BLACKWALL LIMITED — Interim / Quarterly Report 2017

Feb 23, 2017

INTERIM CONSOLIDATED FINANCIAL REPORT

Half Year Ended 31 December 2016

Financial Report

Directors' Report	Page 3
Consolidated Statement of Profit or Loss and Other Comprehensive Income	Page 7
Consolidated Statement of Financial Position	Page 8
Consolidated Statement of Changes in Equity	Page 9
Consolidated Statement of Cash Flows	Page 10
Notes to the Financial Statements	Page 11
Directors' Report ‐ Continued	Page 18
Auditor's Independence Declaration	Page 19
Directors' Declaration	Page 20
Group Details	Page 21
Independent Auditor's Review Report	Page 22
Contents – Notes to the Financial Statements	Page 24
Glossary	Page 25

For the half year to 31 December 2016 BlackWall's gross revenue grew 33% to \$7 million (on the corresponding period in 2015) generating an after-tax profit of \$1.1 million. The directors have declared a fully franked dividend of 1.8 cents per share to be paid on 7 April 2017.

In late 2016, BlackWall completed a private placement to sophisticated investors raising just over \$4 million. The company has 59 million shares on issue. Key highlights across our three complementary activities are:

WOTSO WorkSpace

WOTSO provides flexible business accommodation on short-term arrangements. Our offer ranges from open plan workspace leased by the desk and private serviced offices to event, meeting and project space. Our spaces and agreements are configured in such a way to allow sole traders, SMEs and corporates to expand and contract their leased space to suit their changing requirements. The aim is that our services, fitout and terms accommodate our members so they become long-term tenants with short-term commitments.

Our revenue is spread across 1000 members in 12 sites on the Eastern seaboard, South Australia, Tasmania and Singapore. Our members can check in and work from any space in the network.

DIRECTORS' REPORT

OSO commenced operations in late 2014 and has grown to ecome a significant facet of lacall's operationsǤ he graph elow shows OSO's annualised turnover growth and moving annual turnover ȋAȌǤ A is a measure commonly used in retail usinesses and shows gross revenue for the 12 months preceding a particular monthǤ As OSO is in such a significant growth phase it is a useful measure of our performanceǤ

WOTSO TURNOVER

Annualised Turnover Moving Annual Turnover (MAT)

BlackWall Property Funds

Our property and funds management usiness has een in operation for over 20 yearsǤ It generates consistent fee income from a portfolio of real estate and the investment structures that control itǤ he investment trusts are capitalised y wholesale and retail investorsǤ lacall has a long trac record of securing and eecuting property special situationsǤ

Over the past 12 months lacall has epanded its sophisticated investor networ oth directly and through intermediariesǤ

One of lacall's central activities is the management of the AS listed lacall Property rust ȋASǣ RȌǡ with lacall holding a strategic investment of 1Ψ in RǤ R is a smallǡ nimle and dynamic property investment vehicleǤ he rust's total return philosophy gives investors the enefit of an underlyingǡ reliale distriution flow while active positions drive NA growthǤ he rust holds passive income producing assets in its Income Portfolio and taes on active special situations or development opportunities originated y lacall in the Growth PortfolioǤ ore detail on R can e found in the half yearly reportǡ which was released to the maret on 23 Feruary 2017Ǥ

R owns a seven level commercial uilding in the AC called OSO ouse and also has a significant investment in another lacall proectǡ 55 Pyrmont ridge Roadǡ located in SydneyǤ oth assets are eing repositioned through leasing and internal reconfigurationǤ ith continued leasing successǡ these proects will add around ̈́2 million to R's net incomeǡ and therefore lacall's investment revenueǤ his activity also has the potential to generate additional revenue to lacall through leasing and development feesǤ Furthermoreǡ lacall's recurring management fees grow with increased rental income and asset valuesǤ

In 201 the lacall group announced that it had received a highly conditional offer to purchase its marquee proectǡ the aehouse uarter at North StrathfieldǤ As recently reportedǡ this proposal is not proceeding and the oard has since resolved not to pursue selling the site in one lineǤ As suchǡ lacall's significant involvement in the management and development of the site will continueǤ lacall is woring on a numer of development ideas for the site with the potential to raise a development fund on suitale elements of the proectǤ It is also epected that R will grow its eisting ̈́20 million position in the siteǤ

