BWP GROUP — Annual Report 2004

Aug 5, 2004

6 August 2004

Company Announcements Office Australian Stock Exchange, Sydney

Preliminary Final Report

In accordance with ASX Listing Rule 4.3A, the following documents are attached for release to the market:

• Full Year Results Announcement
• Appendix $4E -$ Preliminary Final Report
• Ernst & Young Independent Audit Report

Jereo Baraton (

A M NIARDONE COMPANY SECRETARY

6 August 2004

8.4% Distribution Growth for 2003/04

The Directors of Bunnings Property Management Limited, the responsible entity for the Bunnings Warehouse Property Trust, today announced a profit of \$32.2 million for the year ended 30 June 2004, an increase of 22.4 per cent on the profit of \$26.3 million earned last vear.

Total income was \$44.5 million, up by 23.8 per cent from last year's \$35.9 million due to additional income received from new properties, programmed rental escalations, and 20 market rent reviews.

Final distribution

A final distribution of 5.87 cents per unit has been declared. The final distribution will be made on 27 August 2004 to unitholders on the Trust's register as at 5.00 pm on 30 June 2004.

This lifts the total distribution for the 2003/04 year to 11.38 cents per unit, an 8.4 per cent increase on last year's distribution of 10.50 cents per unit.

The tax advantaged component for the 2003/04 distribution is 26.83 per cent.

The directors have determined that the discount on the units available under the Distribution Reinvestment Plan of the Trust will remain at 2.5 per cent for this distribution which results in an issue price of \$1.54.

Finance

At 30 June 2004, the Trust had total assets of \$575.3 million, with unitholders' equity of \$395.3 million and total liabilities of \$180.0 million.

The gearing ratio (debt to total assets) at 30 June 2004 was 27.0 per cent, within the Trust's preferred range of 20 to 40 per cent.

At 30 June 2004, 95 per cent of the Trust's interest bearing debt was hedged against movements in interest rates at a weighted average rate, excluding margins, of 5.75 per cent.

Acquisitions and developments

During the financial year, the Trust acquired two properties and the portfolio at year end comprised 50 properties.

The acquisition of an established Bunnings Warehouse property, which was formerly a BBC Hardwarehouse, from a subsidiary of Wesfarmers was made at Lismore, in New South Wales. The Trust now owns six former BBC Hardwarehouse properties, with five purchased from subsidiaries of Wesfarmers Limited and the other from a third party.

The Trust acquired a development site at Maitland in the Hunter Valley region of New South Wales. Development of a Bunnings Warehouse on the site commenced in October and completion is scheduled by September 2004.

Bunnings Warehouse stores were developed on sites owned by the Trust at Rocklea in Brisbane, Port Macquarie in New South Wales, and Bayswater in Melbourne, and a distribution centre was developed for Bunnings at Hemmant, in Brisbane.

Capital expenditure on acquisitions and developments during the year was \$52.2 million.

The acquisitions and developments have enhanced the geographic diversification of the Trust's portfolio and maintained the average lease expiry profile, which at year end was 10.8 years. All property acquisitions and developments are considered to have potential for rental growth and capital appreciation.

During the period the Trust disposed of one hectare of surplus land at the Oakleigh South property in Melbourne. The disposal was in accordance with the agreement between the Trust and Bunnings for purchase and development of the property, with proceeds to the Trust of \$1.25 million.

Revaluations

During the year, 24 property revaluations were completed. Four of the revaluations, at Frankston, Maribyrnong, Oakleigh South in Victoria and Midland in Western Australia, were completed on properties acquired by the Trust in 2001. The remaining 20 revaluations were completed on properties that underwent market rent reviews during the year.

The valuations of these properties by independent valuers represent an increase in the book value of 20.8 per cent, and contributed to an increase in the underlying net tangible asset backing of the Trust's units from \$1.14 per unit at 30 June 2003 to \$1.34 per unit at 30 June 2004.

Market rent reviews

During the year, 20 market rent reviews were completed, resulting in an average 14.6 per cent uplift in the passing rent of the properties. These were the first market reviews conducted on Trust properties, which all have leases which call for reviews on the fifth anniversary of the lease commencement date.

The rental reviews on properties at Burleigh Heads, Southport and Underwood in Queensland were negotiated with the tenant, Bunnings Pty Ltd, and the results were

consistent with independent advice obtained by Bunnings Property Management Limited. The remaining 17 market rent reviews completed this year were determined by independent valuers appointed by the Trust and Bunnings Pty Ltd.

Outlook

Current expectations are for continued growth in the 2004/05 financial year.

Growth opportunities for the Trust are expected from the ongoing rollout of the Bunnings Warehouse chain in Australia, and the rollout of Bunnings Warehouse stores in New Zealand. As at 30 June 2004 Bunnings Pty Ltd operated from 125 Bunnings Warehouse stores across Australia and New Zealand and planned to develop some 8 to 12 stores per annum in the future. The Trust will consider any proposal made by Bunnings Pty Ltd in relation to these properties. Furthermore, the Trust will continue to actively pursue the acquisition of Bunnings Warehouse properties from Wesfarmers Limited and other parties.

