ $ $

Loan - National Australia Bank (i) 58,852,750 57,394,857 59,023,250 50,416,783

Loan - ING Bank (Australia) (ii) 21,015,000 19,815,000 21,015,000 19,815,000

Loan - ING Bank (Australia) (iii) 17,300,000 17,300,000 - -

Loan - ING Bank (Australia) (iv) 7,865,000 7,865,000 - -

Loan - Bank of Queensland (v) 16,500,000 11,026,340 14,300,000 4,195,309

Total facilities 121,532,750 113,401,197 94,338,250 74,427,092

The Trust had $8,131,553 (June 2017: $19,911,158) in unused finance facilities at balance date.

(i) The National Australia Bank finance facility is secured by first registered mortgages over eight of the investment properties

held by the Trust and a first priority General Security Agreement over all present and after-acquired property of the Trust. The

facility has a maturity date of June 2019.

(v) The Bank of Queensland finance facility is secured by a first registered mortgage over, and a General Security Agreement

limited to, the development property known as "Epiq" Lennox. The facility has a maturity date of January 2019. Since balance

date, the Trust has agreed a new $21,000,000 facility with a maturity date of January 2020.

(ii) The ING Bank (Australia) finance facility is secured by a first registered mortgage over, and a General Security Agreement

limited to, the property known as 'The Rocket' of which the Trust owns 50%. This is a joint facility with the co-owner of that

property. The amounts quoted represent the Trust's 50% interest. The facility has a maturity date of October 2018.

(iii) The ING Bank (Australia) finance facility is secured by a first registered mortgage over, and a General Security Agreement

limited to, three of the investment properties held by the Trust. The facility has a maturity date of September 2020.

(iv) The ING Bank (Australia) finance facility is secured by a first registered mortgage over, and a General Security Agreement

limited to, the Spring Hill property held by the Trust. The facility has a maturity date of September 2020.

Page 26




31 December 30 June

2017 2017

18 Derivative financial instruments $ $

New note Derivatives financial instruments Non-current

Needed for June 18 accounts per Jim Interest rate swap contracts – at fair value 1,869,053 2,358,637

1,869,053 2,358,637

19 Franking credits

Franking credits available for subsequent years based on a tax rate of 30% - 879,788

- 879,788

The above amounts represent the balance of the franking account as at the end of the financial year, adjusted for:

20 Segment reporting

The Trust operates as a property investor throughout Australia.

21 Contingencies

No asset or liability has been recognised within these financial statements (June 2017: $Nil).

22 Commitments for capital expenditure

Inventory

Development costs in respect to "Epiq" Lennox payable within 12 months 10,420,260 4,865,161

10,420,260 4,865,161

The Responsible Entity, on behalf of the Trust, has commenced court action against the Co-Owner of the Trust's property at 203

Robina Town Centre Drive, Robina Qld. The outcome of this action remains uncertain. Legal fees in respect to this matter are

being paid by the Trust.

The Trust manages its cash flow interest-rate risk by using floating-to-fixed interest rate derivatives. Such interest rate

derivatives have the economic effect of converting borrowings from floating rates to fixed rates. Generally, the Trust

raises long term borrowings at floating rates.

Details of principal amounts, expiry dates and interest ranges of interest rate derivative (hedging) contracts are set

out in note 26(d).

Information regarding the Trust's exposure to interest rates is provided in note 26(c).

- franking credits that will arise from the payment of the amount of the provision for income tax at the reporting

date.

As at 31 December 2017 the Trust had the following commitments contracted for which costs

have not been recognised as liabilities.

Page 27





Note 2017 2016

23 Notes to the statement of cash flows $ $

a) Cash and cash equivalents

Security deposits 6 3,700 3,700

Cash held in trust 6 1,755,050 287,831

Cash at bank 6 1,302,569 1,359,158

3,061,319 1,650,689

b) Reconciliation of net profit to net cash flows from operating activities

Total comprehensive profit attributable to unitholders 3,399,640 6,469,230

Non-cash items:

Profit (loss) on sale of non-current assets (44,695) -

Fair value adjustments to investment properties (2,500,374) (1,709,026)

Straightlining of rental income (143,275) 99,783

Amortisation of lease incentives and leasing fees 94,616 92,655

Changes in assets and liabilities:

Decrease (increase) in current receivables 29,666 (127,181)

Decrease (increase) in trust distributions receivable - -

Decrease (increase) in inventories (6,994,490) 3,227,146

Decrease (increase) in deferred tax assets 658,919 335,953

Decrease (increase) in other assets (443,966) 132,623

Increase (decrease) in sundry creditors 575,060 111,745

Increase (decrease) in other liabilities (6,174,027) 412,902

Increase (decrease) in GST payable (129,595) 139,824

Increase (decrease) in provision for income tax 101,743 1,207,802

Increase (decrease) in deferred tax liabilities 679,388 1,228,772

Increase (decrease) in income in advance 557,157 272,150

Increase (decrease) in derivative financial instruments (489,584) (1,643,102)

Net cash provided by/(used in) operating activities (10,823,817) 10,251,276

24 Events subsequent to reporting date

Cash at the end of the period as shown in the statement of

cash flows is reconciled to the related items in the statement of

financial position as follows:

Property acquisition

A contract for the purchase of a large format retail property at 1-17 Compton Road, Underwood in Brisbane (known as "The

Zone, Underwood") was signed in December 2017 for $31,250,000. Settlement is due to take place during April 2018. The

purchase is expected to be funded by a new finance facility secured by the property itself and the currently unencumbered

Hamilton property, together with proceeds from the current capital raising.

