CENTURIA CAPITAL GROUP — Interim / Quarterly Report 2021

Feb 9, 2021

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Centuria Capital Group Interim Financial Report for the half year ended 31 December 2020

Centuria Capital Group comprises of Centuria Capital Limited ABN 22 095 454 336 (the 'Company') and its subsidiaries and Centuria Capital Fund ARSN 613 856 358 ('CCF') and its subsidiaries. The Responsible Entity of CCF is Centuria Funds Management Limited ACN 607 153 588, AFSL 479 873, a wholly owned subsidiary of the Company.

Centuria Capital Group Interim Financial Report - 31 December 2020

Contents

Contents
	Page
Directors' report	1
Auditor's Independence Declaration	4
Consolidated interim financial statements	5
Independent auditor's review report to the members	40

These consolidated interim financial statements are the interim financial statements of the consolidated entity consisting of Centuria Capital Limited and its subsidiaries. The interim financial statements are presented in Australian currency.

Centuria Capital Limited is a company limited by shares, incorporated and domiciled in Australia. Its registered office and principal place of business is:

Centuria Capital Limited Level 41, Chifley Tower, 2 Chifley Square Sydney NSW 2000

The consolidated interim financial statements were authorised for issue by the Directors on 10 February 2021.

Directors' report

The Directors of Centuria Capital Limited (the 'Company') present their interim report together with the interim financial statements of the Company and its controlled entities (the 'Group') for the half year ended 31 December 2020 and the auditor’s review report thereon.

ASX listed Centuria Capital Group consists of the Company and its controlled entities including Centuria Capital Fund ('CCF'). The shares in the Company and the units in CCF are stapled, quoted and traded on the Australian Securities Exchange ('ASX') as if they are a single security under the ticker code 'CNI'.

Directors

The following persons were Directors of the Company during the whole of the half year and up to the date of this report:

report:
Director	Role	Appointment Date
Mr GarryS. Charny	Independent Non-Executive Director and Chairman	23 February2016
Mr Peter J. Done	Independent Non-Executive Director	28 November 2007
Mr John R. Slater	Independent Non-Executive Director	22 May 2013
Ms Susan Wheeldon	Independent Non-Executive Director	31 August 2016
Mr Nicholas R. Collishaw	Non-Executive Director	27 August 2013
Mr John E. McBain	Executive Director and Joint Chief Executive Officer	10 July2006
Mr Jason C. Huljich	Executive Director and Joint Chief Executive Officer	28 November 2007

Operating and financial review

The current year results continue to be impacted by the onset of the COVID-19 pandemic. On 7 April 2020, the government announced a National Cabinet Mandatory Code of Conduct ('the Code'). The Code continues to apply to all tenancies suffering financial stress or hardship as a result of the COVID-19 pandemic. The Group has complied with the Code across all its managed property funds and worked with tenants to provide appropriate rent relief packages.

The Group recorded a consolidated statutory net profit after tax for the half year of $42,754,000 (half year ended 31 December 2019: $77,993,000). Statutory net profit after tax has been prepared in accordance with the Corporations Act 2001 and Australian Accounting Standards.

The Group recorded an operating profit after tax for the half year of $34,025,000 (half year ended 31 December 2019: $33,406,000). Operating profit after tax excludes non-operating items such as transaction costs and fair value movements and share of net profit of equity accounted investments in excess of distributions received.

The Segment profit or loss in Note B1 has a detailed breakdown of the composition of operating profit and statutory profit. The Segment summary disclosure in Note A6 provides a detailed summary of the Group’s segments and further detail of what is considered operating and non-operating segments.

Eliminations between the operating and non-operating segment largely relate to elimination of inter-group revenues and expenses between the benefit funds, controlled property funds and the Group. Fair value movements of financial instruments and property are also eliminated which relate to movements in fair value of underlying properties in the controlled property funds to appropriately reflect the consolidated results of the controlled property funds.

The table below provides a summarised reconciliation from Statutory Profit after tax to Operating Profit after tax.

Centuria Capital Group 1 31 December 2020

Directors' report

Operating and financial review (continued)

Reconciliation of statutory profit to operating profit Statutory profit after tax Statutory earnings per Centuria Capital Group security (EPS) (cents) Less non-operating items: Unrealised gain on fair value movements in derivatives, property and investments Corporate restructure, transaction and other costs Profit attributable to controlled property funds Eliminations between the operating and non-operating segment Equity accounting adjustments Tax impact of above non-operating adjustments Operating profit after tax Operating EPS (cents)	31 December 2020 $'000 31 December 2019 $'000 42,754 77,993 7.5 18.6 (9,036) (38,316) 1,013 2,110 (4,145) (645) 3,048 (1,940) 196 128 195 (5,924)
	34,025 33,406
	6.2 8.1

Operating profit after tax provides an assessment of performance of the Group aligned with the reporting to the Group’s CEO for resource allocation purposes.

Operational highlights for the key divisions were as follows:

Segment	Operating profit after tax for the halfyear $'000	Operating profit after tax for the halfyear $'000	Increase/ (Decrease)	%	Highlights
	31 December 2020	31 December 2019
Property Funds Management Investment Bonds Co-Investments Corporate Operating profit after tax	23,458 372 11,446 (1,251)	26,856 881 8,013 (2,344)	(3,398) (509) 3,433 1,093	(13) (58) 43 (47)	(a) (b) (c)
	34,025	33,406

(a) Property Funds Management

For the half year ended 31 December 2020, excluding the after tax impact of performance fees, the Property Funds Management segment profit increased by $2,130,000 or 18.1% reflecting the growth in AUM and accretion from the Group's acquisition of Augusta Capital Limited in the prior year. Significant acquisitions in Centuria Industrial REIT, such as the Telstra data centre acquisition in Clayton, Victoria, have contributed to the increase in AUM in the half year ended 31 December 2020.

For the half year ended 31 December 2020, Property Funds Management operating NPAT of $23,458,000 was lower than the previous half year ended 31 December 2019 by $3,398,000. This decrease is primarily due to lower acquisition fees and timing of performance fees in the half year ended 31 December 2020 compared to the previous corresponding period.

(b) Investment Bonds Management

For the half year ended 31 December 2020, the Investment Bond Management segment’s operating profit after tax decreased by $509,000 to $372,000. The lower prevailing level of interest rates have contributed to a decline in the earnings of Capital Guaranteed products which has necessitated the rebating of a portion of the segments management fees to ensure the continued viability and capital adequacy of these products.

(c) Co-Investments

For the half year ended 31 December 2020, the Co-Investments segment operating profit after tax increased by $3,433,000 which is mainly due to higher distribution income from additional co-investment stakes in Centuria Industrial REIT (CIP) during the half-year ended 31 December 2020.

During the current half year, the Group's ownership stakes in Centuria Office REIT (COF) remained at 17.04% and CIP decreased to 15.16% due to the Group not fully participating in all equity raises/rights issue despite additional units purchased in the funds. The operating profit after tax for the Co-Investments segment represents the distributions and returns generated from those investments after the applicable financing costs.

