BWP GROUP — Interim / Quarterly Report 2016

Feb 10, 2016

Half-Year Report 2015/16 Six months to 31 December 2015

CONTENTS

OVERVIEW

Half-year summary 2

BUSINESS REVIEW

Financial & market performance 3 Our property portfolio 4 Report to unitholders 8 FINANCIAL REPORT Financial statements 15 UNITHOLDER INFORMATION Directory 32 Investor information 33

BWP Trust aims to provide a premium commercial real estate investment product, delivering unitholders a secure and growing income stream and long-term capital growth, through strong alignment with, and by supporting the ongoing property needs of its customers.

OVERVEW

HALF-YEAR SUMMARY

• Income of $74.7 million for the six months – up 4.9 per cent on the previous corresponding period

• Distributable profit of $53.3 million for the six months – up 8.5 per cent on the previous corresponding period

• Interim distribution of 8.29 cents per unit – up 8.1 per cent on the previous corresponding period

• Completed the expansion of Bunnings Warehouse stores at Lismore, New South Wales and Rockingham, Western Australia

• Assigned Joondalup lease to Automotive Holdings Group

• Market rent reviews on nine tenancies were completed during the six months – at a weighted average 5.4 per cent increase in annual rent

• Like-for-like rental growth of 2.5 per cent for the 12 months to 31 December 2015

• Weighted average cost of debt of 5.06 per cent for the six month period – down from 5.79 per cent in the previous corresponding period

• Weighted Average Lease Expiry of 6.4 years at 31 December 2015 with 100 per cent occupancy

• 8.7 per cent net revaluation gain on the property investment portfolio of $173.5 million

• Net Tangible Assets of $2.52 per unit at 31 December 2015

• Gearing (debt/total assets) 22.0 per cent at 31 December 2015

DISTRIBUTION PER UNIT (CENTS)

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Interim
11/12 6.63 8.04 [1] distribution
Final
12/13 7.00 7.14 distribution
13/14 6.83 7.88 [2]
14/15 7.67 8.17
15/16 8.29
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• 1 FY11/12 final distribution includes a distribution of capital profits of 1.17 cents per unit, resulting from the sale of an investment property.

• 2 FY13/14 final distribution includes a partial distribution of capital profits of 0.13 cents per unit, resulting from the sale of investment properties.

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BWP Trust Half-Year Report 2015/16

BUSINESS REVIEW

FINANCIAL & MARKET PERFORMANCE

FINANCIAL PERFORMANCE

FINANCIAL PERFORMANCE
Half-year ended 31 December	2015	2014
Total income $m Net proft $m _Less:_net unrealised gains in fair value of investment properties $m Distributable proft for the period $m Distribution per ordinary unit cents Total assets $m Borrowings $m Unitholders’ equity $m Gearing (debt to total assets) % Number of units on issue m Number of unitholders Net tangible asset backing per unit $ Unit price at 31 December $ Management expense ratio(annualised) %		71.2
	74.7
	226.8	117.3 (68.2)
	(173.5)
	53.3	49.1
	8.29	7.67 1,926.0 451.2 1,392.2 23.4 640 23,974 2.18 2.79 0.63
	2,179.8
	479.6
	1,617.1
	22.0
	642
	24,675
	2.52
	3.16
	0.66

MARKET PERFORMANCE

BWP Trust (“the Trust”) generated a 5.9 per cent total return for the six months to 31 December 2015, compared with 7.1 per cent for the benchmark S&P/ASX 200 Property Accumulation Index (source: UBS Australia).

Comparative returns over one, three, five and ten year periods, are shown in the following table:

Total returns[1] compared to market (source: UBS Australia)

Periods ended	1 year	3 years	5 years	10 years
31 Dec 2015	(%)	(%)2	(%)2	(%)2
BWP	19.2	20.3	20.2	12.3
S&P / ASX 200 Property
Accumulation Index	14.3	15.9	15.3	2.2
ASX All Ordinaries
Accumulation Index	3.8	9.3	6.5	5.7

1 Total returns include movement in security price and distributions (which are assumed to be reinvested).

2 Annual compound returns.

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BWP Trust Half-Year Report 2015/16

BUSINESS REVIEW

OUR PROPERTY PORTFOLIO

PORTFOLIO SUMMARY

As at 31 December 2015	Gross lettable area1 sqm	Annual rental2 $000	Valuation $000
Western Australia Albany3 Australind Balcatta Belmont Bibra Lake Cockburn Ellenbrook Geraldton Geraldton Showrooms Harrisdale Joondalup Mandurah Midland Mindarie Morley Port Kennedy Rockingham	13,660 13,475 25,439 10,381 13,977 12,839 15,337 17,874 1,511 17,124 13,358 12,097 13,694 14,479 9,852 11,675 17,179	861 1,250 2,269 1,407 1,672 1,576 1,819 1,319 243 2,181 1,480 1,540 1,636 1,636 1,425 1,480 2,024	13,800 19,200 36,300 20,800 22,300 23,300 29,100 17,600 3,300 30,100 17,900 21,200 24,200 22,200 19,700 20,400 32,400
Total–WA	233,951	25,818	373,800
Victoria Altona4 Bayswater Broadmeadows Caroline Springs Coburg Craigieburn Croydon Dandenong Epping Fountain Gate Frankston Hawthorn Maribyrnong Mentone Mornington Northland Nunawading5 Oakleigh South Pakenham Port Melbourne Scoresby Springvale Sunbury Vermont South	9,254 17,677 12,765 14,319 24,728 16,764 13,292 12,313 12,027 12,624 13,843 7,462 17,550 11,814 13,324 14,460 14,766 16,949 14,867 13,846 12,515 13,458 15,185 16,634	1,173 2,325 1,796 1,632 4,795 1,530 1,869 1,595 1,256 1,469 2,044 3,140 2,540 1,608 1,675 1,877 2,338 1,930 1,838 2,003 1,857 1,963 1,711 2,167	16,357 33,400 26,600 24,200 63,200 22,700 31,000 19,300 14,000 22,600 30,300 44,900 42,300 22,200 24,800 27,800 40,587 22,700 25,100 32,400 27,500 32,700 27,400 32,100
Total–VIC	342,436	48,131	706,144
Australian Capital Territory Fyshwick6 Tuggeranong	6,648 11,857	1,216 1,791	19,100 27,600
Total–ACT	18,505	3,007	46,700
South Australia Mile End Noarlunga	14,888 15,054	2,340 1,505	39,000 19,400
Total–SA	29,942	3,845	58,400

