CENTURIA CAPITAL GROUP — Interim / Quarterly Report 2013

Feb 21, 2013

CENTURIA CAPITAL LIMITED AND CONTROLLED ENTITIES

A.B.N. 22 095 454 336

INTERIM FINANCIAL REPORT

FOR THE HALF YEAR ENDED 31 DECEMBER 2012

Directors' Report For the half year ended 31 December 2012

The directors of Centuria Capital Limited (the Company, CCL or Centuria) submit herewith the interim financial report of the Company and its controlled entities (the Group) for the half year ended 31 December 2012. In order to comply with the provisions of the Corporations Act 2001, the directors' report is as follows:

INFORMATION ABOUT THE DIRECTORS AND COMPANY SECRETARIES

Directors

The names of the Directors of the Company in office during or since the end of the half year are:

Name	Position	Appointment date
R.W. Dobson, LLB (Hons), LLM.	Independent Director and Chairman	28th November 2007
P.J. Done, BComm. FCA.	Independent Director	28th November 2007
D.K. Gupta, BComm. MBA.	Independent Director	28th November 2007
J.C. Huljich, BComm.	Executive Director	28th November 2007
J.E. McBain, DipUrbVal.	Executive Director	10th July 2006

Unless indicated otherwise, the Directors held their positions throughout the half year and up to the date of this report.

Company Secretaries

T.D. Reid, Dip. Bus. Studies (Acc), CA, Fdn FPA. Company Secretary since 10th December 2007. M.J. Coy, BBus, CPA. Company Secretary since 19th October 2009.

PRINCIPAL ACTIVITIES

The principal activities of the Group during the course of the half year were the marketing and management of investment products (including friendly society investment bonds and property investment units), general insurance through an agency arrangement, mortgage management, property investment and management of Over Fifty Guardian Friendly Society Limited.

REVIEW OF OPERATIONS

The consolidated net profit of the Group for the period is \$2.842 million (2011: \$0.980 million) after providing for an income tax expense relating to shareholders of \$2.370 million (2011: \$1.490 million).

On 7 December 2012, the Company concluded its unmarketable share parcel buy-back (the buy-back). The buyback resulted in 4,215,316 shares being bought back and cancelled for a total consideration of \$2.009 million leaving 77,625,802 shares on issue.

During the period, the Group established a Singapore office to create an Asian platform for Centuria.

On 5 December 2012, the Group completed the sale of two legacy investment properties:

• Moonah Links, Fingal; and

• Pepper Sands Resort, Torquay.

The net sales proceeds were paid to the National Australia Bank in full and final settlement of its limited recourse loan.

CHANGES IN STATE OF AFFAIRS

There was no significant change in the state of affairs of the Group during the half year.

DIVIDENDS

There were no dividends paid during the half year ended 31 December 2012 (half year ended 31 December 2011: \$1.945 million).

SUBSEQUENT EVENTS

On 22 February 2013, the Company declared an interim dividend of 1.25 cents per share franked at 100%. The dividend is expected to be paid on 28 March 2013.

CENTURIA CAPITAL LIMITED AND CONTROLLED ENTITIES

Directors' Report For the half year ended 31 December 2012

AUDITOR'S INDEPENDENCE DECLARATION

The auditor's independence declaration is included on page 3 and forms part of the Directors' Report for the half year ended 31 December 2012.

ROUNDING OFF OF AMOUNTS

The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order, amounts in the Directors' report and the interim financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

Signed in accordance with a resolution of the Directors.

For and on behalf of the Board

J.E. McBain Executive Director & Chief Executive Officer

Sydney 22 February 2013

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P.J. Done Director Chairman - Audit, Risk Management & Compliance Committee

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

To: the directors of Centuria Capital Limited

I declare that, to the best of my knowledge and belief, in relation to the review for the half-year ended 31 December 2012 there have been:

• no contraventions of the auditor independence requirements as set out in the $(i)$ Corporations Act 2001 in relation to the review; and
• no contraventions of any applicable code of professional conduct in relation to the $(ii)$ review.