Page 28




25 Related party disclosures

a) Responsible Entity

b) Key management personnel

Key management person Position

Chairman – Non-Executive

Managing Director - Executive

Director – Non-Executive

Tony Tippett Director – Non-Executive

c) Key management personnel compensation

d) Unit holdings:

The Responsible Entity and its key management personnel held units in the Trust as follows:

Balance Balance Balance

01/07/2016 30/06/2017 31/12/2017

Jim Dougherty:

James Dougherty - - - - -

JW & CP Dougherty Super Fund 372,021 - 372,021 - 372,021

Peter Fahey:

P & D Fahey Super Fund 589,544 40,859 630,403 9,448 639,851

Tony Tippett:

Tippett Superanuation Fund - 329,082 329,082 12,266 341,348

Remain Fluid At All Times Pty Ltd - 113,955 113,955 - 113,955

Geoff Shepherd:

HS P/L Super Fund No. 2 1,275,000 98,548 1,373,548 41,489 1,415,037

Responsible Entity:

Clarence Property Corporation Ltd 510,343 47,656 557,999 25,089 583,088

Total 2,746,908 630,100 3,377,008 88,292 3,465,300

The Trust is required to have an incorporated responsible entity to manage the activities of the Trust. The

Responsible Entity of Westlawn Property Trust is Clarence Property Corporation Limited.

The following persons were key management personnel of the Responsible Entity from 1 July 2017 to 31 December

2017, unless otherwise stated.

Peter Fahey

Net Purchases

/ (Sales)

Jim Dougherty

Net Purchases

/ (Sales)

Geoff Shepherd

No compensation is paid to any of the key management personnel or employees of the Responsible Entity directly by

the Trust.

Page 29




31 December

2016

25 Related party disclosures (continued) $

e) Transactions

The Manager

Paid/payable to the Manager:

Management fees 561,959

Acquisition fees 308,994

Disposal fees 246,800

Development management fees 48,000

Project management fees -

Sales Commission 123,400

Registry fees 6,000

Reimbursable expenses 2,300

1,297,453

Clarence Property Works Pty Ltd

Property management, rent review & leasing fees 479,313

Westlawn Insurance Brokers Pty Ltd

Insurance premiums 188,672

including broker fee of 24,000

-

9,000

275,855

7,560

31 December

2017

48,000

$

Transactions between related parties are on normal commercial terms and

conditions no more favourable than those available to other parties unless

otherwise stated:

669,150

682,427

501,636

230,354

22,000

1,739,992

48,000

Page 30




26 Financial instruments

a) Financial risk management

The Trust has exposure to the following risks from its use of financial instruments:

- Credit risk

- Liquidity risk

- Market risk (interest rate risk & equity price risk).

i) Credit risk

Trade and other receivables

Investment in securities

ii) Liquidity risk

The Trust also ensures that as far as practicable, sufficient borrowing facilities are approved for a minimum of 3 years.

iii) Market risk

Interest rate risk

Equity securities price risk

Market risk is the risk that changes in market prices, such as interest rates and equity prices, will affect the Trust's

income or value of its holdings of financial instruments. The objective of market risk management is to manage and

control market risk exposure within acceptable parameters, while optimising the return. The Trust enters into

financial liabilities in order to manage market risks.

Interest rate risk is the risk that a financial instrument's value will fluctuate as a result of changes in the market

interest rate. The Trust has a guideline that 70-90% of its exposure to changes in interest rates on borrowings is

hedged through entering into fixed rate bills or interest rate swaps. Additionally the Trust may hold interest rate caps

to provide further protection should extreme unforeseen circumstances arise.

Equity securities price risk is the movement in quoted price of stocks which is influenced by a range of factors, most

of which are outside the control of the Trust. The Trust only invests in securities that are primarily backed by real

property assets.

Credit risk is the risk of financial loss to the Trust if a customer or counterpart to a financial instrument fails to meet its

contractual obligations, and arises principally from the Trust's receivables from tenants and investment in securities.

The Trust's exposure to credit risk is influenced mainly by the individual characteristics of each purchaser. The Trust

has a diverse range of tenants and therefore there is no significant concentration of credit risk, either by nature of

industry or geographically.

The Trust limits its exposure to credit risk by only investing in liquid securities or securities that have fixed term

durations.