The operating revenue of Bunnings Pty Ltd has continued to increase strongly through growth in sales from existing and from new stores. Sales from Bunnings Warehouse stores continue to be the major source of operating revenue for Bunnings Pty Ltd.

Given the age of many of the properties owned by the Trust, a programme of building condition surveys by independent experts will be instigated during the year. Results from the programme will detail the respective obligations of the Trust and Bunnings Pty Ltd, as defined under the property leases, of any building repair works required.

Directors are budgeting for continued growth in revenue and earnings in the 2004/05 financial year as a result of more properties being added to the Trust's portfolio, programmed rental escalation on all properties, and market rent reviews that are scheduled for seven properties.

For further information please contact:

Mr Andrew Hopkins General Manager, Bunnings Property Management Limited

Telephone: (08) 9327 4318 E-mail: andrew.hopkins@bpml.wesfarmers.com.au

APPENDIX 4E

ARSN 088 581 097

Financial year ended 30 JUNE 2004

Results for announcement to the market

			\$000
Revenues from ordinary activities		up 23.8%	to	44,474
Profit from ordinary activities attributable to members		up 22.4%	to	32,249
Net profit for the year attributable to members		up 22.4%	to	32,249
Distributions				Amount per ordinary security
Interim Distribution				5.51 cents
Final Distribution				5.87 cents
Previous Corresponding Year
Interim Distribution				5.15 cents
Final Distribution				5.35 cents
Record date for determining entitlements to the final distribution		30 June 2004
Date the final distribution is payable		27 August 2004
Has the distribution been declared?		Yes
	Current year \$'000	Previous corresponding year	\$'000
Final distribution amount	17,314		14,233
Distribution Plan
The Bunnings Warehouse Property Trust Distribution Reinvestment Plan is currently in operation.

The last date for receipt of election notices for the distribution plan was 30 June 2004.

Statement of financial performance and distribution
For the year ended 30 June 2004

	2004 \$000	2003 \$000
Revenue and expenses from ordinary activities
Rental income	42,347	33,693
Other property income	1,988	2,112
Interest income	139	130
	44,474	35,935
Responsible entity's fees	(2,987)	(2,359)
Auditors' remuneration	(43)	(27)
Interest and borrowing costs	(8,366)	(6,679)
Rates and taxes	(366)	(260)
Other operating expenses	(463)	(270)
Net profit attributable to members of Bunnings Warehouse Property Trust	32,249	26,340
Increase in asset revaluation reserve	51,726	3,482
Total revenues, expenses and valuation adjustments attributable to unitholders and recognised directly in unitholders' funds	51,726	3,482
Total changes in equity other than those resulting from transactions with unitholders as unitholders	83,975	29,822
STATEMENT OF DISTRIBUTION Net profit attributable to members of Bunnings Warehouse
Property Trust	32,249	26,340
Undistributed income at the beginning of the financial year	7	1
Total available for distribution	32,256	26,341
Distributions paid and payable	32,255	26,334
Undistributed income at the end of the financial year	1	7
Basic and diluted earnings per unit (cents per unit)	11.4	10.5
Distribution per ordinary unit (cents per unit) Weighted average number of units on issue used in	11.38	10.50
the calculation of basic and diluted earnings per unit	284,090,785	249,793,986

Statement of financial position
As at 30 June 2004

	2004	2003
	\$000	\$000
Current assets
Cash assets	5,366	4,783
Other	714	243
Total current assets	6,080	5,026
Non-current assets
Investment properties	569,262	466,539
Total non-current assets	569,262	466,539
Total assets	575,342	471,565
Current liabilities
Payables	7,479	5,412
Distribution payable	17,314	14,233
Total current liabilities	24,793	19,645
Non-current liabilities
Payables		13,726
Interest bearing liabilities	155,220	135,552
Total non-current liabilities	155,220	149,278
Total liabilities	180,013	168,923
Net assets	395,329	302,642
Unitholders' funds
Contributed equity	320,249	279,282
Asset revaluation reserve	75,079	23,353
Undistributed income reserve	1	7
Total unitholders' funds	395,329	302,642

Statement of cash flows
For the year ended 30 June 2004

	2004 \$000	2003 \$000
Cash flows from operating activities
Rent received	49,956	43,705
Payments to creditors	(6, 302)	(4,619)
Payments to the responsible entity	(2,864)	(2, 196)
Interest received	139	130
Borrowing costs paid	(8,450)	(6,838)
Net cash flows from operating activities	32,479	30,182
Cash flows from investing activities Payments for purchase of, and additions to, the Trust's property investments Proceeds from sale of property investments	(51, 135) 1,500	(114, 894)
Net cash flows used in investing activities	(49, 635)	(114, 894)
Cash flows from financing activities
Proceeds from the issue of units	25,000	33,680
Issue costs paid	(186)	(463)
Proceeds from interest bearing liabilities	19,668	55,100
Distribution paid	(13, 017)	(12,803)
(Repayments)/proceeds of non-interest bearing liabilities	(13, 726)	13,726
Net cash flows from financing activities	17,739	89,240
Net increase in cash held	583	4,528
Cash held at the beginning of the financial year	4,783	255
Cash held at the end of the financial year	5,366	4,783

Borrowing Costs
	2004
	\$000
Interest expense – other persons/corporations	8,511
Interest expense capitalised	(145)
	8,366
Reconciliation of operating profit to the net cash flows from operations.