KPMG

Steven Gatt Partner

Sydney

22 February 2013

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

Independent auditor's review report to the members of Centuria Capital Limited

Report on the interim financial report

We have reviewed the accompanying interim financial report of Centuria Capital Limited (the Company), which comprises the condensed consolidated statement of financial position as at 31 December 2012, condensed consolidated statement of comprehensive income, condensed consolidated statement of changes in equity and condensed consolidated statement of cash flows for the half-year period ended on that date, notes 1 to 10 comprising a summary of significant accounting policies and other explanatory information and the directors' declaration of the Group comprising the company and the entities it controlled at the half-year's end or from time to time during the half-year period.

Directors' responsibility for the interim financial report

The directors of the Company are responsible for the preparation of the interim financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such control as the directors determine is necessary to enable the preparation of the interim 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 interim 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 interim 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 2012 and its performance for the half-year period ended on that date; and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of Centuria Capital Limited, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of an interim 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.

KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity.

Liability limited by a scheme approved under Professional Standards Legislation.

$\overline{4}$

Conclusion

Based on our review, which is not an audit, we have not become aware of any matter that makes us believe that the interim financial report of Centuria Capital Limited 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 2012 and of its performance for the half-year period ended on that date; and
• b) complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

KPMG

Steven Gatt Partner

Sydney 22 February 2013

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Directors' Declaration For the half year ended 31 December 2012

• $1.$ In the opinion of the directors of the Company:
• the financial statements and notes that are contained in pages 7 to 16 are in accordance with the $(a)$ Corporations Act 2001, including:
  • giving a true and fair view of the Group's financial position as at 31 December 2012 and of $(i)$ its performance for the financial period ended on that date; and
  • complying with Australian Accounting Standard AASB 134 Interim Financial Reporting $(ii)$ and the Corporations Regulations 2001; and
• there are reasonable grounds to believe that the Group will be able to pay its debts as and when $(b)$ they become due and payable.

Signed in accordance with a resolution of the directors.

For and on behalf of the Board

J.E. McBain Executive Director & Chief Executive Officer

Sydney 22 February 2013

P.J. Done Director Chairman - Audit, Risk Management & Compliance Committee

Condensed Consolidated Statement of Comprehensive Income For the half year ended 31 December 2012

		Half year ended
		31-Dec-12	31-Dec-11
	Note	\$'000	\$'000
Operating revenue	2(i)	7,133	5,926
Residential Mortgage interest income		7,571	8,523
Centuria Life revenue	2(ii)	6,018	6,516
National Leisure Trust rental income		-	1,385
Other income		753	460
Total income		21,475	22,810
Finance costs		(6,199)	(8,605)
Employee benefits expense		(4,009)	(5,053)
Administrative and other expenses		(3,568)	(3,482)
Centuria Life expenses	2(ii)	(2,487)	(2,674)
Net revenue/(expense) from benefit funds	2(ii)	471	(706)
Share of loss of associates		-	(326)
Impairment of investment in associates		-	(200)
Profit before tax	2(iii)	5,683	1,764
Income tax expense relating to shareholders		(2,370)	(1,490)
Income tax (expense)/benefit relating to benefit funds	2(ii)	(471)	706
Total income tax expense		(2,841)	(784)
Profit/(loss) for the period		2,842	980
Other comprehensive income:
Gain/(loss) on cash flow hedges taken to equity		149	(165)
Income tax (loss)/benefit relating to other comprehensive income		(45)	4 9
Other comprehensive income/(loss) for the period (net of tax)		104	(116)
Total comprehensive income for the period		2,946	864
Earnings per share
Basic (cents per share)		3.5	1.2
Diluted (cents per share)		3.5	1.2

Condensed Consolidated Statement of Financial Position

As at	31 December 2012

		As at
		31-Dec-12	30-Jun-12
	Note	\$'000	\$'000
ASSETS
Cash and cash equivalents		9,557	15,409
Trade and other receivables		13,663	11,377
Financial assets at fair value through profit and loss		270	399
Other financial assets - Residential Mortgages	3	200,447	202,083
Non-current assets held for sale		-	15,000
Other assets		1,693	1,790
Investment in associates		684	686
Plant & equipment		817	763
Assets in respect of Benefit Funds	8	443,814	465,280
Deferred tax assets		8,612	9,906
Intangible assets		53,284	53,459
TOTAL ASSETS		732,841	776,152
LIABILITIES
Trade and other payables		4,804	5,769
Borrowings	4	157,843	180,919
Income tax payable		6,601	6,277
Other liabilities		471	727
Derivative financial liabilities		26,939	25,758
Liabilities in respect of Benefit Funds	8	443,814	465,280
Provisions		1,056	1,046
TOTAL LIABILITIES		641,528	685,776
NET ASSETS		91,313	90,376
EQUITY
Contributed equity		88,267	90,276
Reserves		(563)	(667)
Retained earnings		3,609	767
TOTAL EQUITY		91,313	90,376