Centuria Capital Group 2 31 December 2020

Directors' report

Operating and financial review (continued)

Earnings per security (EPS)

Earnings per security (EPS)
Basic EPS (cents/security) Diluted EPS (cents/security) Dividends and Distributions	31 December 2020 31 December 2019 Operating Statutory Operating Statutory
	6.2 7.5 8.1 18.6 6.1 7.4 7.8 18.0

Dividends and distributions paid or declared by the Group during the current half year were:

	Cents.	Cents.	Total amount	Date
Dividends/distributions paid during the halfyear	per security .		$'000	paid/payable
Final 2020 dividend (100% franked)	1.80		8,690	8 July 2020
Final 2020 Trust distribution	3.40		16,420	8 July 2020
Dividends/distributions declared during the half year
Interim 2021 dividend (100% franked)	1.20		7,203	29 January 2021
Interim 2021 Trust distribution	3.30		19,811	29 January2021
Total amount	9.70	.	52,124

Auditor's independence declaration

A copy of the auditor's independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 4.

Rounding of amounts

The Group is an entity of a kind referred to in ASIC Legislative Instrument 2016/191, related to the ‘rounding off’ of amounts in the Directors’ Report and interim financial statements. Amounts in the Directors’ Report and interim financial statements have been rounded off, in accordance with the instrument to the nearest thousand dollars, unless otherwise indicated.

This report is made in accordance with a resolution of Directors.

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Mr Garry S. Charny Director

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Mr Peter J. Done Director

Sydney 10 February 2021

Centuria Capital Group 3 31 December 2020

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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 of Centuria Capital Group for the half-year ended 31 December 2020 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.

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KPMG

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Paul Thomas Partner Sydney 10 February 2021

©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.

4

Centuria Capital Group

Interim financial report - 31 December 2020

Contents

Contents	Page
Consolidated interim statement of comprehensive income	6
Consolidated interim statement of financial position	7
Consolidated interim statement of changes in equity	8
Consolidated interim statement of cash flows	10
Notes to the consolidated interim financial statements	11
A About the report	11
A1 General information	11
A2 Coronavirus (COVID-19) impact	12
A3 Significant accounting policies	13
A4 New Accounting Standards and Interpretations	13
A5 Use of judgements and estimates	13
A6 Segment summary	14
B Business performance	15
B1 Segment profit and loss	15
B2 Revenue	17
B3 Expenses	18
B4 Finance costs	19
B5 Dividends and distributions	19
C Assets and liabilities	20
C1 Segment balance sheet	20
C2 Receivables	22
C3 Financial assets	22
C4 Investment properties	24
C5 Property held for development	26
C6 Intangible assets	27
C7 Payables	27
C8 Borrowings	28
C9 Contributed equity	29
C10 Commitments and contingencies	30
D Cash flows	31
D1 Operating segment cash flows	31
E Group Structure	32
E1 Interests in associates	32
F Other	36
F1 Fair value of financial instruments	36
F2 Events subsequent to the reporting date	38
Directors' declaration	39
Independent auditor's review report to the members	40

Centuria Capital Group 5 31 December 2020

Consolidated interim statement of comprehensive income

For the half year ended 31 December 2020

		31 December	31 December
		2020	2019
	Notes	$'000	$'000
Revenue	B1, B2	116,335	79,538
Share of net profit of equity accounted investments	E1	608	9,396
Net movement in policyholder liability		(3,293)	7,648
Fair value movements of financial instruments and property		21,702	44,112
Expenses	B3	(44,459)	(46,143)
Cost of sales		(29,248)	(1,330)
Finance costs	B4	(9,083)	(9,556)
Profit before tax		52,562	83,665
Income tax expense		(9,808)	(5,672)
Profit after tax		42,754	77,993
Profit after tax is attributable to:
Centuria Capital Limited		15,240	8,338
Centuria Capital Fund (non-controlling interests)		26,148	68,707
External non-controlling interests		1,366	948
Profit after tax		42,754	77,993
Other comprehensive income
Foreign currency translation reserve		646	-
Total comprehensive income for the period		43,400	77,993
Total comprehensive income for the period is attributable to:
Centuria Capital Limited		15,362	8,338
Centuria Capital Fund (non-controlling interests)		26,672	68,707
External non-controlling interests		1,366	948
Total comprehensive income		43,400	77,993
Total comprehensive income for the period is attributable to Centuria
Capital Group securityholders:
Centuria Capital Limited		14,716	8,338
Centuria Capital Fund (non-controlling interests)		26,672	68,707
Total comprehensive income for the period is attributable to Centuria
Capital Group securityholders		41,388	77,045
		Cents	Cents
Earnings per Centuria Capital Group security
Basic (cents per stapled security)		7.5	18.6
Diluted (cents per stapled security)		7.4	18.0
x
Earnings per Centuria Capital Limited share
Basic (cents per share)		2.8	2.1
Diluted (cents per share)		2.7	2.0

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

Centuria Capital Group 6 31 December 2020

Consolidated interim statement of financial position

As at 31 December 2020

		31 December	30 June
		2020	2020
	Notes	$'000	$'000
Cash and cash equivalents	D1	202,515	174,458
Receivables	C2	119,110	68,729
Income tax receivable		4,936	755
Financial assets	C3	839,665	773,417
Other assets		10,305	10,795
Investment properties held for sale		-	861
Property held for development	C5	32,340	31,295
Deferred tax assets		37,614	39,519
Equity accounted investments	E1	33,353	32,955
Investment properties	C4	155,750	167,110
Right of use asset		19,977	21,393
Intangible assets	C6	280,955	280,120
Total assets		1,736,520	1,601,407
Payables	C7	53,049	76,532
Provisions		3,041	2,201
Borrowings	C8	277,214	265,051
Provision for income tax		-	5,998
Interest rate swaps at fair value		34,695	33,388
Benefit Funds policyholder's liability		315,694	311,535
Deferred tax liabilities		45,207	35,825
Call/Put option liability		21,138	17,167
Lease liability		21,703	22,564
Total liabilities		771,741	770,261
Net assets		964,779	831,146
Equity attributable to Centuria Capital Limited
Contributed equity	C9	217,423	177,149
Reserves		2,910	2,901
Retained earnings		25,111	17,074
Total equity attributable to Centuria Capital Limited		245,444	197,124
Equity attributable to Centuria Capital Fund (non-controlling interests)
Contributed equity	C9	681,288	545,744
Reserves		524	-
Retained earnings		(3,434)	(9,771)
Total equity attributable to Centuria Capital Fund (non-controlling interests)		678,378	535,973
Total equity attributable to Centuria Capital Group securityholders		923,822	733,097
Equity attributable to external non-controlling interests
Contributed equity		12,789	57,230
Retained earnings		28,168	40,819
Total equity attributable to external non-controlling interests		40,957	98,049
Total equity		964,779	831,146

