==> picture [596 x 88] intentionally omitted <==

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

ASX Announcement – Australian Unity Office Fund (‘AOF’)
----- End of picture text -----

8 August 2017

Appendix 4E

Australian Unity Office Fund (‘AOF’) Preliminary Final Report For the Year Ended 30 June 2017

Results for announcement to the market

ASX code: AOF

Issuer

Australian Unity Investment Real Estate Limited ABN 86 606 414 368 AFSL 477434

Enquiries:

Australian Unity Office Fund Investor Services 1300 721 637 or +61 2 8016 2890 (outside Australia)

Contact details:

Australian Unity Limited 114 Albert Road South Melbourne VIC 3205 Tel: 13 29 39

1.0	Reporting period Current reporting period Prior reporting period	12 months to 30 June 2017 12 months to 30 June 2016
2.0 2.1 2.2 2.3 2.3A	Results for announcement to the market Total revenues and other income (Note 1) Profit from ordinary activities after tax attributable to unitholders Net profit for the period attributable to unitholders Directors assessment of Funds From Operations (Note 2)	30 June 2017 $’000 30 June 2016 $’000 Movement $’000 Movement % 44,023 42,787 1,236 2.9% 60,637 18,637 42,000 225.4% 60,637 18,637 42,000 225.4% 23,997 18,682 5,315 28.4%
2.4	Distributions Distribution for the quarter to 30 September 2016 Distribution for the quarter to 31 December 2016 Distribution for the quarter to 31 March 2017 Distribution for the quarter to 30 June 2017	Amount per unit Record date 3.70 cents 30 Sept 16 3.70 cents 30 Dec 16 3.80 cents 31 Mar 17 3.80 cents 30 June 17
2.5	Record date for determining entitlement to the distributions	Refer section 2.4
2.6	Brief explanation of any figures in 2.1 to 2.4 necessary to enable the figures to be understood.	Refer to the annual financial report for the year ended 30 June 2017 attached to this Appendix 4E for further information.
3-6	A statement of comprehensive income, statement of financial position, a statement of changes in equity and a statement of cash flows.	Refer to the annual financial report for the year ended 30 June 2017 attached to this Appendix 4E for further information.
7	Details of individual and total distributions and distribution payments.	Date Paid Amount Per Unit Foreign Sourced Income
	Distribution for the quarter to 30 September 2016	14 Oct 2016 3.70 cents n/a
	Distribution for the quarter to 31 December 2016	16 Jan 2017 3.70 cents n/a
	Distribution for the quarter to 31 March 2017	13 Apr 2017 3.80 cents n/a
	Distribution for the quarter to 30 June 2017	14 July 2017 3.80 cents n/a
8	Details of any distribution reinvestment plans in operation and the last date for the receipt of an election notice for participation in any distribution reinvestment plan.	The AOF Distribution Reinvestment Plan is not yet active.

==> picture [596 x 88] intentionally omitted <==

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

ASX Announcement – Australian Unity Office Fund (‘AOF’)
----- End of picture text -----

9	Net tangible assets per security	30 June 2017 $2.23 30 June 2016 $1.95
10	Details of entities over which control has been gained or lost during the period, including the following.	Not applicable
11	Details of associates and joint venture entities including the following.	Not applicable
12	Any other significant information needed by an investor to make an informed assessment of the entity’s financial performance and financial position.	None
13	For foreign entities, which set of accounting standards is used in compiling the report (e.g. International Financial Reporting Standards).	Not applicable
14	A commentary on the results for the period.	Refer to the annual financial report for the year ended 30 June 2017 attached to this Appendix 4E for commentary on the results for the period.
15	A statement as to whether the report is based on accounts which have been audited or subject to review, are in the process of being audited or reviewed, or have not yet been audited or reviewed	The 2017 Annual financial report has been audited and contains an unqualified audit opinion.
16	If the accounts have not yet been audited and are likely to contain an independent audit report that is subject to a modified opinion, emphasis of matter or other matter paragraph, a description of the modified opinion, emphasis of matter or other matter paragraph	Not applicable
17	If the accounts have been audited and contain an independent audit report that is subject to a modified opinion, emphasis of matter or other matter paragraph, a description of the modified opinion, emphasis of matter or other matter paragraph.	No modified opinion, emphasis of matter or other matter.

ASX code:

AOF

Issuer

Australian Unity Investment Real Estate Limited ABN 86 606 414 368 AFSL 477434

Note (1): Total revenues and other income comprises rental income and interest income

Note (2): Directors use Property Council of Australia’ definition of Funds From Operations (FFO) as a key determination of the level of distributions to pay and aims to distribute between 80% and 100% of its FFO each year. FFO is a Property Council of Australia definition which adjusts statutory Australian Accounting Standards net profit for non-cash changes in investment properties, non-cash impairment of goodwill, non-cash fair value adjustments to financial instruments, amortisation of incentives, rental straight-line adjustments and other unrealised or one-off items.

Enquiries:

Australian Unity Office Fund Investor Services 1300 721 637 or +61 2 8016 2890 (outside Australia)

Contact details:

Australian Unity Limited 114 Albert Road South Melbourne VIC 3205 Tel: 13 29 39

ARSN 113 369 627

Annual financial report for the year ended 30 June 2017

ARSN 113 369 627

Annual financial report for the year ended 30 June 2017

Contents	Page
Directors' report	2
Auditor's independence declaration	7
Consolidated statement of comprehensive income	8
Consolidated statement of financial position	9
Consolidated statement of changes in net assets attributable to unitholders	10
Consolidated statement of cash flows	11
Notes to the consolidated financial statements	12
Directors' declaration	41
Independent auditor's report to the unitholders of Australian Unity Office Fund	42

Australian Unity Office Fund Directors' report 30 June 2017

Directors' report

The directors of Australian Unity Investment Real Estate Limited (ABN 86 606 414 368), the Responsible Entity of Australian Unity Office Fund (the "Scheme"), present their report together with the consolidated financial statements of the Scheme for the year ended 30 June 2017.

Directors

The following persons were directors of the Responsible Entity of the Scheme during the year and up to the date of this report:

Peter Day Independent Non-Executive Director and Chairman Don Marples Independent Non-Executive Director and Chairman of the Audit & Risk Committee Eve Crestani Non-Executive Director Greg Willcock Non-Executive Director Kirsty Dullahide Executive Director

Company secretary

The company secretaries of the Responsible Entity during the year and up to the date of this report (unless otherwise stated) were:

Emma Rodgers

Liesl Petterd (appointed 3 October 2016)

Operating and financial review

Principal activities

The Scheme is an ASX-listed Real Estate Investment Trust that wholly owns a diversified portfolio of eight office properties located across Australian metropolitan and CBD office markets.

Investment objective and strategy

The Scheme's objective is to provide unitholders with sustainable income returns via quarterly distributions and the potential for capital growth over the long-term by investing in a diversified portfolio of Australian office properties.

The Scheme's strategy is to:

Focus predominantly on owning Australian office properties in metropolitan and CBD markets
Grow net property income and enhance capital values through active asset management
Deliver investors sustainable and growing income returns via quarterly distributions
Maintain a capital structure which has target gearing below 40%
Construct a portfolio that maintains diversification of geography, tenants and lease expiry profile through:
(i) investments in existing properties (which may include undertaking refurbishment and alterations to meet changing tenant requirements and where income risk can be substantially mitigated, undertaking redevelopment of a property); and
(ii) potential future acquisitions.

The Responsible Entity will review this strategy from time to time when it considers it in the best interests of unitholders to do so.

The appointed Investment Manager of the Scheme's assets is Australian Unity Funds Management Limited (ABN 60 071 497 115).

Australian Unity Office Fund Directors' report 30 June 2017 (continued)

Financial result

The following table summarises the statutory profit before finance costs attributable to unitholders for the year ended 30 June 2017 and provides a comparison to the Product Disclosure Statement issued on 23 May 2016 ("PDS") as part of the Initial Public Offering.

("PDS") as part of the Initial Public Offering.
$'000	Actual FY17	PDS Forecast FY17
Rental Income *	43,537	42,300
PropertyExpenses **	(11,752)	(11,100)
Straight lining of rental income and amortisation of leasing commissions and tenant incentives	(3,529)	(5,100)
Net property income	28,256	26,100
Interest income	14	-
Netgain on financial instruments held at fair value***	1,176	-
Net fair value increment of investmentproperties***	38,993	-
Responsible Entityand Investment Manager fees	(2,478)	(2,400)
Borrowing costs	(4,420)	(4,800)
Other expenses	(904)	(900)
Profit attributable to unitholders	60,637	18,000

Rental Income does not include the impact of straight lining of rental income. ** Property Expenses does not include the amortisation of leasing commissions and tenant incentives. *** As disclosed in the PDS, the PDS did not forecast any potential fair value adjustments of investment properties and derivative financial instruments on the basis that such amounts could not be reliably determined at the date of the PDS.

As at 30 June 2017, the Scheme’s net assets attributable to unitholders per unit was $2.23 (2016: $1.95).

Funds From Operations

The Scheme uses the Property Council of Australia's definition of Funds From Operations (FFO) as a key determinant of the level of distributions to pay and aims to distribute between 80% and 100% of its FFO each year.

FFO is a Property Council of Australia definition which adjusts statutory Australian Accounting Standards net profit for non-cash changes in investment properties, non-cash impairment of goodwill, non-cash fair value adjustments to financial instruments, amortisation of incentives, rental straight-line adjustments and other unrealised or one-off items.

A reconciliation of the statutory profit to FFO and distributions is set out below for the year ended 30 June 2017.

==> picture [442 x 159] intentionally omitted <==

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

$'000 Actual FY17 PDS Forecast FY17
Net profit 60,637 18,000
Adjusted for:
Straight lining of rental income and amortisation of leasing
commissions and tenant incentives 3,529 5,100
Net gains on financial instruments held at fair value (1,176) -
Net fair value increment of investment properties (38,993) -
Funds From Operations 23,997 23,100
[KEEP THIS ROW BLANK!!! -
Distributions declared 21,056 20,800
Cents per unit Actual FY17 PDS Forecast FY17
Funds From Operations 17.1 16.4
Distributions declared 15.0 14.8
----- End of picture text -----

Australian Unity Office Fund Directors' report 30 June 2017 (continued)

Property portfolio

At 30 June 2017, the Scheme wholly owned a diversified portfolio of eight office properties located across Australian metropolitan and CBD markets. The portfolio is valued at $441,067,000 (2016: $392,772,000) and has a total net lettable area of 97,580 sqm (2016: 97,645 sqm).

a) Leasing and occupancy

Since listing the Scheme on 20 June 2016, the Scheme has completed approximately 17,400 sqm of leasing across 26 separate transactions. This represents approximately 18% of the portfolio by area. Approximately 2,000 sqm of the completed leasing related to space that was previously vacant.

At 30 June 2017, the Scheme's investment properties weighted average lease expiry was 4.6 years (2016: 4.8 years) and occupancy rate was 93.5% (2016: 94.7%).

b) Valuations

As per the valuation policy, all properties were independently revalued during the year, ensuring values are reflective of current market conditions.

Four properties were externally valued as at 31 December 2016, namely 468 St Kilda Road, Melbourne, VIC; 32 Phillip Street, Parramatta, NSW; 2 Eden Park Drive, North Ryde, NSW; and 64 Northbourne Avenue, Canberra, ACT. Combined these valuations resulted in an increase of $13,731,000 or 10.5% over the preceding book value for those properties externally valued at that time.

