Asset Plus Limited — Annual Report 2018

Jun 29, 2018

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A N N U A L R E P O R T 2 0 1 8

Don’t be afraid to give up the good to go for the great

The notes set out on pages 37 to 57 form part of, and should be read in conjunction with, the consolidated financial statements

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The notes set out on pages 37 to 57 form part of, and should be read in conjunction with, the consolidated financial statements.

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Contents

Chairman’s Report	5
Key Highlights	6
Manager’s Report	8
Finance Report	10
Property Report	14
Director Profles	18
Corporate Govenance	20
Financial Statements	31
Independent Auditors Report	58
Shareholder Statistics	61
Directory	63

4

Chairman’s Letter

With Augusta, the Board have now identified a defined value add strategy in which the company will seek to acquire properties with the potential to reposition, redevelop and lease; all with the aim of creating future value. We believe that the future strategy differentiates Asset Plus (Formerly NPT) from the sector and provides a framework for relative outperformance.

The last 12 months have produced a steady financial result whilst we have embedded a new board and negotiated a new management arrangement. As a result we have set a platform from which we can all put performance related legacies behind us and embark on a unique new strategic direction.

On 19 March 2018, shareholders voted to externalise the management of Asset Plus to the Augusta Funds Management team who have a strong track record of success in real estate management. In the period since Augusta have joined us, their team has provided considerable focus and resource to the existing assets to ensure that the foundations are strong for the future.

You are probably aware that we have made some changes already, including changing our name to Asset Plus Limited. This name is designed to more accurately demonstrate our strategic purpose. We are confident that the existing portfolio is

now financially sustainable and alongside our new branding we believe we are well positioned for value add related growth moving forward.

The new strategic direction is to refocus Asset Plus to a yield plus growth orientation and seek assets that are capable of benchmark outperformance. Asset Plus will primarily focus on assets north of Taupo with a heightened focus on Auckland. However, we will consider assets in other locations throughout NZ for their ability to deliver shareholders with appropriate risk adjusted returns.

I would like to thank you all for your support during our transition period, and I can assure you that we are focussed on ensuring that the future for Asset Plus shareholders presents greater opportunity than was experienced as NPT.

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Regards Bruce Cotterill Chairman

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Key Highlights

Key Highlights from the Last Financial Year

NET PROFIT AFTER TAX

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$3.073 million in the prior corresponding period (pcp).

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The sale of both Print Place and the AA Centre creates balance sheet capability to EXECUTE FUTURE STRATEGY.

ADJUSTED FUNDS FROM OPERATIONS OF $ 6.15 million

LOAN TO VALUE RATIO

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33.1% at 31 March 2017

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Chairman’s Report (continued)Key Highlights

NET TANGIBLE ASSETS

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reduced from 72.3 cps.

EXTERNALISATION OF MANAGEMENT to Augusta for $4.5 million.

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WALE
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which is reduced from 4.6 years (pcp)

PORTFOLIO OCCUPANCY

97.4[%]

increased from 96%

due to higher occupancy at Stoddard Rd, Auckland and the sale of Print Place, Christchurch.

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Manager’s Report

Manager’s Report

Strategy Overview

Augusta is pleased to be able to present to shareholders our first Manager’s Report after having been in control now for approximately 3 months. As Augusta Capital is Asset Plus’ largest shareholder (18.85%) we are delighted to now be able to shape the future of the business to the ultimate benefit of all shareholders.

As a reminder to all investors before we summarise the year that was, we thought it important that we reiterate the strategic direction Asset Plus is now following. Accordingly, Augusta’s strategy recommended by the Board and supported by shareholders follows:

A growth mandate to target assets for their ability to contribute to a yield plus growth orientation

Adopt a wide ranging diversified, value-add strategy that is sector agnostic

Geographical capability to invest in major regions with a focus on assets north of Taupo and more specifically, Auckland

Seek assets capable of benchmark outperformance through active management and development

As Asset Plus’ manager, Augusta’s overarching strategic objective is to:

Close the share price to NTA gap by resolving existing asset issues and restoring faith in Asset Plus asset valuations

Provide the S&P/NZX All Real Estate Index with a pure real estate growth stock which is capable of taking advantage of inevitable changing economic conditions

Create sustainable shareholder growth through disciplined acquisition

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Manager’s Report

The Result

The year ended 31 March 2018 represents consistency in operating earnings against the prior corresponding period (pcp), however revaluation adjustments and losses on disposal have resulted in a 2.3% reduction in net tangible assets.

Highlights from FY18 include:

• Net profit after tax of $3.095 million ($3.073 million in the prior corresponding period (pcp)).

The primary focus is to close the share price to NTA gap through active management and pursue prudent investment opportunities that provide yield plus growth potential for shareholders.

• Adjusted funds from operations of $6.15 million.

• Portfolio occupancy is 97.4% which has increased from 96% due to higher occupancy at Stoddard Rd, Auckland and the sale of Print Place, Christchurch.

• The WALE is 4.4 years, reduced from 4.6 years (pcp)

• Loan to value ratio is 26.6% (33.1% as at 31 March 2017).

• Net tangible assets of 70.6 cents per share reduced from 72.3 cps.

• The sale of both Print Place and the AA Centre creates balance sheet capability to execute future strategy.

• Externalisation of management to Augusta for $4.5 million.

Dividend

A final quarter dividend of 0.9 cents per share has been declared, with the record date set for 13 June 2018 and payment made on 20 June 2018.

Total dividends paid for the year are 3.60 cents per share which is consistent with guidance.

Outlook

Post the sale of the AA Centre, which is expected to settle in July 2018, there is further balance sheet capacity to acquire investment property which is in line with the future strategy.

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Finance Report

Finance Report

Five Year Financial Summary

	2018	2017	2016	2015	2014
	$’000	$’000	$’000	$’000	$’000
Net Rental Income	11,704	11,906	11,575	11,475	10,790
Administration Expenses	(2,225)	(2,612)	(2,318)	(2,112)	(3,115)
Redundancy Costs	(726)	-	-	-	-
Gross Operating Proft	8,753	9,294	9,257	9,363	7,675
Net Finance Costs	(2,821)	(2,726)	(2,448)	(2,404)	(1,689)
Operating Proft Before Fair Value Movements, Disposals And Taxation	5,932	6,568	6,809	6,959	5,986
Net Gain / (Loss) from Canterbury Earthquake	-	-	-	-	(89)
Net Gain / (Loss) on sale of Plant and Equipment	(29)	(87)	-	1	(6)
Net Gain / (Loss) on sale of Investment Property	(2,970)	-	-	-	-
Unrealised Gain / (Loss) in Fair Value of Interest Rate Swaps	79	732	(677)	(829)	458
Unrealised Gain / (Loss) in Fair Value of Investment Properties	(2,945)	(1,651)	3,160	1,187	2,633
Transaction Costs	(686)	(1,339)	-	-	-
Sale of Management Rights	4,500	-	-	-	-
Proft Before Income Tax	3,881	4,223	9,292	7,318	8,982
Income Tax Expense	(786)	(1,150)	(895)	(933)	(1,350)
Total Comprehensive Income	3,095	3,073	8,397	6,385	7,632
Basic and diluted earnings per share	1.91	1.90	5.19	3.94	4.71

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Finance Report (continued)

Financial Result Summary

	2018	2017	Variance	Comment
				Income lower due to increased
Net Income	11,704	11,906	(202)	vacancies at Print Place, offset by new tenants at Stoddard Road
				and the AA Centre.
				Savings on Legal Fees and
Administration Expenses	(2,225)	(2,612)	387	Staff Costs (people leaving but not replaced) offset by
				higher depreciation
Redundancy Costs	(726)	-	(726)	Costs of externalisation
Gross Operating Proft	8,753	9,294	(541)
Net Finance Costs	(2,821)	(2,726)	(95)	Higher debt profle across the year
Operating Proft Before Fair Value Movements, Disposals And Taxation	5,932	6,568	(636)
Net Gain / (Loss) on sale of Plant and Equipment	(29)	(87)	58
Net Gain / (Loss) on sale of Investment Property	(2,970)	-	(2,970)	Loss on sale of Print Place
Unrealised Gain / (Loss) in Fair Value of Interest Rate Swaps	79	732	(653)
Unrealised Gain / (Loss) in Fair Value of Investment Properties	(2,945)	(1,651)	(1,294)	Loss driven by AA Centre and Eastgate, offset by 22 Stoddard Road
Transaction Costs	(686)	(1,339)	653	$430,00 carry over of costs from the Kiwi proposal, $256,000 from the Augusta transaction
Sale of Management Rights	4,500	-	4,500	Externalisation to Augusta
Total Other Gains / (Losses)	(2,051)	(2,345)
Proft Before Income Tax	3,881	4,223
Income Tax Expense	(786)	(1,150)
Total Comprehensive Income	3,095	3,073

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Finance Report (continued)

Adjusted Funds from Operations - Reconciliation to Net Profit After Tax

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2018 2017
$’000 $’000 Comments
Statutory Net Profit After Tax 3,095 3,073
Investment Property and Inventory
Losses from sales of investment property 2,970 - Sale of Print Place
Fair value loss on investment property 2,945 1,651 Revaluation losses higher in '18 than '17
Depreciation on owner occupied PP&E 357 129 High depreciation on head office assets
Financial Instruments
FV gain on the mark to market of derivatives (79) (732)
Deferred Tax
Deferred Tax Expense (438) 78 Sale of Print Place
Tax on depreciation recovery (non-operating) 209 - Depreciation recovered from Print Place
Other unrealised or one-off items
Sale of Management Rights (4,500) - Sale of management rights to Augusta
$430k from Kiwi proposal, $256k for
Transaction Costs 686 1,339
Augusta externalisation
Restructuring Costs 523 - After tax effect of redundancy payments
Legal Proceedings Costs - 255
Net Loss on Sale of Plant and Equipment 29 87 Loss on sale of fixed assets
Net operating income after tax 5,797 5,880 1.4% drop from '17 to '18
Incentives and Rent Straightening
Higher in '18 due to accelerated
Amortisation of lease incentives and costs 482 280
amortisation from the AA Centre
Funds From Operations (FFO) 6,279 6,160 1.9 % increase from '17 to '18
G1 Derivative close out costs - -
Maintenance CAPEX (131) (255)
Adjusted Funds From Operations (AFFO) [1] 6,148 5,905 4.1 % increase from '17 to '18
CPS 3.80 3.65
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1 Adjusted funds from operations (AFFO) is non-GAAP financial information and is a common investor metric, calculated based on guidance issued by the Property Council of Australia. Asset Plus considers that AFFO is a useful measure for shareholders and management because it assists in assessing the Company’s underlying operating performance. This non-GAAP financial information does not have a standardised meaning prescribed by GAAP and therefore may not be comparable to similar financial information prescribed by other entities. A reconciliation of the net profit after tax to AFFO is included in results presentation. The independent auditors have confirmed that the AFFO calculations have been fairly extracted from the audited Group financial statements for the year ended 31 March 2018.

The adjusted funds from operations support the current dividend level and represents a pay-out ratio of 95%. Net revenues from the property portfolio have been flat with no material growth. There were no material lease expiries (aside from the now divested Print Place) during the period, however no new material leases were signed with respect to vacancies at Eastgate.

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Finance Report (continued)

Financial Performance

In comparison with 2017 rental income fell at Print Place and Eastgate, due to increased vacancies and lower opex recovery respectively. Rental income increased at Stoddard Road due to new tenants and increased opex recovery and at the AA Centre due to new tenants.

Administration costs were marginally lower than last year due to savings on legal fees and staff costs (due to a lower number of employees). This excludes $0.73 million of restructuring costs which were incurred as part of the externalisation.

Funding costs reflected a slightly higher debt profile during the year. Material debt repayments were made late in March 2018 and there is now $25.50 million of undrawn debt.

Transaction costs of $0.69 million were incurred with the bulk of these relating to the Kiwi proposal. $0.26 million related to the externalisation of management to Augusta.

Balance Sheet

$44.50 million of debt is currently drawn which represents a LVR of 26.6% (33.1% in the prior year). Asset Plus has $25.50 million of headroom on its $70 million banking facility with the Bank of New Zealand.

The NTA is now 70.6 cents per share (down from 72.3 cps in the pcp) driven by the unrealised revaluation loss as well as the realised loss on disposal of Print Place, offset against the sale of the management rights.

Net book value of Plant and Equipment has reduced from $1.07 million to $0.08 million. This is mostly due to the effect of a change in accounting policy in which plant and equipment that are an integral part of the buildings have been included in the investment property valuations.