As an overall oservationǡ lacall is seeing rent inflation in a numer of the marets in which it is activeǤ his is despite general inflation remaining at historically low levelsǤ Generallyǡ as economic conditions improveǡ the demand for commercial space is growingǤ his demand is amplified in oth Sydney and the AC maretǡ where the availaility of commercial office space has reduced due to proliferation of residential conversion and a numer of government land resumptions to facilitate infrastructure proectsǤ OSO orSpaceǡ he aehouse uarterǡ 55 Pyrmont ridge Road and OSO ouse all enefit from these maret conditionsǤ

On Balance Sheet Property Ǧ Adelaide and Brisbane

In mid 201 lacall purchased two vacant properties to house new OSO sitesǤ In each case the property came with fitout that could e easily repurposed for use in OSO's operationsǤ At risane a coffee shop has recently taen occupation and is tradingǤ OSO memership is uilding with almost 30 memers in residenceǤ At Adelaide a DA has een granted for a retail premisesǡ cafe and function space at the rear of the uildingǤ hese activities are in addition to OSO's operations and complement the worspace modelǤ Lease terms have een agreed with a retailer and discussions are advanced with a cafe operatorǤ he OSO space at this site has uilt to over 50 memersǤ As occupancy uilds at oth sitesǡ OSO has the capacity to grow its offer y fitting out further space oth for office and coworingǤ Fully occupied with a OSO spaceǡ cafe and retail usesǡ these two uildings have the potential to add ̈́1Ǥ2 million to lacall's gross revenueǤ elow is a series of images showing the transformation parts of each proectǤ

Once the property operations at each site are matureǡ lacall will loo to either syndicate the two assets into an off alance sheet investment trust or move them across to R's alance sheetǤ Of course when this occursǡ the margin generated y OSO's operations aove maret rent would stay with OSOǤ

Share BuyǦBack

he share uy‐ac scheme has een etended until arch 2018Ǥ No shares have een acquired since 30 une 201Ǥ

Subsequent Events And Significant Changes in Affairs

o the est of the Directors' nowledgeǡ since the end of the financial period there have een no other matters or circumstances ecept for the comments aoveǡ that have materially affected the Group's operations or may materially affect its operationsǡ state of affairs or the results of operations in the current or future financial yearsǤ

Directors' Report continues on page 18Ǥ

Signed in accordance with a resolution of the oard of DirectorsǤ

Stuart Brown Director Sydneyǡ 24 Feruary 2017

CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

	Note	December 2016 \$'000	December 2015 \$'000
OSO orSpace income		2ǡ714	1ǡ409
lacall Property Funds
Asset management fees		1ǡ112	1ǡ100
Property management fees		994	1ǡ037
ransaction fees		719	2͸͸
		2ǡ825	2ǡ403
Total Operating Revenue		5,539	3,812
Investment
nrealised gain on revaluation		1ǡ3͸͸	1ǡ294
Investment		͸4	143
Total Revenue		6,969	5,249
usiness operating ešpenses	2	ȋ3ǡ59͸Ȍ	ȋ2ǡ590Ȍ
OSO orSpace rent ešpense		ȋ1ǡ338Ȍ	ȋ501Ȍ
Depreciation		ȋ2͸2Ȍ	ȋ95Ȍ
Finance costs		ȋ94Ȍ	ȋ4Ȍ
Other ešpenses		‐	ȋ8Ȍ
Profit Before Income Tax		1,679	2,051
Income taš ešpense Profit After Tax		ȋ583Ȍ 1,096	ȋ͸02Ȍ 1,449
Total Comprehensive Income		1,096	1,449
Profit / (Loss) Attributable to: Owners of the Company		1ǡ103	1ǡ449
Outside equity interests		ȋ7Ȍ	‐
		1,096	1,449
Total Comprehensive Income / (Loss) Attributable to: Owners of the Company		1ǡ103	1ǡ449
Outside equity interests		ȋ7Ȍ	‐
		1,096	1,449
Earnings Per Share
Continuing operationsǣ
asic earnings per share	8	2Ǥ0 cents	2Ǥ9 cents
Diluted earnings per share	8	1Ǥ9 cents	2Ǥ8 cents

he accompanying notes form part of these consolidated ϐinancial statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