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BWP Trust Half-Year Report 2015/16

As at 31 December 2015	Gross lettable area1 sqm	Annual rental2 $000	Valuation $000
New South Wales Artarmon Belmont North Belrose Blacktown (Blackwoods) Dubbo Greenacre Hoxton Park Lismore Maitland Minchinbury Port Macquarie Rydalmere Thornleigh Villawood Wagga Wagga Wallsend Wollongong	5,746 12,640 8,888 8,346 16,344 14,149 26,508 10,076 12,797 16,869 8,801 16,645 5,301 10,886 13,774 16,863 10,811	1,647 955 2,039 720 1,483 2,475 3,568 1,261 1,379 2,710 1,004 2,894 1,349 1,639 1,351 1,915 1,419	25,300 15,700 31,400 7,200 19,400 38,100 47,200 19,400 16,900 45,800 12,100 48,200 18,600 21,100 18,600 30,600 17,700
Total–NSW	215,444	29,808	433,300
Queensland Arundel Bethania Brendale Browns Plains Burleigh Heads Cairns Cannon Hill Fairfeld Waters Gladstone Hervey Bay Manly West Morayfeld Mount Gravatt North Lakes Rocklea Smithfeld Southport Townsville North Underwood West Ipswich	15,588 13,494 15,029 18,398 12,428 12,917 16,556 13,645 21,511 11,824 13,021 12,507 11,824 18,861 14,403 13,094 12,431 14,038 12,245 14,977	2,249 1,829 1,934 2,974 1,723 1,274 2,424 1,564 3,113 1,236 2,112 1,770 1,163 2,567 2,067 1,463 1,723 1,639 1,597 2,343	34,700 27,900 32,200 35,000 17,500 11,000 37,100 22,600 34,000 14,800 33,900 26,200 15,000 40,600 32,100 20,200 24,300 25,300 20,000 37,800
Total–QLD	288,791	38,764	542,200
Grand Total	1,129,069	149,373	2,160,544

Note: Totals and Grand Total adjusted for rounding

• 1 For Bunnings Warehouses this comprises the total retail area of the Bunnings Warehouse. 2 Annual rental figures do not include access fees detailed below.

• 3 Includes adjoining land (1.2 hectares) for which Bunnings Group Limited pays the Trust an access fee of $211,882 per annum.

• 4

• Includes additional land (1.0 hectares) for which Bunnings Group Limited pays the Trust an access fee of $221,636 per annum.

• 5 Includes adjoining properties (0.1 hectares) for which Bunnings Group Limited pays the Trust an access fee of $126,935 per annum.

• 6 Includes adjoining property (1.0 hectares) for which Bunnings Group Limited pays the Trust an access fee of $301,020 per annum.

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BWP Trust Half-Year Report 2015/16

BUSINESS REVIEW

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BUSINESS REVIEW

REPORT TO UNITHOLDERS

The directors of BWP Management Limited, the responsible entity for the BWP Trust, are pleased to present this interim report to unitholders covering the financial results and activities of the Trust for the six months to 31 December 2015.

Activities during the period included: the completion of Bunnings Warehouse expansions in Rockingham, Western Australia and Lismore, New South Wales; the completion of nine market rent reviews; and the revaluation of the fair value of the property investment portfolio.

John Atkins resigned from the Board in August 2015, to take up the position of Agent General for Western Australia in London. The Board thanks him for his valuable contribution to the governance of the Trust while he was a director.

John Austin retired from the Board in December 2015, having served as a director since 2004, and as Chairman since 2007. The Board acknowledges his excellent contribution to, and leadership of the Board, during which time the Trust’s market capitalisation grew from $500 million to $2.0 billion, the number of unitholders doubled, and the portfolio of properties increased from 49 to 82.

Erich Fraunschiel was appointed Chairman of the Board upon Mr Austin’s retirement.

FINANCIAL RESULTS

Financial performance

Total income for the period was $74.7 million, a 4.9 per cent increase over the previous corresponding period. The increase in income was mainly due to rental growth from the existing property portfolio, additional rental income from the store expansions completed during the period, and from completed property developments during the previous corresponding period.

Finance costs of $12.3 million were 7.4 per cent lower than the previous corresponding six months, with higher borrowing levels being offset by a lower weighted average cost of debt. The average level of borrowings was 6.6 per cent higher than the previous corresponding period ($481.2 million compared with $451.6 million). The weighted average cost of debt for the half-year (finance costs less finance income as a percentage of average borrowings) was 5.06 per cent, compared to 5.79 per cent for the previous corresponding period.

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BWP Trust Half-Year Report 2015/16

The lower cost of debt was the result of higher utilisation of debt facilities and reductions in the rate of bank fees and margins during or since the previous corresponding period. Average utilisation of debt facilities (average borrowings as a percentage of average facility limits) for the period was higher than for the previous corresponding period (86.7 per cent compared with 75.3 per cent).