CENTURIA CAPITAL LIMITED AND CONTROLLED ENTITIES

Condensed Consolidated Statement of Cash Flows For the half year ended 31 December 2012

	Consolidated
	31-Dec-12 \$'000	31-Dec-11 \$'000
Cash flows from operating activities
Interest received	523	750
Dividends received	-	1 4
Management fees received	10,040	10,430
Rent, trust distributions and other income received	2,256	3,964
Benefit Funds payments	(24,636)	(24,398)
Payments to suppliers and employees	(11,611)	(11,666)
Income tax paid	(1,190)	(995)
Net cash used in operating activities	(24,618)	(21,901)
Cash flows from investing activities
Benefit Funds receipts	22,862	38,434
Payments for investment property	-	(11)
Payments for plant and equipment	(185)	(21)
Proceeds from investment in other financial assets	7 1	1,710
Payments for sale of National Leisure Trust assets	15,000	-
Net cash provided by investing activities	37,748	40,112
Cash flows from financing activities
Loans to related entities	(92)	(700)
Benefit Funds receipts	-	700
Share buy-back payments	(2,009)	-
Collections from mortgage holders	10,490	13,453
Repayment of borrowings - National Leisure Trust	(15,530)	(500)
Repayment of borrowings - residential mortgages	(6,915)	(7,055)
Repayment of borrowings - other	(800)	-
Dividends and distributions paid	-	(1,945)
Interest paid on residential mortgage loans	(5,309)	(6,276)
Financing costs paid	(591)	(1,968)
Net cash used in financing activities	(20,756)	(4,291)
Net increase in cash and cash equivalents	(7,626)	13,920
Cash and cash equivalents at the beginning of the period	52,400	30,700
Cash and cash equivalents at the end of the period	44,774	44,620
Cash attributable to benefit funds	35,217	33,809
Cash attributable to shareholders	9,557	10,811
	44,774	44,620

CENTURIA CAPITAL LIMITED AND CONTROLLED ENTITIES

Condensed Consolidated Statement of Changes in Equity

For the half year ended 31 December 2012

		CONSOLIDATED
		Share capital	Retained earnings/ (losses)	Cash flow hedge reserve	Share-based incentive reserve	Total attributable to equity holders of the parent
	Note	\$'000	\$'000	\$'000	\$'000	\$'000
Balance at 1 July 2011		100,235	(8,886)	(1,345)	477	90,481
Profit for the period		-	980	-	-	980
Other comprehensive income for the period		-	-	(116)	-	(116)
Total comprehensive income for the period		-	980	(116)	-	864
Issued during the period:
Employee share scheme		477	-	-	(477)	-
Dividend reinvestment plan		804	(804)	-	-	-
Payment of dividends	5	-	(1,945)	-	-	(1,945)
Transfer to retained earnings		(11,480)	11,480	-	-	-
Balance at 31 December 2011		90,036	825	(1,461)	-	89,400
Balance at 1 July 2012		90,276	767	(667)	-	90,376
Profit for the period		-	2,842	-	-	2,842
Other comprehensive income for the period		-	-	104	-	104
Total comprehensive income for the period		-	2,842	104	-	2,946
Issued during the period:
Share buy-back and cancellation	5	(2,009)	-	-	-	(2,009)
Balance at 31 December 2012		88,267	3,609	(563)	-	91,313

For the half year ended 31 December 2012

Corporate information

The interim financial report of Centuria Capital Limited for the half year ended 31 December 2012 was authorised for issue in accordance with a resolution of the Directors. Centuria Capital Limited is a company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Securities Exchange.