		December 2016	June 2016
	Note	\$'000	\$'000
ASSETS
Current Assets Cash and cash equivalents		871	1ǡ9͸5
rade and other receiva"les		2ǡ895	218
Other assets		2͸7	‐
Investment properties	3	7ǡ520	7ǡ500
Total Current Assets		11ǡ553	9ǡ͸83
NonǦcurrent Assets
Financial assets	4	14ǡ038	12ǡ011
Propertyǡ plant and equipment		2ǡ5͸2	1ǡ714
Total NonǦcurrent Assets		1͸ǡ͸00	13ǡ725
TOTAL ASSETS		28,153	23,408
LIABILITIES
Current Liabilities
rade and other paya"les		͸13	574
Current taš paya"le		45	59
Provisions		341	308
Other paya"les		30͸	183
orrowings	5	3ǡ500	3ǡ500
Total Current Liabilities		4ǡ805	4ǡ͸24
NonǦcurrent Liabilities
Deferred taš lia"ilities Provisions		2ǡ03͸ 139	1ǡ5͸͸ 114
Total NonǦcurrent Liabilities		2ǡ175	1ǡ͸80
TOTAL LIABILITIES		6,980	6,304
NET ASSETS		21,173	17,104
EQUITY
Share capital	͸	15ǡ͸32	11ǡ733
Reserves	͸	1͸	‐
Retained earnings		5ǡ532	5ǡ371
Parent's Equity		21ǡ180	17ǡ104
Outside Equity Interests		ȋ7Ȍ	‐
TOTAL EQUITY		21,173	17,104

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Ordinary shares \$'000	Retained earnings \$'000	Reserve \$'000	Attributable to Owners of the Parent \$'000	Outside equity interests \$'000	Total \$'000
Balance at 1 July 2016	11,733	5,371	Ǧ	17,104	Ǧ	17,104
Profit for the period	‐	1ǡ103	‐	1ǡ103	ȋ7Ȍ	1ǡ09͸
Dividend paid	‐	ȋ942Ȍ	‐	ȋ942Ȍ	‐	ȋ942Ȍ
Issue of shares	3ǡ899	‐	‐	3ǡ899	‐	3ǡ899
Share options	‐	‐	1͸	1͸	‐	1͸
Balance at 31 December 2016	15,632	5,532	16	21,180	(7)	21,173
Balance at 1 July 2015	11,247	4,191	8	15,446	Ǧ	15,446
Profit for the period	‐	1ǡ449	‐	1ǡ449	‐	1ǡ449
Dividend paid	‐	ȋ857Ȍ	‐	ȋ857Ȍ	‐	ȋ857Ȍ
Balance at 31 December 2015	11,247	4,783	8	16,038	Ǧ	16,038

CONSOLIDATED STATEMENT OF CASH FLOWS

	December 2016	December 2015
	\$'000	\$'000
Cash Flows From Operating Activities
lacall Property Funds fee receipts	1ǡ843	2ǡ3͸7
OSO orSpace receipts	2ǡ979	1ǡ5͸8
ransaction fee receipts	‐	91
Investment income	͸4	143
Payments to suppliers and employees	ȋ4ǡ1͸2Ȍ	ȋ3ǡ177Ȍ
OSO rent paid	ȋ1ǡ338Ȍ	ȋ501Ȍ
Income taš paid	ȋ158Ȍ	ȋ277Ȍ
an charges and interest paid	ȋ94Ȍ	ȋ4Ȍ
Net Cash Flows From/(Used in) Operating Activities	(866)	210
Cash Flows From Investing Activities
Returns of capital from R	377	450
Payment for R units	ȋ1ǡ004Ȍ	‐
Payment for OSO orSpace fitout	ȋ1ǡ015Ȍ	ȋ381Ȍ
Payment for fišed assets	ȋ91Ȍ	ȋ9Ȍ
Loan to related parties	ȋ50Ȍ	‐
Proceeds from redemption of aehouse onds	‐	5ǡ420
Net proceeds from ald Roc Fund loan repayment	‐	430
Net Cash Flows From/(Used in) Investing Activities	(1,783)	5,910
Cash Flows From Financing Activities
Proceeds from issue of shares	2ǡ͸20	‐
Dividend paid	ȋ944Ȍ	ȋ854Ȍ
Payment for capital raising costs	ȋ121Ȍ	‐
Net Cash Flows From/(Used in) Financing Activities	1,555	(854)
Net Increase / (Decrease) in Cash Held	(1,094)	5,266
Cash and cash equivalents at the "eginning of the year	1ǡ9͸5	483
Cash and Cash Equivalents at End of the Period	871	5,749