Current liabilities include a $4.70 million deposit for the sale of the AA Centre.

A loss on revaluation of investment property of $2.95 million was recorded, driven primarily by Eastgate and the AA Centre. Reclassifications of lease fitouts and certain plant and equipment as investment property further increased the loss on revaluation by $0.98 million.

The stairwell project at the AA Centre is now forecast to cost materially more than was originally estimated and a full allowance for the expected costs to complete has been recorded in this financial year.

Print Place was divested on 29 March 2018 and a $2.97 million loss realised.

The receipt of $4.50 million from Augusta for the management contract rights has been recorded as income.

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Property Report

Eastgate Shopping Centre

Cnr Buckleys Road & Linwood Avenue, Christchurch

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Occupancy 94.30%

WALT 4.7 years

Market value (31 March 2018) $58m

Passing Rent $3.91m

Passing Rent Yield

6.74%

Market Cap Rate (2018) 8.00%

It has been a challenging year for Eastgate. The speciality retail market has remained difficult for a number of operators, with two tenants placed into liquidation over the course of the year and two other tenants vacating the centre at lease expiry. As a result moving annual turnover and pedestrian counts are both down year on year.

This, in conjunction with the pending renewal of lease for anchor tenant Countdown due in December 2018, has seen the value compress from $61m to $58m. Colliers International took over the property management function for the centre in September 2017. Colliers have a depth of expertise both at a local and national level that is already starting to drive increased activity at the centre. We can be confident that the asset value is now at a level which provides us with a platform to improve from in the future.

The market rent review for Countdown was successfully settled during the year, representing a 5% increase, and the Library has renewed for a further term. Management are focused on a reinvigoration strategy for the centre to decrease vacancy, drive an increase in income and restore value in the centre moving forward.

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Property Report (continued)

Heinz Wattie’s National Distribution Centre

113 Elwood Road, Hastings

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Occupancy 100.00%

WALT 8.9 years

Market value (31 March 2018) $27.30m

Passing Rent $2.13m

Passing Rent Yield

7.82%

Hawkes Bay, the original home of Heinz Wattie’s, retains its reputation around the world as one of the finest areas for producing fruit and vegetables. With the Heinz Wattie’s production facility right next door, the Distribution Centre remains an integral part of its regional production and distribution infrastructure.

The Distribution Centre currently processes over 1,200 product lines and Heinz Wattie’s have communicated its requirement for expansion of the current facility. We are currently working with Heinz Wattie’s to improve the asset and ensure that it meets their changing needs in the future.

Market Cap Rate (2018) 8.13%

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Property Report (continued)

Roskill Centre

22 Stoddard Road, Mt Roskill, Auckland

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Occupancy 100%

WALT 3.8 years

Market value (31 March 2018) $38m

22 Stoddard Rd remains one of the preferred neighbourhood shopping centres on Auckland’s southern isthmus, evidenced by the foot traffic on a daily basis.

Anchored by The Warehouse, the centre provides the community with a healthy tenancy mix and is currently 100% occupied. The strong tenant demand to remain and renew at the centre further supports the investment decision to retain this asset and continue to enhance its potential in the future.

Passing Rent $2.50m

Passing Rent Yield 6.58%

Market Cap Rate (2018) 6.25%

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Property Report (continued)

AA Centre

99 Albert Street, Auckland

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WALT

1.65 years

Market value (31 March 2018) $43.80m

Passing Rent $3.40m

Passing Rent Yield 7.76%

Unconditionally sold. Settles 12 July 2018.

Located on the corner of Albert and Victoria Streets, this central location adjoins the popular Federal Street entertainment and dining precinct. The AA Centre is an 18 level high-rise office tower with ground floor retail space and a basement car park.

The building is unit titled with Asset Plus owning the majority of the floors.

Market Cap Rate (2018) 7.25%

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Director Profiles

Director Profiles

Paul Duffy

Bruce Cotterill

Chairman, Non-Executive Independent Director Bruce Cotterill joined the Board of Asset Plus in April 2017. Bruce is an experienced CEO, Chairman and Company Director, who has excelled in a number of sectors and in a range of extremely demanding roles. This includes businesses going through major transformation brought about by financial performance, structural change and cultural issues. As a CEO he has led real estate group Colliers, both in New Zealand and Australia, Kerry Packer’s ACP Magazines, and iconic New Zealand sportswear company Canterbury International. As CEO of Yellow Pages Group he was appointed to lead that Company through a period of dramatic change, including the restructure of the Company’s $1.8 billion of debt. Bruce was Chairman of Noel Leeming Group for 8 years until that Company’s sale to The Warehouse, and he is currently Chairman of both MOVE Logistics Limited, and Swimming New Zealand.

Non-Executive Director

Paul Duffy has over 35 years’ experience in the property investment/ development industry, including CEO/executive director of DNZ Property Fund (now named Stride Property) for 13 years. During his career, Paul held the position of General Manager of Fletcher Property Limited and was Joint Managing Director of US Real Estate Subsidiaries for the Abu Dhabi Investment Authority. In this role he oversaw the formation of a large real estate portfolio in the United States and Europe. Paul is currently a Director of Leighs Construction and a number of private companies. Paul is also the chairman of Augusta Capital and Augusta Funds Management and is therefore not an independent director.

Allen Bollard

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Non-Executive Independent Director

Allen has a long background in accounting, business analysis, risk management, tax, and finance, mostly in property and construction. Starting as a partner in a major accounting firm, he was then CFO for three listed property

Carol Campbell

Non-Executive Independent Director Carol Campbell joined the Board of Asset Plus in May 2015. Carol is a Chartered Accountant and a member of Chartered Accountants Australia and New Zealand. Carol has extensive financial experience and a sound understanding of efficient Board governance.

companies and for ten years was CEO/CFO of Tramco Group, which managed and financed several large privately held leasehold land owning partnerships including Viaduct Harbour Holdings, Tram Lease, Quay Lease, Kiwi Forests, Wairakei Pastoral and Calland Properties Ltd. He is now an independent business and finance consultant and Director, still advising Tramco and is an independent trustee for the Wyborn and Green families. He is the Government approved independent director of Tamaki Makaurau Community Housing Joint Venture and Chair of the Odyssey House Board of Trustees.

Carol holds a number of directorships across a broad spectrum of companies, including T&G Global, New Zealand Post, NZME and the Fisher Listed Investment companies – Kingfish, Barramundi and Marlin Global, where she is also Chair of the Audit and Risk Committee. She is also a Director of Kiwibank and Chair of Ronald McDonald House Charities in New Zealand. Carol was a Director of The Business Advisory Group for 11 years, a Chartered Accountancy Practice, and prior to that a partner at Ernst & Young for over 25 years.

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Augusta

Founded in 2001, Augusta is a leading diversified listed fund manager with value-adding and asset management expertise across New Zealand and Australia. Augusta owns and manages 99 properties across the office, retail and industrial sectors, with $1.85 billion of assets under management.

Augusta employs 36 staff across offices in Auckland and New Plymouth, with specialist expertise in asset management and development management, as well as other essential professional functions including accounting, treasury and investor relations, legal, compliance and company secretariat.

The number of assets it manages gives Augusta a vantage point from which to understand the market and unlock real estate opportunities. Augusta has comprehensive and up-to-date knowledge and insights pertaining to property buyers/sellers, tenants and, importantly, the constant and subtle shifts to lending and bank sentiment. Understanding this sentiment has a critical bearing on the investment strategies ultimately determined for each property it manages.

Augusta’s wide market reach, coupled with its professional expertise across all the key areas of property management, represents the backbone of the value proposition which will underpin its strategy for the Asset Plus portfolio future growth and success.

There is a dedicated asset manager for each property within the portfolio with oversight from the senior management team in respect to portfolio strategy.

In line with the yield plus growth ambitions of Asset Plus, each asset manager has been selected for their ability to actively manage each asset and exhaust all avenues to extract value from the existing portfolio in the short term.

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Corporate Govenance

Corporate Governance

The Board of Asset Plus is committed to maintaining the highest standards of business behaviour and accountability.

Accordingly, the Board has adopted corporate governance policies and practices designed to promote responsible conduct.

The corporate governance framework is set out in Asset Plus’ Corporate Governance Manual, a copy of which can be found at the Company’s website: www.assetplusnz.co.nz/corporate-governance.

This section sets out Asset Plus’ corporate governance policies, practices and processes by reference to the NZX Corporate Governance Code’s eight key principles and supporting recommendations.

Principal 1 - Code of Ethical Behaviour

Directors should set high standards of ethical behaviour, model this behaviour and hold management accountable for these standards being followed throughout the organisation.

A Code of Ethics has been adopted under which the Company has set out expectations for all Directors, officers, any employees and representatives to act in a manner consistent with its guiding principles and the values set out in its Code of Ethics. This Code sets out clear expectations of ethical decision-making and personal behaviour with regard to confidentiality, securities trading, transparency, company information, conflict resolution processes, workplace responsibilities, environmental responsibility and stakeholder interaction. A copy of the Code of Ethics is available at www.assetplusnz.co.nz/wp-content/ uploads/code_of_ethics_final.pdf.

Any illegal or unethical behaviour is to be reported to the Board. The Chairman may determine whether

an exception or waiver is granted. Otherwise a subcommittee of the Board will be formed to determine what action should be taken.

Asset Plus’ manager, Augusta, has also adopted a Code of Ethics which applies to its employees and directors. The Code sets out the minimum standards expected of Augusta’s employees and directors and is intended to facilitate decisions that are consistent with Augusta values, business goals and legal and policy obligations. A copy of the Augusta Code of Ethics is available at www.augusta.co.nz/assets/Uploads/ Augusta-Code-of-Ethics.pdf.

Asset Plus has also adopted a share trading policy which sets out the rules for dealing in the listed financial products of Asset Plus. The policy prohibits trading by directors of Asset Plus without the written consent of the Company Secretary. The Board may set ‘no trade’ periods around the release of the Annual and Interim reports, changes in Asset Plus’ capital structure or where there is significant acquisition or divestment activity happening. A copy of the policy is available at www.assetplusnz.co.nz/wp-content/ uploads/share_trading_policy_final.pdf.

Augusta has also adopted an Insider trading Policy which sets out the rules for dealing in the financial products of any entity that Augusta manages (including Asset Plus). The policy prohibits trading by any employee or director of Augusta without the written consent of the Augusta Chair. Other than in exceptional circumstances, all trading is prohibited during blackout periods for 30 days prior to half- and full-year balance dates until the first trading day after the relevant results are announced. A copy of the policy is available at www.augusta.co.nz/assets/ Uploads/Augusta-Insider-trading-policy.pdf.

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Corporate Govenance (continued)

Principal 2 - Board Composition & Performance

• To ensure an effective board, there should be a balance of independence, skills, knowledge, experience and perspectives.

Board Charter

The Asset Plus Board has adopted a Board Charter and Governing Principles which sets out that the specific responsibilities of the Board and its Committees include:

• oversight of the Company including its control and accountability procedures and systems;

• setting the strategic direction and objectives of the Company;

• oversee the audit and monitor risk;

• approval of operating plans including annual business plans and budgets;

• monitoring actual results against the annual business plan, budget and strategic objectives;

• delegating the appropriate authority of the management of the company, and monitoring management’s performance on a regular basis;

Director nominations and appointments

The Board has adopted a Nomination Committee Charter which sets out the procedure for nominating and appointing potential directors to the Board. Given its size, the full Board of Asset Plus acts as the Nominations Committee. The responsibilities set out in the Nomination Committee Charter are:

• to identify and nominate candidates to fill Board vacancies as and when they arise;

• before making an appointment, to evaluate the balance of skills, knowledge and experience on the Board and, in the light of the evaluation, to determine the role and capabilities required for the appointment;

• to formulate succession plans for Directors taking into account the challenges and opportunities facing the Company and the skills and expertise accordingly required to govern the Company in the future;

• to regularly review the structure, size and composition (including the skills, knowledge and experience) of the Board and to make any changes;

• to keep under review the leadership requirements of the Company, both non-executive and executive, with a view to ensuring the continued ability of the Company to compete efficiently in the marketplace; and

• to consider such other matters relating to Board nomination or succession issues as may be identified by the Board.

Formal agreements are entered into with all new directors.

• setting the remuneration of the Directors;

• approval and monitoring of the progress of capital expenditure, capital management initiatives and acquisitions and divestments;

• approval of capital structure and dividend policies; and

• oversight of disclosure and monitoring of price sensitive matters affecting the Company.