Other operating expenses of $3.1 million were slightly lower than the previous corresponding period of $3.3 million.

Financial position

At 31 December 2015, the Trust’s total assets were $2,179.8 million, funded by unitholders’ equity of $1,617.1 million and total liabilities of $562.7 million.

The underlying net tangible asset backing of the Trust’s units increased by 28 cents per unit during the period, from $2.24 per unit at 30 June 2015, to $2.52 per unit at 31 December 2015. This increase was the result of the net unrealised gains on revaluation of investment properties (refer to the Revaluations section).

INTERIM DISTRIBUTION

For the half-year, the Trust reported a distributable profit of $53.3 million, an increase of 8.5 per cent on the previous corresponding period, primarily due to increased property income from rental growth from the existing property portfolio, completed developments and market rent reviews, and a lower average cost of debt.

An interim distribution of 8.29 cents per ordinary unit has been declared. This is 8.1 per cent higher than the previous corresponding period (7.67 cents per unit), reflecting the increase in distributable profit over the previous corresponding period.

There were approximately 0.4 per cent more units on issue at 31 December 2015 than at 31 December 2014.

The interim distribution will be made on 25 February 2016 to unitholders on the Trust’s register at 5:00 pm on 31 December 2015. Units issued under the Trust’s distribution reinvestment plan (“DRP”) in respect of the interim distribution will be issued at $3.09 per unit, representing the average of the daily volume weighted average price of the Trust’s units for the 20 trading days from and including 7 January 2016 to 4 February 2016, without the application of a discount.

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BWP Trust Half-Year Report 2015/16

BUSINESS REVIEW

REPORT TO UNITHOLDERS (CONTINUED)

PROPERTY PORTFOLIO

Capital expenditure

Total capital expenditure on the portfolio during the half-year amounted to $11.5 million, comprising the items outlined below.

Completion of expansion of Bunnings Warehouse Lismore, New South Wales

In August 2015, a $4.6 million expansion of the Trust’s Lismore Bunnings Warehouse was completed by Bunnings for the Trust. As at 30 June 2015, the Trust had accrued $3.2 million of the $4.6 million in capital expenditure. The annual rental increased by approximately $0.3 million to $1.3 million on completion of the expansion works.

Completion of expansion of Bunnings Warehouse Rockingham, Western Australia

In October 2015, a $4.6 million expansion of the Trust’s Rockingham Bunnings Warehouse was completed by Bunnings for the Trust. As at 30 June 2015, the Trust had accrued $2.5 million of the $4.6 million in capital expenditure. The annual rental increased by approximately $0.3 million to $2.0 million on completion of the expansion works.

Flood damage Bunnings Warehouse Maitland, New South Wales

During the period, the Trust incurred $1.5 million in expenditure to rectify the damage to the Maitland Bunnings Warehouse from the floods in April 2015. Bunnings commenced partial occupation of the store in August 2015. The repairs to the building are expected to be completed in March 2016, at which time Bunnings will occupy the entire building.

Other capital expenditure

Sundry capital improvements, comprising minor works at various investment properties, made by the Trust during the half-year totalled $0.8 million.

Capital commitments

Work is continuing on reinstating the damaged area at the Maitland Bunnings Warehouse and implementing an appropriate longer term rectification plan. The additional capital cost to be incurred by the Trust in rectifying the damage and implementing a new storm water run-off solution is approximately $1.0 million.

Occupancy and average lease expiry

At 31 December 2015, the portfolio was 100 per cent occupied with a weighted average lease expiry term of 6.4 years (30 June 2015: 6.6 years, 31 December 2014: 6.8 years).

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BWP Trust Half-Year Report 2015/16

RENT REVIEWS

The rent payable for each leased property is increased annually, either by a fixed percentage or by the Consumer Price Index (“CPI”), except when a property is due for a market rent review.

Annual escalations

Fifty-two of the leases of Trust properties were subject to annual fixed or CPI reviews during the period. The weighted average increase in annual rent for these 52 leases was 2.0 per cent.

Market rent reviews

During the period, market rent reviews were concluded on six Bunnings Warehouses and the showrooms occupied by BCF at Geraldton, Western Australia and at Bayswater, Victoria, and Dollar Curtains and Blinds at Pakenham, Victoria. The market rent review for the Fountain Gate Bunnings Warehouse, due during the year ended 30 June 2015, is being determined by an independent valuer and remains unresolved as at 31 December 2015. Market rent reviews for two Trust-owned Bunnings Warehouses and one showroom due during the period are still being negotiated. The market rent reviews completed during the half-year are shown in the following table.

Propertylocation	Customer	Passing rent ($ pa)	Market review1 ($ pa)	Uplift (%)	Effective date
Mornington, VIC2 Nunawading, VIC2 Morayfeld, QLD2 Mile End, SA2,3 Morley, WA Vermont South, VIC Geraldton Showrooms, WA Pakenham, VIC Bayswater,VIC	Bunnings Bunnings Bunnings Bunnings Bunnings Bunnings BCF Dollar Curtains BCF	1,607,814 2,289,748 1,676,042 2,050,595 1,290,348 2,166,812 182,436 123,022 269,423	1,650,000 2,337,500 1,770,000 2,340,000 1,425,000 2,166,812 182,436 126,713 290,000	2.6% 2.1% 5.6% 14.1% 10.4% 0.0% 0.0% 3.0% 7.6%	13-Dec-14 11-Feb-15 22-Mar-15 23-Mar-15 3-Jul-15 15-Aug-15 12-Nov-15 10-Jan-16 3-Jun-16
Weighted Average				5.4%

1 All market rent reviews were negotiated between the Trust and the Customer except Mile End and Morayfield which were determined by an independent valuer.