1. Segment Information

he segment information for the Group is as followsǤ For information on segment reportingǡ refer to Statement of Significant Accounting Policies for more detailsǤ

Profit & Loss December 2016 (\$'000)	Income	Gains	Total Revenue	Expenses	EBITDA	PreǦtax Profit
lacall Property Funds	2ǡ77͸	‐	2ǡ77͸	ȋ2ǡ122Ȍ	͸54	4͸͸
OSO orSpace	2ǡ7͸3	‐	2ǡ7͸3	ȋ2ǡ471Ȍ	292	124
Investment	͸4	1ǡ3͸͸	1ǡ430	ȋ341Ȍ	1ǡ089	1ǡ089
Consolidated	5,603	1,366	6,969	(4,934)	2,035	1,679
Profit & Loss	Income	Gains	Total	Expenses	EBITDA	PreǦtax
December 2015 (\$'000)			Revenue			Profit
lacall Property Funds OSO orSpace	2ǡ371 1ǡ441	‐ ‐	2ǡ371 1ǡ441	ȋ1ǡ͸07Ȍ ȋ1ǡ2͸1Ȍ	7͸4 180	752 93
Investment	143	1ǡ294	1ǡ437	ȋ231Ȍ	1ǡ20͸	1ǡ20͸

	December 2016		June 2016
	Assets	Liabilities	Net Assets	Assets	Liabilities	Net Assets
Balance Sheet (\$'000)
lacall Property Funds	11ǡ351	ȋ4ǡ499Ȍ	͸ǡ852	9ǡ72͸	ȋ4ǡ097Ȍ	5ǡ͸29
OSO orSpace	2ǡ7͸3	ȋ292Ȍ	2ǡ471	1ǡ͸71	ȋ488Ȍ	1ǡ183
Investment	14ǡ039	ȋ2ǡ189Ȍ	11ǡ850	12ǡ011	ȋ1ǡ719Ȍ	10ǡ292
Consolidated	28,153	(6,980)	21,173	23,408	(6,304)	17,104

2. Expenses

	December 2016	December 2015
	\$'000	\$'000
Employee Ƭ consultants' costs	1ǡ793	1ǡ381
OSO orSpace operating ešpenses	1ǡ133	7͸0
Administration ešpenses	541	449
Property ešpenses	129	‐
otal "usiness operating ešpenses	3ǡ59͸	2ǡ590

3. Current Assets – Investment Properties

	WOTSO	WOTSO
31 December 2016	Brisbane	Adelaide	Total
	\$'000	\$'000	\$'000
alance at the "eginning of year	4ǡ500	3ǡ000	7ǡ500
Capital improvements	33	5͸	87
Revaluations	15	2	17
Depreciation	ȋ38Ȍ	ȋ48Ȍ	ȋ13͸Ȍ
Balance at the end of period	4,510	3,010	7,520

NOTES TO THE FINANCIAL STATEMENTS

30 June 2016	WOTSO Brisbane \$'000	WOTSO Adelaide \$'000	Total \$'000
Balance at the beginning of year
Purchase	4.501	2.959	7,460
Capital improvements	۰	50	50
Revaluations	19	21	40
Depreciation	(20)	(30)	(50)
Balance at the end of year	4,500	3,000	7,500

Refer to the Borrowings note for details of borrowings secured against the properties.

The properties are classified as current assets. Once WOTSO's operations are more mature a conventional lease on market rental terms will be entered into between WOTSO and the respective SPVs with each rolled into a stand alone investment trust or individually syndicated.

WOTSO Brisbane is located at 84 Brunswick St, Fortitude Valley. It houses an 800 sqm WOTSO as well as a recently opened café.

WOTSO Adelaide is located at 217-219 Flinders St, Adelaide. The WOTSO now has around 50 members. The building also houses some independent commercial tenants and is in the process of securing a café.