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

Centuria Capital Group 7 31 December 2020

Consolidated interim statement of changes in equity

For the half year 31 December 2020

					Centuria Capital Fund	Centuria Capital Fund	Centuria Capital Fund	Centuria Capital Fund			External	non-controlling	non-controlling
	Centuria Capital Limited				(non-controlling interests)						interests
									Total
									attributable to
									Centuria
Contributed			Retained	Contributed			Retained		Capital Group	Contributed		Retained		Total
	equity	Reserves	earnings	Total	equity Reserves		earnings	Total	Securityholders		equity	earnings	Total	equity
	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000		$'000	$'000	$'000	$'000
Balance at 1 July 2020	177,149	2,901	17,074	197,124	545,744	-	(9,771)	535,973	733,097		57,230	40,819	98,049	831,146
Profit for the period	-	-	15,240	15,240	-	-	26,148	26,148	41,388		-	1,366	1,366	42,754
Foreign Currency Translation
Reserve	-	122	-	122	-	524	-	524	646		-	-	-	646
Total comprehensive income for
the period	-	122	15,240	15,362	-	524	26,148	26,672	42,034		-	1,366	1,366	43,400
Equity settled share based
payments expense	1,482	(113)	-	1,369	-	-	-	-	1,369		-	-	-	1,369
Dividends and distributions
paid/accrued	-	-	(7,203)	(7,203)	-	-	(19,811)	(19,811)	(27,014)		-	(1,423)	(1,423)	(28,437)
Stapled securities issued	39,506	-	-	39,506	137,483	-	-	137,483	176,989		-	-	-	176,989
Cost of equity raising	(714)	-	-	(714)	(1,939)	-	-	(1,939)	(2,653)		-	-	-	(2,653)
Purchase of non-controlling interest	-	-	-	-	-	-	-	-	-		(42,982)	(13,387)	(56,369)	(56,369)
Deconsolidation of controlled
property funds	-	-	-	-	-	-	-	-	-		(1,459)	793	(666)	(666)
Balance at 31 December 2020	217,423	2,910	25,111	245,444	681,288	524	(3,434)	678,378	923,822		12,789	28,168	40,957	964,779

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

Centuria Capital Group 8 31 December 2020

Consolidated interim statement of changes in equity For the half year 31 December 2019

For the half year ended 31 December 2019	Centuria Capital Limited	Centuria Capital Limited	Centuria Capital Limited			Centuria Capital Fund (non-controlling interests)	Centuria Capital Fund (non-controlling interests)	Centuria Capital Fund (non-controlling interests)			External non-controlling interests	External non-controlling interests	External non-controlling interests
									Total
									attributable to
									Centuria
	Contributed		Retained		Contributed		Retained		Capital Group	Contributed		Retained		Total
	equity	Reserves	earnings	Total		equity	earnings	Total	securityholders		equity	earnings	Total	equity
	$'000	$'000	$'000	$'000		$'000	$'000	$'000	$'000		$'000	$'000	$'000	$'000
Balance at 1 July 2019	128,164	2,101	12,438	142,703		343,438	19,067	362,505	505,208		32,927	13,233	46,160	551,368
Profit for the period	-	-	8,338	8,338		-	68,707	68,707	77,045		-	948	948	77,993
Total comprehensive income for
the period	-	-	8,338	8,338		-	68,707	68,707	77,045		-	948	948	77,993
Equity settled share based
payments expense	795	118	-	913		-	-	-	913		-	-	-	913
Dividends and distributions
paid/accrued	-	-	(7,630)	(7,630)		-	(12,567)	(12,567)	(20,197)		-	(1,647)	(1,647)	(21,844)
Stapled securities issued	29,419	-	-	29,419		96,439	-	96,439	125,858		-	-	-	125,858
Cost of equity raising	(594)	-	-	(594)		(1,535)	-	(1,535)	(2,129)		-	-	-	(2,129)
Balance at 31 December 2019	157,784	2,219	13,146	173,149		438,342	75,207	513,549	686,698		32,927	12,534	45,461	732,159

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

Centuria Capital Group 9 31 December 2020

Consolidated interim statement of cash flows

For the half year ended 31 December 2020

Cash flows from operating activities Management fees received Performance fees received Rent received Distributions received Interest received Payments to suppliers and employees Interest paid Income taxes paid Applications - Benefits Funds Redemptions - Benefits Funds Net cash (used in)/provided by operating activities Cash flows from investing activities Purchase of investments in related parties Benefit Funds net disposals of investments in financial assets Deposits paid Purchase of subsidiaries Proceeds from sale of related party investments Repayment of loans by related parties Payments for property, plant and equipment Payments in relation to investment properties Loans to related parties Proceeds from sale of investment property Purchase of property held for development Collections from reverse mortgage holders Purchase of equity accounted investments Purchase of other investments Cash on acquisition of Healthcare Acquisition of Healthcare Net cash used in investing activities Cash flows from financing activities Proceeds from issue of securities to securityholders of Centuria Capital Group Distributions paid to securityholders of Centuria Capital Group Proceeds from borrowings Repayment of borrowings Equity raising costs paid Distributions paid to external non-controlling interests Costs paid to issue debt Net cash provided by financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at end of period	31 December 2020 $'000 31 December 2019 $'000 53,373 38,936 394 27,092 7,684 10,219 18,566 16,713 663 1,677 (87,975) (42,889) (4,680) (5,975) (5,797) (5,019) 6,429 7,122 (11,554) (17,532)
	(22,897) 30,344
	(63,507) (94,235) 17,130 17,348 (19,842) - (12,950) - 11,753 31,573 2,541 11,800 (1,347) (1,545) (1,376) (12,481) - (11,800) 868 - (936) - 695 893 (586) (20,477) - (124) - 4,140 - (20,429)
	(67,557) (95,337)
	133,072 125,858 (25,110) (19,180) 20,958 732 (6,024) (35,602) (2,635) (2,129) (1,423) (1,647) (481) -
	118,357 68,032
	27,903 3,039 174,458 124,673 154 -
	202,515 127,712

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

Centuria Capital Group 10 31 December 2020

A About the report

A1 General information

The shares in Centuria Capital Limited and the units in Centuria Capital Fund ('CCF') are stapled to trade together as a single stapled security ('Stapled Security') on the ASX as 'Centuria Capital Group' (the 'Group') under the ticker code, 'CNI'.

The Group is a for-profit entity and its principal activities are the marketing and management of investment products, including property investment funds and friendly society investment bonds, and co-investments in property investment funds.

Statement of compliance

The consolidated interim financial statements for the half year ended 31 December 2020 have been prepared in accordance with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001 .

The consolidated interim financial statements do not include all the notes of the type normally included in the annual financial report. Accordingly, this report should be read in conjunction with the annual consolidated financial statements for the year ended 30 June 2020 and any public announcements made by the Group during the half year reporting period in accordance with continuous disclosure requirements of the Corporations Act 2001 .

Basis of preparation

The consolidated interim financial statements have been prepared on the basis of historical cost, except for financial assets at fair value through profit and loss, investment properties and investment property held for sale which have been measured at fair value at the end of each reporting period. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, which is the company’s functional currency, unless otherwise noted.