2003 \$000 6,679 $\sim 100$ 6,679

Net operating income from ordinary activities	32,249	26,340
Increase in receivables	(470)	(168)
Increase in accounts payable	700	4,010
Net cash provided by operating activities	32,479	30,182
Reconciliation of cash
Cash balance comprises:
Cash assets	5,366	4.783

Non cash financing activities

Distribution Reinvestment Plan

Under the terms of the Distribution Reinvestment Plan, \$16,156,530 (2003: \$10,806,784) of distribution to unitholders was paid by way of the issue of 10,660,049 units (2003: 8,326,571 units).

Ratios

Net Tangible Asset Backing Net tangible asset backing per unit	\$1.34	\$1.14
Profit/Revenue Profit from ordinary activities as a percentage of revenue	73%	73%
Profit/Equity Interests Net profit from ordinary activities attributable to members as a percentage of equity (similarly attributable) at the end of the year	10%	9%

Related Party Disclosure

Number of units held by the management company or responsible entity or their related parties.	65,744,461
Management fees paid and payable to the management company, Bunnings Property Management Limited, a wholly	\$2,986,538

Seament Reporting

The Trust operates in a single segment being property investment in Australia.

owned subsidiary of Wesfarmers

Commentary on the results for the year.

Limited.

The commentary on the results for the year is contained in the press release dated 6 August 2004 accompanying this statement.

Subsequent Event

On 31 May 2004 the Trust exchanged contracts with BBC Hardware Properties (NSW) Pty Ltd in regard to the acquisition by the Trust of a Bunnings Warehouse property at Thornleigh, New South Wales, for \$13.3 million. The contract is now unconditional. Upon settlement of the acquisition, the property will be subject to a long term lease with Bunnings Pty Ltd at an annual commencement rent of \$1,000,000.

Audit

This report is based on accounts that have been audited.

EI FINST & YOUNG

■ Central Park 152 St Goorges Terrace Pouh WA 6000 Australia

GPO Box 4959 Penn WA 6841

Independent audit report to the Unitholders of Bunnings Warehouse Property Trust

Scope

The financial report and directors' of Bunnings Property Management Limited responsibility

The financial report comprises the statement of financial position, statement of financial performance, statement of cash flows, accompanying notes to the financial statements, and the directors' declaration for the Bunnings Warehouse Property Trust (the Trust), for the year ended 30 June 2004.

The directors of Bunnings Property Management Limited are responsible for preparing a financial report that gives a true and fair view of the financial position and performance of the Trust, and that complies with Accounting Standards in Australia, in accordance with the Corporations Act 2001. This includes responsibility for the maintenance of adequate accounting records and internal controls that are designed to prevent and detect fraud and error, and for the accounting policies and accounting estimates inherent in the financial report.

Audit approach

We conducted an independent audit of the financial report in order to express an opinion on it to the unitholders of the Trust. Our audit was conducted in accordance with Australian Auditing Standards in order to provide reasonable assurance as to whether the financial report is free of material misstatement. The nature of an audit is influenced by factors such as the use of professional judgement, selective testing, the inherent limitations of internal control, and the availability of persuasive rather than conclusive evidence. Therefore, an audit cannot guarantee that all material misstatements have been detected.

We performed procedures to assess whether in all material respects the financial report presents fairly, in accordance with the Corporations Act 2001, including compliance with Accounting Standards in Australia, and other mandatory financial reporting requirements in Australia, a view which is consistent with our understanding of the Trust's financial position, and of its performance as represented by the results of its operations and cash flows.

We formed our audit opinion on the basis of these procedures, which included:

• examining, on a test basis, information to provide evidence supporting the amounts and disclosures in the financial report, and
• assessing the appropriateness of the accounting policies and disclosures used and the ٠ reasonableness of significant accounting estimates made by the directors.

While we considered the effectiveness of management's internal controls over financial reporting when determining the nature and extent of our procedures, our audit was not designed to provide assurance on internal controls.

We performed procedures to assess whether the substance of business transactions was accurately reflected in the financial report. These and our other procedures did not include consideration or judgment of the appropriateness or reasonableness of the business plans or strategies adopted by the directors of Bunnings Property Management Limited and management of the Trust.

Independence

We are independent of the Trust, and have met the independence requirements of Australian professional ethical pronouncements and the Corporations Act 2001.

Audit opinion

In our opinion, the financial report of the Bunnings Warehouse Property Trust is in accordance with:

• $(a)$ the Corporations Act 2001, including:
• $(i)$ giving a true and fair view of the financial position of the Trust at 30 June 2004 and of its performance for the year ended on that date; and
• $(ii)$ complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
• other mandatory financial reporting requirements in Australia. (b)

Ernst & Young

G H Meyerowitz Partner Perth Date: 6 August 2004