$\overline{4}$ . Non-current Assets - Financial Assets

		December 2016 \$'000	June 2016 \$'000
(a) Financial assets
BlackWall Property Trust	(b)	13,837	11,860
Pelathon Management Group		100	100
Loans		101	51
Total		14,038	12.011

(b) BlackWall Property Trust

BlackWall Property Trust is an ASX-listed real estate investment trust managed by BlackWall. BlackWall holds 10.25 million (17%) BWR units (June 2016: \$9.4 million BWR units).

5. Current Liabilities - Borrowings

	December 2016	June 2016
	\$'000	$$^{\prime}000$
NAB bill facility	3.500	3.500
Total	3,500	3,500

The facility is secured against the WOTSO Brisbane and Adelaide properties (refer to the Investment Properties note). The borrowings will mature in May 2017 and therefore are classified as a current liability. These borrowings are subject to a margin of 2.5% p.a. over BBSY.

6. Share Capital and Reserves

(a) Summary table

	December 2016	June 2016
	\$'000	\$'000
59ǡ040ǡ445 ȋ une 201͸ǣ 52ǡ340ǡ445Ȍ Ordinary	15ǡ͸32	11ǡ733
Total	15,632	11,733
(b) Movement in shares on issue
	No.	No.
At the "eginning of reporting period	52ǡ340ǡ445	52ǡ340ǡ445
Issue of new shares	͸ǡ700ǡ000	‐
At reporting date	59,040,445	52,340,445

ǡ700ǡ000 shares were issued during the period at 0 cents per shareǤ No further shares have een issued since 30
une 201Ǥ No amounts are unpaid on any of the sharesǤ

Ordinary shares participate in dividendsǤ At shareholders' meetingsǡ each ordinary share is entitled to one vote when a poll is calledǡ otherwise each shareholder has one vote on a show of handsǤ All shares are fully paidǤ

(c) Reserves

	December 2016	June 2016
	\$'000	\$'000
Share options reserve	1͸	‐
Total	16	Ǧ

he following options are currently on issue at the date of this reportǣ

Options	Expiry date	Exercise price	Number
Stuart rown	30 une 2018	̈́0Ǥ35	2ǡ000ǡ000
Employees	14 uly 2019	̈́0Ǥ͸0	2ǡ000ǡ000

7. Dividends

Fully franed dividends paid to memers during the period ended 31 Decemer were as followsǣ

	2016	2015
	\$'000	\$'000
201͸ final dividend of 1Ǥ8 cents paid in Novem"er 201͸ ȋ2015ǣ 1Ǥ7 centsȌ	942	857
Total	942	857

In additionǡ the oard has declared an interim fully franed dividend of 1Ǥ8 cents per share to e paid on 7 April 2017Ǥ

8. Earnings Per Share

	December 2016	December 2015
asic EPS	2Ǥ0 cents	2Ǥ9 cents
Diluted EPS	1Ǥ9 cents	2Ǥ8 cents
Calculated as followsǣ
Profit attri"uta"le to the owners of the Group	̈́1ǡ103ǡ000	̈́1ǡ449ǡ000
eighted average num"er of shares for "asic EPS	55ǡ981ǡ749	50ǡ395ǡ445
eighted average num"er of shares for diluted EPS	5͸ǡ931ǡ715	51ǡ213ǡ3͸2

9. Contingencies

he Group had no contingent assets or liailities at 31 Decemer 201 ȋDecemer 2015ǣ ̈́nilȌǤ

10. Subsequent Events

Other than the susequent events disclosed in the Directors' Reportǡ to the est of the Directors' nowledgeǡ since the end of the financial period there have een no matters or circumstances that have materially affected the Group's operations or may materially affect its operationsǡ state of affairs or the results of operations in future financial yearsǤ

11. Fair Value Measurement of Financial Instruments

(a) Fair value hierarchy

AASB 13 Fair Value Measurement requires disclosure of fair value measurements y level of the following fair value measurement hierarchyǣ