Liquidity risk is the risk that the Trust will not be able to meet its financial obligations as they fall due. The Trust's

approach to managing liquidity is to ensure, as far as possible, it always has sufficient liquidity to meet its liabilities

when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the

Trust's reputation.

The Trust has liquidity risk management policies, which assist in monitoring cash flow requirements. Typically the

Trust ensures it has sufficient cash on demand to meet expected operational expenses and commitments for a period

of 90 days, including the servicing of financial obligations. Cash on demand is defined as cash held or unutilised

borrowing facilities.

Page 31




26 Financial instruments (continued)

b) Credit risk

30 June

2017

$

Cash and cash equivalents 8,040,203

Trade receivables 128,025

Construction Bonds 595,637

Financial assets at fair value through profit or loss 1,425,000 -

10,188,865

c) Liquidity risk

The following are the contractual maturities of financial liabilities:

31 December 2017

$

Non-derivatives

Secured loans -

Trade & other payables -

-

Derivatives

Net settled interest rate swaps -

-

30 June 2017

Non-derivatives

Secured bank loans/bills -

Trade & other payables -

-

Derivatives

Net settled interest rate swaps -

-

1,425,000

5,471,587

Carrying

amount 1 year or less

9,574,717 -

-

2,358,637 1,131,906

1,164,345

The carrying amount of the Trust's financial assets represents the maximum credit exposure. The Trust's maximum

exposure to credit risk at reporting date was:

74,427,092 4,195,309 70,231,783 -

729,896 -

-

1,131,906 1,274,028

4,486,272

1,869,053 1,164,345

9,574,717

$ $ $ $

113,401,197 19,815,000 93,586,197 -

31 December

1-3 years 3 -5 years

889,323

$

3,061,319

95,945

4,486,272 - -

More than 5

years

13,770,026

729,896

117,887,469 24,301,272 93,586,197 -

-

84,001,809

1,869,053

1,274,028 -

70,231,783

2017

2,358,637 -

Page 32





d) Interest rate risk

At reporting date the interest rate profile of the Trust's interest bearing financial instruments was:

30 June

2017

$

Variable rate financial assets

Cash - National Australia Bank 7,438,542

Cash - Commonwealth Bank of Australia 404,432

Cash - Bank of Queensland 1,721

7,844,695

Variable rate financial liabilities

Loan - National Australia Bank 50,416,783

Loan - ING Bank (Australia) 19,815,000

Loan - ING Bank (Australia) -

Loan - ING Bank (Australia) -

Loan - Bank of Queensland 4,195,309

74,427,092

In addition the Trust holds the following treasury instruments:

Type

Fixed Rate Swap

Fixed Rate Swap

%

2017 2017

60,000,000

3.95 N/A 7,865,000

17,300,000 N/A3.95

N/A

280,651

1.24

2017

3.65% 60,000,000 Aug-17

Aug-18

Aug-18

Aug-193.90%

BBSY Rate

3.54

Amount $ Start Date Expiry Date

5.00 5.00

57,394,857

3.41 3.42 19,815,000

11,026,340

$

113,401,197

3.69

1.46 1,018,133

0.25 0.25

1,302,569

Weighted average effective

interest rate

30 June 31 December31 December

%

N/A 3,785

Page 33





Sensitivity analysis

e) Equity securities price risk

f) Fair values

27 Trust details

At 31 December 2017 there were sixteen employees of the Responsible Entity.

An increase of 100 basis points in interest rates at the reporting date would have increased net profit before tax by

$466,577 (June 2017: an increase of $1,208,479); an equal change in the opposite direction would have decreased

net profit before tax by $466,577 (June 2017: a decrease of $1,208,479).

The Trust has no exposure to equity investments listed on the Australian Securities Exchange.

The principal place of business is 2/75 Tamar Street Ballina NSW and its principal activity is investing in commercial

rental properties.

The net fair values of listed investments have been valued at the quoted market bid price at balance date. For other

assets and other liabilities net fair value approximates their carrying value and is determined from observable market

data (directly or indirectly). No financial assets or financial liabilities are readily traded on organised markets in

standardised form other than listed investments.

The aggregate net fair values and carrying amounts of financial assets and financial liabilities are disclosed in the

Statement of Financial Position and in the notes to the financial statements.

Interest rate risk represents the effect of a change in interest rates applied to the interest rate risk exposures at

reporting date, including the estimated change in the value of derivative financial instruments that are carried at fair

value. Cash and floating rate debt at reporting date are multiplied by the reasonably possible change in interest rates

to determine the effect on profit for the financial year. The Trust's derivative financial instruments whose carrying

values are affected by changes in interest rates are interest rate swaps. In calculating the change in value of interest

rate swaps, a change in interest rates at reporting date is assumed to result in a parallel shift in the forward yield

curve. A change in interest rates of up to 100 basis points (1%) is considered to be reasonably possible in the current

economic environment.

Page 34

Documents

HALF YEARLY REPORT - Clarence Property Group · Jim is a licensed real estate agent and chartered accountant with wide ranging experience in the property, ... In November 2017, the