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Corporate Govenance (continued)

Board composition

Principle 3 – Board Committees

Director profiles are on page 18 and director shareholdings on page 29.

Directors undertake continuing education to keep their skills current and understand how to best perform their duties.

The Board Charter sets out that the Board will review its performance as a whole on an annual basis and instigate additional comprehensive reviews as may be deemed necessary from time to time. External consultants may be commissioned as needed to assist in the assessment of individual director performance, the effectiveness of the Board’s processes and/or the Board’s own effectiveness.

Diversity

Asset Plus has not adopted a diversity policy as it no longer has any employees. Instead, the Asset Plus Board has reviewed the Manager’s diversity policy and relied on the Manager to implement diversity measures with its employees.

Breakdown of Gender Composition of Asset Plus’ Directors and Officers.

Directors and	Offcers.
Financial Year	Male	Female
	Directors Offcers	Directors Offcers
Year ending 31 March 2018	3 3	1 0
Year ending 31 March 2017	2 1	1 0

Chair and CEO

The board should use committees where this will enhance its effectiveness in key areas, while still retaining board responsibility.

The Asset Plus Board has established a separate Audit and Risk Committee comprising of three directors. The Corporate Governance Manual also includes charters for Nominations Committee and Remuneration Committee. However, the full Board undertakes the responsibilities of those Committees. Given the size and operations of Asset Plus, the Board does not consider that any further committees are necessary.

Audit and Risk Committee

The Audit and Risk Committee’s primary objectives are:

• to set the principles and standards with respect to internal controls, accounting policies and the nature, scope, objectives and functions of the external audit. This objective enables the Board to satisfy itself that management is discharging its responsibilities in accordance with established processes and, wherever practical, best practice methodologies; and

• to ensure the efficient and effective management of all business risks, and the efficient and effective compliance with Asset Plus’ Risk Management Policy.

In accordance with the NZX Corporate Governance Code, Asset Plus’ Chair is not also its CEO.

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Corporate Govenance (continued)

Key responsibilities for the Audit and Risk Committee include:

• Establishing guidelines for the selection, appointment and/ or removal of the external auditor as well as the rotation of the lead partner of the audit firm;

• Ensuring the external auditor is discharging its responsibilities, including monitoring the effectiveness, objectivity and independence of the external auditor.

• Reviewing draft financial statements, NZX preliminary announcements and annual and interim reports;

• Reviewing accounting policies and practices;

• Reviewing the risk management policy and the annual risk management plans; and

• Reviewing the Delegated Authority Policy annually.

The members are all independent directors being Carol Campbell (Chair), Allen Bollard and Bruce Cotterill. The Audit and Risk Committee meets at least twice a year. During the 2018 financial year two meetings were held which were each attended by all members of the Audit and Risk Committee.

Representatives of the Manager only attend meetings of the Audit and Risk Committee at the invitation of the committee.

Remuneration Committee

The full Board acts as the Remuneration Committee. The Remuneration Committee Charter is included in the Corporate Governance Manual. The responsibilities include setting and reviewing all components of the remuneration of non-executive Directors.

Principle 4 – Reporting & Disclosure

• The board should demand integrity in financial and non financial reporting, and in the timeliness and balance of corporate disclosures.

Continuous disclosure

Asset Plus has adopted a disclosure policy setting out its approach to disclosing material information and communication with shareholders or analysts. Asset Plus recognises that the cornerstone of New Zealand and international securities law is full and fair disclosure of material information and that the timely, non-exclusionary distribution of information to the public is crucial to the efficiency and integrity of the capital markets.

A copy of the policy is available on Asset Plus’ website at www.assetplusnz.co.nz/corporate-governance, along with the Corporate Governance Manual.

Non-financial disclosures

Due to the change of management during the past financial year and Asset Plus’ limited staff resources during that financial year, Asset Plus has not considered ESG policies and disclosures. Asset Plus has an objective of providing further reporting in the 2019 annual report.

Nominations Committee

The full Board acts as the Nominations Committee. The Nominations Committee Charter is included in the Corporate Governance Manual. The responsibilities are as set out on page 21.

Takeover Protocols

In June 2018, the Board adopted protocols setting out the procedures to be followed if a takeover offer is received.

2 3

Corporate Govenance (continued)

Principle 5 – Remuneration

The remuneration of directors and executives should be transparent, fair and reasonable.

Remuneration of directors is reviewed by the Board.

The director remuneration pool was approved at $300,000 when Asset Plus was formed following the corporatisation of the National Property Trust in 2011. In June 2017, the Asset Plus board approved the following director fees:

Director remuneration

				Amount paid
Director	Base director fees	Committee fees	Annual fee	during the year
Bruce Cotterill	$90,000 – chair	-	$90,000	$82,339
Carol Campbell	$65,000	$10,000 – Chair of Audit and Risk Committee	$75,000	$70,000
Allen Bollard	$65,000	$5,000 – Member of Audit and Risk Committee	$70,000	$62,826
Paul Duffy	$65,000	-	$65,000	$57,500
Total			$300,000
Approvedpool			$300,000

Anthony Sewell was also paid fees of $6,667 during the period until his removal as a director on 21 April 2017.

As Asset Plus no longer has any employees, it does not have a remuneration policy.

Chief Executive Remuneration

Asset Plus is unable to disclose details of the remuneration of its former Chief Executive, Tony Osborne for the 2018 financial year due to confidentiality obligations.

Following the externalisation of management to Augusta, Asset Plus no longer has any employees.

Remuneration of employees whose remuneration and benefits exceeded $100,000 for the year ending 31 March 2018

	2018	2017
$1,020,000-$1,029,999	1	-
$600,000-$609,999	-	1
$170,000-$179,999	1	-
$140,000-$149,999	-	1
$130,000-$139,999	-	1
$110,000-$119,999	-	1
$100,000-$109,999	1	-

24

Corporate Govenance (continued)

Principle 6 – Risk Management

Directors should have a sound understanding of the material risks faced by the issuer and how to manage them. The Board should regularly verify that the issuer has appropriate processes that identify and manage potential and material risks.

Asset Plus has a risk management policy (set out in the Corporate Governance Manual). As part of this a range of risks have been identified from financial/ operational risk to investment market risk with causes, potential outcomes and risk management strategies detailed.

Asset Plus also relies on Augusta’s risk management framework to identify, oversee, manage and control risks that Asset Plus faces. Key risks have been identified including interest rate and treasury risk, cyber security, compliance with regulatory obligations, property risks (such as tenant default), fraud and health and safety risks.

Augusta is responsible under the management agreement for advising the Asset Plus board on risk management matters. The Audit and Risk Committee will receive such reports and oversee risk management.

Health and Safety

Augusta oversees health and safety compliance on a day to day basis for Asset Plus in conjunction with the property managers for each property. Each property has a hazard register which is managed on a day to day basis by Bayleys Property Services and overseen by Augusta’s asset managers.

Augusta’s Legal and Compliance Manager oversees compliance with Augusta’s health and safety framework including regular reporting to the board. This includes monthly reporting to the Board on key health and safety statistics and incidents in addition to quarterly reporting to the Health and Safety Committee which considers all health and safety hazards and incidents.

During the past year, Augusta has arranged for asbestos surveys to be completed on all properties within its managed portfolio and asbestos management plans prepared and implemented where necessary. Fire safety plans for each property have also been updated. During the coming year, hazard registers for each property will be re-reviewed.

A health and safety assessment will be conducted of all new properties to identify all relevant hazards prior to acquisition.

Principle 7 – Auditors

The board should ensure the quality and independence of the external audit process.

The Audit and Risk Committee Charter sets out Asset Plus’ framework for managing relationships with its auditor. This includes the ability for directors to communicate directly with auditors and for auditors to attend meetings of the Audit and Risk Committee without management present. Any non-audit services provided by the audit firm must be approved by the Audit and Risk Committee.

Grant Thornton is the auditor of Asset Plus with the audit partner rotated every 5 years. Grant Thornton attends each annual shareholder meeting and is available to answer shareholder questions at the meeting.

Asset Plus has no separate internal audit function and relies on the internal audit functions of Augusta that are conducted as part of Augusta’s compliance assurance programme.

2 5

Corporate Govenance (continued)

Principle 8 – Shareholder Rights & Relations

• The board should respect the rights of shareholders and foster constructive relationships with shareholders that encourage them to engage with the issuer.

Asset Plus’ website at www.assetplusnz.co.nz includes a range of information including bios for directors, copies of the Corporate Governance Manual, the constitution and historical annual and interim reports.

The Company engages with shareholders through annual and interim reports, results conference calls, presentations to shareholders and the annual shareholder meeting.

Shareholders have the right to receive communications electronically by notifying the share registrar. Major decisions which require approval under the NZX Main Board Listing Rules are submitted to shareholders for approval. All voting at shareholder meetings is conducted by a poll.

The annual shareholders notice of meeting will be provided to shareholders at least 28 days prior to the annual meeting.

		Date ceased
		to be a
Director	Date Appointed	director
Bruce Cotterill	21 April 2017
Carol Campbell	25 May2015
Allen Bollard	21 April 2017
Paul Duffy	21 April 2017
AnthonySewell	25 August 2016	21 April 2017
Jim Sherwin	10 August 2010	21 April 2017

Board Attendance

Directors attended the following formal meetings of the Board in the year to 31 March 2018.

		Board
	Board Meetings	Meetings
Director	Held	attended
Bruce Cotterill	11	11
Carol Campbell	11	11
Allen Bollard	11	10
Paul Duffy	11	11

Interest Register Record

The following disclosures were recorded in the interest register during the year ended 31 March 2018.

Specific Disclosures

There were no specific disclosures made during the year for interests in any transactions entered into by Asset Plus Limited or its subsidiaries.

Statutory Disclosures

Principal Activities

Asset Plus Limited is a listed commercial property investment company investing solely in New Zealand real estate.

Board Composition

The table below sets out details of:

• the current directors of Asset Plus Limited and its subsidiaries, including the date on which they were appointed; and

• details of those persons who ceased to be directors of the company and its subsidiaries during the year ending 31 March 2018.

26

Corporate Govenance (continued)

General Disclosures

The following general disclosures were made in the year ended 31 March 2018 in respect to the Company under Section 140(2) of the Companies Act 1993.

Name of Director	Nature of Interest Core Business
Allen Bollard	Director Deed of Indemnity
	Director Asset Plus Limited
	Director NPT Management Team Limited
	Director NPT Capital Limited
	Director The National PropertyTrust No. 2 Limited
	Director Eastgate ShoppingCentre Limited
	Director 99 Albert Street Limited
	Director 22 Stoddard Road Limited
	Director NPT 10 Limited
	Director NPT 11 Limited
	Independent Trustee Wyborn Investment Trust- Private familytrust investedprimarilyin real estate
	Independent Trustee AffnityTrust- Private familytrust investedprimarilyin real estate
	Independent Trustee Riverside Trust- Private familytrust investedprimarilyin real estate
	Trustee Bean Rock Trust- Private familytrust investedprimarilyin real estate
	Chair OdysseyHouse Trust- Gov’t funded NGO – drugand alcohol rehabilitation
	Director Riverside Industries Ltd - Trustee for RiversideJVB Trust
	Independent Director Tamaki Makarau- Gov’t funded Community Housing development Joint Venture
Carol Campbell	Director Asset Plus Limited
	Director NPT Management Team Limited
	Director NPT Capital Limited
	Director The National PropertyTrust No. 2 Limited
	Director Eastgate ShoppingCentre Limited
	Director 99 Albert Street Limited
	Director 22 Stoddard Road Limited
	Director NPT 10 Limited
	Director NPT 11 Limited
	Director NZ Post Limited
	Director Nica ConsultingLimited
	Director Kingfsh Limited
	Director Marlin Global Limited
	Director Barramundi Limited
	Director Hick Bros HoldingLimited & Subsidiaries
	Director Woodford Properties Limited
	Director KeyAssets New Zealand and its Charitable Trust
	Director AlphaXRT Limited
	Director Kiwibank Limited
	Director T & G Global Limited
	Director T&G Insurance Limited
	Director Bankside Chambers Limited
	Director NZME Limited

27

Corporate Govenance (continued)

General Disclosures (continued)