1. Basis of Preparation

Statement of compliance

The interim financial report is a general purpose financial report prepared in accordance with the Corporations Act 2001 and AASB 134 Interim Financial Reporting. Compliance with AASB 134 ensures compliance with International Financial Reporting Standard IAS 34 Interim Financial Reporting. The interim financial report does not include notes of the type normally included in an annual financial report and should be read in conjunction with the Group's annual financial report as at and for the year ended 30 June 2012.

This condensed consolidated interim financial report was approved by the Directors on 22 February 2013.

The Company is a company of the kind referred to in ASIC Class Order 98/0100, dated 10 July 1998, and in accordance with that Class Order, amounts in the interim financial report are rounded off to the nearest thousand dollars, unless otherwise indicated.

Estimates

In preparing this consolidated interim financial report, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements as at and for the year ended 30 June 2012.

Significant accounting policies

The accounting policies and methods of computation adopted in the preparation of the interim financial report are consistent with those adopted and disclosed in the Group's annual financial report for the financial year ended 30 June 2012.

2. Revenue, income and expense items

The following is an analysis of the Group's revenue for the period:

	Half year ended
	31-Dec-12 \$'000	31-Dec-11 \$'000
(i) Revenue
Interest revenue	268	490
Dividend revenue	9	14
Fees from property funds	5,041	4,589
Property sale fees	693	-
Property acquisition fees	466	-
Commission received	599	627
Rental income	57	206
	7,133	5,926

For the half year ended 31 December 2012

2. Revenue, income and expense items (cont'd)

(ii) Centuria Life and benefit fund results

	Centuria Life	Benefit		31-Dec-12
	Limited	Funds		Total
Income	\$'000	\$'000		\$'000
Investment income	271	18,314		18,585
Management fee income	5,747	-		5,747
Application for bonus funds (DPF only)	-	3,044		3,044
	6,018 (i)	21,358		27,376
Expenses
Redemption Expense (DPF only)	-	24,373		24,373
Net movement in policyholder liabilities	-	(19,643)		(19,643)
Management fee expense	-	7,783		7,783
Bad debts - mortgage loans	-	8,374		8,374
Management fund operating expenses	2,487 (i)	-		2,487
	2,487	20,887		23,374
Profit before tax	3,531	471	(i)	4,002
Income tax expense	(1,607)	(471)	(i)	(2,078)
Profit after tax	1,924	-		1,924
	Centuria Life	Benefit		31-Dec-11
	Limited	Funds		Total
Income	\$'000	\$'000		\$'000
Investment income	258	6,245		6,503
Management fee income	6,258	-		6,258
Application for bonus funds (DPF only)	-	6,338		6,338
	6,516 (i)	12,583		19,099
Expenses
Redemption Expense (DPF only)	-	31,022		31,022
Net movement in policyholder liabilities	-	(23,242)		(23,242)
Management fee expense	-	5,209		5,209
Bad debts - mortgage loans	-	300		300
Management fund operating expenses	2,674 (i)	-		2,674
	2,674	13,289		15,963
Profit/(loss) before tax	3,842	(706)	(i)	3,136
Income tax (expense)/benefit	(1,783)	706	(i)	(1,077)
Profit after tax	2,059	-		2,059

(i) These numbers have also been included in the Condensed Consolidated Statement of Comprehensive Income on page 7.

	Half year ended
(iii) Profit/(loss) before income tax expense	31-Dec-12 \$'000	31-Dec-11 \$'000
The amount in the income statement is represented by: - Profit before income tax expense relating to shareholders	5,212	2,470
- Profit/(loss) before income tax expense relating to benefit funds	471 5,683	(706) 1,764

For the half year ended 31 December 2012

3. Other financial assets – Residential Mortgages

	31-Dec-12 \$'000	30-Jun-12 \$'000
Residential Mortgages - at cost	180,379	182,528
Residential Mortgages - at fair value	20,068	19,245
Commercial Mortgages	-	310
	200,447	202,083
4. Borrowings	31-Dec-12 \$'000	30-Jun-12 \$'000
NAB working capital facility (i)	12,300	13,100
Residential mortgage bill facilities and notes - secured (ii)	145,543	152,289
Investment property facilities - secured (iii)	-	15,530
	157,843	180,919