The Scheme’s remaining four properties, namely 30 Pirie Street, Adelaide, SA; 10 Valentine Avenue, Parramatta, NSW; 5 Eden Park Drive, North Ryde, NSW; and 241 Adelaide Street, Brisbane, QLD were externally valued as at 30 June 2017. Combined these valuations resulted in an increase of $21,697,000 or 8.0% over the preceding book value for those properties externally valued.

The weighted average capitalisation rate for the portfolio firmed by 50 basis points to 7.5% as at 30 June 2017.

Capital management

As at 30 June 2017, the Scheme had debt facilities totalling $140,000,000 with a weighted average expiry of 3.0 years. Drawn borrowings totalled $123,500,000 with an all in interest cost of 3.6% and 81.0% of debt hedged. The Scheme's gearing (calculated as interest bearing liabilities, excluding unamortised establishment costs, less cash divided by total tangible assets less cash) was 27.0% (2016: 27.5%).

As foreshadowed in the PDS, the Scheme terminated two interest rate swaps on 1 July 2016 and as a result incurred $7,987,000 in swap break costs.

During the year the Scheme implemented the following new interest rate swaps with a total nominal value of $40,000,000:

two interest rate swaps expiring on 21 June 2018 with a total nominal value of $20,000,000; and
one forward dated interest rate swap commencing 8 August 2019, expiring on 8 February 2022, with a nominal value of $20,000,000.

Outlook and guidance

The Scheme will continue to be managed in accordance with the investment objectives and guidelines as set out in the governing documents of the Scheme and in accordance with the provisions of the Scheme's Constitution.

The Responsible Entity is focused on leasing current vacancy, reducing short-medium term lease expiry risk and growing FFO.

The Responsible Entity provides 2018 financial year FFO guidance of 17.1 to 17.3 cents per unit and 2018 financial year distribution guidance of 15.6 cents per unit. Distributions will be paid quarterly.

Matters subsequent to the end of the financial year

No matter or circumstance has arisen since 30 June 2017 that has significantly affected, or may significantly affect the operations of the Scheme, the result of operations, or the state of the Scheme's affairs in the future years.

Australian Unity Office Fund Directors' report 30 June 2017 (continued)

Significant changes in the state of affairs

In the opinion of the directors, there were no significant changes in the state of affairs of the Scheme that occurred during the year.

Environmental regulation

The property operations of the Scheme are subject to environmental regulations under Australian law. There have been no known reportable breaches of these regulations.

Fees paid to and interests held in the Scheme by the Responsible Entity or its associates

Fees paid to the Responsible Entity and its associates out of Scheme property during the year are disclosed in note 21 to the consolidated financial statements.

No Directors' fees were paid out of the assets of the Scheme to the directors of the Responsible Entity, except for independent directors who receive their fees from the Scheme. Directors' fees paid during the year was $227,900 reflecting the first full year of operations as a listed entity (2016: $8,117).

The number of interests in the Scheme held by the Responsible Entity or its associates as at the end of the year are disclosed in note 21 to the consolidated financial statements.

The number of units held by directors in the Scheme are:

The number of units held by directors in the Scheme are:
Director	Units at 30 June 2017
Peter Day	50,000

At the date of this report, none of the other current directors of the Responsible Entity hold any units in the Scheme.

The following table sets out the directorships of Australian listed companies held by the directors of the Responsible Entity during the three years immediately before the end of the financial year:

==> picture [442 x 57] intentionally omitted <==

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

Director Listed Entity Appointed Resigned
Alumina Limited January 2014 Not applicable
Ansell Limited August 2007 Not applicable
Peter Day
Boart Longyear Limited February 2014 Not applicable
SAI Global Limited August 2008 December 2016
----- End of picture text -----

Units in the Scheme

The movement in units on issue in the Scheme during the year is disclosed in note 8 to the consolidated financial statements.

The value of the Scheme's assets and liabilities is disclosed in the consolidated statement of financial position and derived using the basis set out in note 2 to the consolidated financial statements.

Indemnification and insurance of officers and auditors

No insurance premiums are paid for out of the assets of the Scheme in regards to insurance cover provided to either the officers of Australian Unity Investment Real Estate Limited or the auditors of the Scheme. So long as the officers of Australian Unity Investment Real Estate Limited act in accordance with the Scheme's Constitution and the Corporations Act 2001 , the officers remain indemnified out of the assets of the Scheme against losses incurred while acting on behalf of the Scheme. The auditors of the Scheme are in no way indemnified out of the assets of the Scheme.

Provision of non-audit services by auditor

The Scheme may decide to employ the auditor (PricewaterhouseCoopers, 2016: Ernst & Young) on assignments in addition to their statutory audit duties. Details of the amounts paid to the auditor, which includes amounts paid for non-audit services and other assurance services, are set out in note 6 to the financial statements.

Australian Unity Office Fund Directors' report 30 June 2017 (continued)

Provision of non-audit services by auditor (continued)

The Directors have considered the non-audit services and other assurance services provided by the auditor during the financial year. In accordance with advice received from the Audit and Risk Committee, the Directors are satisfied that the provision of non-audit services is compatible with, and did not compromise, the general standard of auditor independence imposed by the Corporations Act 2001 for the following reasons:

all non-audit services have been reviewed by the Audit and Risk Committee to ensure they do not impact the impartiality and objectivity of the auditor; and
none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants .

Rounding of amounts to the nearest thousand dollars

The Scheme is an entity of a kind referred to in ASIC Corporations Instrument 2016/191 issued by the Australian Securities and Investments Commission relating to the "rounding off" of amounts in the directors' report. Amounts in the directors' report and financial statements have been rounded to the nearest thousand dollars.

Auditor's independence declaration

A copy of the Auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 7.

Signed in accordance with a resolution of the directors of Australian Unity Investment Real Estate Limited.

==> picture [89 x 54] intentionally omitted <==

Don Marples Director

==> picture [85 x 56] intentionally omitted <==

Peter Day Chairman 7 August 2017

==> picture [77 x 59] intentionally omitted <==

Auditor’s Independence Declaration

As lead auditor for the audit of Australian Unity Office Fund for the year ended 30 June 2017, I declare that to the best of my knowledge and belief, there have been:

(a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and
(b) no contraventions of any applicable code of professional conduct in relation to the audit.

This declaration is in respect of Australian Unity Office Fund and the entities it controlled during the period.

==> picture [108 x 59] intentionally omitted <==

George Sagonas Partner PricewaterhouseCoopers

Melbourne 7 August 2017

PricewaterhouseCoopers, ABN 52 780 433 757

2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331, MELBOURNE VIC 3001 T: 61 3 8603 1000, F: 61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Australian Unity Office Fund Consolidated statement of comprehensive income For the year ended 30 June 2017

Consolidated statement of comprehensive income

2017 Notes $'000 *Income* Rental income 3 44,009 Property expenses 4 (15,753) Net property income 28,256 Interest income 14 Net gains/(losses) on financial instruments held at fair value through profit or loss 5 1,176 Net fair value increment of investment properties 14(b) 38,993 Total income net of property expenses 68,439 *Expenses* Responsible Entity and Investment Manager fees 21 2,478 Borrowing costs 4,420 Other expenses 7 904 Total expenses, excluding property expenses 7,802 Profit attributable to unitholders 60,637 *Finance costs attributable to unitholders* Distributions to unitholders 9 - Increase in net assets attributable to unitholders 8 - Total comprehensive income attributable to unitholders 60,637 Basic and diluted earnings per unit attributable to unitholders pre consolidation of units 10 - Basic and diluted earnings per unit attributable to unitholders* post consolidation of units 10 43.20	2017 Notes $'000 *Income* Rental income 3 44,009 Property expenses 4 (15,753) Net property income 28,256 Interest income 14 Net gains/(losses) on financial instruments held at fair value through profit or loss 5 1,176 Net fair value increment of investment properties 14(b) 38,993 Total income net of property expenses 68,439 *Expenses* Responsible Entity and Investment Manager fees 21 2,478 Borrowing costs 4,420 Other expenses 7 904 Total expenses, excluding property expenses 7,802 Profit attributable to unitholders 60,637 *Finance costs attributable to unitholders* Distributions to unitholders 9 - Increase in net assets attributable to unitholders 8 - Total comprehensive income attributable to unitholders 60,637 Basic and diluted earnings per unit attributable to unitholders pre consolidation of units 10 - Basic and diluted earnings per unit attributable to unitholders* post consolidation of units 10 43.20	2016 $'000 42,769 (14,938)
		27,831 18 (3,408) 14,413
	68,439	38,854
		7,313 10,026 2,878
	7,802	20,217
	60,637	18,637
		(15,618) (3,019)
	60,637	-
		8.60
		0.29

The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.

*In previous financial years until the Scheme listing on the ASX on 20 June 2016, units were redeemable therefore net assets attributable to unitholders were classified as financial liabilities and distributions to unitholders were classified as finance costs.

**On 20 June 2016, the units of the Scheme were consolidated on the basis of 0.4165 units for every 1 unit held.

Australian Unity Office Fund Consolidated statement of financial position As at 30 June 2017

Consolidated statement of financial position

2017 Notes $'000 *Assets* Cash and cash equivalents 11 4,118 Receivables 12 432 Financial assets held at fair value through profit or loss 13 232 Other assets 361 Investment properties 14 441,067 Total assets 446,210 *Liabilities* Distributions payable 9 5,334 Payables 15 4,332 Financial liabilities held at fair value through profit or loss 13 - Borrowings 16 122,817 Total liabilities 132,483 Net assets attributable to unitholders 8 313,727	2017 Notes $'000 *Assets* Cash and cash equivalents 11 4,118 Receivables 12 432 Financial assets held at fair value through profit or loss 13 232 Other assets 361 Investment properties 14 441,067 Total assets 446,210 *Liabilities* Distributions payable 9 5,334 Payables 15 4,332 Financial liabilities held at fair value through profit or loss 13 - Borrowings 16 122,817 Total liabilities 132,483 Net assets attributable to unitholders 8 313,727	2016 $'000 10,589 1,553 - 314 392,772
	446,210	405,228
		505 3,555 8,931 118,091
	132,483	131,082
		274,146

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

Australian Unity Office Fund Consolidated statement of changes in net assets attributable to unitholders For the year ended 30 June 2017

Consolidated statement of changes in net assets attributable to unitholders

Balance at the beginning of the year Profit attributable to unitholders Distributions to unitholders Equity raising costs Applications Redemptions Units issued upon reinvestment of distributions Balance at the end of the year	2017 $'000 274,146 60,637 (21,056) - - - -	2016 $'000 184,771 18,637 (15,618) (6,155) 152,130 (62,299) 2,680
	313,727	274,146

The above consolidated statement of changes in net assets attributable to unitholders should be read in conjunction with the accompanying notes.