Name of Director	Nature of Interest Core Business
Bruce Cotterill	Director Deed of Indemnity
	Director & Chairman Asset Plus Limited
	Director NPT Management Team Limited
	Director NPT Capital Limited
	Director The National PropertyTrust No. 2 Limited
	Director Eastgate ShoppingCentre Limited
	Director 99 Albert Street Limited
	Director 22 Stoddard Road Limited
	Director NPT 10 Limited
	Director NPT 11 Limited
	Director & Chairman MOVE Logistics Limited
	AdvisoryBoard Member International DrugDetection Agency
	Independent Board member Duncan Cotterill
	Independent Board member Nexia New Zealand
	Chairman SwimmingNew Zealand
	Director Blue Ocean Capital Limited
	Director InterAct Business AdvisoryLtd
	Director The Board Limited
	Consultant Barfoot & Thompson
Paul John Duffy	Director Deed of Indemnity
	Director Asset Plus Limited
	Director NPT Management Team Limited
	Director NPT Capital Limited
	Director The National PropertyTrust No. 2 Limited
	Director Eastgate ShoppingCentre Limited
	Director 99 Albert Street Limited
	Director 22 Stoddard Road Limited
	Director NPT 10 Limited
	Director NPT 11 Limited
	Director Able scaffoldingLimited
	Director PKD Investments Limited
	Director Moturoa Island Wine Limited
	Director Leighs Construction Holdings Limited
	Director Hayphil Investments Limited
	Director WhitbyVillage(2009)Limited
	Director PKD Investments Limited
	Director Boulder BayWine CompanyLimited
	Director Cook St Limited
	Director Carbine Road Limited
	Director McDonald St Limited

2 8

Corporate Govenance (continued)

General Disclosures (continued)

Name of Director	Nature of Interest Core Business
PaulJohn Duffy	Director Augusta Value Add Fund No.1 Limited
	Director Kitchener St Limited
	Director 151 Victoria Street West Limited
	Director Leighs Construction Limited
	Director Augusta Capital Limited
	Director Augusta Funds Management Limited
	Director PhilhayInvestments Limited
	Director Motu Roa Island Limited
	Director TwentyTwentyPropertyFinance Limited
	Director TwentyTwentyPropertyPartners Limited
	Director Hayphil PropertyLimited
	Director PKD Investments(No.2)Limited

Share Dealings by Directors

There were no share dealings by the Directors in the year ending 31 March 2018.

Securities of the Company in which each Director had a relevant interest as at 31 March 2018:

		Security	Nature of
Director	Holding	Held	Relevant Interest
Carol Campbell	50,000	Shares	Registered holder and benefcial owner

Indemnity and Insurance

Audit Fees

Amounts paid to the Auditor of the Company:

	GROUP	GROUP
	2018	2017
	$’000	$’000
Grant Thornton Audit Fees	79	55
In addition to the audit fee
the following other fees
werepaid to Auditors:
Review Engagement	29	29
Financial ModellingServices	-	47
Other Consultancy	-	3
Total	108	134

The Company has affected Directors and Officers liability insurance at prevailing rates for all Directors.

The Company and its subsidiaries have continued to indemnify the Directors for any costs referred to in Section 162(3) of the Companies Act 1993 and any liability or costs referred to in Section 162(4) of the Act.

Donations

The Company did not make any donations in the year to 31 March 2018 (2017: Nil).

2 9

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2018 Financials
Financial Statements for the year ended 31 March 2018
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3 0

Financial Statements

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Contents

Consolidated Statement
of Comprehensive Income	32
Financial Statements	33
Consolidated Statement of
Changes in Shareholders’ Funds	33
Consolidated Statement of
Financial Position	34
Consolidated Statement
of Cash Flows	35
Reconciliation of Net Proft to Net Cash Infow from
Operating Activities	36
Notes to the Consolidated
Financial Statements	37
Independent
Auditors Report	58
Shareholder Statistics	61
Directory	63

The financial statements were approved by the board of NPT Limited and released to the NZX on 29 May 2018. At that date, the company was called NPT Limited and the financials therefore refer to NPT Limited.

3 1

Financial Statements

Consolidated Statement of Comprehensive Income

For the year ended 31 March 2018

		Group	Group
		2018	2017
	Note	$’000	$’000
Gross Rental Income		16,694	17,152
Other Income		5	30
Unrealised Change in Fair Value of Interest Rate Swaps	10	79	732
Sale of Management Rights	25	4,500	-
Total Income		21,278	17,914
Direct Property Operating Expenses	6	(4,995)	(5,276)
Net Finance Costs	7	(2,821)	(2,726)
Administration Expenses	8	(2,951)	(2,612)
Net Loss on Sale of Plant and Equipment	14	(29)	(87)
Unrealised Change in Fair Value of Property	12	(2,945)	(1,651)
Net (Loss) on Sale of Investment Property	12	(2,970)	-
Transaction Costs	23	(686)	(1,339)
Total Expenses		(17,397)	(13,691)
Proft Before Income Tax		3,881	4,223
Income Tax Expense	9	(786)	(1,150)
Net Proft After Taxation		3,095	3,073
Other Comprehensive Income		-	-
Total Comprehensive Income		3,095	3,073
Earnings Per Share		Cents per Share
Basic and Diluted Earnings Per Share	19	1.91	1.90

The notes set out on pages 37 to 57 form part of, and should be read in conjunction with, the consolidated financial statements

32

Financial Statements

Consolidated Statement of Changes in Shareholders’ Funds

For the year ended 31 March 2018

		Contributed	Retained	Attributable to Owners of
		Capital	Earnings	the Group
	Note	$’000	$’000	$’000
Shareholders' Funds at 1 April 2016		134,089	(14,297)	119,792
Net Proft after Taxation		-	3,073	3,073
Distributions Paid and Payable to Shareholders	20	-	(5,792)	(5,792)
Other Comprehensive Income		-	-	-
Shareholders' Funds at 31 March 2017		134,089	(17,016)	117,073
Shareholders' Funds at 1 April 2017		134,089	(17,016)	117,073
Net Proft after Taxation		-	3,095	3,095
Distributions Paid and Payable to Shareholders	20	-	(5,829)	(5,829)
Other Comprehensive Income		-	-	-
Shareholders' Funds at 31 March 2018		134,089	(19,750)	114,339

The notes set out on pages 37 to 57 form part of, and should be read in conjunction with, the consolidated financial statements.

33

Financial Statements

Consolidated Statement of Financial Position

As at 31 March 2018

		Group	Group
		2018	2017
	Note	$’000	$’000
Current Assets
Cash and Cash Equivalents		472	2,030
Trade and Other Receivables	11	339	462
Prepayments		340	616
Investment PropertyHeld for Sale	12	43,814	-
Total Current Assets		44,965	3,108
Non-Current Assets
Investment Properties	12	124,556	178,173
Plant & Equipment	14	80	1,068
Total Non-Current Assets		124,636	179,241
Total Assets		169,601	182,349
Current Liabilities
Trade and Other Payables	15	2,227	2,589
Deposit Received on PropertyHeld for Sale	12	4,700	-
Tax Payable	9	462	296
Total Current Liabilities		7,389	2,885
Non-Current Liabilities
Bank and Other Loans	16	44,500	58,500
Deferred Tax Liability	9	2,533	2,972
Interest Rate Swaps	10	840	919
Total Non-Current Liabilities		47,873	62,391
Shareholders' Funds
Contributed Capital	17	134,089	134,089
Retained Earnings	18	(19,750)	(17,016)
Total Shareholders' Funds		114,339	117,073
Total Shareholders' Funds and Liabilities		169,601	182,349

The Board of NPT Limited approved the consolidated financial statements for issued on 29 May 2018.

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Bruce Cotterill

==> picture [122 x 20] intentionally omitted <==

Carol Campbell

Chairman Chair Audit and Risk Committee

The notes set out on pages 37 to 57 form part of, and should be read in conjunction with, the consolidated financial statements

3 4

Financial Statements

Consolidated Statement of Cash Flows

For the year ended 31 March 2018

	Group	Group
	2018	2017
Note	$’000	$’000
Cash Flows from Operating Activities
Cash wasprovided from/(applied to):
Gross Rental Income	17,286	16,762
Interest Income	41	69
Taxation Paid	(1,057)	(1,055)
Other Income	5	285
OperatingExpenses	(6,908)	(9,123)
Interest Expense	(2,902)	(2,794)
Net Cash Infow from Operating Activities	6,465	4,144
Cash Flows from Investing Activities Cash wasprovided from/(applied to):
Sale of Investment Property	8,250	-
Cost of Disposal of Investment Property	(220)	-
Deposit Received from Investment PropertyHeld for Sale 12	4,700	-
Plant and Equipment	-	(584)
Capital Expenditure on Investment Properties	(4,738)	(8,201)
Transaction Costs	(686)	(1,138)
Sale of Management Rights 25	4,500	-
Net Cash(Outfow) from Investing Activities	11,806	(9,923)
Cash Flows from Financing Activities Cash wasprovided from/(applied to):
(Repayment)/Drawdown of Bank and Other Loans(Secured)	(14,000)	10,500
Distributions made to Shareholders 20	(5,829)	(5,792)
Net Cash(Outfow) / Infow from Financing Activities	(19,829)	4,708
Net Increase/(Decrease)in Cash and Cash Equivalents	(1,558)	(1,071)
Cash and Cash Equivalents at the Beginningof the Year	2,030	3,101
Cash and Cash Equivalents at the End of the Year	472	2,030

The notes set out on pages 37 to 57 form part of, and should be read in conjunction with, the consolidated financial statements.

35

Financial Statements

Reconciliation of Net Profit to Net Cash Inflow from Operating Activities

For the year ended 31 March 2018

	Group	Group
	2018	2017
	$’000	$’000
Net Proft after Taxation	3,095	3,073
Items Classifed as Investing or Financing Activities:
Unrealised(Gain)/Loss in Fair Value of Investment Properties	2,945	1,651
Transaction Costs	686	1,339
Loss on Disposal of Investment Property	2,750	-
Loss on Sale of Plant and Equipment	29	87
Cost of Sale of Print Place	220	-
Unrealised Loss in Fair Value of Interest Rate Swaps	(79)	(732)
Movement in Deferred Taxation	(439)	78
Sale of Management Rights	(4,500)	-
Movements in Working Capital Items:
Accounts Receivable and Prepayments	868	(328)
Trade and Other Payables	367	(1,170)
Taxation Payable	166	17
Non-Cash Item
Depreciation	357	129
Net Cash Infow from Operating Activities	6,465	4,144

Reconciliation of Liabilities arising from Financing Activities

The changes in the Group’s liabilities arising from financing activities can be classifed as follows:

Bank and Other Loans
1 April 2017	58,500
Repayments	(14,000)
31 March 2018	44,500
1 April 2016	48,000
Loan Increases	10,500
31 March 2017	58,500

The notes set out on pages 37 to 57 form part of, and should be read in conjunction with, the consolidated financial statements

36

Notes to the Consolidated Financial Statements

For the year ended 31 March 2018

1. Reporting Entity

The reporting entity is the consolidated group comprising NPT Limited (“the Company”) and its New Zealand subsidiaries together referred to as “the Group”. NPT Limited is a limited liability company incorporated and domiciled in New Zealand. NPT Limited is registered under the Companies Act 1993, is listed on the New Zealand Stock Exchange (NZX) and is an FMC reporting entity under the Financial Markets Conduct Act 2013.

The principal activity of the Group is investing in industrial, retail and commercial property in New Zealand.

2. Statement of Compliance and Basis of Preparation

These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (‘NZ GAAP’). They comply with New Zealand equivalents to International Financial Reporting Standards (‘NZ IFRS’) and other applicable Financial Reporting Standards, as appropriate for a profit-orientated entity that falls into the Tier 1 for profit category as determined by the New Zealand Accounting Standards Board.

The consolidated financial statements have been prepared under the assumption that the Group operates on a going concern basis and also comply with International Financial Reporting Standards (‘IFRS’) issued by the International Accounting Standards Board.

These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Practice in New Zealand (‘NZ GAAP’) and the requirements set out in section 7 of the Financial Markets Conduct Act 2013 and the Main Board Listing Rules of the NZX.

Basis of Measurement

The consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of investment properties and certain financial instruments. They are the same accounting policies as were applied for the year ended 31 March 2017 consolidated financial statements.

Cost is based on the fair value of the consideration given in exchange for assets.

Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the concepts of relevance and reliability, therefore ensuring that the substance of the underlying transactions or other events are reported.

Functional and Presentation Currency

The consolidated financial statements are presented in New Zealand Dollars (NZD), which is the Group’s

functional currency, rounded to the nearest thousand dollars (000’s) except in certain notes where disclosure may be to the dollar.