Assets and liabilities have been presented on the face of the statement of financial position in decreasing order of liquidity and do not distinguish between current and non-current items.

Going Concern

The financial report has been prepared on a going-concern basis, which assumes continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The COVID-19 pandemic has created uncertainty on the global and local financial markets and may impact on the ability of funds managed by the Group to meet their obligations. The Group has completed an extensive assessment on trade receivables and remains confident that it will be able to continue as a going concern. Refer to Note C2.

Rounding of amounts

The Group is an entity of a kind referred to in ASIC Legislative Instrument 2016/191, related to the ‘rounding off’ of amounts in the Directors’ Report and consolidated interim financial statements. Amounts in the Directors’ Report and consolidated interim financial statements have been rounded off, in accordance with the instrument to the nearest thousand dollars, unless otherwise indicated.

Centuria Capital Group 11 31 December 2020

About the report

A2 Coronavirus (COVID-19) impact

Background

COVID-19 was declared a worldwide pandemic by the World Health Organisation in March 2020. COVID-19, as well as measures to slow the spread of the virus, have since had a significant impact on global financial markets. Governments across the globe have enforced restrictions to limit the spread of the virus, with most governments having implemented economic stimulus packages. Despite these measures, there is still considerable economic uncertainty.

COVID-19 has presented a fast evolving and significant challenge to global and local economies. The real estate sector specifically has been impacted by concerns surrounding security of income and uncertainty around property valuations. In addition, this uncertainty and associated market volatility has resulted in a significant slowdown of transactional activity and investment in most real estate markets.

The Group has considered the continuing impact of COVID-19 and other market volatility in preparing its financial statements. While the specific areas of judgement as noted in Note A5 did not change, the impact of COVID-19 resulted in the application of further judgement within those identified areas. Given the evolving nature of COVID-19 and the limited recent experience of the economic and financial impacts of such a pandemic, changes to the estimates and outcomes that have been applied in the measurement of the Group's assets and liabilities may arise in the future. Other than adjusting events that provide evidence of conditions that existed at the end of the reporting period, the impact of events that arise after the reporting period will be accounted for in future reporting periods.

Processes applied

As a consequence of COVID-19 and in preparing these financial statements, Management:

• re-evaluated whether there were any additional areas of judgement or estimation uncertainty;

• assessed the carrying values of its assets and liabilities and determined the impact thereon as a result of market inputs and variables impacted by COVID-19; and

• considered the continuing impact of COVID-19 on the Group's financial statement disclosures.

Consideration of the statements of financial position and further disclosures

Key statement of financial position items and related disclosures that have been impacted by COVID-19 were as follows:

Financial assets

The Group carries significant investments in entities that directly own real estate, such as external funds that are managed by subsidiaries of the Group. These investments are impacted by stock market volatility (for investments in ASX-listed securities) and by property valuations (for investments in unlisted securities). Refer to Note C3. The Group's residential mortgage receivables are fair valued with inputs including long term yield curve and assumptions in relation to the valuation of secured properties at the expiry of the arrangement. Refer to Note F1.

Investment properties

As a result of COVID-19, there is continuing valuation uncertainty in global financial markets and has affected the ability of impacted tenants to meet their rental obligations. The Group has completed an extensive assessment of trade receivables to determine the recoverability of rental income.

Intangible assets

Consistent with the Group’s accounting policies, the Group has tested goodwill and indefinite life intangible assets for impairment. Such assessment incorporated a consideration of COVID-19. Refer to Note C6

Financial instruments

Given recent market uncertainty as a result of COVID-19, the Group reviewed the appropriateness of the inputs to its valuations of financial instruments including receivables, payables and derivative instruments. The impact of changes of inputs to the valuations has also been considered in terms of the classification of exposures in the fair value hierarchy and transfers within the fair value hierarchy. Refer to Note F1.

Centuria Capital Group 12 31 December 2020

About the report

A3 Significant accounting policies

The accounting policies and methods of computation in the preparation of the consolidated interim financial statements are consistent with those adopted in the previous financial year ended 30 June 2020 with the exception of the adoption of new accounting standards outlined below or in the relevant notes to the consolidated interim financial statements.

When the presentation or classification of items in the consolidated interim financial statements has been amended, comparative amounts are also reclassified, unless it is impractical.

Accounting policies are selected and applied in a manner that ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events are reported.

A4 New Accounting Standards and Interpretations

A number of new accounting standards have been published that are not effective for the 31 December 2020 reporting period. The Group has not early adopted the new or amended standards in preparing these consolidated financial statements. The following amended standards and interpretations are not expected to have a significant impact on the Group's consolidated financial statements.

AASB 17 Insurance Contracts

AASB 17 Insurance Contracts establishes principles for the recognition, measurement, presentation and disclosure of insurance contracts issued. It also requires similar principles to be applied to reinsurance contracts held and investment contracts with discretionary participation features issued. The objective is to ensure that entities provide relevant information in a way that faithfully represents those contracts. This information gives a basis for users of financial statements to assess the effect that contracts within the scope of AASB 17 have on the financial position, financial performance and cash flows of the entity. The Group is currently assessing the impact of AASB 17 Insurance Contracts.

AASB 2018-6

Clarifies the definition of a business as per AASB 3 Business Combinations and is applied prospectively to future acquisitions.

AASB 2018-7

Clarifies the definition of material as applied across all reporting standards as per AASB 101 Presentation of Financial Statements with intention of increasing a user's focus on the material items in a financial report.

AASB 2014-10

Clarifies the requirements for recording the sale or contribution of assets between an investor and its associate or joint venture.

A5 Use of judgements and estimates

In preparing these consolidated interim financial statements management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense that are not readily apparent from other sources. The judgements, estimates and assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation were the same as those applied in the consolidated financial statements as at and for the year ended 30 June 2020.

Centuria Capital Group 13 31 December 2020

About the report

A6 Segment summary

As at 31 December 2020 the Group has four reportable operating segments. These reportable operating segments are the divisions which report to the Group's Joint Chief Executive Officer's and Board of Directors for the purpose of resource allocation and assessment of performance.

The reportable operating segments are:

Operating segments	Description
Property Funds Management	Management of listed and unlisted property funds and completion of structured property developments which span sectors ranging from Commercial Office,
	Industrial and Health through to Affordable Housingand Residential Mixed Use.
Investment Bonds Management	Management of the Benefit Funds of Centuria Life Limited and management
	of the Over Fifty Guardian Friendly Society Limited. The Benefit Funds
	include a range of financial products, including single and multi-premium
	investments.
Co-Investments	Direct interest in property funds, properties held for development and other liquid
	investments.
Corporate	Overheads for supporting the Group's operating segments and management of a
	reverse mortgage lending portfolio.