10 -

Australian Unity Office Fund Consolidated statement of cash flows For the year ended 30 June 2017

Consolidated statement of cash flows

2017 Notes $'000 *Cash flows from operating activities* Interest received 14 Rental income received 45,080 Payments to suppliers (14,826) Net cash inflow from operating activities 22 30,268 *Cash flows from investing activities* Payments for additions to owned investment properties (12,831) Net cash outflow from investing activities (12,831) *Cash flows from financing activities* Proceeds from/(repayment of) borrowings 4,500 Borrowing costs paid (4,194) Payment of swap break costs (7,987) Proceeds from applications by unitholders - Payments for redemptions by unitholders - Distributions paid (16,227) Equity raising costs paid - Net cash outflow from financing activities (23,908) Net (decrease)/increase in cash and cash equivalents (6,471) Cash and cash equivalents at the beginning of the year 10,589 Cash and cash equivalents at the end of the year 11 4,118	2017 $'000 14 45,080 (14,826)	2016 $'000 18 41,548 (17,845)
		23,721
	(12,831)	(7,669)
	(12,831)	(7,669)
	4,500 (4,194) (7,987) - - (16,227) -	(64,418) (9,859) - 152,130 (62,299) (16,418) (7,743)
	(23,908)	(8,607)
	(6,471) 10,589	7,445 3,144
		10,589

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

11 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017

Notes to the financial statements

		Page
1	General information	13
2	Summary of significant accounting policies	13
3	Rental income	22
4	Property expenses	22
5	Net gains/(losses) on financial instruments held at fair value through profit or loss	23
6	Auditors' remuneration	23
7	Other expenses	23
8	Net assets attributable to unitholders	24
9	Distributions to unitholders	24
10	Earnings per unit	25
11	Cash and cash equivalents	25
12	Receivables	25
13	Financial assets/(liabilities) held at fair value through profit or loss	25
14	Investment properties	26
15	Payables	27
16	Borrowings	27
17	Derivative financial instruments	28
18	Financial risk management	29
19	Fair value hierarchy	32
20	Segment information	36
21	Related party transactions	36
22	Reconciliation of profit to net cash inflow from operating activities	39
23	Parent entity financial information	40
24	Events occurring after the end of the financial year	40
25	Contingent assets and liabilities and commitments	40

12 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

1 General information

These consolidated financial statements cover Australian Unity Office Fund and its subsidiaries ("the Scheme"). The Scheme was constituted on 23 March 2005. The Scheme will terminate on the 80th anniversary unless terminated earlier in accordance with the provisions of the Scheme's Constitution.

The Responsible Entity of the Scheme is Australian Unity Investment Real Estate Limited (ABN 86 606 414 368) (the "Responsible Entity"), a wholly owned subsidiary of Australian Unity Limited (ABN 23 087 648 888). The Responsible Entity's registered office is Level 14, 114 Albert Road, South Melbourne, VIC 3205.

The Responsible Entity is incorporated and domiciled in Australia.

The consolidated financial statements are for the year 1 July 2016 to 30 June 2017.

The consolidated financial statements were authorised for issue by the directors of the Responsible Entity on 7 August 2017. The directors of the Responsible Entity have the power to amend and reissue the consolidated financial statements.

The Scheme's assets are managed by Australian Unity Funds Management Limited (ABN 60 071 497 115) ("the Investment Manager"), a related party of the Responsible Entity.

The controlled entities of the Scheme comprise:

Australian Unity Holding Trust which was constituted on 31 May 2005;
Australian Unity Second Industrial Trust which was constituted on 28 September 2001;
Australian Unity Fourth Commercial Trust which was constituted on 27 September 2002;
Australian Unity Fifth Commercial Trust which was constituted on 31 July 2002;
Australian Unity Sixth Commercial Trust which was constituted on 2 October 2003; and
Pirie Street Trust which was established by Trust Deed dated 31 July 2002.

2 Summary of significant accounting policies

The principal accounting policies applied in the preparation of these consolidated financial statements are set out below. These policies have been consistently applied to all years presented, unless otherwise stated. Where appropriate, comparatives have been reclassified to enhance comparability with current year disclosures.

(a) Basis of preparation

These general purpose consolidated financial statements have been prepared in accordance with Australian Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board (AASB) and the Corporations Act 2001 .

The Scheme is a for-profit entity for the purposes of preparing the consolidated financial statements.

The consolidated financial statements are prepared on the basis of fair value measurement of assets and liabilities except where otherwise stated.

The consolidated statement of financial position is presented on a liquidity basis. Assets and liabilities are presented in decreasing order of liquidity and are not distinguished between current and non-current. All balances are generally expected to be recovered or settled within 12 months, except for investment properties, financial assets/(liabilities) held at fair value through profit or loss and borrowings, where the amount expected to be recovered or settled within 12 months after the end of the year cannot be reliably determined.

(i) Compliance with Australian Accounting Standards and International Financial Reporting Standards The consolidated financial statements of the Scheme comply with AASB and also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. The consolidated financial statements of the Scheme have been prepared on a consolidated basis to provide the end users of the financial information with the most appropriate information in making financial decisions.

(ii) Amended standards adopted by the Scheme

There are no new significant standards or amendments to standards that became mandatory for the first time during the year.

13 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

2 Summary of significant accounting policies (continued)

(b) Principles of consolidation

(i) Subsidiaries

The consolidated financial statements incorporate the assets and liabilities of all subsidiaries controlled by the Scheme as at 30 June 2017 and their results for the year then ended. The Scheme and its subsidiaries together are referred to in these consolidated financial statements as the consolidated entity.

Subsidiaries are all entities over which the Scheme is exposed, or has rights, to variable returns from its involvement with the subsidiary and the ability to affect those returns through its powers over the subsidiaries.

Consolidation of subsidiaries begins from the date the Scheme obtains control of the subsidiary and ceases when the Scheme loses control of the subsidiary.

The acquisition method of accounting is used to account for business combinations by the Scheme.

All transactions (including gains and losses) and balances between entities in the consolidated group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Scheme.

Investments in subsidiaries are accounted for at fair value through profit or loss in the individual consolidated financial statements of the parent entity.

(c) Investment properties

Initially, investment properties are measured at the cost of acquisition, being the purchase consideration determined at the date of acquisition plus costs incidental to the acquisition. Costs incidental to acquisition may include legal fees, stamp duty and other government charges, professional fees preceding acquisition and where applicable financing charges incurred during the construction or development of an asset.

Subsequent to initial recognition investment properties are stated at fair value. Gains or losses arising from changes in the fair value of investment properties are included in the consolidated statement of comprehensive income in the year in which they arise.

Investment properties are derecognised when they have either been disposed of or when the investment property is permanently withdrawn from use and no future benefit is expected from its disposal. Any gains or losses on the derecognition of an investment property are recognised in the consolidated statement of comprehensive income in the year of derecognition.

Independent valuations of investment properties are generally obtained at least once in any 12 month period from the date of the last valuation or as soon as practicable, but not later than within two months after the directors of the Responsible Entity form a view that there is reason to believe that the fair value of the investment property is materially different from its current carrying value. Such valuations are reflected in the consolidated financial statements of the Scheme. Notwithstanding, the directors of the Responsible Entity determine the carrying value of each investment property at each reporting date to ensure that its carrying value does not materially differ from its fair value. Where the carrying value differs from fair value, that asset is adjusted to its fair value.

Where assets have been revalued, the potential effect of the capital gains tax on disposal has not been taken into account in the determination of the revalued carrying amount because the Scheme does not expect to be ultimately liable for capital gains tax in respect of the assets.

Expenditure capitalised to properties includes the cost of acquisition, capital and refurbishment additions, lease commissions and incentives, related professional fees incurred and other directly attributable transaction costs.

14 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017

(continued)

2 Summary of significant accounting policies (continued)

(d) Financial instruments

(i) Classification

• Financial instruments designated at fair value through profit or loss The consolidated entity's and the Scheme's investments are classified as held at fair value through profit or loss. They comprise:

Financial instruments designated at fair value through profit or loss upon initial recognition These include financial assets and liabilities that are not held for trading purposes and which may be sold. These may include investments in listed property trust, unlisted property trust and other unlisted trust.

Financial assets and liabilities designated at fair value through profit or loss at inception are those that are managed and their performance evaluated on a fair value basis in accordance with the consolidated entity's and the Scheme's documented investment strategy. The consolidated entity's and the Scheme's policy is for the Responsible Entity to evaluate the information about these financial instruments on a fair value basis together with other related financial information.

The information on the fair value basis is provided internally to the Scheme's key management personnel. In addition, the designation of financial assets and financial liabilities at fair value through profit or loss will reduce any measurement or recognition inconsistencies and any accounting mismatch that would otherwise arise.

• Borrowings and receivables/payables Borrowings and receivables/payables are non-derivative financial assets/liabilities with fixed or determinable payments that are not quoted in an active market. This category includes short term receivables/payables.

(ii) Recognition/derecognition

The consolidated entity and the Scheme recognises financial assets and financial liabilities on the date it becomes party to the contractual agreement (trade date) and recognises changes in fair value of the financial assets or financial liabilities from this date.

A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where:

the rights to receive cash flows from the asset have expired;
the Scheme retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a 'pass through' agreement; or
the Scheme has transferred its rights to receive cash flows from the asset and either:
(a) has transferred substantially all the risks and rewards of the asset; or has neither transferred nor retained substantially all the risks and rewards of the asset but has
(b) transferred control of the asset.

A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. Any gains or losses arising on derecognition of the asset (calculated as the difference between the disposal proceeds and the carrying amount of the asset) is included in the consolidated statement of comprehensive income in the year the asset is derecognised as realised gains or losses on financial instruments.

(iii) Measurement

Financial assets and financial liabilities held at fair value through profit or loss

Financial assets and financial liabilities held at fair value through profit or loss are measured initially at fair value excluding any transaction costs that are directly attributable to the acquisition or issue of the financial asset or financial liability. Transaction costs on financial assets and financial liabilities held at fair value through profit or loss are expensed immediately. Subsequent to initial recognition, all instruments held at fair value through profit or loss are measured at fair value with changes in their fair value recognised in the consolidated statement of comprehensive income.

15 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

2 Summary of significant accounting policies (continued)

(d) Financial instruments (continued)

(iii) Measurement (continued)

• Fair value in an active market The fair value of financial assets and financial liabilities traded in active markets is based on their quoted market prices at the end of the year without any deduction for estimated future selling costs.

A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arm's length basis.

The Scheme's financial instruments that are valued based on active markets generally include listed property trusts.

• Fair value in an inactive or unquoted market

The fair value of financial assets and liabilities not traded in an active market is determined using valuation techniques. These include the use of recent arm’s length market transactions, discounted cash flow techniques, option pricing models or any other valuation technique that provides a reliable estimate of prices obtained in actual market transactions.

Where discounted cash flow techniques are used, estimated future cash flows are based on management’s best estimates and the discount rate used is the market rate at the end of the reporting period applicable for an instrument with similar terms and conditions. For other pricing models, inputs are based on market data at the end of the reporting period.

There may be a difference between the fair value at initial recognition and amounts determined using a valuation technique. If such a difference exists, the Scheme recognises the difference in the statement of comprehensive income to reflect a change in factors, including time, that market participants would consider in setting a price.

The fair value of derivatives that are not exchange traded is estimated at the amount that the Scheme would receive or pay to terminate the contract at the end of the reporting period taking into account current market conditions (volatility and appropriate yield curve) and the current creditworthiness of the counterparties. The fair value of a forward contract is determined as the net present value of estimated future cash flows, discounted at appropriate market rates as at the valuation date. The fair value of an option contract is determined by applying the most appropriate option valuation model.

Investments in unlisted unit trusts are recorded at the net asset value per unit as reported by the managers of such trusts.

The Scheme's financial instruments that are valued based on inactive or unquoted markets generally include investments in unlisted unit trusts and over the counter derivatives, where applicable.

• Borrowings and receivables/payables Borrowings and receivables/payables are measured initially at fair value plus transaction costs.

Subsequently, borrowings are carried at amortised cost using the effective interest method. Short term receivables/payables are carried at their initial fair values.

(iv) Offsetting financial instruments

Financial assets and liabilities are offset and the net amount reported in the consolidated statement of financial position when, and only when, there is currently a legally enforceable right to offset the recognised amounts and there is an intention to settle on a net basis, or realise the asset and settle the liability simultaneously.

16 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

2 Summary of significant accounting policies (continued)

(e) Derivatives

In order to minimise exposure to fluctuations in interest rates, the Scheme may use a combination of interest rate swaps and options to ensure that the rate of interest on debt is predominantly fixed. Derivative financial instruments are not held for speculative purposes and are carried on the consolidated statement of financial position at fair value. Changes in fair value are recognised in the consolidated statement of comprehensive income.