Critical Judgments in Applying Accounting Policies and Key Sources of Estimation Uncertainty

In the application of NZ IFRS, management are required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

In particular, 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 these Consolidated Financial Statements are described in the following notes:

• Valuation of Investment Properties (Note 12)

• Recognition of Deferred Tax (Note 9)

3. Significant Accounting Policies

Changes in Accounting Policy

In prior years certain lease fitouts, plant and equipment and furniture and fittings have been recorded separately from the investment properties as plant and equipment. These have been reclassified as investment property at reporting date as management has determined they would likely include these items in any sale of property. Note 14 discloses the impact of this reclassification.

In addition the Group’s policy to provide details on its financing activities was changed as a result of the following standard. The amendments to NZ IAS 7 ‘Statements of Cash Flows’, effective 1 January 201, require the Group to provide disclosures about the changes in liabilities from financing activities. The Group categorises those changes into changes arising from cash flows and non-cash changes with further sub-categories as required by NZ IAS 7.

The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial statements.

37

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

Basis of Consolidation

(a) Subsidiaries

The consolidated financial statements incorporate the assets, liabilities, equity, income, expenses and cash flows of entities controlled by NPT Limited at the end of the reporting period or from time to time during the reporting period. A controlled entity is any entity over which NPT Limited has the power to direct relevant activities, exposure, or rights, to variable returns from its involvement with the investee, and the ability to use its power over the investee to affect the amount of investor return.

Consistent accounting policies are employed in the preparation and presentation of the consolidated financial statements.

Accounting policies of subsidiaries are consistent with the policies adopted by the Company.

All material intra-group transactions, balances, income and expenses are eliminated on consolidation.

(b) Investment Properties

Investment properties, which are properties held to earn rentals and/or for capital appreciation, are initially brought to account at cost plus related costs of acquisition. After initial recognition, investment properties are stated at fair value as determined by an independent registered valuer. Investment properties are valued annually. The fair value is based on market values, being the estimated amount for which a property could be exchanged on the date of the valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

In the absence of an active market, alternative valuation techniques are utilised which may include discounted cash flow projections, capitalisation of income or sales comparison approach as appropriate to the property being valued. The valuations are prepared by considering the aggregate of the estimated cash flows expected from rental income, the occupancy rates, average lease terms and capitalisation rates which reflect the current market conditions. The estimate of fair value is a judgement which has been made based on the market conditions which apply at each reporting date.

Any gains or losses arising from changes in the fair value of investment properties are included in the Consolidated Statement of Comprehensive Income in profit or loss in the period in which the change occurred.

(c) Plant and Equipment

Each class of plant and equipment is stated at cost less accumulated depreciation and any impairment. Any gains or losses arising from disposal of plant and equipment are included in Profit and Loss.

Depreciation

Depreciation is charged on a straight-line basis to write down the cost of plant and equipment to its estimated residual value over its estimated useful life. Plant and equipment residual values are reviewed annually.

Summary of rates used:

Summary of rates used:
Computer Equipment & Software	30% - 40%
Plant & Equipment	7% - 67%
Furniture & Fittings	8.5% - 30%
Lease Fitouts	8.40%

(d) Operating Leases

(i) Group as Lessor

Property leases under which all the risks and rewards of ownership are effectively retained by the lessor (the Group) are classified as operating leases. Annual rental income and expenditure are included in the Consolidated Statement of Comprehensive Income on a systematic basis over the term of the lease.

(ii) Group as Lessee

Property leases are recognised as an expense on a straight line basis over the lease term.

(e) Lease Incentives

In the event lease incentives are provided to lessees, such incentives are recognised as an asset. The aggregate benefits provided are amortised to the Consolidated Statement of Comprehensive Income on the straight line basis over the period of the lease as a reduction in rental income, except where another systematic basis is more representative of the time pattern in which benefits provided are consumed.

(f) Impairment of Assets

Assets other than investment properties and deferred tax assets are tested for impairment whenever events or changes in circumstance indicate that the carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows that are largely independent of the cash flows from other assets or groups of assets (cash generating units).

(g) Borrowing Costs

Borrowing costs, interest payable on borrowings within the consolidated Statement of Comprehensive Income and gain/loss on interest rate swaps are recognised as an expense in the profit or loss when incurred. Borrowing costs incurred that do not relate to qualifying assets are treated as an expense and are not capitalised.

3 8

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

(h) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable and represents rental received and property expenses recovered in the normal course of business. The following specific recognition criteria must be met before revenue is recognised:

combination) which affects neither taxable income nor accounting profit.

If a deferred tax liability or asset arises from investment property that is measured at fair value, there is a rebuttable assumption that the carrying amount of the investment property will be recovered through sale. The presumption has not been rebutted.

(i) Rental Income

Rental Income from Operating Leases is recognised on a straight line basis over the term of the relevant lease including any lease incentives.

(ii) Interest Income

Interest Income is recognised on an effective interest method.

(iii) Sale of Investment Properties/Non-Current Assets Held for Sale

Revenue on the sale of Investment Properties/NonCurrent Assets Held for Sale is recognised when the risks and rewards have transferred to the buyer.

(iv) Property Management Income

Property management income is recognised on completion of service.

(i) Taxation

The tax expense recognised in the Profit or Loss comprises the sum of deferred tax and current tax not recognised in other comprehensive income or directly in equity.

(i) Current Tax

Current tax is calculated by reference to the amount of income taxes payable or recoverable in respect of the taxable profit or tax loss for the period. It is calculated using tax rates and tax laws that have been enacted or substantively enacted by reporting date. Current tax for current and prior periods is recognised as a liability (or asset) to the extent it is unpaid (or refundable).

The Group holds investment properties for the purpose of capital appreciation and rental income and therefore the measurement of any related deferred tax reflects the tax consequences of recovering the carrying amount of the investment property entirely through sale.

In New Zealand there is no capital gains tax, therefore the tax consequences on sale will be limited to depreciation previously claimed for tax purposes (i.e. depreciation recovered).

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries except where the consolidated entity is able to control the reversal of the temporary differences and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets arising from deductible temporary differences associated with these investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised based on tax rates that have been enacted or substantively enacted at reporting date. Deferred tax is charged or credited in the Consolidated Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity.

(j) Goods and Services Tax (GST)

(ii) Deferred Tax

Deferred tax is calculated by using the liability method in respect of temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and the corresponding tax base of those items.

Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are recognised to the extent that it is probable that sufficient taxable income will be available against which deductible temporary differences or unused tax losses and tax credits can be utilised. However, deferred tax assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial recognition of assets and liabilities (other than as a result of a business

All items in the Consolidated Statement of Financial Position are stated exclusive of GST, with the exception of receivables and payables, which are stated inclusive of GST. All items in the Consolidated Statement of Comprehensive Income are stated exclusive of GST.

Cash flows are included in the Consolidated Statement of Cash Flows on a net basis. The GST component of cash flows arising from investing and financing activities which is recoverable from, or payable to the taxation authority, are classified as an operating cash flow.

(k) Cash and Cash Equivalents

Cash and cash equivalents comprise cash on hand, demand deposits, and other short-term highly liquid

3 9

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.

(l) Financial Instruments

Financial Assets and Financial Liabilities are recognised on the Consolidated Statement of Financial Position when the Group becomes a party to the contractual provisions of the instrument.

(i) Accounts Receivable

Accounts Receivable are measured at initial recognition at fair value and are subsequently measured at amortised cost using the effective interest rate method. Appropriate allowances for estimated irrecoverable amounts are recognised in the Consolidated Statement of Comprehensive Income when there is objective evidence that the asset is impaired. The allowance recognised is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the effective interest rate computed at initial recognition.

(ii) Accounts Payable

Accounts Payable are initially measured at fair value and subsequently measured at amortised cost using the effective interest rate method.

(iii) Equity Instruments

Equity Instruments issued by the Group are recorded as the proceeds are received, net of direct issue costs.

(iv) Fair Value Estimation

The fair value of financial instruments traded in active markets is based on quoted market prices as at each reporting date.

The fair value of derivative financial instruments is based on quoted market prices. Where such prices are not available, use is made of discounted cash flow analysis using the applicable yield curve for the duration of the instruments.

The nominal value less estimated credit risk adjustments of accounts receivable and payable are assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market vs. interest rate that is available to the Group for similar financial instruments.

(v) Loans and Borrowings

All loans and borrowings are initially recognised at fair value plus transaction costs. After initial recognition, these loans and borrowings are subsequently measured at amortised cost using the effective interest rate method which allocates the cost through the expected life of the

loan or borrowing. Amortised cost is calculated taking into account any issue costs and any discount or premium on drawdown. Interest accrued on Loans and Borrowings is separately disclosed under Trade and Other Payables (refer Note 16).

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability, or where appropriate, a shorter period, to the net carrying amount of the financial instrument.

(vi) Derivative Financial Instruments

The Group’s activities expose it primarily to the financial risk of changing interest rates. The Group therefore uses interest rate swap contracts to manage these exposures.

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at the reporting date. The gain/loss on re-measurement to fair value is recognised in Profit or Loss within the Consolidated Statement of Comprehensive Income.

In determining the fair value of derivatives, an adjustment would be made to reflect the creditworthiness of the counterparty only if material.

4. Standards and Interpretations on Issue not yet adopted

The Group has elected not to early adopt the following standards, which have been issued by the International Accounting Standards Board and the New Zealand Accounting Standards Board.

NZ IFRS 9 Financial instruments (Effective from 1 January 2018)

The New Zealand Accounting Standards Board (NZASB) issued the completed version of NZ IFRS 9 Financial Instruments, bringing together the classification and measurement, impairment and hedge accounting to replace NZ IAS 39 Financial Instruments: Recognition and Measurement and all previous versions of NZ IFRS 9.

NZ IFRS 15 Revenue from Contracts with Customers (Effective from 1 January 2018)

NZ IFRS 15 establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The core principle of NZ IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

40

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

NZ IFRS 16 Leases (Effective from 1 January 2019)

NZ IFRS 16 changes the relevant information to be reported by lessors and lessees with a view to faithful representation of information to the users of financial statements so they can assess the effect leases have on cash flow, financial performance and the financial position of the entity. The standard requires the lessee to recognise assets and liabilities for the rights and obligations created by those leases. Lessors reporting

requirements are similar to the previous standard NZ IAS 17 Leases.

The Directors have evaluated the impact of these new standards on the consolidated financial position and performance of the Group. Their current preliminary evaluation has indicated that there is no material effect on the Group’s result in adopting the new standards but additional disclosures will be required.

5. Operating Profit before Fair Value Movements, Disposals and Taxation

	Group	Group
	2018	2017
	$’000	$’000
Gross Rental Income	16,694	17,152
Other Income	5	30
Total Income	16,699	17,182
Direct PropertyOperatingExpenses	(4,995)	(5,276)
Net Income	11,704	11,906
Administration Expenses	(2,951)	(2,612)
Gross Operating Proft	8,753	9,294
Interest Income	41	69
Interest and Finance Charges	(2,862)	(2,795)
Net Finance Costs	(2,821)	(2,726)
Operating Proft before Fair Value Movements, Disposals and Taxation	5,932	6,568

6. Direct Property Operating Expenses

6. Direct Property Operating Expenses
	Group	Group
	2018	2017
	$’000	$’000
Tenant OperatingExpenses	(4,120)	(4,009)
Owner OperatingExpenses	(802)	(994)
Bad Debts	(29)	(14)
Movement in allowance for Doubtful Debts	(44)	(259)
Total Direct Property Operating Expenses	(4,995)	(5,276)

41

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

7. Net Finance Costs

7. Net Finance Costs
	Group	Group
	2018	2017
	$’000	$’000
Interest Income	41	69
Interest and Finance Charges	(2,862)	(2,795)
Net Finance Costs	(2,821)	(2,726)

8. Administration Expenses

8. Administration Expenses
	Group	Group
	2018	2017
	$’000	$’000
Audit Fees	(108)	(87)
Directors Fees	(279)	(234)
Employee Costs	(931)	(1,160)
RedundancyCosts	(726)	-
Offce Costs	(392)	(316)
Professional Fees	(313)	(625)
Registryand Stock Exchange Fees	(113)	(105)
Shareholder Communications	(66)	(85)
Total Administration Expenses	(2,951)	(2,612)

Fees for Grant Thornton comprise the following:

Fees for Grant Thornton comprise the following:
	Group	Group
	2018	2017
	$’000	$’000
Other Assurance Services	(29)	(29)
StatutoryAudit	(79)	(58)
Total Fees Paid to Grant Thornton	(108)	(87)

42

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

9. Income Tax	Group	Group
	2018	2017
	$’000	$’000
Net Proft Before Taxation	3,881	4,223
Taxation at 28%	1,087	1,182
Less Taxation Efect of Permanent Diferences
Loss/(Gain)on Realisation of Investment Properties	832	(389)
Investment Properties Depreciation	(657)	-
Adjustment for non-recovered Depreciation	(272)	-
Investment Properties Gain(Loss)	824	-
Loss on Disposal	(7)	-
Sale of Management Rights	(1,260)	-
Transaction Costs	192	-
Other	47	357
Taxation Expense /(Beneft) per the Statement of Comprehensive Income	786	1,150
The Income Tax Expense is represented by:
Current Tax
Current Year Tax Provision	(1,223)	(1,095)
Total Current Tax Movement	(1,223)	(1,095)
Current Tax Asset / (Liability)
OpeningBalance	(296)	(279)
Current Year Tax Provision	(1,223)	(1,095)
Tax Paid /(refunded)	1,057	1,078
Total Current Tax Asset /(Liability)	(462)	(296)
Deferred Tax
Lease Incentives	98	49
Unrealised Interest Rate SwapGain /(Loss)	(22)	(205)
Depreciation on Investment Properties	272	-
Investment PropertySale	209	-
Provisions	(119)	86
Other	-	(8)
Total Deferred Tax Movement	438	(78)
	Group	Group
	2018	2017
Deferred Tax Asset / (Liability)	$’000	$’000
Investment Properties Depreciation Recovery	(2,868)	(3,350)
Interest Rate Swaps	235	257
Other	100	121
Balance at the End of the Period	(2,533)	(2,972)

43

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

10. Interest Rate Swaps

The Group manages its interest rate risk by using floatingto-fixed Interest Rate Swaps which have the economic effect of converting interest on borrowings from floating rates to fixed rates.