In addition, the Group provides disclosures in relation to a further four non-operating segments, which are:

In addition, the Group provides	disclosures in relation to a further four non-operating segments, which are:
Non-operating segments	Description
Non-operating items	Comprises transaction costs, mark-to-market movements on financial assets, property and derivative financial instruments, share of equity accounted net profit
	in excess of distributions received and all other non-operatingactivities.
Benefit Funds	Represents the operating results and financial position of the Benefit Funds which are required to be consolidated in the Group's financial statements in
	accordance with accountingstandards.
Controlled Property Funds	Represents the operating results and financial position of property funds which
	are managed by the Group and consolidated under accounting standards.
	The Group's principal activities do not include direct ownership of these funds for
	the purpose of control and deriving rental income. Therefore, the results
	attributable to the controlled property funds are excluded from operating profit.
	However, the performance management of the controlled property funds is
	included in operating profit, aligned with how performance of the business is
	assessed bymanagement of the Group.
Eliminations	Elimination of transactions between the operating segments and the other
	non-operating segments above, including transactions
	between the operating entities within the Group and the property funds controlled
	bythe Groupand the benefit funds.

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

Refer below for an analysis of the Group's segment results:

• Note B1 Segment profit and loss

• Note C1 Segment balance sheet

• Note D1 Operating segment cash flows

Centuria Capital Group 14 31 December 2020

B Business performance

B1 Segment profit and loss

B1 Segment profit and loss
		Property	Investment					Non		Controlled
		Funds	Bonds		Co-		Operating	operating	Benefits	Property	Statutory
For the half year 31 December 2020	Management		Management	Investments		Corporate	profit	items	Funds	FundsEliminations		profit
	Notes	$'000	$'000		$'000	$'000	$'000	$'000	$'000	$'000	$'000	$'000
Management fees		34,313	3,959		-	-	38,272	-	-	-	(2,172)	36,100
Property acquisition fees		4,786	-		-	-	4,786	-	-	-	-	4,786
Property performance fees		13,632	-		-	-	13,632	-	-	-	-	13,632
Development revenue		31,983	-		-	-	31,983	-	-	-	-	31,983
Property sales fees		115	-		-	-	115	-	-	-	-	115
Interest revenue		148	11		67	1,411	1,637	-	419	1	(30)	2,027
Rental income		-	-		-	87	87	-	-	5,233	-	5,320
Recoverable outgoings		-	-		-	-	-	-	-	1,677	-	1,677
Distribution/dividend revenue		-	-		17,658	-	17,658	(804)	2,374	-	(1,302)	17,926
Premiums - discretionary participation features		-	-		-	-	-	-	659	-	-	659
Other income		465	183		40	1,354	2,042	-	30	38	-	2,110
Total Revenue		85,442	4,153		17,765	2,852	110,212	(804)	3,482	6,949	(3,504) 116,335
Share of profit from associates and joint venture partnership	E1	-	-		-	-	-	608	-	-	-	608
Net movement in policyholder liabilities		-	-		-	-	-	-	(3,293)	-	-	(3,293)
Fair value movements of financial instruments and property		-	-		-	-	-	9,036	12,776	1,636	(1,746)	21,702
Expenses	B3	(21,947)	(3,586)		(370)	(7,846)	(33,749)	(445)	(9,089)	(3,348)	2,172	(44,459)
Cost of sales		(29,248)	-		-	-	(29,248)	-	-	-	-	(29,248)
Finance costs	B4	(361)	(1)		(5,837)	(1,252)	(7,451)	(568)	(2)	(1,092)	30	(9,083)
Profit/(Loss) before tax		33,886	566		11,558	(6,246)	39,764	7,827	3,874	4,145	(3,048)	52,562
Income tax benefit/(expense)		(10,428)	(194)		(112)	4,995	(5,739)	(195)	(3,874)	-	-	(9,808)
Profit/(Loss) after tax		23,458	372		11,446	(1,251)	34,025	7,632	-	4,145	(3,048)	42,754
Profit/(Loss) after tax attributable to:
Centuria Capital Limited		23,458	372		111	(10,586)	13,355	1,885	-	-	-	15,240
Centuria Capital Fund		-	-		11,335	9,335	20,670	5,747	-	-	(269)	26,148
Profit/(Loss) after tax attributable to Centuria Capital Group		23,458	372		11,446	(1,251)	34,025	7,632	-	-	(269)	41,388
Securityholders
Non-controlling interests		-	-		-	-	-	-	-	4,145	(2,779)	1,366
Profit/(Loss) after tax		23,458	372		11,446	(1,251)	34,025	7,632	-	4,145	(3,048)	42,754

Centuria Capital Group 15 31 December 2020

Business performance

B1 Segment profit and loss (continued)

B1 Segment profit and loss (continued)
For the half year 31 December 2019 Notes Management fees Property acquisition fees Property performance fees Property sales fees Interest revenue Development revenue Rental income Recoverable outgoings Distribution/dividend revenue Premiums - discretionary participation features Other income Total revenue Share of net profit of equity accounted investments E1 Net movement in policyholder liabilities Fair value movements of financial instruments and property Expenses B3 Cost of sales Finance costs B4 Profit/(Loss) before tax Income tax benefit/(expense) Profit/(Loss) after tax Profit/(loss) after tax attributable to: Centuria Capital Limited Centuria Capital Fund Profit/(loss) after tax attributable to Centuria Capital Group securityholders Non-controlling interests Profit/(loss) after tax	Property Funds Management Investment Bonds Management Co- Investments Corporate Operating profit Non operating items Benefits Funds Controlled Property Funds Eliminations Statutory profit $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 25,636 5,010 - - 30,646 - - - (3,086) 27,560 6,193 - - - 6,193 - - - - 6,193 21,529 - - - 21,529 - - - - 21,529 1,398 - - - 1,398 - - - - 1,398 56 31 263 1,507 1,857 - 1,494 16 (59) 3,308 1,967 - - - 1,967 - - - - 1,967 - - - 276 276 - - 6,924 - 7,200 - - - - - - - 2,115 - 2,115 - - 15,391 - 15,391 (9,063) 1,562 - (1,409) 6,481 - - - - - - 1,019 - - 1,019 550 114 - 5 669 - 64 35 - 768
	57,329 5,155 15,654 1,788 79,926 (9,063) 4,139 9,090 (4,554) 79,538
	- - - - - 8,935 461 - - 9,396 - - - - - - 7,648 - - 7,648 - - - - - 38,316 4,945 (2,498) 3,349 44,112 (16,916) (3,829) (330) (6,564) (27,639) (1,659) (15,460) (4,471) 3,086 (46,143) (1,330) - - - (1,330) - - - - (1,330) (7) (2) (6,886) (791) (7,686) (451) (2) (1,476) 59 (9,556)
	39,076 1,324 8,438 (5,567) 43,271 36,078 1,731 645 1,940 83,665 (12,220) (443) (425) 3,223 (9,865) 5,924 (1,731) - - (5,672)
	26,856 881 8,013 (2,344) 33,406 42,002 - 645 1,940 77,993
	26,856 881 368 (7,391) 20,714 (12,376) - - - 8,338 - - 7,645 5,047 12,692 54,378 - - 1,637 68,707
	26,856 881 8,013 (2,344) 33,406 42,002 - - 1,637 77,045 - - - - - - - 645 303 948
	26,856 881 8,013 (2,344) 33,406 42,002 - 645 1,940 77,993

Centuria Capital Group 16 31 December 2020

Business performance

B2 Revenue

Revenue has been disaggregated in the segment profit and loss in Note B1.