Interest payments and receipts under interest rate swap contracts are recognised on an accrual basis in the consolidated statement of comprehensive income, as an adjustment to interest expense when the hedge transaction occurs.

(f) Net assets attributable to unitholders

Prior to the Scheme listing on the ASX, units were redeemable at the unitholders' option and were therefore classified as financial liabilities. The units could be put back to the Scheme for cash via withdrawal facility offers by the Responsible Entity equal to a proportionate share of the Scheme's net asset value. The fair value of redeemable units were measured at the redemption amount that was payable (based on the redemption unit price) at the end of the year if unitholders exercised their right to put the units back to the Scheme.

Post listing on the ASX, the units are no longer redeemable at the unitholders' option and are therefore classified as equity.

(g) Cash and cash equivalents

For the purpose of presentation in the consolidated statement of cash flows, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value, and bank overdrafts. Bank overdrafts, if any, are shown within borrowings in the consolidated statement of financial position.

(h) Investment income

Interest income is recognised in the consolidated statement of comprehensive income for all financial instruments using the effective interest method. Other changes in fair value for such instruments are recorded in accordance with the policies described in note 2(d).

Trust distributions (including distributions from cash management trusts) are recognised on an entitlements basis.

Net gains/(losses) on financial assets and liabilities held at fair value through profit or loss arising on a change in fair value are calculated as the difference between the fair value at the end of the year and the fair value at the previous valuation point. Net gains/(losses) do not include interest or dividend/distribution income. Realised and unrealised gains/(losses) are shown in the notes to the consolidated financial statements.

(i) Expenses All expenses, including property expenses, Responsible Entity's fees and custodian fees, are recognised in the consolidated statement of comprehensive income on an accruals basis.

(j) Income tax Under current legislation, the Scheme is not subject to income tax as unitholders are presently entitled to the income of the Scheme.

Properties and financial instruments held at fair value may include unrealised capital gains. Should such a gain be realised, that portion of the gain that is subject to capital gains tax will be distributed so that the Scheme is not subject to capital gains tax.

Realised capital losses are not distributed to unitholders but are retained in the Scheme to be offset against any future realised capital gains. If realised capital gains exceed realised capital losses, the excess is distributed to unitholders.

The benefit of imputation credits and foreign tax paid, if any, are passed on to unitholders.

17 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

2 Summary of significant accounting policies (continued)

(k) Distributions

In accordance with the Scheme's Constitution, the Scheme distributes income adjusted for amounts determined by the Responsible Entity, to unitholders by cash or reinvestment. Prior to the Scheme listing on the ASX, the distributions were recognised in the consolidated statement of comprehensive income as finance costs attributable to unitholders. Post listing on the ASX, distributions are recognised as a reduction of equity.

(l) Receivables

Receivables may include amounts for interest, rental income arrears, trust distributions and securities sold where settlement has not yet occurred. Trust distributions are accrued when the right to receive payment is established. Interest is accrued at the end of each reporting period from the time of last payment in accordance with the policy set out in note 2(h) above. Amounts are generally received within 30 days of being recorded as receivables.

Receivables include such items as Reduced Input Tax Credits (RITC) and application monies receivable from unitholders.

Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off by reducing the carrying amount directly. An allowance account (provision for impairment of trade receivables) is used when there is objective evidence that the Scheme will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the impairment allowance is the difference between the asset's carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial.

The amount of the impairment loss is recognised in the consolidated statement of comprehensive income within other expenses or property expenses, if related to rental income. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against property expenses in the consolidated statement of comprehensive income.

(m) Payables

Payables include liabilities and accrued expenses owed by the Scheme which are unpaid as at the end of the reporting period.

The distribution amount payable to unitholders as at the end of each reporting period is recognised separately in the consolidated statement of financial position when unitholders are presently entitled to the distributable income under the Scheme's Constitution.

Liabilities for trade creditors are carried at original invoice amount which is the fair value of the consideration to be paid in the future for goods and services received, whether or not billed to the Scheme.

Payables to related parties are recognised and carried at the nominal amount due. They are carried at the nominal amount due to the short term nature of the payable. Interest is taken up as an expense on an accrual basis.

Provisions are recognised when the Scheme has a present obligation as a result of the past event and it is probable that the Scheme will be requested to settle the obligation and a reliable estimate can be made of the amount of the obligation.

(n) Applications

Units issued through ASX are recognised at the fair value of the consideration received. Transaction costs arising from the issue of units are recognised directly as a reduction of the proceeds received.

18 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

2 Summary of significant accounting policies (continued)

(o) Borrowings and borrowing costs

All loans are initially recognised at cost, being the fair value of the consideration received net of issue costs associated with borrowings.

After initial recognition, loans are subsequently measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement. Gains and losses are recognised in the consolidated statement of comprehensive income when liabilities are derecognised or impaired.

(p) Goods and Services Tax (GST)

The consolidated statement of comprehensive income is shown exclusive of GST, unless the GST incurred (or part thereof) on expenses that are not recoverable. Expenses of various services provided to the Scheme by third parties, such as custodial services and investment management fees, may have non-recoverable GST components, as applicable. In these cases, the non-recoverable GST component is recognised as part of the particular expense in the consolidated statement of comprehensive income.

Accounts payable and receivable are stated inclusive of the GST receivable and payable, respectively. The net amount of GST recoverable, or payable, is included in receivables or payables in the consolidated statement of financial position.

Cash flows relating to GST are included in the consolidated statement of cash flows on a gross basis.

(q) Revenue

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the entity and the revenue can be reliably measured. Revenue brought to account but not received at the end of the reporting period is recognised as a receivable. The following specific recognition criteria must also be met before revenue is recognised:

Rental revenue

Rental income is recognised on a straight line basis over the lease term.

Contingent rentals, such as turnover rent and market rent adjustments, are recognised as income in the financial reporting period in which they are earned.

Fixed rental increases which do not represent direct compensation for underlying cost increases or capital expenditure are recognised on a straight line basis over the term of the lease.

The rental adjustments resulting from this policy are disclosed in the consolidated financial statements for financial reporting presentation purposes only.

Incidental income (costs) derived from an investment property undergoing construction or development but not directly related to bringing the assets to the working condition, are recognised in profit for the reporting period.

Rent not received at the end of the reporting period is reflected in the consolidated statement of financial position as a receivable or if paid in advance, as a liability.

Interest revenue

Interest income is recognised in the consolidated statement of comprehensive income as it accrues.

19 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

2 Summary of significant accounting policies (continued)

(r) Leases

Leasing costs

Lease costs are costs that are directly associated with negotiating and arranging an operating lease (including commissions, legal fees and costs of preparing and processing documentation for new leases). These costs, if material, are capitalised and are amortised on a straight-line basis over the term of the lease as property expenses. The carrying amount of the leasing cost is reflected in the carrying value of investment properties.

Lease incentives

Incentives such as cash, rent-free periods, lessee or lessor owned fitouts may be provided to lessees to enter into an operating lease. Rent-free incentives are capitalised and are amortised on a straight-line basis over the term of the lease as a reduction of rental income. Fitout incentives are capitalised and are amortised on a straight-line basis over the term of the lease as property expenses. The carrying amount of the lease incentives is reflected in the carrying value of investment properties.

(s) Use of judgements and estimates

The preparation of the Scheme's consolidated financial statements requires it to make judgements, estimates and assumptions that affect the reported amounts of assets and liabilities. Uncertainty about these assumptions and estimates could result in outcomes that could require a material adjustment to the carrying amount of the asset or liability affected in the future. However, estimates are continually evaluated and based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

Critical judgements are made by the Scheme in respect of the fair values of investment properties. These investments are reviewed regularly by reference to external independent property valuations and market conditions, using generally accepted market practices.

The key weighted average assumptions used by the external independent property valuers in the latest valuations have been used by the Scheme for the investment properties and the weighted average total for all properties, including the weighted average lease expiry ("WALE"), have been disclosed in note 19.

The Scheme's financial instruments are valued primarily based on the prices provided by independent pricing services.

When the fair values of the reported financial instruments cannot be derived from active markets, they are determined using prices obtained from inactive or unquoted markets and/or other valuation techniques. The inputs to these valuation techniques (if applicable) are taken from observable markets to the extent practicable. Where observable inputs are not available, the inputs may be estimated based on a degree of judgements and assumptions in establishing fair values.

Where appropriate, the outcomes of the valuation techniques that are used in establishing fair values are validated using prices from observable current market transactions for similar instruments (without modification or repackaging) or based on relevant available observable market data.

The determination of what constitutes 'observable' requires significant judgement by the Scheme. The Scheme considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

In addition, areas such as credit risk (both own and counterparty), volatilities and correlations require management to make estimates and judgements. Changes in assumptions about these factors could affect the reported fair value of financial instruments.

For certain other financial instruments, including amounts due from/to brokers, accounts payable and the carrying amounts approximate fair value due to the immediate or short term nature of these financial instruments.

20 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

2 Summary of significant accounting policies (continued)

(t) New accounting standards and interpretations not yet adopted Certain new accounting standards and interpretations have been published that are not mandatory for 30 June 2017 reporting periods and have not been early adopted by the Scheme. The directors' assessment of the impact of these new standards (to the extent relevant to the Scheme) and interpretations is set out below:

(i) AASB 9 Financial Instruments (and applicable amendments) (effective 1 January 2018)

AASB 9 Financial Instruments addresses the classification, measurement, recognition and derecognition of financial assets and financial liabilities. It has now also introduced revised rules for hedge accounting and impairment. The Standard is not applicable until 1 January 2018 but is available for early adoption. The Scheme does not expect this to have a significant impact on the recognition and measurement of the Scheme’s financial instruments as they are carried at fair value through profit or loss. The derecognition rules have not been changed from the previous requirements and the Scheme does not apply hedge accounting. AASB 9 introduces a new impairment model. However, as the Scheme’s investments are all held at fair value through profit or loss, the change in impairment rules will not impact the Scheme. The Scheme does not intend to early adopt AASB 9. The Scheme will apply AASB 9 in its financial statements for the year commencing 1 July 2018.

(ii) AASB 15 Revenue from Contracts with Customers (effective 1 January 2018)

AASB 15 sets out the requirements for recognising revenue that apply to all contracts with customers, except for contracts that are within the scope of the accounting standards for leases, insurance contracts and financial instruments. AASB 15 outlines a single, principles based five-step model for entities to use in accounting for revenue arising from contracts with customers. The core principle 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. Revenue is recognised only when the control of a good or service transfers to a customer. This notion of control replaces the existing notion of risks and rewards. The Scheme’s main source of income includes rental income, distributions, interest and gains on financial instruments held at fair value through profit or loss. All of these are outside the scope of the Revenue standard. Consequently, the Scheme does not expect AASB 15 to have a significant impact on the Scheme’s financial statements. The Scheme does not intend to early adopt AASB 15. The Scheme will apply AASB 15 in its financial statements for the year commencing 1 July 2018.

(iii) AASB 16 Leases (effective 1 January 2019)

AASB 16 sets out the principles for the recognition, measurement, presentation and disclosure of leases. AASB16 substantially carries forward the lessor accounting requirements in AASB 17 and require enhanced disclosures to be provided by the lessor that will improve information disclosed about the lessor's risk exposure, particularly to residual value risk. The standard will be effective for annual periods beginning on or after 1 January 2019. Early adoption is permitted provided AASB 15 has been applied, or is applied at the same date as AASB16. Based on the existing recognition of leases, the Scheme does not expect a material impact from the application of this standard. The Scheme is currently assessing the effects of applying AASB 16 on the financial statement disclosures. The Scheme does not intend to early adopt AASB 16. The Scheme will apply AASB 16 in its financial statements for the year commencing 1 July 2019.