Changes in the fair value of Swaps are recognised in the Consolidated Statement of Comprehensive Income. Any unrealised change is expected to unwind over the longer

term. Swaps have been recognised as non-current as the current portion as disclosed in Note 22 is not considered material for separate disclosure in the Statement of Financial Position.

The Group has four interest rate swaps currently in place, with the following values: The first for $20m will expire on 7 May 2019, the second for $5m expires on 22 April 2021, the third, also for $5m, expires on 30 September 2021, and the fourth for $10m will expire on 8 May 2022.

	Group	Group
	2018	2017
	$’000	$’000
Balance at the Beginningof the Period	919	1,651
Current Year Fair Value Change of Swaps	(79)	(732)
Balance at the End of the Period	840	919

11. Trade and other Receivables

11. Trade and other Receivables
	Group	Group
	2018	2017
	$’000	$’000
Trade Receivables	353	494
Allowance for Doubtful Debts	(91)	(55)
Total Accounts Receivable	262	439
Other Loans and Receivables	77	23
Total Trade and Other Receivables	339	462

12. Investment Properties

12. Investment Properties
	Group	Group
	2018	2017
Reconciliation of Carrying Amount	$’000	$’000
Balance at the Beginningof the Period	175,956	171,265
Disposal of Investment Property	(11,008)	-
Work in Progress	119	-
BuildingImprovements	15	-
Reclassifcations from Work in Progress	5,726	4,736
Reclassifcations from Plant and Equipment	977	-
Capitalised Lease Incentives and Commissions	(470)	1,606
Revaluation of Investment Properties	(2,945)	(1,651)
Investment PropertyHeld for Sale Reclassifed as current asset	(43,814)	-
Balance at the End of the Period	124,556	175,956

44

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

All properties that will not be sold in the next 12 months were valued on a fair value basis at each reporting date by independent registered valuers, listed below, who are members of the Institute of Valuers of New Zealand. These valuers are experienced in valuing commercial properties.

The fair values of the Investment Properties at each reporting date are as follows:

					Group
		Capitalisation	Occupancy	WALT	2018
Description	Valuer	Rate	Rate %	Year	$’000
Eastgate Shopping Centre
Cnr Buckleys Road & Linwood Avenue,Christchurch	Jones Lang LaSalle	8.00%	94.30%	4.7	58,910
Heinz Wattie's Warehouse
113 Elwood Road,Hastings	Colliers	8.13%	100.00%	8.9	27,439
Roskill Centre
22 Stoddard Road,Auckland	Colliers	6.25%	100.00%	3.8	38,049
			97.40%	4.4	124,398

Print Place was sold on 29 March for $8.25 million. This resulted in a loss on sale of this property of $2.97 million, recognised in the Consolidated Statement of Comprehensive Income profit or loss.

The AA Centre has an unconditional Sale and Purchase Agreement in place that is expected to settle 12 July

1. The sales price is $47 million and a deposit of $4.7 million has been received, the deposit is shown in current liabilities. The property is classified as held for sale and is measured at fair value less costs to sell. Fair value is based up on the contracted sale price less known costs to complete refurbishment that NPT limited is contractually obliged to perform.

	Group
	12 Months 2018
Investment Property Held for Sale	$’000
Contract Sale Price AA Centre	47,000
WIP	(68)
Lease Incentives	(39)
Contractual Cost to Complete cladding	(2,584)
Cost of Sale	(495)
Sale Price	43,814

45

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

					Group
Group 2017		Capitalisation	Occupancy	WALT	2017
Description	Valuer	Rate	Rate %	Year	$’000
AA Centre
99 Albert Street,Auckland	Jones LangLaSalle	7.63%	91.58%	2.1	41,129
Eastgate Shopping Centre
Cnr Buckleys Road & Linwood Avenue,Christchurch	Jones Lang LaSalle	8.13%	96.15%	4.5	60,574
Print Place
17 Print Place,Christchurch	Jones LangLaSalle	9.50%	77.81%	1.3	11,026
Heinz Wattie's Warehouse
113 Elwood Road, Hastings	Jones LangLaSalle	8.13%	100.00%	9.8	27,162
Roskill Centre
22 Stoddard Road, Auckland	Jones LangLaSalle	6.38%	100.00%	4.9	36,065
					175,956

Measurement of Fair Value

(i) Fair Value Hierarchy

The Group’s investment properties were valued at 31 March 2018 by independent registered valuers who have recent experience in the locations and segments of the investment properties valued. For all investment properties, their current use equates to the highest and best use.

Discussions of valuation processes and results are held between the Management Team and the Audit and Risk Committee on an annual basis where they verify all major inputs to the independent valuation report, assess property valuation movements when compared to the prior year valuation report and determine whether there are any changes in fair values.

The investment properties are stated at fair value as determined by independent registered valuers. The valuation basis, which conforms to the New Zealand Property Institute’s Valuation for Financial Reporting Purposes Practice Standard, was determined by reference to market evidence of transaction prices for similar properties. Accordingly, fair value is the amount at which the properties could be sold in an arm’s length transaction between willing parties, in an active market for similar properties in the same location and condition and subject to similar leases. However, where an active market is absent, in line with usual commercial valuation practice, the valuations are prepared by considering the historical transactions, the aggregate of the estimated cash flows expected from rental income, the occupancy rates, average lease terms and capitalisation rates which reflect the current market conditions.

In deriving fair value under each approach all assumptions are compared, where possible, to the Direct Comparison Approach using the market based evidence and transactions for properties with similar locations, condition and quality of accommodation and analysis of the rate per square metre of net lettable area. The adopted Fair Value is a weighted combination of both the Capitalisation and Discounted Cash Flow approaches.

Where recent comparable market based evidence and transactions are not available, alternative valuation techniques are utilised which may include discounted cash flow projections, capitalisation of income and sales comparison approaches as appropriate to the property being valued. As each of the investment properties are under $100 million, most of the properties have recent transactional evidence to support their valuation.

Based on the inputs used, the Direct Comparison valuation has been categorised as Level 2 Fair Value and Capitalisation of Net Income and Discounted Cash Flow have been categorised as Level 3. The Group has adopted Jones Lang LaSalle’s valuation for Eastgate Shopping Centre and Colliers’ valuations for the rest of the investment properties.

	Group
	2018
Loss on Sale of Print Place	$’000
OpeningCarryingValue	11,026
Plus Cost of Sale Transaction	194
Less Sale Price	(8,250)
Loss on Sale	2,970

46

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

(ii) Level 3 Fair Value

Valuation Techniques and Significant Unobservable Inputs

The following table shows the Capitalisation of Net Income and Discounted Cash Flow Level 3 valuation techniques used in measuring the fair value of investment property. All investment properties at 31 March 2018 have been categorised within Level 3 of the fair value hierarchy.

==> picture [482 x 284] intentionally omitted <==

----- Start of picture text -----

Sensitivity Of Fair Value To
Changes In the estimated
Valuation Valuation fair value would increase /
Description $’000 Technique Unobservable Inputs (decrease):
The capitalisation rate range applied is Retail and office rental
6.25% - 8.125%. growth was higher (lower)
The rental reversion as a rate of investment
Investment Capitalisation property value rate range is -7.43% - 8.0%. This is Retail and office rental
124,398
Properties of Net Income an adjustment for those tenancies whose rental growth was higher (lower).
is above or below the market rate.
The capital expenditure as a rate of investment
Capital expenditure was
property value rate range is 0.33% - 1.37% over
lower (higher).
the next 24 months.
The discount rate range applied is 8.50% The discount rate was lower
- 9.25%. (higher).
Occupancy rate range applied is 94.3% - The occupancy rate was
100.00%. higher (lower).
Discounted
Cash Flow Rental growth rate range is 1.0% - 3.0% over Office rental growth was
10 years. higher (lower).
A letting up period range of 3 - 8 months has
Capital expenditure was
been allowed at the end of each existing lease of
lower (higher).
the properties.
----- End of picture text -----

47

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

13. Investment in Subsidiaries

13. Investment in Subsidiaries
	Percentage Held
	Group 31 Mar 2018 Group 31 Mar 2017
Eastgate ShoppingCentre Limited	100% 100%
The National PropertyTrust No 2 Limited	100% 100%
22 Stoddard Road Limited	100% 100%
99 Albert Street Limited	100% 100%
NPT Management Team Limited	100% 100%
NPT 10 Limited	100% 100%
NPT 11 Limited	100% 100%

All of the subsidiaries are wholly owned companies incorporated in New Zealand with a 31 March annual reporting date.

14. Plant and Equipment

14. Plant and Equipment
	Lease	Plant &	Furniture &	Computer
	Fitouts	Equipment	Fittings	Equipment	Total
Group 2018	$’000	$’000	$’000	$’000	$’000
Cost
Balance at the Beginningof the Period	524	535	378	138	1,575
Additions	36	262	76	16	390
Disposals	(16)	(19)	(18)	-	(53)
Reclassifed as Investment Property	(544)	(758)	(115)	(89)	(1,506)
Balance at the End of the Period	-	20	321	65	406
Accumulated Depreciation
Balance at the Beginningof the Period	(190)	(103)	(118)	(96)	(507)
Depreciation	(48)	(76)	(203)	(30)	(357)
Disposals	-	3	6	-	9
Reclassifed as Investment Property	238	156	50	85	529
Balance at the End of the Period	-	(20)	(265)	(41)	(326)
Net Book Value at the End of the Period	-	-	56	24	80

Totals across the plant and equipment classes are showing the effect of the change in accounting policy in which plant and equipment that are an integral part of the buildings have been included in the investment property valuations.

The Net Loss on Sale of Plant and Equipment shown in the Consolidated Statement of Comprehensive Income is included in disposals.

4 8

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

	Lease	Plant &	Furniture &	Computer
	Fitouts	Equipment	Fittings	Equipment	Total
Group 2017	$’000	$’000	$’000	$’000	$’000
Cost
Balance at the Beginningof the Period	422	173	368	114	1,077
Additions	102	378	80	25	585
Disposals	-	(16)	(69)	(2)	(87)
Balance at the End of the Period	524	535	378	138	1,575
Accumulated Depreciation
Balance at the Beginningof the Period	(148)	(69)	(89)	(71)	(377)
Depreciation	(42)	(36)	(26)	(26)	(130)
Disposals	-	2	(3)	1	-
Balance at the End of the Period	(190)	(103)	(118)	(96)	(507)
Net Book Value at the End of the Period	334	432	260	42	1,068

15. Trade and other Payables

15. Trade and other Payables
	Group	Group
	2018	2017
	$’000	$’000
Accrued Interest and Fees Payable to Bank	284	324
GST Payable	742	-
Rent in Advance	33	146
Other Creditors and Accruals	1,168	2,119
Total Trade and Other Payables - Current	2,227	2,589

16. Bank and other Loans

16. Bank and other Loans
	Group	Group
	2018	2017
	$’000	$’000
Bank of New Zealand(Secured)	44,500	58,500
Total Bank Loans - Non-Current	44,500	58,500
Agreed Bank Facility	70,000	70,000

49

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

The Group has a $70 million banking facility arranged with the Bank of New Zealand that is secured by way of General Security Agreements granted by NPT Limited and each subsidiary of the Company. In addition, the facility is secured by registered first mortgages over all of the real property assets and the cross guarantee of each of the Group’s subsidiary companies. The facility is due to expire on 22 July 2020.