• x Level 1 ‐ quoted prices ȋunadustedȌ in active marets for identical assetsǢ
• x Level 2 ‐ inputs other than quoted prices included within Level 1 that are oservale for the assetǡ either directly ȋas pricesȌ or indirectly ȋderived from pricesȌǢ and
• x Level 3 ‐ inputs for the asset that are not ased on oservale maret data ȋunoservale inputsȌǤ

he fair value of financial assets traded in active marets is susequently ased on their quoted maret prices at the end of the reporting period without any deduction for estimated future selling costsǤ he quoted maret price used for financial assets held y the Group is the closing price from the AS as at the reporting dateǤ

he following tale presents the Group's financial assets measured at fair value as at period endǤ Refer to the Critical Accounting Estimates and
udgments note for further details of assumptions used and how fair values are measuredǤ

	Level 1 \$'000	Level 2 \$'000	Level 3 \$'000	Total balance \$'000
At 31 December 2016
Financial assets At 30 June 2016	13ǡ837	‐	201	14ǡ038
Financial assets	11ǡ8͸0	‐	151	12ǡ011

(b) Valuation techniques used to derive Level 3 fair values

he fair value of the unlisted securities is determined y reference to the net assets of the underlying entitiesǤ All these instruments are included in Level 3Ǥ

(c) Fair value measurements using significant observable inputs (Level 3)

he following tale is a reconciliation of the movements in financial assets classified as Level 3 for the following periodsǣ

	\$'000
At 31 December 2016
alance at the "eginning of year	151
Purchase	50
alance at the end of period	201
At 30 June 2016
alance at the "eginning of year	͸ǡ874
Purchase	51
Sale	ȋ͸ǡ774Ȍ
alance at the end of year	151

here were no transfers etween Levels 1ǡ 2 and 3 financial instruments during the periodǤ

12. Critical Accounting Estimates and Judgments

he Directors evaluate estimates and udgments incorporated into the financial statements ased on historical nowledge and est availale current informationǤ Estimates assume a reasonale epectation of future events and are ased on current trends and economic dataǡ otained oth eternally and within the GroupǤ

Key estimates Ǧ Impairment

he Group assesses impairment at each reporting date y evaluating conditions specific to the Group that may lead to impairment of assetsǤ

Key estimates – Financial assets

All financial assets at FPL have een classified as financial assetsǡ with gains and losses recognised as profit or lossǤ he fair value of the unlisted securities is determined y reference to the net assets of the underlying entitiesǤ he fair value of the listed securities is ased on the closing price from the AS as at the reporting dateǤ

13. Statement of Significant Accounting Policies

lacall Limited is a pulicly listed companyǡ incorporated and domiciled in AustraliaǤ he financial statements for the Group were authorised for issue in accordance with a resolution of the Directors on the date they were issuedǤ

Statement of Compliance

he financial statements are general purpose financial reportsǡ which have een prepared in accordance with the requirements of the Corporations Act 2001ǡ Australian Accounting Standard AAS 134 Interim Financial Reportingǡ Australian Accounting Interpretations and other authoritative pronouncements of the IFRS IAS 34 Interim Financial ReportingǤ

he financial statements do not include notes of the type normally included in annual financial statementsǤ It is recommended that the financial statements e read in conunction with the annual financial statements for the year ended 30
une 201 and any pulic announcements made y the Group during the half‐year in

accordance with the continuous disclosure obligations of the ASX listing rules.

Basis of Preparation

The financial statements have been prepared on an accruals basis and are based on historical costs modified by the revaluation of selected non-current assets, financial assets and financial liabilities for which the fair value basis of accounting has been applied.

When required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial period. Any change of presentation has been made in order to make the financial statements more relevant and useful to the user.

The Group is a group of the kind referred to in ASIC Class Order 2016/191 and, in accordance with that Class Order, amounts in the Directors' Report and the financial statements are rounded off to the nearest thousand dollars, unless otherwise indicated.

The accounting policies adopted are consistent with those of the previous financial year ended 30 June 2016.

Going concern

The financial statements have been prepared on a going concern basis, which contemplates continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business.

Segment Reporting

AASB 8 requires operating segments to be identified on the basis of internal reports about components of the Group that are regularly reviewed by the chief operating decision maker in order to allocate resources to the segment and to assess its performance. The Group's primary format for segment reporting is based on business segments. The business segments are determined based on the Group management and internal reporting structure. There is only one geographical segment being Australasia. Segment results, assets and liabilities include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. The operating businesses are organised and managed separately according to the nature of the products and services provided, with each segment representing a strategic business unit that offers different products and serves different markets.