(iv) AASB 2016-2 Amendments to Australian Accounting Standards - Disclosure Initiative: Amendments to AASB 107 (effective 1 January 2017)

AASB 2016-2 amends AASB 107 Statements of Cash Flows to require entities to provide disclosure that enable users of financial statements to evaluate cash and non-cash changes in their financing activities. No significant impact is expected upon adoption of the amendments. The Scheme will apply AASB 2016-2 in its financial statements for the year commencing 1 July 2017.

(v) AASB 2016-3 Amendments to Australian Accounting Standards - Clarifications to AASB 15 (effective 1 January 2018)

AASB 2016-3 amends AASB 15 Revenue from Contracts with Customers to clarify the requirements on identifying performance obligations, principal versus agent considerations and the timing of recognising revenue from granting a licence. It also provides further practical expedients on transition to AASB 15. No significant impact is expected upon adoption of the amendments. The Scheme does not intend to early adopt AASB 2016-3. The Scheme will apply AASB 2016-3 in its financial statements for the year commencing 1 July 2018.

21 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

2 Summary of significant accounting policies (continued)

(u) Rounding of amounts

The consolidated entity and the Scheme is an entity of the kind referred to in ASIC Corporations Instrument 2016/191 issued by the Australian Securities and Investments Commission relating to the "rounding off" of amounts in the consolidated financial statements. Amounts in the consolidated financial statements have been rounded off to the nearest thousand dollars.

(v) Functional and presentation currency

Items included in the financial statements of each of the Scheme's operations are measured using the currency of the primary economic environment in which it operates ("the functional currency"). The consolidated financial statements are presented in Australian dollars, which is the Scheme's functional and presentation currency.

(w) Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. The chief operating decision maker has been identified as the Board of Directors of the Responsible Entity (“the Board”) for the achievement of the business strategic and operational plans.

3 Rental income

Rental income Outgoings income	2017 $'000 35,942 8,067	2016 $'000 34,227 8,542
	44,009	42,769

Rental income includes an adjustment for the straight lining of rental income of $472,000 (2016: $117,000).

4 Property expenses

Recoverable outgoings Non recoverable outgoings Bad debts expense Amortisation of lease commissions & lease incentives	2017 $'000 10,767 818 167 4,001	2016 $'000 9,949 750 62 4,177
	15,753	14,938

22 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

5 Net gains/(losses) on financial instruments held at fair value through profit or loss

loss
Net unrealised gain/(loss) on derivatives Net realised loss on derivatives - swap break costs Total net gain/(loss) on financial instruments held at fair value through profit or loss	2017 $'000 9,163 (7,987)	2016 $'000 (3,408) -
	1,176	(3,408)

6 Auditors' remuneration

During the year the following fees were paid or payable for services provided by the auditor of the consolidated entity and the Scheme:

PricewaterhouseCoopers Audit and review of financial statements Audit of compliance plan Out of balance to category total Ernst & Young Audit and review of financial statements Tax compliance services Initial public offering due diligence services	2017 $ 70,500 2,632	2016 $ - 3,570
	73,132	3,570
	- 25,490 -	72,338 19,560 309,458
	25,490	401,356

7 Other expenses

7 Other expenses	Expression	Expression
Directors fees* Sundry Administration Equity raising costs	2017 $'000 228 164 512 -	2016 $'000 8 205 541 2,124
	904	2,878

*The Scheme paid fees to the independent directors of the Responsible Entity from 17 June 2016.

23 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

8 Net assets attributable to unitholders

As stipulated within the Scheme's Constitution, each unit represents a right to an individual share in the Scheme and does not extend to a right to the underlying assets of the Scheme.

Movements in the number of units and net assets attributable to unitholders during the year were as follows:

Movements 2017 '000 140,372 - - - - -	in no. of units 2016 '000 227,691 (128,303) - 76,088 (38,424) 3,320	Movements 2017 $'000 322,343 - - - - -	in net assets 2016 $'000 235,987 - (6,155) 152,130 (62,299) 2,680
140,372	140,372	322,343	322,343
		(48,197) 39,581	(51,216) 3,019
		(8,616)	(48,197)
		313,727	274,146

Capital risk management

The Responsible Entity considers net assets attributable to unitholders of the Scheme to be equity.

The Scheme utilises a mixture of debt and equity to finance its activities, with target gearing of below 40%. Gearing ratio at 30 June 2017 was 27.0% (2016: 27.5%).

9 Distributions to unitholders

The distributions for the year were as follows:

30 September 31 December 31 March 21 June 30 June (payable)	2017 2017 2016 2016 $'000 CPU $'000 CPU 5,194 3.70 3,902 1.75 5,194 3.70 3,917 1.75 5,334 3.80 3,834 1.75 - - 3,460 3.78 5,334 3.80 505 0.36 21,056 15.00 15,618 9.39

24 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

10 Earnings per unit

The earnings and weighted average number of units used in the calculation of basic and diluted earnings per unit are as follows:

*Pre Consolidation of units* Profit before finance costs attributable to unitholders ($'000) Weighted average number of units used as the denominator in calculating basic and diluted earnings per unit ('000) Basic and diluted earnings per unit attributable to unitholders (cents per unit) *Post Consolidation of units* Profit attributable to unitholders ($'000) Weighted average number of units used as the denominator in calculating basic and diluted earnings per unit ('000) Basic and diluted earnings per unit attributable to unitholders (cents per unit)	2017 - -	2016 18,230 211,918
	-	8.60
	60,637 407 140,372 140,372
	43.20 0.29

On 20 June 2016, the units of the Scheme were consolidated on the basis of 0.4165 units for every 1 unit held.

11 Cash and cash equivalents

11 Cash and cash equivalents
Cash at bank 12 Receivables Trade receivables GST receivables Provision for impairment loss	2017 $'000 4,118	2016 $'000 10,589
	4,118	10,589
	2017 $'000 410 189 (167)	2016 $'000 738 815 -
	432	1,553

13 Financial assets/(liabilities) held at fair value through profit or loss

Derivative assets Total financial assets held at fair value through profit or loss Derivative liabilities Total financial liabilities held at fair value through profit or loss	2017 $'000 232	2016 $'000 -
	232	-
	-	(8,931)
	-	(8,931)

An overview of the risk exposures and fair value measurements relating to financial assets and liabilities at fair value through profit or loss is included in note 18.

Refer to note 17 for details of the derivative financial instruments.

25 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

14 Investment properties

(a) Property details

Type Ownership Acquisition date Valuation date Valuation amount (%) $'000	Carrying value Valuer 2017 2016 $'000 $'000	Carrying value Valuer 2017 2016 $'000 $'000
30 Pirie Street, Adelaide, SA Office/ Freehold 100% 11/02/2014 30/06/2017 119,000	Jones Lang Lasalle 119,000	117,187
10 Valentine Ave, Parramatta, NSW Office/ Freehold 100% 07/12/2007 30/06/2017 86,000	Knight Frank 86,000	69,523
5 Eden Park Drive, North Ryde, NSW Commercial/ Freehold 100% 11/02/2014 30/06/2017 52,400	Savills 52,400	40,840
468 St Kilda Rd, Melbourne, VIC Office/ Freehold 100% 03/07/2007 31/12/2016 50,000	CBRE 50,973	44,330
241 Adelaide Street, Brisbane, QLD Office/ Leasehold 100% 01/06/2007 30/06/2017 36,800	Savills 36,800	35,766
32 Phillip Street, Parramatta, NSW Office/ Freehold 100% 01/06/2007 31/12/2016 41,700	Savills 41,700	37,750
2 Eden Park Drive, North Ryde, NSW Commercial/ Freehold 100% 20/06/2013 31/12/2016 34,000	Knight Frank 34,452	28,856
64 Northbourne Avenue, Canberra,ACT Office/ Leasehold 100% 01/06/2005 31/12/2016 19,200	Savills 19,742	18,520
Total 439,100	441,067	392,772

The carrying value of an investment property may vary from the independent valuation of the property due to capital expenditure and the accounting treatment of leasing commissions and lease incentives.

The investment properties valuation policy is included in note 19.

(b) Movements in carrying amount

Reconciliations of the carrying amounts of investment properties are set out below:

Opening balance Additions Lease commissions and incentives amortisation Straight-lining of rental income Revaluation movements Closing balance	2017 $'000 392,772 12,831 (4,001) 472 38,993	2016 $'000 374,750 7,903 (4,177) (117) 14,413
	441,067	392,772

(c) Contractual obligations

Capital expenditure contracted for at the reporting date but not recognised as liabilities:

Within one year	2017 $'000 5,945	2016 $'000 519
	5,945	519

The Scheme's share of capital commitments will be funded using the Scheme's cash and cash equivalents and debt facility. Refer to notes 11 and 16, respectively.

26 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017

(continued)

		30 June 2017 (continued)
15 Payables Trade payables Accrued expenses GST payables 16 Borrowings Bank loan Unamortised borrowing costs	2017 $'000 2,015 1,933 384	2016 $'000 1,703 1,500 352
	4,332	3,555
	2017 $'000 123,500 (683)	2016 $'000 119,000 (909)
	122,817	118,091

The bank loan comprises of two tranches:

Tranche A is a $70,000,000 facility expiring on 21 June 2019, and
Tranche B is a $70,000,000 facility expiring on 21 June 2021.

The facility is secured against the assets of the Scheme and is non-recourse to unitholders.

The Scheme had access to:

Credit facilities Cash advance facilities Drawn balance Undrawn balance	2017 $'000 140,000 (123,500)	2016 $'000 140,000 (119,000)
	16,500	21,000

27 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017

(continued)

17 Derivative financial instruments

Contract/notional $'000 10,000 10,000 20,000 20,000 20,000 20,000	Fair Assets $'000 - - - - 72 72	values Liabilities $'000 2 2 2 2 - -
100,000	144	8
20,000	96	-
Contract/notional $'000 20,000 20,000 20,000 20,000 20,000 20,000	Fair Assets $'000 - - - - - -	values Liabilities $'000 168 168 3,874 3,973 374 374
120,000	-	8,931

An interest rate swap is an agreement between two parties to exchange their interest obligations (payments) or receipts at set intervals on a notional principal amount over an agreed time period.

The fair value of interest rate swaps is the estimated amount that the entity would receive or pay to terminate the swap at the balance sheet date, taking into account current interest rates and the current creditworthiness of the swap counterparties. The valuation policy is included in note 19.

The Scheme has entered into interest rate swap contracts to hedge future interest payments on the Scheme’s borrowings.

A realised loss on derivative instruments held at fair value through profit and loss (swap break costs) of $7,987,000 (2016: $nil) and an unrealised gain of $9,163,000 (2016: $3,408,000 ) relating to the change in the fair value of the Scheme's interest rate swap contracts was recognised in the consolidated statement of comprehensive income during the year ended 30 June 2017.

28 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

18 Financial risk management

(a) Objectives, strategies, policies and processes

The Scheme’s activities expose it to a variety of financial risks: market risk (including price risk and interest rate risk), credit risk and liquidity risk.

The Scheme's overall risk management program focuses on ensuring compliance with the Scheme's disclosure documents and seeks to maximise the returns derived for the level of risk to which the Scheme is exposed. Financial risk management is carried out by the Investment Manager under policies approved by the Board.

The Scheme uses different methods to measure different types of risk to which it is exposed. These methods include sensitivity analysis in the case of interest rates, other price risks, and ratings analysis for credit risk.

As part of its risk management strategy, the Scheme uses interest rate swaps to manage exposures resulting from changes in interest rates.