The weighted average cost of funds for bank debt under the facility, including margin and line fee, at the reporting date was 5.42% (2017: 5.08%).

The Group recognises the risk of the fluctuating economic value of financial instruments because of changes in interest rates in its attempt to manage its cash flow

interest rate risk. The Group manages this risk by using floating-to-fixed Interest Rate Swaps.

Generally, the Group raises borrowings at floating rates and swaps them into fixed rates that are lower than those available if the Group borrowed at fixed rates directly. Under the Interest Rate Swaps, the Group agrees with other parties to exchange the difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional principal amounts. Changes in the fair value of Interest Rate Swaps are recognised in Profit or Loss within the Statement of Comprehensive Income.

Refer to Note 22, Financial Instruments for additional information.

17. Contributed Capital

17. Contributed Capital
Group 2018	Group	Group
	2018 No of shares 2018 $’000	2017 No of shares 2017 $’000
FullyPaid Shares on Issue	161,920,433 134,089	161,920,433 134,089
Movement in Shares on Issue
Balance at the Beginningof the Period	161,920,433 134,089	161,920,433 134,089
Balance at the End of the Period	161,920,433 134,089	161,920,433 134,089

All shares have equal voting rights and share equally in distributions and any surplus on winding up.

18. Retained Earnings

18. Retained Earnings
	Group	Group
	2018	2017
	$’000	$’000
Balance at the Beginningof the Period	(17,016)	(14,297)
Net Proft After Taxation	3,095	3,073
Distributions Paid and Payable to Shareholders	(5,829)	(5,792)
Balance at the End of the Period	(19,750)	(17,016)

5 0

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

19. Earnings Per Share

Earnings per Share is calculated by dividing the Profit or Loss attributable to Shareholders (excluding distributions) of the Group by the weighted average number of ordinary shares on issue during the period.

	Group	Group
	2018	2017
	$’000	$’000
Proft /(Loss)attributable to Shareholders of the Group	3,095	3,073
Number of Shares on Issue	161,920	161,920
Basic and Diluted Earningsper Share(cents)	1.91	1.90
Number of Ordinary Shares
Issued Shares at the Beginningof the Period	161,920,433	161,920,433
Issued Shares at the End of the Period	161,920,433	161,920,433
Number of Ordinary Shares for Basic and Diluted Earnings per Share	161,920,433	161,920,433

20. Distributions Paid and Payable

	Group 2018 $’000 Group 2017 $’000
The following distribution was declared and paid in respect of thepreviousyear:	0.900cents (2017: 0.875 cents) 1,458 1,416
The following distributions were declared and paid during the year:	0.900cents(2017: 0.900 cents) 1,457 1,462
	0.900cents(2017: 0.900 cents) 1,457 1,457
	0.900cents(2017: 0.900 cents) 1,457 1,457
Total Distributions Paid	5,829 5,792

5 1

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

21. Segment Information

The principal business activity of the Group is to invest in New Zealand properties. Investment properties have similar economic characteristics, methods of management and are under leases of various terms. Segment reporting is presented in a consistent manner with internal reporting provided to the chief operating decision maker. During the year ended 31 March 2017 the Chief Executive was the chief operating decision maker who receives internal financial information on a property by property basis, assessing property performance and

deciding on the resource allocation. During the period to 31 March 2018 new directors were appointed who reassessed and changed the previous reporting structure to the board. The Group operates only in New Zealand. On this basis all of the Group’s property have been aggregated into a single reporting segment to most appropriately reflect the nature and financial effects of the business activities. Comparitive information has been restated in order to be comparable with the new way information is being reported.

Segment values for the year ended 31 March 2018 were as follows:

Segment values for the year ended 31 March 2018 were as	follows:
	Investment
	Property	Unallocated	Total
	$’000	$’000	$’000
Segment Revenue	16,706	(12)	16,694
Net Segment Revenue	11,444	(12)	11,432
Net Proft /(Loss)before Taxation	5,514	(1,633)	3,881
Change in Fair Value of Investment Properties	(2,945)	-	(2,945)

Segment values for the year ended 31 March 2017 were as follows:

Segment values for the year ended 31 March 2017 were as	follows:
	Investment
	Property	Unallocated	Total
	$’000	$’000	$’000
Segment Revenue	17,152	-	17,152
Net Segment Revenue	11,593	-	11,593
Net Proft /(Loss)before Taxation	9,932	(5,709)	4,223
Change in Fair Value of Investment Properties	(1,651)	-	(1,651)

22. Financial Instruments

Exposure to interest rate, credit, liquidity and other market risks arise in the normal course of the Group’s business.

The main risks, arising from the Group’s Financial Instruments, are interest rate risk and credit risk.

Interest Rate Risk

The Group’s exposure to interest rate risk primarily arises from its long term variable rate borrowings. Interest Rate Swaps are used to reduce exposure to fluctuating interest rates arising on floating rate borrowings.

Management monitors the level of interest rates on an ongoing basis, and from time to time, will recommend to the Board that fixed rates are locked in. The notional principal or contract amounts of interest rate contracts outstanding at each reporting date were $40m (2017: $40m).

The Group’s exposure to interest rate risk and the effective weighted interest rates for each class of financial asset and liability were:

52

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

		Less than
	Effective Interest	1 year	1-2 years	2 years +
Group 2018	Rate Range	$’000	$’000	$’000
Financial Assets
Cash and Cash Equivalents	1.75%	472	-	-
Accounts Receivable and Prepayments		679	-	-
Total Financial Assets		1,151	-	-
Financial Liabilities
Trade and Other Payables		2,227	-	-
Bank Loans	2.605% - 4.55%	-	-	44,500
Tax Payable		462	-	-
Total Financial Liabilities		2,689	-	44,500
		Less than
	Effective Interest	1 year	1-2 years	2 years +
Group 2017	Rate Range	$’000	$’000	$’000
Financial Assets
Cash and Cash Equivalents	1.75%	2,030	-	-
Accounts Receivable and Prepayments		1,078	-	-
Total Financial Assets		3,108	-	-
Financial Liabilities
Trade and Other Payables		2,589	-	-
Bank Loans	2.605% - 4.55%	-	-	58,500
Tax Payable		296	-	-
Total Financial Liabilities		2,885	-	58,500

53

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

Interest Rate Swaps

Accounting Classifications and Fair Value

Group 2017	Average Fixed Interest Rate	Notional Principal Amount	Fair Value - Level 2
	2018 2017	2018 $’000 2017 $’000	2018 $’000 2017 $’000
Less than 1year	- 4.26%	- 10,000	- 55
Greater than 1year but less than 5years	3.64% 3.91%	40,000 30,000	840 864
5years +	- -	- -	- -
		40,000 40,000	840 919

Interest Rate Swaps have been entered into by the Group to hedge against movements in the variable interest rates on its loan facility. This results in the Group holding fixed rate debt and hence there is a risk that the economic value of the Swaps will fluctuate because of changes in market interest rates. Any unrealised gain or loss is expected to unwind over the longer term. The average interest rate is based on the outstanding balance at the end of each reporting period.

As at 31 March 2018, approximately 89.89% (2017: 68.37%) of the Group’s bank loan is at a fixed rate of interest.

The fair value of Swaps shown represents the amount of unrealised gains and losses, whereas the notional amount is an aggregate exposure value of all contracts.

The Group holds interest rate swaps at Fair Value through Profit or Loss. The Fair Value of Interest Rate Swaps fall into Level 2 of the Fair Value Hierarchy. Level 2 inputs are inputs other than quoted prices included within Level 1 (quoted prices in active market for identical assets or liabilities) that are observable for the asset or liability, either directly (by price) or indirectly (derived from prices). The fair value is determined using a valuation technique being swap models, discounting the future cash flows and using the yield curves at each reporting date and the credit risk inherent in the contract.

Interest Rate Sensitivity

Cash Flow Sensitivity

The Group’s assets and liabilities which are subject to interest rate changes, consist of cash and cash equivalents and secured bank loans. A change of 1% in interest rates would have increased/(decreased) profit after income tax and equity in respect of these items by the amounts shown below. This analysis assumes all other variables remain constant.

	Group	Group
	2018	2017
1% Increase	$’000	$’000
Cash and Cash Equivalents	14	25
Bank Loans	(99)	(95)
	Group	Group
	2018	2017
1% (Decrease)	$’000	$’000
Cash and Cash Equivalents	(14)	(25)
Bank Loans	99	95

5 4

For the year ended 31 March 2018

Notes to the Consolidated Financial Statements (continued)

Fair Value Risk

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at each reporting date. The net fair value of Financial Assets and Liabilities is not materially different from the net carrying amounts disclosed in the consolidated financial statements. The methods used for determining the fair values of financial instruments are discussed in Note 3.

			Financial
	Designated as Fair Value	Loans and Receivables	Liabilities at Amortised Cost	Total Carrying Amount	Fair Value
Group 2018	$’000	$’000	$’000	$’000	$’000
Financial Assets
Cash and Cash Equivalents	-	472	-	472	472
Accounts Receivable	-	339	-	339	339
Total Financial Assets	-	811	-	811	811
Financial Liabilities
Bank Loans	-	-	44,500	44,500	44,500
Trade and Other Payables	-	-	2,227	2,227	2,227
Interest Rate Swaps	840	-	-	840	840
Total Financial Liabilities	840	-	46,727	47,567	47,567

Fair Value Estimation

The fair value of financial instruments that are not traded in an active market such as derivative financial instruments, are determined using a valuation technique such as discounted cash flows. The carrying value less an impairment allowance for other financial assets and liabilities is not expected to be materially different to their fair values.

The only financial instruments measured at fair value in the Consolidated Statement of Financial Position are derivatives (Interest Rate Swaps). The fair value of Interest Rate Swaps is calculated as the present value of the estimated future cash flows based on observable yield curves. As this valuation technique maximises the use of observable market data as an input, the instrument is classified as Level 2 under NZ IFRS 7 Financial Instruments Disclosure.

Credit Risk

To the extent the Group has a receivable from another party there is a credit risk in the event of non-performance by that party. Financial instruments, which potentially subject the Group to credit risk, principally consist of bank balances, receivables and advances to tenants.

The Group manages its exposure to credit risk. Actions include:

• Reviewing each new lease contract on an individual basis and imposing appropriate terms as considered necessary.

• Monitoring the credit quality of major financial institutions that are counterparties to its financial instruments. The Group does not anticipate nonperformance by the counterparties.

• The maximum exposure for all financial assets is the balance recorded in the consolidated financial statements.

Collateral is not required in support of other financial instruments.

Concentrations of Credit Risk

The Group has placed its cash and short-term investments with the Bank of New Zealand. The Group is not exposed to any other concentrations of credit risk other than advances to wholly owned subsidiaries.

Currency Risk

The Group does not have any exposure to foreign currency risk.

Liquidity Risk

Liquidity risk is the risk that the Group will have insufficient funds on hand to meets its commitments. The Group actively monitors its position to ensure that sufficient funds are available to meet liabilities as they arise. Liquidity is monitored on a regular basis and reported to the Board monthly.

The following table sets out the contractual cash flows for all financial liabilities and for derivatives that are settled on a gross cash flow basis.

55

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

Group 2018 Balance $’000 Contracual Cash Flows $’000	On Demand $’000 Less than 1 year $’000	1-2 years $’000 2-5 years $’000 More than 5 years $’000
Trade and Other Payables 2,227 2,227	- 2,227	- - -
Bank Loans 44,500 50,078	- 2,412	2,412 45,253 -
Interest Rate Swaps 840 378	- 92	92 194 -
Total Non-Derivative Net Financial Liabilities 47,567 52,683	- 4,731	2,504 45,447 -

Group 2017 Balance $’000 Contracual Cash Flows $’000	On Demand $’000 Less than 1 year $’000	1-2 years $’000 2-5 years $’000 More than 5 years $’000
Trade and Other Payables 2,589 2,589	26 2,563	- - -
Bank Loans 58,500 68,344	- 2,972	2,972 62,400 -
Interest Rate Swaps 919 1,945	- 795	571 579 -
Total Non-Derivative Net Financial Liabilities 62,008 72,878	26 6,330	3,543 62,979 -

Capital Management

The Group’s capital includes contributed capital and retained earnings.