(a) Performance fees

Property performance fees

The Group receives a performance fee for providing management services where the property fund outperforms a set IRR benchmark at the time the property is sold. Consideration is due upon successful sale of the investment property if the performance hurdles are satisfied.

In measuring the performance fees to be recognised each period, consideration is given to the facts and circumstances with respect to each investment property including external factors such as its current valuation, passage of time and outlook of the property market.

Performance fees are only recognised when they are deemed to be highly probable and the amount of the performance fees will not result in a significant reversal in future periods.

The Group’s performance fees are recognised over-time under AASB 15 Revenue from Contracts with Customers.

The key assumptions made in estimating the amount of performance fee revenue that is highly probable include:

2 years from forecast fund end date: It is assumed that the highly probable threshold is only met when the forecast end date of the fund is within two years from balance date. The forecast end date is generally based on the relevant fund's end date as expressed in the relevant PDS or a revised fund end date in the event that an alternative strategy is undertaken by the Group, in which case the unbooked portion of any forecast performance fees are recognised over the extended term of the fund.

Probability thresholds for sensitivity to property valuations: The level of constraint applied to performance fee revenue is adjusted depending on remaining fund tenure. Specifically, a discount in property values between 10.0% to 20.0% is applied, depending on when in the two-year window the fund is expected to wind up.

Fair value of investment properties: The fair value of investment properties is based on the latest available valuation of the underlying property from the published financial statements or board approved valuations.

Development revenue

In 2019, the Group entered into agreements to develop four social affordable housing dwellings in the greater Newcastle and Gosford areas of NSW. The Group recognises development revenue based on satisfaction of performance obligations on an over-time basis as its customers control the land on which the developments are being delivered.

(b) Transaction price allocated to the remaining performance obligations

The following table includes revenue expected to be recognised in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the reporting date.

		Balance of
	Recognised in	unrecognised
	Half-year ended 31	performance
	December 2020	obligations
	$'000	$'000
Property performance fee*	13,632	22,299
Development revenue	31,983	21,256
Management fees**	9,384	35,510

• The underlying property funds managed by the Group have accrued total performance fees of $43,754,000 as at 31 December 2020. Based on the assumptions outlined in B2(a), the total estimated amount of performance fees available to the Group to recognise is $22,299,000.

** Only relates to unlisted property funds management fees which have defined fund terms.

Centuria Capital Group 17 31 December 2020

Business performance

B2 Revenue (continued)

(c) Transactions with related parties

Management fees are charged to related parties in accordance with the respective trust deeds and management agreements.

agreements.
Management fees from Property Funds managed by Centuria Distributions from Property Funds managed by Centuria Performance fees from Property Funds managed by Centuria Property acquisition fees from Property Funds managed by Centuria Management fees from Over Fifty Guardian Friendly Society Fees from Debt funds managed by Centuria Sales fees from Property Funds managed by Centuria Interest income on loans to Property Funds managed by Centuria	31 December 2020 $ 31 December 2019 $ 33,862,229 25,119,968 15,552,474 4,190,094 13,631,796 21,528,921 4,786,076 6,193,114 2,237,487 2,307,374 345,065 408,358 114,781 1,398,193 - 229,297
	70,529,908 61,375,319

B3 Expenses

B3 Expenses
Employee benefits expense Consulting and professional fees Property outgoings and fund expenses Transaction costs Administration fees Claims - discretionary participation features Property management fees paid Depreciation Expense Other expenses	31 December 2020 $'000 31 December 2019 $'000 21,680 17,254 2,449 2,355 2,581 3,431 301 1,035 1,095 1,896 7,368 12,890 1,920 1,053 1,973 1,332 5,092 4,897
	44,459 46,143

(a) Transactions with key management personnel

As a matter of Board policy, all transactions with Directors and director-related entities are conducted on arms-length commercial or employment terms.

During the half year, the following transactions occurred between the Group and key management personnel:

• Wolseley Corporate Pty Ltd, a related party of Mr Garry S. Charny, was paid $160,350 (inclusive of GST) (31 December 2019: $363,000) for corporate advisory fees.

• Tailwind Consulting Pty Ltd, a related party of Mr John R. Slater, was paid $120,312 (inclusive of GST) (31 December 2019: $137,498) for consultancy services. In addition, Tailwind Consulting paid the Group $nil (31 December 2019: $2,640 inclusive of GST) for rental of office space.

Centuria Capital Group 18 31 December 2020

Business performance

B4 Finance costs

B4 Finance costs
Operating interest charges Bank loans in Controlled Property Funds interest charges Reverse mortgage facility interest charges Fair value (gain)/loss on derivatives Fair value loss/(gain) on financial assets - reverse mortgages Finance lease interest Other finance costs	31 December 2020 $'000 31 December 2019 $'000 5,254 6,188 1,092 1,477 1,174 1,029 (4,538) 1,588 4,538 (1,588) 568 451 995 411
	9,083 9,556

B5 Dividends and distributions

B5 Dividends and distributions
Dividends/distributions paid during the half year Final year-end dividend (fully franked) Final year-end distribution Dividends/distributions declared during the half year Interim dividend (fully franked) (i) Interim distribution (i) Dividends and distributions paid/declared to Centuria Capital Group securityholders (ii)	31 December 2020 31 December 2019 Cents per security Total $'000 Cents per security Total $'000 1.80 8,690 0.50 1,918 3.40 16,420 4.50 17,262 1.20 7,203 1.70 7,630 3.30 19,811 2.80 12,567
	9.70 52,124 9.50 39,377

(i) The Group declared a dividend/distribution in respect of the half year ended 31 December 2020 of 4.5 cents per stapled security which included a dividend of 1.2 cents per share and a distribution of 3.3 cents per security. The final dividend/distribution had a record date of 31 December 2020 and was paid on 29 January 2021. The total amount payable of $27,014,000 has been provided as a liability in these financial statements.

(ii) In addition to the dividends and distributions paid to Centuria Capital Group securityholders, the Group paid distributions of $1,423,000 to external non-controlling Interests.