2 The market rent review was due during the year ended 30 June 2015, but the outcome of the negotiation was only completed during the year ending 30 June 2016.

3 Amortised rental portion of total rent ceased on 22 March 2015, the market rent review excludes the amortised rent not subject to review.

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BWP Trust Half-Year Report 2015/16

BUSINESS REVIEW

REPORT TO UNITHOLDERS

(CONTINUED)

Like-for-like rental growth

Excluding rental income from properties acquired, sold or expanded during or since the previous corresponding period, rental income increased by 2.5 per cent for the 12 months to 31 December 2015 (compared to 3.1 per cent for the 12 months to 31 December 2014, which was previously disclosed as a 2.7 per cent increase, but has now been updated following the finalisation of the 10 market rent reviews related to that period). The four unresolved market reviews at 31 December 2015 are not included in the calculation of like-for-like rental growth for the year.

REVALUATIONS

During the half-year the Trust’s entire investment property portfolio was revalued. Property revaluations were performed by independent valuers for 11 properties during the period. The remaining 71 properties were subject to directors’ revaluations. Following the revaluations, the Trust’s weighted average capitalisation rate for the portfolio at 31 December 2015 was 6.81 per cent (30 June 2015: 7.33 per cent; 31 December 2014: 7.41 per cent).

The value of the Trust’s portfolio increased by $179.3 million to $2,160.5 million during the half-year following developments and capital expenditure of $5.8 million and a net revaluation gain of $173.5 million at 31 December 2015. The net revaluation gain was due to growth in rental income and an average decrease in capitalisation rates across the portfolio during the half-year.

CAPITAL MANAGEMENT

The Trust’s debt facilities as at 31 December 2015 are summarised below.

summarised below.
	Limit ($m)	Amount drawn1 ($m)	Expiry date
Bank debt facilities Australia and New Zealand Banking Group Limited Commonwealth Bank of Australia Westpac Banking Corporation Corporate bonds Fixed term fve-year corporate bond	110.0 110.0 135.0 200.0	92.5 93.4 93.8 200.0	1 July 2018 31 July 2020 30 April 2020 27 May2019
	555.0	479.7

1 Amount drawn includes prepaid interest and borrowing costs of $0.1 million as at 31 December 2015.

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BWP Trust Half-Year Report 2015/16

The weighted average duration of the debt facilities at 31 December 2015 was 3.7 years (31 December 2014: 3.3 years).

The Trust’s gearing ratio (debt to total assets) at 31 December 2015 was 22.0 per cent (30 June 2015: 24.1 per cent, 31 December 2014: 23.4 per cent) which is in the preferred range of 20 to 30 per cent.

The Trust has a policy of hedging the majority of its borrowings against interest rate movements, to ensure stability of distributions. At 31 December 2015, the Trust’s interest rate hedging cover was 79.2 per cent of gross borrowings (excluding prepaid interest and borrowing costs), with $180.0 million interest rate swaps and the $200.0 million fixed rate corporate bond against gross borrowings of $479.7 million. The weighted average term to maturity of hedging was 2.66 years (30 June 2015: 3.17 years, 31 December 2014: 3.25 years) including delayed start swaps.

The Trust’s distribution reinvestment plan was active for the interim distribution and applied to approximately 9.8 per cent of issued units.

OUTLOOK

Property income for the second half of 2015/16 will include a full six months’ rental income from the Bunnings Warehouse expansions completed during the first half of 2015/16 and from the completed developments in the previous corresponding period.

Rent reviews are expected to contribute incrementally to property income for the half-year to 30 June 2016. There are 47 leases to be reviewed to the CPI or by a fixed percentage increase during the second half of 2015/16. There are also five market rent reviews of Bunnings Warehouses, of which one relates to the year ending 30 June 2015, to be completed by the end of this financial year.

As a result of increased utilisation of existing debt facilities, the Trust’s average cost of debt (being the net finance costs, including interest and bank fees and margins, as a percentage of average borrowings) should reduce further to approximately 5.0 per cent for the six months ending 30 June 2016 on the basis of interest rates remaining at around current levels.

The responsible entity will continue to look to acquire quality investment properties that are value accretive for the Trust and expansion opportunities for existing stores in the portfolio. As part of ongoing active portfolio management, the responsible entity will also continue to assess potential divestments where properties have reached optimum value.

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BWP Trust Half-Year Report 2015/16

BUSINESS REVIEW

REPORT TO UNITHOLDERS (CONTINUED)

OUTLOOK (CONTINUED)

On the basis of continued rental growth from the existing portfolio, and no significant changes in the operating environment, the Trust could expect distribution per unit growth of approximately five per cent for the 2016 financial year, in line with the outlook provided in August 2015.

SUBSEQUENT EVENT

In February 2016, the Trust entered into a conditional contract with an unrelated party to sell the Cairns property that was vacated by Bunnings in 2015. The details of the transaction will be announced at the time the transaction becomes unconditional, which is expected to be at the end of March 2016.