The Group’s policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to sustain future development of the business.

The impact of the level of capital on Shareholders’ return is also recognised and the Group recognises the need to maintain a balance between the higher returns that might be possible with greater gearing and the advantage and security afforded by a sound capital position.

The Bank of New Zealand which is the provider of the loan facility to the Group requires the Group to meet the following covenants:

• Bank debt is less than 50% of gross property value

• EBIT is greater than 175% of total debt interest costs

The Group met these covenants at all times during the reporting period.

The Group’s policies in respect of capital management and allocation are reviewed quarterly by the Board of Directors. There are no changes in capital management subsequent to 31 March 2018.

23. Transaction Costs

purchases, and enter into a management contract with Kiwi Property Group Limited, was not approved by shareholders. Consequently, these proposed transactions were terminated and did not proceed.

The investigation of the above proposal, and three other proposals, incurred substantial due diligence, financial investigation, and other legal costs for the Group that have collectively been described as transaction costs. These costs totalled $1.339 million in the 2017 financial year. A further $0.430 million of costs was incurred in the year to 31 March 2018.

In July 2017 NPT received a proposal from Augusta Funds Management Limited to sell the management rights of the Group. This process was carefully reviewed to ensure it was in the best interests of NPT shareholders. The costs incurred in this due diligence process have also been described as transaction costs and totalled $0.256 million.

The total of $0.686 million of costs are included in the Consolidated Financial Statements as transaction costs in the Consolidated Statement of Comprehensive Income.

24. Lease Commitments

Operating Lease Commitments Receivable - As Lessor

The Group has entered into commercial property leases on its investment properties. These non-cancellable leases have remaining terms of between 1 month to 11 years.

At a special meeting of shareholders held on 21 April 2017 a resolution to purchase two properties from Kiwi Property Holdings Limited, raise equity for those

5 6

Notes to the Consolidated Financial Statements (continued)

For the year ended 31 March 2018

	Group	Group
	2018	2017
	$’000	$’000
Future minimum rentals
receivable under non-cancellable
Operating Leases
Within oneyear	10,351	13,634
After one year but not more than fveyears	24,323	38,929
Later than fveyears	17,544	17,828
Total minimum lease receivables	52,218	70,391

The above rental receivables are based on contracted amounts as at 31 March 2018 and 31 March 2017.

Actual rental amounts collected in future will differ due to rental review provisions within the lease agreements.

Operating Lease Commitments - As Lessee

The Group has entered into a commercial property lease for its Head Office premises at Level 13, the AA Centre, 99 Albert Street, Auckland. This non-cancellable lease is $244,303 p.a. and extends out to the 31st of December 2019. On 12 July the sale of the AA Centre to SkyCity will complete and lease obligations will commence.

In 2017 the Group entered into a commercial property lease for its Head Office premises at Level 26 PWC Tower, 188 Quay Street, Auckland. This non-cancellable lease was for $124,922 p.a. and in March 2017 had a remaining term of 9 months.

	Group	Group
	2018	2017
	$’000	$’000
Future minimum rentals payable
under non-cancellable Operating
Leases
Within oneyear	175	94
After one year but not more than fveyears	184	-
Total minimum leasepayables	359	94

25. Related Party Transactions

Key Management Personnel

	Group	Group
	2018	2017
	$’000	$’000
Salaries and other key managementpersonnel benefts	1,292	951
Directors fees	279	234
Total payments to key managementpersonnel	1,571	1,185

The table above includes remuneration of the Chief Executive Officer and other key management personnel of the Group. Values were significantly higher in 2018 due to costs associated with restructuring.

Augusta Funds Management Limited

On 26 March 2018 the Group sold the management rights to Augusta Funds Management Limited (AFM) for $4.5 million. The Group will be managed by AFM under the terms of the signed management contract.

AFM’s parent Augusta Capital Limited holds an 18.85% stake in the Group at 31 March 208 (2017 9.26%).

The table below sets out the related party transactions.

	Group	Group
	2018	2017
	$’000	$’000
Sale of management rights	4,500	-
Management fees	(18)	-
Dividend paid to Augusta Capital Limited	(1,099)	(270)

26. Capital Commitments

At the reporting date the Group had $2.76 million committed to capital expenditure for the AA Centre stairwell (2017: $2.20 million).

27. Contingent Liabilities

At the reporting date the Group had no material contingent liabilities (2017: Nil).

28. Subsequent Events

There have been no significant NPT related events since 31 March 2018.

The Group has a related party relationship with its key management personnel. The key management personnel are the Directors and Executive Management.

57

Independent Auditor’s Report

Independent Auditor’s Report

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To the Shareholders of NPT Limited

Report on the Audit of the consolidated financial statements

Opinion

We have audited the consolidated financial statements of NPT Limited (“the company”) and its subsidiaries (“the Group”), on pages 32 to 57, which comprise the consolidated statement of financial position as at 31 March 2018, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements, including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of NPT Limited as at 31 March 2018 and its consolidated financial performance and consolidated cash flows for the year then ended in accordance with New Zealand Equivalents to International Financial Reporting Standards (NZ IFRS) issued by the New Zealand Accounting Standards Board.

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (New Zealand) (ISAs (NZ)) issued by the New Zealand Audit and Assurance Standards Board. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the consolidated financial statements section of our report. We are independent of the Group in accordance with Professional and Ethical Standard 1 (Revised) Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance Standards Board, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Our firm carries out other assignments for NPT Limited and the entities it controlled in the area of related assurance services. The provision of these other services has not impaired our independence as auditor of the Group. The firm has no other interests in NPT Limited and the entities it controlled.

5 8

Independent Auditor’s Report (continued)

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Key Audit Matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the consolidated financial statements of the current period. We summarise below those matters, and our key audit procedures, to address those matters in order that the Group’s shareholders as a body may better understand the process by which we arrived at our audit opinion.These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.

Key audit matter

Our procedures to address the key audit matter

Investment Property valuation

In the application of NZ IFRS, Management are required to make judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources.

The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements.

The estimates and underlying assumptions are reviewed on an ongoing basis.

As at 31 March 2018, Investment Property carried at fair value of $168 million is held across multiple geographical locations. There are a number of risks that can have a material impact on the investment property balance in the consolidated financial statements, principally:

• valuations of all the investment properties may not be performed by qualified and experienced commercial property valuers;

• methods and assumptions used by the property valuers, may not be considered appropriate;

• the calculation of the fair value amount for each of the investment properties, as well as the revaluation adjustment for the year may not be correct;

We have

• obtained and agreed the schedule of investment properties to the respective independent valuation reports, performed by valuation experts;

• evaluated the qualifications and work of each valuation expert, for each of the investment properties;

• inquired about and documented the methods and assumptions used by the expert, and considered the appropriateness of those assumptions and methods used, for each property valuation;

• re-performed the calculation in determining the fair value amount of each investment property, as well as the revaluation adjustment to be recorded for the year;

• tested the appropriateness of data provided to the expert, for each property valuation;

• ensured properties held for sale are recorded at appropriate fair value at measurement date based upon actual market evidence of the expected sale. That any estimates or judgements made by management are reasonable and appropriate for reporting purposes.

• data provided to the property valuers may not be appropriate;

5 9

Independent Auditor’s Report (continued)

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Other Information

The directors are responsible for all other information included in the Group’s Annual Report. The other information comprises the information included in the Annual Report, but does not include the consolidated financial statements and our auditor’s report thereon.

Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of audit opinion or assurance conclusion thereon.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.

Directors’ responsibilities for the consolidated financial statements

The Directors are responsible on behalf of the Group for the preparation and fair presentation of the consolidated financial statements in accordance with New Zealand equivalents to International Financial Reporting Standards issued by the New Zealand Accounting Standards Board, and for such internal control as the Directors determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the directors are responsible on behalf of the Group for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the Audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (NZ) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

A further description of the auditor’s responsibilities for the audit of the consolidated financial statements is located on the External Reporting Board’s website at: https://www.xrb.govt.nz/standards-for-assurance-practitioners/ auditors-responsibilities/audit-report-1/

Restriction on use of our report

This report is made solely to the Group’s shareholders, as a body. Our audit work has been undertaken so that we might state to the Group’s shareholders, as a body those matters which we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Group and the Group’s shareholders, as a body, for our audit work, for this report or for the opinion we have formed.

Grant Thornton New Zealand Audit Partnership

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K Price Partner Auckland 29 May 2018

6 0

Shareholder Statistics

Shareholder Statistics

Twenty Largest Shareholders

Top 20 Shareholders (with expanded NZCSD Sub-Register) as at 19 June 2018.

Rank	Investor Name	Total Units	% Issued Capital
1	Augusta Capital Limited	30,528,933	18.85%
2	HSBC Nominees(New Zealand)Limited	19,568,507	12.09%
3	Accident Compensation Corporation	15,513,298	9.58%
4	National Nominees New Zealand Limited	7,175,133	4.43%
5	Cogent Nominees Limited	5,948,294	3.67%
6	Premier Nominees Limited	5,927,636	3.66%
7	Forsyth Barr Custodians Limited	4,795,080	2.96%
8	Investment Custodial Services Limited	2,733,689	1.69%
9	NZ Permanent Trustees Ltd GrpInvstmnt Fund No 20	2,182,830	1.35%
10	Premier Nominees Ltd Armstrong Jones PropertySecurities Fund	1,937,728	1.20%
11	FNZ Custodians Limited	1,699,414	1.05%
12	Forhomes Investments Limited	1,466,394	0.91%
13	Mf Mutual Fund Limited	1,433,041	0.89%
14	AlbertJohn Harwood & Marlene MaryHarwod	1,200,000	0.74%
15	Michael Walter Daniel & Nigel Geoffrey Burton & Michael Murray Benjamin	1,000,000	0.62%
16	New Zealand Permanent Trustees Limited	904,831	0.56%
17	Leveraged Equities Finance Limited	892,125	0.55%
18	Tea Custodians Limited	791,570	0.49%
19	BnpParibas Nominees NZ Limited	752,605	0.46%
20	Anthony John Simmonds & Maureen Simmonds	653,849	0.40%

6 1

Shareholder Statistics (continued)

Spread of shareholders

The following is a spread of quoted security holders as at 19 June 2018.

Range	Holders (start)	Shares	% Issued Capital
1-1000	66	43,160.0	0.03%
1001-5000	343	1,009,685.0	0.62%
5001-10000	309	2,436,620.0	1.50%
10001-50000	737	17,885,510.0	11.05%
50001-100000	125	9,182,200.0	5.67%
Greater than 100000	120	131,363,258.0	81.13%

Substantial Security Holders

As at 31 March 2018 the following Shareholders had filed substantial security notices in accordance with section 276 of the Financial Markets Conduct Act 2013.

Shareholder	Number of shares relevant interest disclosed for
Augusta Capital Limited	30,528,933
Salt Funds Management Limited	25,556,866
Westpac BankingCorporation	20,874,406
Accident Compensation Corporation	13,628,852
ANZ New Zealand Investments Limited and ANZ Bank New Zealand Limited	10,221,785

This annual report is dated 29 June 2018 and is signed on behalf of the board by:

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Bruce Cotterill

Chairman

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Carol Campbell

Chair Audit and Risk Committee

62

Directory

Directory

Company

Asset Plus Limited

PO Box 37953, Parnell 1151 Phone: 09 300 6161

www.assetplusnz.co.nz

Directors

Bruce Cotterill Allen Bollard Carol Campbell Paul Duffy

Registrar

Link Market Services Limited

Level 11 Deloitte Centre 80 Queen Street Auckland 1010 PO Box 91976 Auckland 1142

Phone: 09 375 5998 Fax: 09 375 5990

Manager

Bankers

Bank of New Zealand

Level 6 Deloitte Centre 80 Queen Street Auckland

Augusta Funds Management Limited

Level 2 Bayleys House 30 Gaunt Street Wynyard Quarter Auckland 1010

PO Box 37953 Parnell 1151

Auditor

Grant Thornton New Zealand Audit Partnership

L4, Grant Thornton House 152 Fanshawe Street PO Box 1961 Auckland 1140

6 3

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