The Group has adopted three reporting segments: BlackWall Property Funds, WOTSO WorkSpace and Investment.

The BlackWall Property Funds segment engages in funds and asset management as well as property services that include property management, leasing and general property consultancy. Income earned by the BlackWall Property Funds segment includes recurring income from fund and asset management mandates and transaction-based income typically related to those mandates. Management treats these operations as one "fee earning" operating segment. The WOTSO WorkSpace segment represents the serviced office and coworking space business and generates recurring licence and services fees by providing short-term office accommodation, shared workspace and meeting and event venues. The Investment segment includes interests in property related investments such as units in related party listed and unlisted unit trusts, loans and cash. It generates income from dividends, distributions and interest.

New Accounting Standards and Interpretations

Certain new accounting standards and interpretations have een pulished that are not mandatory for the current reporting periodǤ he Group's assessment of the impact of these new standards and interpretations is set out elowǤ

AASB 9 Financial Instruments (effective for annual reporting periods beginning on or after 1 January 2018)

he Group has early adopted the AAS 9 on 1
anuary 2013 ecept for the new hedging rules which will not have any material effects to the Group's financial statementsǤ

AASB 15 Revenue from Contracts with Customers (effective for annual reporting periods beginning on or after 1 January 2018)

he new standard is ased on the principle that revenue is recognised when control of a good or service transfers to a customerǤ he Group is currently assessing the effects of applying the new standard on the financial statements and has not identified any material changesǤ

AASB 16 Leases (effective for annual reporting periods beginning on or after 1 January 2019)

he new standard introduces a single lessee accounting model and requires a lessee to recognise assets and liailities for all leases with a term of more than 12 monthsǡ unless the underlying asset is of low valueǤ he standard also requires enhanced disclosure to e provided y lessors that will improve information disclosed aout a lessor's ris eposureǡ particularly to residual risǤ ith the Group's continued epansionǡ management is currently assessing the impact of applying the new standard on the Group's accountsǤ

Officeholders

he names of the Officeholders during or since the end of the period are set out elowǤ

Richard ill ȋNon‐Eecutive Director and Independent ChairmanȌ oseph ȋSephȌ Glew ȋNon‐Eecutive DirectorȌ Roin edder ȋNon‐Eecutive DirectorȌ Stuart rown ȋEecutive Director and Chief Eecutive OfficerȌ im rown ȋCompany Secretary from 23 Septemer 201Ȍ Caroline Raw ȋCompany Secretary until 23 Septemer 201Ȍ

Auditor

A copy of the auditor's independence declaration as required under Section 307C of the Corporations Act 2001 is set out in these financial statementsǤ

ES continues in office in accordance with section 327 of the Corporations Act 2001Ǥ

Rounding of Amounts

he Group is a group of the ind referred to in ASIC Class Order 201Ȁ191ǡ and in accordance with that Class Orderǡ amounts in the Directors' Report and the financial statements are rounded off to the nearest thousand dollarsǡ unless otherwise indicatedǤ

Signed in accordance with a resolution of the oard of DirectorsǤ

Stuart Brown Director Sydneyǡ 24 Feruary 2017

Auditor's Independence Declaration Under Section 307C of the Corporations Act 2001

As auditor for the review of BlackWall Limited and Controlled Entities for the half-year ended 31 December 2016, I declare that, to the best of my knowledge and belief, there have been no contraventions of:

• (i) the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
• (ii) any applicable code of professional conduct in relation to the review.

Dated at Sydney the $23^{\text{rd}}$ day of February 2017

ESV Accounting and Business Advisors

Chris Kirkwood Partner

LEVEL 18, CITY CENTRE
55 MARKET STREET
SYDNEY NSW 2000
ESVGROUP.COM.AU

In the Directors' opinionǣ

• ȋaȌ the financial statements and notes are in accordance with the Corporations Act 2001ǡ includingǣ
• ȋiȌ complying with Accounting Standards AAS 134 Interim Financial Reportingǡ the Corporations Regulations 2001 and other mandatory professional reporting requirementsǢ and
• ȋiiȌ giving a true and fair view of the Group's financial position as at 31 Decemer 201 and of its performance for the financial period ended on that dateǢ and
• ȋȌ there are reasonale grounds to elieve that the Group will e ale to pay its dets as and when they ecome due and payaleǤ

he Statement of Significant Accounting Policies confirms that the financial statements also comply with International Financial Reporting Standards as issued y the International Accounting Standards oardǤ

his declaration is made in accordance with a resolution of the oard of DirectorsǤ