For BWP Management Limited

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Erich Fraunschiel Chairman 11 February 2016

Michael J Wedgwood Managing Director 11 February 2016

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BWP Trust Half-Year Report 2015/16

FINANCIAL REPORT

FINANCIAL STATEMENTS

FOR THE HALF-YEAR ENDED 31 DECEMBER 2015

FINANCIAL REPORT

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

For the half-year ended 31 December 2015

Note	Dec 2015 $000	Dec 2014 $000
Rental income Other property income Finance income		69,566 1,475 139
	74,161
	431
	61
Total revenue	74,653	71,180
Finance costs Responsible entity’s fees Other operatingexpenses		(13,318) (5,435) (3,306)
	(12,333)
	(5,888)
	(3,137)
Total expenses	(21,358)	(22,059)
Proft before unrealised gains in fair value of investment properties Unrealised gains in fair value of investment properties	53,295	49,121 68,203
	173,513
Proft for the period attributable to unitholders of BWP Trust	226,808	117,324
Other comprehensive income/(loss) Items that may be reclassifed subsequently to proft or loss: Effective portion of changes in fair value of cash fow hedges: - Realised losses transferred to proft or loss - Unrealised losses on cash fow hedges		2,700 (3,433)
	2,616
	(824)
Total comprehensive income for the period attributable to the unitholders of BWP Trust	228,600	116,591
Basic and diluted earnings (cents per unit) resulting from proft 2	35.31	18.39

The statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.

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BWP Trust Half-Year Report 2015/16

STATEMENT OF FINANCIAL POSITION

As at 31 December 2015

Note	Dec 2015 $000	Jun 2015 $000	Dec 2014 $000
ASSETS Current assets Cash Receivables and prepayments Assets held for sale		32,445 4,233 16,357	21,119 4,848 7,210
	14,783
	4,480
	27,357
Total current assets	46,620	53,035	33,177
Non-current assets Investmentproperties 3		1,964,915	1,892,863
	2,133,187
Total non-current assets	2,133,187	1,964,915	1,892,863
Total assets	2,179,807	2,017,950	1,926,040
LIABILITIES Current liabilities Payables and deferred income Derivative fnancial instruments Distributionpayable 4		27,363 392 52,483	20,868 401 49,066
	20,660
	795
	53,254
Total current liabilities	74,709	80,238	70,335
Non-current liabilities Interest-bearing loans and borrowings 5 Derivative fnancial instruments		485,401 10,551	451,156 12,379
	479,636
	8,356
Total non-current liabilities	487,992	495,952	463,535
Total liabilities	562,701	576,190	533,870
Net assets	1,617,106	1,441,760	1,392,170
EQUITY Equity attributable to unitholders of BWP Trust Issued capital 6 Hedge reserve 7 Undistributed income		945,558 (10,943) 507,145	938,076 (12,780) 466,874
	945,558
	(9,151)
	680,699
Total equity	1,617,106	1,441,760	1,392,170

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

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BWP Trust Half-Year Report 2015/16

FINANCIAL REPORT

STATEMENT OF CASH FLOWS

For the half-year ended 31 December 2015

	Dec 2015 $000	Dec 2014 $000
Cash fows from operating activities Rent received Payments to suppliers Payments to the responsible entity Finance income Finance costs		80,987 (9,010) (4,926) 139 (12,827)
	83,606
	(15,005)
	(5,783)
	61
	(12,071)
Net cash fows from operatingactivities	50,808	54,363
Cash fows from investing activities Payments for purchase of, and additions to, investment properties Receipts from the sale of investmentproperties		(57,698) 46,286
	(10,222)
	-
Net cash fows used in investingactivities	(10,222)	(11,412)
Cash fows from fnancing activities (Repayments)/proceeds of borrowings Distributionspaid		2,824 (36,701)
	(5,765)
	(52,483)
Net cash fows used in fnancingactivities	(58,248)	(33,877)
Net (decrease)/increase in cash Cash at the beginningof theperiod		9,074 12,045
	(17,662)
	32,445
Cash at the end of theperiod	14,783	21,119

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

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BWP Trust Half-Year Report 2015/16

STATEMENT OF CHANGES IN EQUITY

For the half-year ended 31 December 2015

	Issued capital $000 Hedge Reserve $000 Undistributed income $000 Total $000
Balance at 1 July2014	924,786 (12,047) 398,616 1,311,355
Proft for the period attributable to unitholders of BWP Trust Other comprehensive loss: Effective portion of changes in fair value of cash fow hedges	- - 117,324 117,324 - (733) - (733)
Total comprehensive income for theperiod	- (733) 117,324 116,591
Distributions to unitholders Issue of units - Distribution reinvestmentplan	- - (49,066) (49,066) 13,290 - - 13,290
Total transactions with unitholders of BWP Trust	13,290 - (49,066) (35,776)
Balance at 31 December 2014	938,076 (12,780) 466,874 1,392,170
Balance at 1 July2015	945,558 (10,943) 507,145 1,441,760
Proft for the period attributable to unitholders of BWP Trust Other comprehensive income: Effective portion of changes in fair value of cash fow hedges
	- - 226,808 226,808
	- 1,792 - 1,792
Total comprehensive income for theperiod	- 1,792 226,808 228,600
Distributions to unitholders
	- - (53,254) (53,254)
Total transactions with unitholders of BWP Trust	- - (53,254) (53,254)
Balance at 31 December 2015	945,558 (9,151) 680,699 1,617,106

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

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BWP Trust Half-Year Report 2015/16

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

For the half-year ended 31 December 2015

1 BASIS OF PREPARATION OF THE HALF-YEAR FINANCIAL STATEMENTS

The financial statements of BWP Trust (“the Trust”) for the half-year ended 31 December 2015 were authorised for issue in accordance with a resolution of the directors on 11 February 2016. The Trust was constituted under a Trust Deed dated 18 June 1998 as amended and is managed by BWP Management Limited (“the responsible entity”). Both the Trust and the responsible entity are domiciled in Australia.