Centuria Capital Group 19 31 December 2020

C Assets and liabilities

C1 Segment balance sheet

C1 Segment balance sheet
As at 31 December 2020 Notes Assets Cash and cash equivalents Receivables C2 Income tax receivable Financial assets C3 Other assets Property held for development C5 Deferred tax assets Equity accounted investments E1 Investment properties C4 Right of use asset Intangible assets C6 Total assets Liabilities Payables C7 Provisions Borrowings C8 Provision for income tax Interest rate swap at fair value Benefit Funds policy holders' liability Deferred tax liability Call/Put option liability Lease liability Total liabilities Net assets	Property Funds Management Investment Bonds Management Co- Investments Corporate Operating balance sheet Benefits Funds Controlled Property Funds Eliminations Statutory balance sheet $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 47,817 7,182 91,061 21,892 167,952 33,090 1,473 - 202,515 79,671 615 31,234 9,196 120,716 430 14 (2,050) 119,110 (2,418) - - 6,335 3,917 1,019 - - 4,936 - - 525,834 58,977 584,811 285,071 - (30,217) 839,665 208 210 - 9,887 10,305 - - - 10,305 - - 32,340 - 32,340 - - - 32,340 32,038 95 - 5,481 37,614 - - - 37,614 - - 33,353 - 33,353 - - - 33,353 - - - - - - 155,750 - 155,750 - - - 19,977 19,977 - - - 19,977 280,955 - - - 280,955 - - - 280,955
	438,271 8,102 713,822 131,745 1,291,940 319,610 157,237 (32,267) 1,736,520
	6,728 1,461 24,043 18,612 50,844 222 4,033 (2,050) 53,049 1,503 - - 1,538 3,041 - - - 3,041 20,268 - 167,138 7,112 194,518 - 83,873 (1,177) 277,214 - - - - - - - - - - - - 33,881 33,881 - 814 - 34,695 - - - - - 315,694 - - 315,694 35,439 - - 6,074 41,513 3,694 - - 45,207 - - - 21,138 21,138 - - - 21,138 - - - 21,703 21,703 - - - 21,703
	(63,938) (1,461) (191,181) (110,058) (366,638) (319,610) (88,720) 3,227 (771,741)
	374,333 6,641 522,641 21,687 925,302 - 68,517 (29,040) 964,779

Centuria Capital Group 20 31 December 2020

Assets and liabilities

C1 Segment balance sheet (continued)

As at 30 June 2020 Notes Assets Cash and cash equivalents Receivables C2 Income tax receivable Financial assets C3 Other assets Investment properties held for sale Deferred tax assets Equity accounted investments Investment properties C4 Property held for development Right of use asset Intangible assets C6 Total assets Liabilities Payables C7 Provisions Borrowings C8 Interest rate swap at fair value Benefit Funds policy holders' liability Provision for income tax Deferred tax liability Call/Put option liability Lease liability Total liabilities Net assets	Property Funds Management Investment Bonds Management Co- Investments Corporate Operating balance sheet Benefits Funds Controlled Property Funds Eliminations Statutory balance sheet $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 $'000 24,632 6,985 50,707 67,137 149,461 22,585 2,412 - 174,458 51,188 1,780 7,744 4,818 65,530 4,192 88 (1,081) 68,729 306 - - 449 755 - - - 755 - - 464,191 58,904 523,095 289,359 - (39,037) 773,417 332 206 205 10,052 10,795 - - - 10,795 - - 861 - 861 - - - 861 29,092 104 - 10,323 39,519 - - - 39,519 - - 32,955 - 32,955 - - - 32,955 - - - - - - 167,110 - 167,110 - - 31,295 - 31,295 - - - 31,295 - - - 21,393 21,393 - - - 21,393 280,120 - - - 280,120 - - - 280,120
	385,670 9,075 587,958 173,076 1,155,779 316,136 169,610 (40,118) 1,601,407
	4,417 2,345 20,749 43,145 70,656 2,220 4,737 (1,081) 76,532 873 - - 1,328 2,201 - - - 2,201 - - 167,291 13,017 180,308 - 85,920 (1,177) 265,051 - - - 32,752 32,752 - 636 - 33,388 - - - - - 311,535 - - 311,535 2,570 - - 494 3,064 2,934 - - 5,998 33,253 2 200 2,923 36,378 (553) - - 35,825 - - - 17,167 17,167 - - - 17,167 - - - 22,564 22,564 - - - 22,564
	41,113 2,347 188,240 133,390 365,090 316,136 91,293 (2,258) 770,261
	344,557 6,728 399,718 39,686 790,689 - 78,317 (37,860) 831,146

Centuria Capital Group 21 31 December 2020

Assets and liabilities

C2 Receivables

C2 Receivables
Contract assets Receivables from related parties (refer to note C2(a)) Other receivables	31 December 2020 $'000 30 June 2020 $'000 52,594 26,537 43,801 26,098 22,715 16,094
	119,110 68,729

The Group does not hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the Group to the counterparty.

(a) Receivables from related parties

The following amounts were owed by related parties of the Group at the end of the financial period:

Performance fees accrued from property funds managed by Centuria Management fees owing from property funds managed by Centuria Redemption receivable of Centuria Healthcare Property Fund units Distribution receivable from Centuria Office REIT Distribution receivable from Centuria Industrial REIT Recoverable expenses owing from property funds managed by Centuria Acquisition fee receivable from Centuria Healthcare Property Fund Distribution receivable from unlisted property funds managed by Centuria Receivable from Over Fifty Guardian Friendly Society Sales fees owing from property funds managed by Centuria Distribution receivable from Augusta funds

31 December 2020 $ 30 June 2020 $ 21,411,211 9,385,830 7,997,201 7,294,799 4,395,588 - 3,229,602 3,484,055 3,488,640 3,182,678 1,916,151 336,300 633,452 - 410,378 288,220 211,965 1,104,355 - 1,022,000 107,222 -

43,801,410 26,098,237

C3 Financial assets

Investment in related party unit trusts at fair value (refer to Note C3(a)) Investments in trusts, shares and other financial instruments at fair value Reverse mortgage receivables (ii) Loans receivable (i)	31 December 2020 $'000 30 June 2020 $'000 512,375 440,529 261,266 267,282 58,977 58,904 7,047 6,702
	839,665 773,417

(i) This is an unsecured loan to a third party that accrues interest at 10% per annum.

(ii) Whilst some mortgages are likely to be repaid during the next 12 months, the Group does not control the repayment date.

The COVID-19 pandemic has had a substantial impact on equity capital markets with significant volatility in security prices as a result of economic uncertainty. Given the continuing and evolving impact of COVID-19 on global financial markets, this volatility is expected to continue in the near term.

The Group holds significant co-investment stakes in its managed funds, COF and CIP, which are listed on the ASX and are therefore exposed to volatility in the equity capital markets. This volatility has resulted in fair value movements being recognised in the financial year in respect of these investments.

In addition, the Group also holds co-investment stakes in other unlisted funds that are managed by subsidiaries of the Group. As these funds are unlisted, they are not exposed to volatility in equity capital markets to the same extent as listed securities, however they are exposed to changes in underlying property values and potential impacts on future cashflows. The funds have taken into account the impact of rent relief packages provided to tenants, increase in downtime, incentive allowances and reductions in rental growth in determining property valuations.

Centuria Capital Group 22 31 December 2020

Assets and liabilities

C3 Financial assets (continued)

(a) Investments in related party unit trusts carried at fair value through profit or loss

The following table details related party investments carried at fair value through profit and loss.