Terms and conditions relating to the working capital facility and bill facilities above are:

• (i) Centuria has a financing facility with the National Australia Bank (NAB) drawn in the amount of \$12.3 million at 31 December 2012. The current facility limit of \$12.8 million (30 June 12: \$14.4 million) is amortising at a rate of \$800,000 per quarter and matures on 31 March 2014. \$2.7 million of the NAB working capital facility is a current liability, \$9.6 million is a non-current liability.
• (ii) The Group has \$145.5 million (30 June 2012: \$152.3m) non-recourse notes on issue to the ANZ Bank secured over the residential mortgages held in Senex Warehouse Trust No.1 (a subsidiary of the Group) maturing on 28 February 2014. The facility limit (\$190 million) is reassessed every 6 months with a view to reducing the facility (and therefore the overall facility cost) in line with the reduction in the residential mortgage book. Under the facility agreement, surplus funds (being mortgages repaid (including interest) less taxes, administration expenses and any hedge payments) are required to be applied against the facility each month. During the 6 months to 31 December 2012, \$7.65m surplus funds have been applied against the facility (6 months to 31 December 2011: \$8.33m).
• (iii) The National Leisure Trust (NLT) had a \$15.5 million non-recourse bank bill owing to the NAB which was settled on 5 December 2012 through the sale of the assets of NLT and its underlying properties located at Moonah Links, Fingal, Victoria (Moonah Links) and Pepper Sands Resort Torquay, Victoria (Torquay).

5. Dividends

There were no dividends paid during the half year ended 31 December 2012 (half year ended 31 December 2011: \$1.945 million).

On 7 December 2012 the Company concluded its unmarketable share parcel buy-back (the buy-back). The buy-back resulted in 4,215,316 shares being bought back and cancelled for a total consideration of \$2.009 million leaving 77,625,802 shares on issue.

6. Contingent assets, liabilities and commitments

There are no material contingent liabilities, contingent assets or commitments.

Notes to the Interim Financial Statements For the half year ended 31 December 2012

7. Operating Segments

The Group has seven reportable segments, as described below, which are the divisions used to report to the Board for the purpose of resource allocation and assessment of performance. For each of the divisions, the Group's CEO (the chief operating decision maker) reviews internal management reports on a monthly basis. The following summary describes the operations in each of the Group's reportable segments:

• (a) Centuria Life and Benefit Funds a range of financial products, including single and multipremium investments.
• (b) Insurance general, home and contents, motor vehicle and travel insurance agency.
• (c) Residential Mortgages provides debt funding secured by first ranking security over residential property.
• (d) Mortgageport equity accounted investment in money manager and mortgage broker (sold during the year ended 30 June 12).
• (e) Property Investments National Leisure Trust (sold during the half year).
• (f) Property Funds Management Centuria Property Funds Limited and Centuria Strategic Property Limited.
• (g) Corporate.

The accounting policies of these reportable segments are the same as the Group's accounting policies.

The following is an analysis of the Group's revenue and results by reportable operating segment for the current period under review:

	Centuria Life \$'000	Benefit Funds (i) \$'000	Insurance \$'000	Residential Mortgages \$'000	Mortgageport (ii) \$'000	Investments Property \$'000	Property Funds Management \$'000	Corporate \$'000	CONSOLIDATED \$'000
Revenue
Interest, dividends and other investment income	271	-	-	7,571	-	6	122	140	8,110
Management, sales, acquisitions, leasing, risk and establishment fees	5,747	-	-		-	-	6,200	-	11,947
Rent and other	-	-	599	74	145	320	19	261	1,418
Total segment revenue	6,018	-	599	7,645	145	326	6,341		401 21,475
Profit/(loss) before tax	3,531	471	458	1,602	145	394	2,050		(2,968) 5,683
Income tax (expense)/benefit	(1,607)	(471)	(137)	(481)	(239)	(137)	(639)	870	(2,841)
Net profit									2,842

Half year ended 31 December 2012

(ii) Part reversal of discount relating to deferred consideration on sale of the business. (i) Net revenue received from the benefit funds has been presented as a single line item. See note 2(iii) for further information.