The half-year financial statements are a general purpose financial report which:

• has been prepared in accordance with the requirements of the Trust’s constitution, the Corporations Act 2001 and AASB 134 Interim Financial Reporting ;

• has been prepared by applying the same significant accounting policies as those applied by the Trust in its financial statements for the year ended 30 June 2015;

• has been prepared on an historical cost basis, except for investment properties and derivative financial instruments, which have been measured at their fair value;

• is presented in Australian dollars, the Trust’s functional currency, and all values are rounded to the nearest thousand dollars ($’000) under the option available to the Trust under ASIC Class Order 98/100, unless otherwise stated; and

• does not include all notes of the type normally included within the annual financial statements and therefore cannot be expected to provide as full an understanding of the financial performance, financial position and financing and investing activities of the Trust as the full financial statements.

It is recommended that the half-year financial statements be read in conjunction with the annual financial statements of the Trust as at 30 June 2015 which are available upon request from the Trust’s registered office at Level 11, 40 The Esplanade, Perth WA 6000 or at bwptrust.com.au and considered together with any public announcements made by the Trust during the half-year ended 31 December 2015 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001 .

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BWP Trust Half-Year Report 2015/16

NOTES TO THE FINANCIAL STATEMENTS

For the half-year ended 31 December 2015

2 INTERIM DISTRIBUTION PER UNIT

In accordance with the Trust’s constitution, the unrealised gains or losses on the revaluation of the fair value of investment properties are not included in the profit available for distribution to unitholders, as well as other items as determined by the directors. The following shows the effect on earnings per unit of excluding unrealised gains or losses and the resulting distribution per unit:

	Dec 2015	Dec 2014
Basic and diluted earnings per unit (cents per unit) Basic and diluted earnings per unit excluding unrealised gains in fair value of properties (cents per unit) Interim distribution per unit (cents per unit) Weighted average number of units on issue used in the calculation of basic and diluted earnings per unit		18.39 7.70 7.67 638,015,868
	35.31
	8.29
	8.29
	642,383,803

3 INVESTMENT PROPERTIES

3 INVESTMENT PROPERTIES
	Dec 2015 $000	Dec 2014 $000
Balance at the beginning of the period Acquisitions during the period Reclassifcation to assets held for sale Capital improvements Net unrealisedgains from fair value adjustments		1,765,480 58,417 - 763 68,203
	1,964,915
	-
	(11,000)
	5,759
	173,513
Balance at the end of theperiod	2,133,187	1,892,863

(a) Fair value

Investment properties are carried at fair value. Fair value for individual properties is determined by a full valuation completed at least every three years by an independent valuer who holds a relevant professional qualification and has recent experience in the location and category of the investment property. During the six months to 31 December 2015, 11 independent property valuations were performed.

Properties that have not been independently valued as at a balance date are carried at fair value by way of directors’ valuation. All investment properties of the Trust have been categorised on a Level 3 fair value basis under AASB 13 Fair Value Measurement , as some of the inputs required to value the properties are not based on “observable market data”. For full details of the methodology and the significant assumptions/inputs used please refer to the 30 June 2015 annual financial statements.

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BWP Trust Half-Year Report 2015/16

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

For the half-year ended 31 December 2015

3 INVESTMENT PROPERTIES (CONTINUED)

(b) Capital expenditure

During the half-year the Trust’s capital expenditure on investment properties totalled $11.5 million, comprising:

BUNNINGS WAREHOUSE DEVELOPMENTS

Property	Cost($m)	Completed
Lismore, New South Wales Rockingham,Western Australia	4.61 4.61	August 2015 October 2015

1 At 30 June 2015 the Trust had accrued capital expenditure of $3.2 million for Lismore and $2.5 million for Rockingham.

FLOOD DAMAGE, MAITLAND, NSW

The Trust incurred $1.5 million in expenditure to rectify damage to the Maitland Bunnings Warehouse from floods in April 2015. Bunnings commenced partial occupation of the store in August 2015 and repairs to the building are expected to be completed in March 2016.

OTHER

Other capital improvements made by the Trust to investment properties during the half-year totalled $0.8 million.

4 DISTRIBUTION PAYABLE

In accordance with the Trust’s constitution, the unrealised gains or losses on the revaluation of the fair value of investment properties are not included in the profit available for distribution to unitholders, as well as other items as determined by the directors. A reconciliation is provided below:

A reconciliation is provided below:
	Dec 2015 $000	Dec 2014 $000
Proft for the period attributable to unitholders of BWP Trust Net unrealised gains in fair value of investment properties		117,324 (68,203)
	226,808
	(173,513)
Distributable proft for the period Opening undistributed proft Closingundistributedproft	53,295	49,121 1 (56)
	22
	(63)
Distributable amount	53,254	49,066
Distribution(centsper unit)		7.67
	8.29

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BWP Trust Half-Year Report 2015/16

NOTES TO THE FINANCIAL STATEMENTS

For the half-year ended 31 December 2015

5 INTEREST-BEARING LOANS AND BORROWINGS

As at 31 December 2015 the Trust had the following borrowings:

	Expirydate	Limit $000	Amount drawn $000
Bank debt facilities Australia and New Zealand Banking Group Limited Commonwealth Bank of Australia Westpac BankingCorporation	1 July 2018 31 July 2020 30 April 2020
		110,000	92,500
		110,000	93,400
		135,000	93,800
		355,000	279,700
Corporate bonds Fixed term fve-year corporate bond _Less:_prepaid interest and borrowingcosts	27 May 2019
		200,000	200,000
			(64)
		200,000	199,936
		555,000	479,636

6 ISSUED CAPITAL

During the period, no new units (2014: 5,329,631 units) were issued under the Trust’s distribution reinvestment plan therefore, the number of ordinary units on issue as at 31 December 2015 remained at 642,383,803. The distribution reinvestment plan remained active for the interim distribution for the half-year ended 31 December 2015 with units acquired on-market.