(b) Market risk

Market risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises two types of risk: price risk and interest rate risk. Market risk is managed and monitored using sensitivity analysis, and minimised through ensuring that all investment activities are undertaken in accordance with established mandates and investment strategies.

The market risk disclosures are prepared on the basis of the Scheme's direct investments and not on a look through basis for investments held in the Scheme.

(i) Price risk

Price risk is the risk that the fair value or future cash flows of equities will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk), whether those changes are caused by factors specific to the individual financial instrument or its issuer, or factors affecting all similar financial instruments traded in the market.

Price risk exposure arises from the Scheme's investment in listed and unlisted property securities. The investments are classified on the consolidated statement of financial position as at fair value through profit or loss. All securities investments present a risk of loss of capital.

The Scheme has no exposures to price risk.

(ii) Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates.

The Scheme is exposed to interest rate risk predominantly through borrowings. The Scheme applies hedging across its differing interest rate exposures and utilises interest rate swaps, to exchange floating interest rates to fixed interest rates, to manage its exposure. Compliance with policy is reviewed regularly by management and is reported to the Audit and Risk Committee meetings.

29 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

18 Financial risk management (continued)

(b) Market risk (continued)

(ii) Interest rate risk (continued)

The Scheme has exposure to interest rate risk on its monetary assets and liabilities, mitigated by the use of interest rate swaps, as shown in the table below:

Floating rate Cash and cash equivalents Borrowings Derivative financial instruments Interest rate swaps - floating to fixed Net exposure	2017 $'000 4,118 (123,500)	2016 $'000 10,589 (119,000)
	(119,382)	(108,411)
	100,000	120,000
	100,000	120,000
	(19,382)	11,589

Represents the notional principal amounts.

The table below demonstrates the sensitivity to reasonably possible changes in year end interest rates, with all other variables held constant. A negative amount in the table reflects a potential net reduction in profit and net assets attributable to unitholders, while a positive amount reflects a potential net increase.

Drawn borrowings were 81.0% hedged as at 30 June 2017.

	Impact on	profit and net
	assets	attributable to
		unitholders
	2017	2016
Sensitivity	$'000	$'000
Interest rate + 0.50%	(97)	58
Interest rate - 0.50%	97	(58)

The above calculation ignores the impact of any changes to the valuation of interest rate swaps.

(c) Credit risk

Credit risk is the risk that a contracting entity will not complete its obligations under a financial instrument and cause the Scheme to make a financial loss. The Scheme has exposure to credit risk on all of its financial assets included in the Scheme's consolidated statement of financial position.

The Scheme manages this risk by performing credit reviews of prospective tenants, obtaining tenant collateral where appropriate and performing detailed reviews on tenant arrears. The Scheme reviews the aggregate exposures of tenant debtors and tenancies across its portfolio.

The Scheme is exposed to credit risk on financial instruments and derivatives. There is only a credit risk where the contracting entity is liable to pay the Scheme in the event of a close out.

30 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

18 Financial risk management (continued)

(d) Liquidity risk

Liquidity risk is the risk that an entity will encounter difficulty in meeting obligations associated with financial liabilities that are settled by delivering cash or another financial asset. This risk is controlled through the Scheme's maintaining an adequate amount of committed credit facilities. In addition, the Scheme maintains sufficient cash and cash equivalents to meet normal operating requirements.

Maturities analysis of financial liabilities

The table below analyses the consolidated entity's and the Scheme's financial liabilities into relevant maturity groupings based on the remaining period at the end of the year to the contractual maturity date. The amounts in the table are the contractual undiscounted cash flows. Financial liabilities such as trade payables, where there are no specific contractual settlement dates, have been grouped into the 'less than 1 year' maturity grouping as such liabilities are typically settled within 30 days.

Less than 1 year $'000 5,334 4,332 -	1-2 years $'000 - - 70,000	2-3 years $'000 - - -	3+ years $'000 - - 53,500
9,666	70,000	-	53,500
Less than 1 year $'000 505 3,555 1,979 -	1-2 years $'000 - - 1,979 -	2-3 years $'000 - - 1,979 70,000	3+ years $'000 - - 2,342 49,000
6,039	1,979	71,979	51,342

As disclosed above, the Scheme manages its liquidity risk by investing predominantly in liquid assets that it expects to be able to liquidate within seven days or less. Liquid assets include cash and cash equivalents. As at 30 June 2017, these assets amounted to $4,118,000 (2016: $10,589,000).

(e) Estimation of fair values of financial assets and financial liabilities

The carrying amounts of the consolidated entity's and the Scheme's assets and liabilities at the end of the year approximate their fair values.

The Scheme values its investments in accordance with the accounting policies set out in note 19.

(f) Instruments used by the Scheme

The Scheme is party to derivative financial instruments in the normal course of business in order to manage exposure to fluctuations in interest rates in accordance with the Scheme's financial risk management policies.

The details of the Scheme's interest rate management activities are detailed in note 17.

31 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

19 Fair value hierarchy

The Scheme measures and recognises the financial assets/(liabilities) held at fair value through profit or loss and investment properties at fair value on a recurring basis.

(a) Fair value hierarchy

The Scheme is required to classify fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making the measurements. The fair value hierarchy has the following levels:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices).
Level 3: Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the asset or liability.

The determination of what constitutes ''observable'' requires significant judgement by the Responsible Entity. The Responsible Entity considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The table below sets out the Scheme's financial assets and liabilities (by class) measured at fair value according to the fair value hierarchy at the reporting date.

Level 1 $'000 -	Level 2 $'000 232	Level 3 $'000 -	Total $'000 232
-	232	-	232
-	-	441,067	441,067
-	-	441,067	441,067

32 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017

(continued)

19 Fair value hierarchy (continued)

19 Fair value hierarchy (continued)
2016 Non-financial assets Investment properties Total non-financial assets Financial liabilities Financial liabilities held at fair value through profit or loss Derivatives Total financial liabilities	Level 1 $'000 -	Level 2 $'000 -	Level 3 $'000 392,772	Total $'000 392,772
	-	-	392,772	392,772
	-	8,931	-	8,931
	-	8,931	-	8,931

The Scheme's policy is to recognise transfers into and out of fair value hierarchy levels as at the end of the year. There are no transfers between levels 1, 2 and 3 for fair value measurements during the year (2016: $nil).

(b) Valuation techniques

(i) Financial instruments The pricing for the majority of the Scheme's investments is generally sourced from independent pricing sources, the relevant Investment Managers or reliable brokers' quotes.

Investments whose values are based on quoted market prices in active markets, and therefore classified within level 1, include active listed property trusts and exchange traded derivatives.

Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices or alternative pricing sources supported by observable inputs are classified within level 2. These include unlisted property trusts and over-the-counter derivatives.

The fair value of interest rate swaps is calculated using a discounted cash flow model as the present value of the estimated future cash flows based on observable yield curves. The model incorporate various inputs including both credit and debit valuation adjustments for counterparty and own credit risk, and interest rate curves.

The stated fair value of each financial instruments at the end of the year represents the Responsible Entity’s best estimate at the end of the year.

33 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

19 Fair value hierarchy (continued)

(ii) Investment properties

The investment property valuation policy is to have independent valuations conducted regularly, typically annually, to aid with the determination of the assets fair value. In determining the fair value of an investment property, the primary appropriate method of assessment is considered to be via reconciliation between the discounted cash flow and income capitalisation methods. Direct comparison may also be used as a secondary assessment method.

Discounted cash flow method - this methodology involves formulating a projection of net income over a specified time horizon, normally 10 years, and discounting this cash flow including the projected terminal value at the end of the projection period at an appropriate market-derived discount rate. The present value of this discounted cash flow provides a guide to the fair value of the property;
Income capitalisation method - this methodology involves the assessment of a net market income for the various components of the subject property. The net market income is capitalised at a rate derived from the analysis of comparable sales evidence to derive a capital value. Appropriate capital adjustments are then made where necessary to reflect the adopted cash flow profile and the general risk characteristic of the property; and
Direct comparison method - this methodology identifies comparable sales on a dollar per square metre of lettable area and compares the equivalent rates to the subject property to establish the property’s market value. This approach is somewhat subjective given the fact that specific items of income and expenditure are difficult to directly reflect and compare when adopting a rate per metre.

At each reporting date the appropriateness of those valuations is assessed by the Responsible Entity.

The stated fair value of each investment property at the end of the year represents the Responsible Entity's best estimate as at the end of the year. However, if an investment property is sold in the future the price achieved may be higher or lower than the most recent valuation, or higher or lower than the fair value recorded in the consolidated financial statements if that differs from the valuation.

The fair value estimates for investment properties are included in level 3 as explained in section (c) below.

(c) Fair value measurements using significant unobservable input (level 3)

The changes in fair value of investment properties for the year are set out in note 14(b).

(i) Valuation inputs and relationship to fair value The following are the key valuation assumptions used in the determination of the investment properties fair value using the discounted cash flows and income capitalisation valuation methodologies:

Current net market rental - the estimated amount for which a property or space within a property should be leased between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing and wherein the parties have each acted knowledgeably, prudently and without compulsion. In the calculation of net rent, the owner recovers outgoings from the tenant on a pro-rata basis (where applicable);
Adopted capitalisation rate - the rate at which net market income is capitalised to determine the value of the property. This rate is determined with regards to market evidence;
Adopted terminal yield - the capitalisation rate used to convert income into an indication of the anticipated value of the property at the end of a holding period when carrying out a discounted cash flow calculation. This rate is determined with regards to market evidence; and
Adopted discount rate - the rate of return to convert a monetary sum, payable or receivable in the future, into present value. Theoretically, it should reflect the opportunity cost of capital, that is, the rate of return the capital can earn if put to other uses having similar risk. This rate is determined with regards to market evidence;
34 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

19 Fair value hierarchy (continued)

The ranges of the key valuation inputs to measure the fair value of the Scheme's investment properties are shown in the table below:

shown in the table below:
Valuation inputs	30 June 2017	30 June 2016
Current net market rental ($ per sqm)	238 - 453	211 - 439
Adopted capitalisation rate (%)	6.75% - 9.00%	7.50% - 9.25%
Adopted terminal yield (%)	7.00% - 10.37%	7.75% - 9.75%
Adopted discount rate (%)	7.50% - 10.50%	8.25% - 11.00%
Occupancy rate by area (%)	85.28% - 100.00%	82.24% - 100.00%
Weighted average lease expiry (years)	2.54 -6.57	1.94 - 7.00

At 30 June 2017, the Scheme's investment properties weighted average lease expiry was 4.6 years (2016: 4.8 years) and occupancy rate was 93.5% (2016: 94.7%).

(ii) Valuation processes

Independent valuations of investment properties are obtained at least once in any 12 month period from the date of the last valuation or as soon as practicable, but not later than within two months after the directors of the Responsible Entity form a view that there is reason to believe that the fair value of the investment property is materially different from its current carrying value. Such valuations are reflected in note 14. Notwithstanding, the directors of the Responsible Entity determine the carrying value of each investment property at each reporting date to ensure that its carrying value does not materially differ from its fair value. Where the carrying value differs from fair value, that asset is adjusted to its fair value.

(iii) Sensitivity information The table below details the movement in the fair value when each of the significant inputs either increase or decrease, with all other inputs remaining constant:

Significant inputs	Fair value measurement sensitivity to significant increase in input	Fair value measurement sensitivity to significant decrease in input
Current net market rental	Increase	Decrease
Adopted capitalisation rate	Decrease	Increase
Adopted terminal yield	Decrease	Increase
Adopted discount rate	Decrease	Increase
Occupancy rate by area	Increase	Decrease
Weighted average lease expiry	Increase	Decrease

It is often the case that multiple significant inputs change simultaneously, on these occasions the impact of the changes in the individual inputs can be reduced or vice versa can magnify the movement in the fair value.