For the half year ended 31 December 2012

7. Operating Segments (cont'd)

		Half year ended 31 December 2011

	Centuria Life \$'000	Benefit Funds (i) \$'000	Insurance \$'000	Residential Mortgages \$'000	Mortgageport \$'000	Investments Property \$'000	Property Funds Management \$'000	Corporate \$'000	CONSOLIDATED \$'000
Revenue Interest, dividends and other investment income	258	-	-	8,523	-	46	181	263	9,271
Management, sales, acquisitions, leasing, risk and establishment fees	6,258	-	-		-	-	4,161		100 10,519
Rent and other	-	-	628	43	-	1,385	697	267	3,020
Total segment revenue	6,516	-	628	8,566	-	1,431	5,039		630 22,810
Profit/(loss) before tax	3,842	(706)	481	1,640	(201)	(81)	741		(3,952) 1,764
Income tax (expense)/benefit	(2,674)	-	(144)	(492)	-	24		(162) 2,664	(784)
Net loss									980

(i) Net revenue received from the benefit funds has been presented as a single line item. See note 2(iii) for further information.

8. Assets and liabilities in respect of benefit funds

	31-Dec-12	30-Jun-12
	\$'000	\$'000
Assets
Cash	35,217	36,992
Trade and other receivables	2,740	1,227
Financial assets at fair value	396,719	419,595
Income tax receivable	8,343	434
Deferred tax assets	795	7,032
	443,814	465,280
Liabilities
Trade and other payables	9 3	5 1
Policyholders' funds	443,721	464,970
Deferred tax liabilities	-	259
	443,814	465,280

9. Subsequent events

On 22 February 2012, the Company declared an interim dividend of 1.25 cents per share franked at 100%. The dividend is expected to be paid on 28 March 2013.

10. Related party transactions

	31-Dec-12	31-Dec-11
	\$'000	\$'000
Aggregate amounts received from related parties:
Management fees:
Over Fifty Guardian Friendly Society Limited	658	607
Centuria Life Limited Benefit Funds	5,089	5,652
Property Trusts managed by Centuria	6,200	4,589
	11,947	10,848

Where a management agreement is in place, management fees are charged to controlled entities in accordance with such agreements.

Notes to the Interim Financial Statements For the half year ended 31 December 2012

10. Related party transactions (cont'd)

Terms and conditions of transactions with related parties

Investments in benefit funds held by certain directors are made on the same terms and conditions as all other persons. Directors and director-related entities received the same returns on these investments as other policyholders.

The parent entity and its related entities entered into transactions, which are insignificant in amount, with directors and their director-related entities in their domestic dealings and are made in arm's length transactions at normal market prices and on normal commercial terms. These are:

• receipt of general insurance premiums; and - payment of general insurance benefits.

CCL pays some expenses on behalf of related entities and receives a reimbursement for these payments. There are no loans on non-market terms between the Centuria Capital Group and the Benefit Funds.

Transactions between CCL and its related parties

During the financial year, the following transactions occurred between the Company and its other related parties:

• CCL has advanced \$2.3 million to Centuria Diversified Property Fund as a loan earning 10% p.a. The loan is a convertible note which has a 25 February 2013 maturity date. The loan provides CCL the right to convert into Centuria Diversified Property Fund units at the market price at conversion date or demand repayment of all principal plus accrued interest. Part of the interest has capitalised into the loan balance. The total loan balance at 31 December 2012 is \$2.7 million.
• CCL has a \$1.2 million receivable from Centuria Bulky Goods Fund 1 which has been fully provisioned, \$258k receivable from Strategic Property Holdings Pty Ltd ATF The Aristocrat Joint Venture and a \$0.2 million receivable from Over Fifty Guardian Friendly Society Limited.
• At 31 December 2012, Centuria Life Limited (CLL), being a subsidiary of CCL, has a seed capital investment of \$5.25 million in the Income Accumulation Fund which is managed by CLL (31 December 2011: \$2.7 million).
• On 1 November 2012, Huljich Wealth Management (New Zealand) ("Huljich Wealth") sold 3,113,000 units in Centuria 131-139 Grenfell Street Fund ("the Fund") to the Centuria Growth Bond Fund on an arms-length basis. Huljich Wealth is a related party of Jason Huljich who is a director of the Company and Chief Executive Officer of the Centuria Property division.