7 HEDGE RESERVE

This reserve records the portion of the change in fair values of a hedging instrument in a cash flow hedge that is determined to be an effective hedge.

an effective hedge.
	Dec 2015 $000	Jun 2015 $000
Balance at the beginning of the fnancial period Effective portion of changes in fair value of cash fow hedges: - Realised losses transferred to proft or loss - Unrealised losses on cash fow hedges		(12,047) 5,290 (4,186)
	(10,943)
	2,616
	(824)
Balance at the end of the fnancialperiod	(9,151)	(10,943)

The movement in the half-year was largely due to the decrease in the weighted average term to maturity of the hedging instruments.

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BWP Trust Half-Year Report 2015/16

FINANCIAL REPORT

NOTES TO THE FINANCIAL STATEMENTS

For the half-year ended 31 December 2015

8 SEGMENT REPORTING

The Trust operates wholly within Australia and derives rental income from investments in commercial property.

9 FINANCIAL INSTRUMENTS

(a) Fair value

The fair values and carrying amounts of the Trust’s financial assets and financial liabilities recorded in the financial statements are materially the same with the exception of the following:

	Dec 2015 $000	Jun 2015 $000
Corporate bonds – book value Corporate bonds – fair value		(199,701) (206,743)
	(199,936)
	(206,692)

The methods and assumptions used to estimate the fair value of financial instruments are as follows:

LOANS AND RECEIVABLES, AND PAYABLES AND DEFERRED INCOME Due to the short-term nature of these financial rights and obligations, their carrying amounts are estimates to represent their fair values.

CASH AND SHORT-TERM DEPOSITS

The carrying amount is fair value due to the liquid nature of these assets.

BANK DEBT FACILITIES AND CORPORATE BONDS

Market values have been used to determine the fair value of corporate bonds using a quoted market price. The fair value of bank debt facilities have been calculated discounting the expected future cash flows at prevailing interest rates using market observable inputs.

INTEREST RATE SWAPS

Interest rate swaps are measured at fair value by valuation techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly (Level 2).

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BWP Trust Half-Year Report 2015/16

NOTES TO THE FINANCIAL STATEMENTS

For the half-year ended 31 December 2015

9 FINANCIAL INSTRUMENTS (CONTINUED)

(b) Financial risk management – credit risk

During the period no (2014: $nil) rental income was deemed non-recoverable. There are no other allowances for impairment in respect of receivables during the current or previous period.

Other aspects of the Trust’s financial risk management objectives and policies are consistent with those disclosed in the 30 June 2015 annual financial statements.

10 CAPITAL EXPENDITURE COMMITMENTS

Estimated capital expenditure contracted for at balance date, but not provided for in the financial statements, which is payable:

	Dec 2015 $000	Jun 2015 $000
Not later than one year: Unrelated parties Relatedparties		- 3,272
	1,300
	-
	1,300	3,272

Capital commitments to unrelated parties

MAITLAND, NSW

Work is continuing on reinstating the damaged area at the Bunnings Warehouse in Maitland and implementing an appropriate longer term rectification plan. The additional capital cost to be incurred by the Trust in rectifying the damage and implementing a new storm water run-off solution is approximately $1.0 million.

11 RELATED PARTIES

Arrangements with related parties continue to be in place. For details on these arrangements refer to the 30 June 2015 annual financial statements, along with Notes 3 and 10 of these financial statements.

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BWP Trust Half-Year Report 2015/16

FINANCIAL REPORT

DIRECTORS’ REPORT

For the half-year ended 31 December 2015

In accordance with the Corporations Act 2001 , BWP Management Limited (ABN 26 082 856 424), the responsible entity for BWP Trust, provides this report for the financial half-year that commenced 1 July 2015 and ended 31 December 2015 and review report thereon. The information on pages 8 to 14 forms part of this directors’ report and is to be read in conjunction with the following information:

Directors

The names of directors of the responsible entity in office during the financial half-year and until the date of this report were:

• Mr E Fraunschiel (Chairman)

• Mr J K Atkins (resigned 31 August 2015)

• Mr J A Austin (retired 2 December 2015)

• Ms F E Harris

• Mr R D Higgins

• Mr A J Howarth

• Mr M J G Steur

• Mr M J Wedgwood

Directors were in office for the entire period unless otherwise stated.

Review and results of operations

The operations of the Trust during the six months to 31 December 2015 and the results of those operations are reviewed on pages 8 to 14 of this report and the accompanying financial statements.

statements.
	Dec 2015 $000	Dec 2014 $000
Proft for the period attributable to unitholders of BWP Trust Net unrealised gains in fair value of investment properties		117,324 (68,203)
	226,808
	(173,513)
Distributable proft for the period Opening undistributed proft Closingundistributedproft	53,295	49,121 1 (56)
	22
	(63)
Distributable amount	53,254	49,066

The interim distribution is 8.29 cents per ordinary unit (2014: 7.67 cents). This interim distribution will be paid on 25 February 2016.

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BWP Trust Half-Year Report 2015/16

Units on issue

At 31 December 2015, 642,383,803 units of BWP Trust were on issue (30 June 2015: 642,383,803).

Significant events after the balance date

In February 2016, the Trust entered into a conditional contract with an unrelated party to sell the Cairns property that was vacated by Bunnings in 2015. The details of the transaction will be announced at the time the transaction becomes unconditional, which is expected to be at the end of March 2016.

Auditor independence declaration

The lead auditor’s independence declaration is set out on page 29 and forms part of the directors’ report for the half-year ended 31 December 2015.

Rounding off

The responsible entity is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in accordance with that Class Order, amounts in the financial statements and the directors’ report have been rounded off to the nearest thousand dollars, unless otherwise stated.

Signed in accordance with a resolution of the directors of BWP Management Limited.