Stuart Brown Director Sydneyǡ 24 Feruary 2017

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The Group's details are as follows:

Registered office and principal place of	Level 1, 50 Yeo Street
business	Neutral Bay NSW 2089
Telephone	+612 9033 8611
Fax	+612 9033 8600
Websites	www.blackwall.com.au
	www.wotsoworkspace.com.au
Registry	Computershare Investor Services Pty Limited
	GPO Box 2975
	Melbourne VIC 3001
	www.computershare.com.au
	Telephone: +613 9415 4000

HS

Independent Review Report to the Members of Blackwall Limited and Controlled Entities

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of Blackwall Limited and Controlled Entities ("the Group"), which comprises the condensed statement of financial position as at 31 December 2016, the condensed statement of profit and loss and other comprehensive income, condensed statement of changes in equity and condensed statement of cash flows for the half-year ended on that date, notes comprising a summary of significant accounting policies and other explanatory information, and the directors' declaration.

Directors' Responsibility for the Half-Year Financial Report

The Directors of the Group are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the half-year financial report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the half-year financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the Group's financial position as at 31 December 2016 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of Blackwall Limited and Controlled Entities, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001. We confirm that the independence declaration required by the Corporations Act 2001, which has been given to the Directors of the Group, would be in the same terms if given to the Directors as at the time of this auditor's report.

LEVEL 18, CITY CENTRE
55 MARKET STREET SYDNEY NSW 2000
ESVGROUP.COM.AU

TELEPHONE, +61 2 9283 1666
FACSIMILE, +61 2 9283 1866
ADMIN@ESVGROUP,COM,AU

A member of TIAG^* [The International Accounting Group], a worldwide alliance of independent accounting firms. Liability limited by a scheme approved under Professional Standards Legislation.

22

Independent Review Report to the Members of Blackwall Limited and Controlled Entities

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the halfyear financial report of Blackwall Limited and Controlled Entities is not in accordance with the Corporations Act 2001 including:

• $(a)$ giving a true and fair view of the Group's financial position as at 31 December 2016 and of its performance for the half-year ended on that date; and
• $(b)$ complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001.

Dated at Sydney the 24 day of February 2017

ESV Accounting and Business Advisors

Chris Kirkwood Partner

1Ǥ Segment Information	Page 11
2Ǥ Ešpenses	Page 11
3Ǥ Investment Properties	Page 11
4Ǥ Financial Assets	Page 12
5Ǥ orrowings	Page 12
͸Ǥ Share Capital and Reserves	Page 13
7Ǥ Dividends	Page 13
8Ǥ Earning Per Share	Page 14
9Ǥ Contingencies	Page 14
10Ǥ Su"sequent Events	Page 14
11Ǥ Fair alue easurement of Financial Instruments	Page 14
12Ǥ Critical Accounting Estimates and udgments	Page 15
13Ǥ Statement of Significant Accounting Policies	Page 15

XON

ASX	Australian Securities Exchange
BlackWall /BWF/Company	BlackWall Limited
BWR	BlackWall Property Trust
Consolidated financial report	Financial statements
EPS	Earnings per share
Financial assets	Financial assets at FVTPL
FVTPL	Fair value through profit and loss
Group	BlackWall Limited & subsidiaries
IFRS	International Financial Reporting Standards
NTA	Net tangible assets
p.a.	Per annum
SPV	Special purpose vehicles
sqm	Square metre
WOTSO Adelaide	217 Flinders Street, Adelaide, South Australia
WOTSO Brisbane	84 Brunswick Street, Fortitude Valley, Queensland

ABN 37 146 935 131

Level 1, 50 Yeo Street, Neutral Bay NSW 2089 PO Box 612, Neutral Bay NSW 2089

Phone: (02) 9033 8611 Fax: (02) 9033 8600

Web: www.blackwall.com.au