When assessing the discounted cash flow, the adopted discount rate and adopted terminal yield have a strong interrelationship because the discount rate will determine the rate at which the terminal value is discounted to the present value. In theory, an increase (softening) in the adopted discount rate and a decrease (tightening) in the adopted terminal yield could potentially offset the impact on fair value, and vice versa. The impact on fair value may be magnified if both the discount rate and terminal yield move in the same direction.

When calculating the income capitalisation, the net market rent has a strong interrelationship with the adopted capitalisation rate. This is because the methodology involves assessing the total net market income receivable from the property and capitalising this in perpetuity to derive a capital value. In theory, an increase in the net market rent and an increase (softening) in the adopted capitalisation rate could potentially offset the impact to the fair value. The same can be said for a decrease in the net market rent and a decrease (tightening) in the adopted capitalisation rate. The impact on fair value may be magnified if the net market rent is increasing while the capitalisation rate is decreasing (or vice versa).

35 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

19 Fair value hierarchy (continued)

(d) Fair value of other financial instruments Due to their short-term nature, the carrying amounts of the receivables and payables are assumed to approximate their fair values.

Borrowings are measured at amortised cost using the effective interest method. Amortised cost is calculated by taking into account any issue costs and any discount or premium on settlement. The fair value of borrowings approximates the carrying amount.

20 Segment information

The Scheme operates as one business segment being investment in office properties, and in one geographic segment being Australia.

The Scheme’s segments are based on reports used by the Board in making strategic decisions about the Scheme, assessing the financial performance and financial position, determining the allocation of resources, and risk management.

21 Related party transactions

Responsible entity

The Responsible Entity of Australian Unity Office Fund is Australian Unity Investment Real Estate Limited (ABN 86 606 414 368).

Key management personnel

(a) Directors

Key management personnel include persons who were directors of the Australian Unity Investment Real Estate Limited at any time during the year as follows:

Company secretary

The company secretaries of the Responsible Entity during the year and up to the date of this report (unless otherwise stated) were:

Emma Rodgers Liesl Petterd (appointed 3 October 2016)

No Directors' fees were paid out of the Scheme property to the directors of the Responsible Entity, except for independent directors who receive their fees from the Scheme. Directors' fees paid during the year was $227,900 (2016: $8,117).

As at 30 June 2017, Peter Day held 50,000 units (2016: Peter Day held 50,000 units). None of the other current directors of the Responsible Entity held any units in the Scheme.

(b) Other key management personnel

There were no other persons with responsibility for planning, directing and controlling the activities of the Scheme, directly or indirectly during the year.

Other transactions within the Scheme

From time to time directors of the Responsible Entity, or their director related entities, may buy or sell units of the Scheme. These transactions are on the same terms and conditions as those entered into by other Scheme unitholders.

36 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

21 Related party transactions (continued)

Responsible Entity's fees and other transactions

Under the terms of the Scheme's Constitution, the Responsible Entity is entitled to receive fees monthly calculated:

0.60% per annum of the gross asset value of the Scheme up to and including $750,000,000; plus
0.55% per annum of the gross asset value of the Scheme that exceeds $750,000,000.

Administration expenses incurred in the day to day running of the Scheme are reimbursed in accordance with the Scheme’s Constitution.

The transactions during the year and amount payable at the year end between the Scheme and the Responsible Entity were as follows:

Entity were as follows:
Responsible Entity and Investment Manager fees for the year paid by the Scheme to the Responsible Entity* Administration expenses incurred by the Responsible Entity which are reimbursed in accordance with the Scheme's Constitution Aggregate amounts payable to the Responsible Entity at the end of the year	2017 $ 2,477,988	2016 $ 7,313,100
	149,487	268,000
	240,878	246,924

Prior year amount included a one-off performance fee of $4,632,000 which was paid prior to the Scheme listing on the ASX.

(a) Other related party transactions

Investment management agreement

Australian Unity Funds Management Limited (ABN 60 071 497 115) is the appointed provider of investment management services to the Scheme effective 17 June 2016. Under the Investment Management Agreement, the Investment Manager is engaged to provide a number of services including:

Investment management services;
Fund analyst services;
Transactional services; and
Fund accounting services.

In consideration for the provisions of the management services to the Scheme, the Investment Manager is entitled to an annual fee equivalent to 95% of the Responsible Entity fee. This equates to 0.57% per annum of the gross assets of the Scheme. To the extent the investment management fee is paid to the Investment Manager, the Responsible Entity will reduce the base fee it takes out of the Scheme. Additionally, the Investment Manager is entitled to a fee for accounting services of $140,000 per annum, adjusted upwards by CPI each year.

The total fees to the Investment Manager under the Investment Management Agreement for the year ended 30 June 2017 was $2,354,089 (2016: $82,042). Total accrued fees payable to the Investment Manager as at 30 June 2017 was $208,739 (2016: $82,042).

Property management agreement

Australian Unity Property Management Pty Ltd (ABN 76 073 590 600) ("AUPMPL") has been appointed to provide a number of property related services to the Scheme. These services include:

Property management services;
Financial management services;
Leasing services;
Rent review services; and
Project supervision services (in relation to capital works).

The total fees paid/payable to AUPMPL for the year ended 30 June 2017 was $1,253,877 (2016: $754,894). Total accrued fees payable to AUPMPL as at 30 June 2017 was $117,312 (2016: $13,735).

The Responsible Entity, the Investment Manager and AUPMPL are wholly owned subsidiaries of Australian Unity Limited (ABN 23 087 648 888). All related party transactions are under normal commercial terms and conditions and at market rates.

37 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

21 Related party transactions (continued)

Related party unitholdings

Parties related to the Scheme (including Australian Unity Investment Real Estate Limited, its related parties and other schemes managed by Australian Unity Investment Real Estate Limited), held units in the Scheme as follows:

2017

Unitholders Australian Unity Diversified Property Fund Australian Unity Property Income Fund Australian Unity Health Limited Australian Unity A-REIT Fund Australian Unity Funds Management Limited Australian Unity Grand United Corporate Health Australian Unity Property Securities Fund LAFS Benefit Fund Cap Guaranteed Funeral Bond (Taxed) LAFS Benefit Fund CG Funeral Bond (Untaxed) Capital Secure Funeral Bond LAFS Limited Benefit Fund Funeral Benefit No 2 (Taxed) LAFS Benefit Fund Funeral Benefits Funds No 2 (Untaxed) Total	No. of units held opening '000 8,637 4,269 3,284 98 2,316 900 - - - - - -	No. of units held closing '000 8,637 2,269 2,724 186 2,316 710 750 370 240 160 770 460	Fair value of investment $'000 19,261 5,059 6,075 415 5,165 1,583 1,673 825 535 357 1,717 1,026	Interest held (%) 6.15 1.62 1.94 0.13 1.65 0.51 0.53 0.26 0.17 0.11 0.56 0.33	No. of units acquired '000 - - - 88 - - 750 370 240 160 770 460	No. of units disposed '000 - (2,000) (560) - - (190) - - - - - -	Distributions paid/payable by the Scheme $'000 1,296 426 429 27 347 114 57 42 27 18 87 52
	19,504	19,592	43,691	13.96	2,838	(2,750)	2,922

38 -

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017

(continued)

21 Related party transactions (continued)

Related party unitholdings (continued)

2016

No. of units held opening No. of units held closing Fair value of investment Interest held No. of units acquired Impact of unit consolidation and no. of units disposed Distributions paid/payable by the Scheme Unitholders '000 '000 $'000 (%) '000 '000 $'000 Australian Unity Diversified Property Fund 20,738 8,637 18,398 6.15 - (12,101) 1,446 Australian Unity Property Income Fund 8,476 4,269 9,092 3.04 1,000 (5,207) 551 Australian Unity Health Limited - 3,284 6,995 2.34 3,284 - 12 Australian Unity A-REIT Fund - 98 208 0.07 98 - - Australian Unity Funds Management Limited - 2,316 4,933 1.65 2,316 - 8 Australian Unity Grand United Corporate Health - 900 1,917 0.64 900 - 3 Total 29,214 19,504 41,543 13.89 7,598 (17,308) 2,020 On 20 June 2016, the units of the Scheme were consolidated on the basis of 0.4165 units for every 1 unit held as at the date of consolidation. Australian Unity Property Income Fund redeemed 627,871 units prior to consolidation of units. 22 Reconciliation of profit to net cash inflow from operating activities 2017 2016 $'000 $'000 Profit attributable to unitholders 60,637 18,637 Add back interest expenses and debt establishment costs 4,420 10,026 Add back swap break costs paid 7,987 - Decrease/(increase) in receivables 1,121 (1,104) Increase in payables/liabilities 777 973 Change in fair value of the investment properties - revaluation increment (38,993) (14,413) Adjustments to net lease incentives and straight line rental 3,529 4,060 Unrealised (gains)/losses on financial instruments held at fair value through profit or loss (9,163) 3,408 (Increase)/decrease in other assets/prepayments (47) 10 Equity raising costs - 2,124 Net cash inflow from operating activities 30,268 23,721	No. of units held opening '000 20,738 8,476 - - - -	No. of units held closing '000 8,637 4,269 3,284 98 2,316 900	Fair value of investment $'000 18,398 9,092 6,995 208 4,933 1,917	Interest held (%) 6.15 3.04 2.34 0.07 1.65 0.64	No. of units acquired '000 - 1,000 3,284 98 2,316 900	No. of units acquired '000 - 1,000 3,284 98 2,316 900	Impact of unit consolidation and no. of units disposed* '000 (12,101) (5,207) - - - -	Distributions paid/payable by the Scheme $'000 1,446 551 12 - 8 3
	29,214	19,504	41,543	13.89	7,598		(17,308)	2,020
						30,268		23,721

39 -

Australian Unity Office Fund Notes to the consolidated financial statements

30 June 2017

(continued)

23 Parent entity financial information Statement of financial position Cash and cash equivalents Receivables Other assets Financial assets held at fair value through profit or loss Investment properties Investment in subsidiaries Total assets Distributions payable Financial liabilities held at fair value through profit or loss Payables Borrowings Total liabilities Net assets attributable to unitholders Statement of comprehensive income Profit attributable to unitholders *Finance costs attributable to unitholders* Distributions to unitholders Increase in net assets attributable to unitholders Total comprehensive income for the year	2017 $'000 3,618 34 46 232 19,742 457,673	2016 $'000 10,166 704 15 - 18,520 422,463
	481,345	451,868
	5,334 - 39,467 122,817	505 8,931 50,195 118,091
	167,618	177,722
	313,727	274,146
	60,637	18,637
	- -	15,618 3,019
	60,637	-

24 Events occurring after the end of the financial year

The directors of the Responsible Entity are not aware of any matter or circumstance arising since 30 June 2017 which has significantly affected or may significantly affect the financial position of the Scheme disclosed in the consolidated statement of financial position as at 30 June 2017 or on the results and cash flows of the Scheme for the year ended on that date.

25 Contingent assets and liabilities and commitments

There are no outstanding contingent assets, liabilities or commitments as at 30 June 2017 and 30 June 2016.

Commitments arising from contracts principally relating to capital expenditure on investment properties which are contracted for at reporting date but not recognised on the consolidated statement of financial position are $5,945,000 (2016: $519,000).