==> picture [99 x 42] intentionally omitted <==

Erich Fraunschiel

Chairman BWP Management Limited Perth, 11 February 2016

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BWP Trust Half-Year Report 2015/16

FINANCIAL REPORT

DIRECTORS’ DECLARATION

For the half-year ended 31 December 2015

In accordance with a resolution of the directors of BWP Management Limited, responsible entity for the BWP Trust (“the Trust”), I state that:

In the opinion of the directors:

• (a) the financial statements and notes of the Trust are in accordance with the Corporations Act 2001 , including:

• (i) giving a true and fair view of the Trust’s financial position as at 31 December 2015 and of its performance for the half-year ended on that date; and

• (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and Corporations Regulations 2001 ; and

• (b) there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they become due and payable.

For and on behalf of the board of BWP Management Limited.

==> picture [99 x 41] intentionally omitted <==

Erich Fraunschiel

Chairman BWP Management Limited Perth, 11 February 2016

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BWP Trust Half-Year Report 2015/16

AUDITOR’S INDEPENDENCE DECLARATION

For the half-year ended 31 December 2015

Lead Auditor’s Independence Declaration under Section 307C of the Corporations Act 2001

To: the directors of BWP Management Limited the responsible entity of BWP Trust.

I declare that, to the best of my knowledge and belief, in relation to the review for the half-year ended 31 December 2015 there have been:

• (i) no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation to the review; and

• (ii) no contraventions of any applicable code of professional conduct in relation to the review.

==> picture [46 x 35] intentionally omitted <==

KPMG Perth, 11 February 2016

==> picture [90 x 39] intentionally omitted <==

Grant Robinson Partner

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BWP Trust Half-Year Report 2015/16

FINANCIAL REPORT

INDEPENDENT AUDITOR’S REVIEW REPORT TO THE UNITHOLDERS OF BWP TRUST

For the half-year ended 31 December 2015

Report on the financial report

We have reviewed the accompanying half-year financial report of BWP Trust (the Trust), which comprises the statement of financial position as at 31 December 2015, statement of profit or loss and other comprehensive income, statement of changes in equity and statement of cash flows for the half-year ended on that date, notes 1 to 11 comprising a summary of significant accounting policies and other explanatory information and the directors’ declaration of the Trust.

Directors’ responsibility for the half-year financial report

The directors of the BWP Management Limited (The Responsible Entity) 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 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 Trust’s financial position as at the 31 December 2015 and its performance for the half-year ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . As auditor of BWP Trust, 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.

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BWP Trust Half-Year Report 2015/16

Independence

In conducting our review, we have complied with the independence requirements of the Corporations Act 2001 .

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the half-year financial report of BWP Trust is not in accordance with the Corporations Act 2001 , including:

• (a) giving a true and fair view of the Trust’s financial position as at 31 December 2015 and of its performance for the half-year ended on that date; and

• (b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

==> picture [46 x 35] intentionally omitted <==

KPMG Perth, 11 February 2016

==> picture [90 x 39] intentionally omitted <==

Grant Robinson Partner

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BWP Trust Half-Year Report 2015/16

UNITHOLDER INFORMATION

DIRECTORY

RESPONSIBLE ENTITY

BWP Management Limited

ABN 26 082 856 424 Level 11, Wesfarmers House 40 The Esplanade Perth WA 6000

Telephone: +61 8 9327 4356 Facsimile: +61 8 9327 4344

bwptrust.com.au

DIRECTORS AND SENIOR MANAGEMENT

• Mr E Fraunschiel (Chairman)

• Mr M J Wedgwood (Managing Director)

• Mr J K Atkins (Director) (resigned 31 August 2015)

• Mr J A Austin (Chairman and Director) (retired 2 December 2015)

• Ms F E Harris (Director)

• Mr R D Higgins (Director)

• Mr A J Howarth (Director)

• Mr M J G Steur (Director)

• Ms K A Lange (Secretary)

REGISTRY MANAGER

Computershare Investor Services Pty Limited

Level 11, 172 St Georges Terrace Perth WA 6000

Telephone: 1300 136 972 (within Australia) Telephone: +61 3 9415 4323 (outside Australia) Facsimile: 1800 783 447 (within Australia Facsimile: +61 3 9473 2500 (outside Australia)

computershare.com.au

AUDITOR

KPMG

235 St Georges Terrace Perth WA 6000

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BWP Trust Half-Year Report 2015/16

INVESTOR INFORMATION

Stock exchange listing

The BWP Trust is listed on the Australian Securities Exchange (“ASX”) and reported in the “Industrial” section in daily newspapers – code BWP.

Unitholder enquiries

Please contact the registry manager if you have any questions about your unitholding or distributions.

Website

The Trust’s website, bwptrust.com.au provides information on each property in the portfolio, and an overview of the Trust’s approach to investment, corporate governance and sustainability. The site also provides unit price information and access to annual and half-year reports and releases made to the ASX.

Complaints handling

The procedure for lodgement of complaints and complaints handling is set out under the Contact Us tab of the BWP Trust website at bwptrust.com.au.

Should a complainant be dissatisfied with the decision made by the Responsible Entity in relation to a complaint, the complainant is entitled to take the matter up with the Financial Ombudsman Service (“FOS”), an external and independent industry complaint handling scheme. FOS is located at Level 12, 717 Bourke Street, Docklands, Victoria, 3008. FOS can be contacted by telephone on 1300 780 808, by facsimile on +61 3 9613 6399, by mail at GPO Box 3, Melbourne, Victoria, 3001, by email at info@fos.org.au, or by visiting their website at fos.org.au.

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BWP Trust Half-Year Report 2015/16

Half-Year Report 2015/16 Six months to 31 December 2015