40 -

Australian Unity Office Fund Directors' declaration 30 June 2017

Directors' declaration

In the opinion of the directors of Australian Unity Investment Real Estate Limited, as the Responsible Entity of the Scheme:

(a) the consolidated financial statements and notes set out on pages 8 to 40 are in accordance with the Corporations Act 2001 , including:
(i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and
(ii) giving a true and fair view of the consolidated Scheme's financial position as at 30 June 2017 and of its performance, as represented by the results of its operations and cash flows for the year on that date,
(b) there are reasonable grounds to believe that the Scheme will be able to pay its debts as and when they become due and payable,
(c) the consolidated financial statements are in accordance with the Scheme's Constitution, and
(d) Note 2(a) confirms that the consolidated financial statements comply with International Financial Reporting Standards as issued by the International Accounting Standards Board.

This declaration is made in accordance with a resolution of the directors.

==> picture [100 x 62] intentionally omitted <==

Don Marples Director

==> picture [113 x 74] intentionally omitted <==

Peter Day Chairman 7 August 2017

41 -

==> picture [77 x 59] intentionally omitted <==

Independent auditor’s report to the unitholders of Australian Unity Office Fund

Report on the audit of the financial report

Our opinion

In our opinion the accompanying financial report of Australian Unity Office Fund (the Scheme) and its controlled entities (together, the Group) is in accordance with the Corporations Act 2001 , including:

a) giving a true and fair view of the Group’s financial position as at 30 June 2017 and of its financial performance for the year then ended
b) complying with Australian Accounting Standards and the Corporations Regulations 2001 .

What we have audited

The Group financial report comprises:

the consolidated statement of financial position as at 30 June 2017
the consolidated statement of comprehensive income for the year then ended
the consolidated statement of changes in net assets attributable to unitholders for the year then ended
the consolidated statement of cash flows for the year then ended
the notes to the consolidated financial statements, which include a summary of significant accounting policies
the directors’ declaration.

Basis for opinion

We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of the financial report section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordance with the auditor independence requirements of the Corporations Act 2001 and the ethical requirements of the Accounting Professional and Ethical Standards Board’s APES 110 Code of Ethics for Professional Accountants (the Code) that are relevant to our audit of the financial report in Australia. We have also fulfilled our other ethical responsibilities in accordance with the Code.

Our audit approach

An audit is designed to provide reasonable assurance about whether the financial report is free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.

PricewaterhouseCoopers, ABN 52 780 433 757

2 Riverside Quay, SOUTHBANK VIC 3006, GPO Box 1331 MELBOURNE VIC 3001 T: +61 3 8603 1000, F: +61 3 8603 1999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

==> picture [77 x 59] intentionally omitted <==

We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial report as a whole, taking into account the geographic and management structure of the Group, its accounting processes and controls and the industry in which it operates.

==> picture [195 x 112] intentionally omitted <==

Materiality

For the purpose of our audit we used overall group materiality of $1,199,000, which represents approximately 5% of adjusted profits (funds from operations) of the Group.

We applied this threshold, together with qualitative considerations, to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements on the financial report as a whole.

We chose adjusted Group profits because, in our view, it is the key performance measure used by unitholders to measure the performance of the Group and it underpins the basis of distributable income. We adjusted Group profit for fair value movements in investment properties, derivatives and straight lining of rental income and amortisation of leasing commissions and tenant incentives.

Audit scope

Our audit focused on areas where subjective judgements were made; for example, significant accounting estimates involving assumptions and inherently uncertain future events.

The Group’s investment property portfolio comprises Australian metropolitan and CBD office properties. The investment manager for the Group is Australian Unity Funds Management Limited. The Group’s accounting processes and controls are performed by Australian Unity Funds Management Limited at its Melbourne head office, where we predominately performed our audit procedures.

Key audit matters

Amongst other relevant topics, we communicated the following key audit matter to the Audit and Risk Committee:

Valuation of investment properties.

This is further described in the Key audit matters section of our report.

==> picture [77 x 59] intentionally omitted <==

Key audit matters

Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial report for the current period. The key audit matters were addressed in the context of our audit of the financial report as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters. Further, any commentary on the outcomes of a particular audit procedure is made in that context.

Key audit matter	How our audit addressed the key audit matter
*Valuation of investment properties* (Refer to note 14) $441m The Group’s investment properties are carried at fair value. The determination of fair value by the Group was considered a key audit matter as: 1. Investment property valuation is highly judgemental as minor changes in the underlying assumptions can significantly impact the valuation results. 2. Investor returns and the net assets of the Group are significantly affected by changes in the valuation of investment properties. Investment properties comprised 99% of total assets of the Group at 30 June 2017. Furthermore, 64% of profit of $61m for the year ended 30 June 2017 of the Group is contributed by changes in fair value of investment properties. The valuation of investment properties is dependent on the valuation methodology	We checked that the Group’s valuation policy for investment properties (refer note 2c) is in accordance with Australian Accounting Standards. External valuations Where the Group was assisted in their determination of fair value by external valuations we:  Assessed the competency and capabilities of the external valuer.  Read the valuer’s terms of engagement – we did not identify any terms that might affect their objectivity or impose limitations on their work relevant to the valuation.  Inspected the final valuation reports and agreed the fair value to the Group’s accounting records, noting no material differences. For a sample of investment property leases, we compared the rental income and lease terms used in the external valuations to the tenancy schedule and lease agreement, with no material differences noted. We compared key assumptions (capitalisation rate and discount rate) for a sample of properties in the external valuations, to a range we determined to be reasonable based on benchmark market data. We obtained evidence to support material assumptions where they fell outside our anticipated range. Typically, the variances related to specific location, tenant and lease term of the property. In the context of the specific properties identified, we considered the reasons for variances to be appropriate.

Key audit matter

How our audit addressed the key audit matter

Valuation of investment properties
(Refer to note 14) $441m
The Group’s investment properties are
carried at fair value. The determination of
fair value by the Group was considered a
key audit matter as:
1.
Investment property valuation is
highly judgemental as minor changes
in the underlying assumptions can
significantly impact the valuation
results.
2.
Investor returns and the net assets of
the Group are significantly affected
by changes in the valuation of
investment properties. Investment
properties comprised 99% of total
assets of the Group at 30 June 2017.
Furthermore, 64% of profit of $61m
for the year ended 30 June 2017 of
the Group is contributed by changes
in fair value of investment
properties.
The valuation of investment properties is
dependent on the valuation methodology

We checked that the Group’s valuation policy for investment
properties (refer note 2c) is in accordance with Australian Accounting
Standards.
External valuations
Where the Group was assisted in their determination of fair value by
external valuations we:

Assessed the competency and capabilities of the external valuer.

Read the valuer’s terms of engagement – we did not identify any
terms that might affect their objectivity or impose limitations on
their work relevant to the valuation.

Inspected the final valuation reports and agreed the fair value to
the Group’s accounting records, noting no material differences.
For a sample of investment property leases, we compared the rental
income and lease terms used in the external valuations to the tenancy
schedule and lease agreement, with no material differences noted.
We compared key assumptions (capitalisation rate and discount rate)
for a sample of properties in the external valuations, to a range we
determined to be reasonable based on benchmark market data. We
obtained evidence to support material assumptions where they fell
outside our anticipated range. Typically, the variances related to
specific location, tenant and lease term of the property. In the context
of the specific properties identified, we considered the reasons for
variances to be appropriate.

The valuation of investment properties is dependent on the valuation methodology adopted and the inputs used into the model. Certain assumptions made in the valuation exercise are key in establishing fair value particularly the capitalisation rate and discount rate.

Other information

The directors of Australian Unity Investment Real Estate Limited (the responsible entity of Australian Unity Office Fund) are responsible for the other information. The other information comprises the Director’s Report included in the Group’s annual report for the year ended 30 June 2017, but does not include the financial report and our auditor’s report thereon. We expect other information to be made available to us after the date of this auditor’s report, including Corporate Governance, Chairman’s Letter, ASX Additional information and Directory. Our opinion on the financial report does not cover the other information and accordingly, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial report, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial report or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

==> picture [77 x 59] intentionally omitted <==

If, based on the work we have performed on the other information that we obtained prior to the date of this auditor’s report, 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.

When we read the other information not yet received as identified above, if we conclude that there is a material misstatement therein, we are required to communicate the matter to the directors and use our professional judgement to determine the appropriate action to take.

Responsibilities of the directors for the financial report

The directors of Australian Unity Investment Real Estate Limited (the directors) are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal controls as the directors determine is necessary to enable the preparation of the financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

In preparing the financial report, the directors are responsible for assessing the ability of the Group 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 financial report

Our objectives are to obtain reasonable assurance about whether the financial report as a whole is 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 the Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial report.

A further description of our responsibilities for the audit of the financial report is located at the Auditing and Assurance Standards Board website at: http://www.auasb.gov.au/auditors_responsibilities/ar1.pdf. This description forms part of our auditor’s report.

==> picture [180 x 47] intentionally omitted <==

PricewaterhouseCoopers

==> picture [95 x 52] intentionally omitted <==

George Sagonas Partner

Melbourne 7 August 2017

AI assistant

AUSTRALIAN UNITY OFFICE FUND — Annual Report 2017

64393_rns_2017-08-07_6bacb760-bbe2-426f-bb1d-c868fef69984.pdf

Appendix 4E

Australian Unity Office Fund (‘AOF’) Preliminary Final Report For the Year Ended 30 June 2017

Results for announcement to the market

Issuer

Enquiries:

Contact details:

ASX code:

Issuer

Enquiries:

Contact details:

Annual financial report for the year ended 30 June 2017

Annual financial report for the year ended 30 June 2017

Directors' report

Directors

Company secretary

Operating and financial review

Principal activities

Investment objective and strategy

Financial result

Funds From Operations

Property portfolio

a) Leasing and occupancy

b) Valuations

Capital management

Outlook and guidance

Matters subsequent to the end of the financial year

Significant changes in the state of affairs

Environmental regulation

Fees paid to and interests held in the Scheme by the Responsible Entity or its associates

Units in the Scheme

Indemnification and insurance of officers and auditors

Provision of non-audit services by auditor

Australian Unity Office Fund Directors' report 30 June 2017 (continued)

Provision of non-audit services by auditor (continued)

Rounding of amounts to the nearest thousand dollars

Auditor's independence declaration

Auditor’s Independence Declaration

Australian Unity Office Fund Consolidated statement of comprehensive income For the year ended 30 June 2017

Consolidated statement of comprehensive income

Australian Unity Office Fund Consolidated statement of financial position As at 30 June 2017

Consolidated statement of financial position

Australian Unity Office Fund Consolidated statement of changes in net assets attributable to unitholders For the year ended 30 June 2017

Consolidated statement of changes in net assets attributable to unitholders

Australian Unity Office Fund Consolidated statement of cash flows For the year ended 30 June 2017

Consolidated statement of cash flows

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017

Notes to the financial statements

1 General information

2 Summary of significant accounting policies

(a) Basis of preparation

(ii) Amended standards adopted by the Scheme

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

2 Summary of significant accounting policies (continued)

(b) Principles of consolidation

(i) Subsidiaries

(c) Investment properties

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017

2 Summary of significant accounting policies (continued)

(d) Financial instruments

(i) Classification

(ii) Recognition/derecognition

(iii) Measurement

Australian Unity Office Fund Notes to the consolidated financial statements 30 June 2017 (continued)

2 Summary of significant accounting policies (continued)

(d) Financial instruments (continued)

(iii) Measurement (continued)

• Fair value in an inactive or unquoted market

(iv) Offsetting financial instruments

2 Summary of significant accounting policies (continued)

(e) Derivatives

(f) Net assets attributable to unitholders

(g) Cash and cash equivalents

(h) Investment income

2 Summary of significant accounting policies (continued)

(k) Distributions

(l) Receivables

(m) Payables

AUSTRALIAN UNITY OFFICE FUND Annual Report 2017