Financial assets held by the Group Centuria Industrial REIT Centuria Office REIT Asset Plus Limited Augusta Industrial Fund Centuria Healthcare Direct Medical Fund No.2 Centuria Healthcare Aged Care Property Fund No.1 Augusta Property Fund Nexus Property Unit Trust Centuria Scarborough House Fund Centuria Life Goals - Various Funds Financial assets held by the Benefit Funds Centuria Office REIT Centuria Industrial REIT Centuria SOP Fund

31 December 2020 30 June 2020 Fair value $ Units held Ownership % Fair value $ Units held Ownership % 253,644,634 82,085,642 14.91% 215,809,359 68,078,662 17.01% 167,547,805 78,923,367 15.22% 158,152,599 78,293,366 15.22% 23,816,387 72,575,945 19.99% 9,705,148 30,528,933 18.85% 21,575,712 19,000,000 10.00% 17,232,050 19,000,000 10.00% 13,337,301 12,472,928 8.38% 10,305,433 11,025,391 7.48% 2,945,343 5,513,559 9.21% 5,748,988 5,513,559 9.21% 3,613,158 3,850,000 10.00% - - 0% 347,863 347,169 2.60% - - 0% 105,921 102,836 0.22% 97,694 102,836 0.22% 14,096 13,499 0% 11,096 10,499 0% 486,948,220 274,884,945 90.53% 417,062,367 212,553,246 77.99% 20,082,614 9,384,398 1.82% 18,956,484 9,384,398 1.82% 4,267,506 1,381,070 0.25% 3,446,506 1,087,226 0.27% 1,076,200 1,000,000 3.28% 1,064,000 1,000,000 3.28% 25,426,320 11,765,468 5.35% 23,466,990 11,471,624 5.37% 512,374,540 286,650,413 95.88% 440,529,357 224,024,870 83.36%

Centuria Capital Group 23 31 December 2020

Assets and liabilities

C3 Financial assets (continued)

(a) Investments in related party unit trusts carried at fair value through profit or loss (continued)

Related party unit trusts carried at fair value through profit and loss Opening balance Investment purchases Acquisition of subsidiary Disposal Fair value (loss)/gain Carrying value transferred from deconsolidation of controlled property funds Foreign exchange translation Carrying value transferred from/(to) equity accounted investments Fair value gain on discontinuing equity accounted investments C4 Investment properties	31 December 2020 $ 30 June 2020 $ 440,529 14,571 63,506 105,176 - 26,937 (16,256) (28,194) 14,438 (108,138) 9,860 - 298 - - 378,407 - 51,770
	512,375 440,529

C4 Investment properties
Opening balance Acquisition of investment properties Capital improvements and associated costs Gain/(loss) on fair value Change in deferred rent and lease incentives Deconsolidation of controlled property funds Sale of investment property	31 December 2020 $'000 30 June 2020 $'000 167,110 177,500 - 15,116 1,376 4,660 362 (6,141) (988) (525) (12,110) - - (23,500)
	155,750 167,110

The carrying amount of investment properties includes components related to deferred rent, capitalised lease incentives and leasing fees amounting to $12,943,314 (30 June 2020: $12,704,534).

Centuria Capital Group 24 31 December 2020

Assets and liabilities

C4 Investment properties (continued)

	31		31 December	31 December	31
	December	30 June	2020	2020	December
	2020	2020	Capitalisation	Discount rate	2020
Property	$'000	$'000	rate %	%	valuer
					Director
111 St George Terrace, Perth WA	155,750	155,000	6.75%	7.00%	valuation*
8-10 Warneford St, Sandy Bay TAS	-	5,610	-%	-%
120 and 122 Spencer St, South Bunbury WA	-	6,500	-%	-%
	155,750	167,110	6.75%	7.00%

*111 St Georges Terrace, Perth WA was last externally valued by Colliers as at 30 June 2020.

Key estimate and judgements

(a) Valuation techniques and significant unobservable inputs

The investment properties recognised by the Group are properties owned by related party funds that are taken to be controlled by the Group under accounting standards. Investment properties are properties held either to earn rental income or for capital appreciation or for both. Investment properties are initially recorded at cost which includes stamp duty and other transaction costs. Subsequently, the investment properties are measured at the fair value with any change in value recognised in profit or loss. The carrying amount of investment properties includes components relating to deferred rent, lease incentives and leasing fees.

An investment property is derecognised upon disposal. Any gain or loss arising on derecognition of the property (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in profit or loss in the period in which the property is derecognised.

The fair value of the investment properties were determined by the directors of the responsible entity of the relevant fund or by an external, independent valuation company having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued. Fair value is based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and willing seller in an arm's length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

Given the changing economic conditions as a result of the COVID-19 pandemic, there is uncertainty surrounding the potential impact on future cash flows and the potential impact on the valuation. Rent relief allowances in accordance with the National Cabinet's Code of Conduct (the 'Code') which sets out commercial leasing principles for businesses during the pandemic were taken into consideration when determining the cashflows for the property, however actual future cashflows may differ from this.

The valuations were prepared by considering the following valuation methodologies:

• Capitalisation Approach: the annual net rental income is capitalised at an appropriate market yield to arrive at the property's market value. Appropriate capital adjustments are then made where necessary to reflect the specific cash flow profile and the general characteristics of the property.

• Discounted Cash Flow Approach: this approach incorporates the estimation of future annual cash flows over a 10 year period by reference to expected rental growth rates, ongoing capital expenditure, terminal sale value and acquisition and disposal costs. The present value of future cash flows is then determined by the application of an appropriate discount rate to derive a net present value for the property.

• Direct Comparison Approach: this approach identifies comparable sales on a dollar per square metre of lettable area basis and compares the equivalent rates to the property being valued to determine the property's market value.

The valuations reflect, when appropriate, the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting of vacant accommodation and the market’s general perception of their credit-worthiness; the allocation of maintenance and insurance responsibilities between the lessor and lessee; and the remaining economic life of the property. It has been assumed that whenever rent reviews or lease renewals are pending with anticipated reversionary increases, all notices and, where appropriate, counter notices have been served validly and within the appropriate time.

The most significant unobservable input used in the above valuation techniques and its relationship with fair value measurement is the capitalisation rate. The higher/lower the rate, the lower/higher fair value.

Centuria Capital Group 25 31 December 2020

Assets and liabilities

C4 Investment properties (continued)

(b) Fair value measurement

The fair value measurement of investment properties has been categorised as a Level 3 fair value as it is derived from valuation techniques that include inputs that are not based on observable market data (unobservable inputs).

	Fair value measurement	Fair value measurement
Significant unobservable	sensitivity to significant	sensitivity decrease in	Inputs for half-year ended
inputs	increase in input	input	31 December 2020
Market rent	Increase	Decrease	$552 psm
Capitalisation rate	Decrease	Increase	6.75%
Discount rate	Decrease	Increase	7.00%

A further sensitivity analysis was taken by the Group to assess the fair value of investment properties given the uncertain impact of the COVID-19 pandemic on property values. The table below illustrates the valuation of movements in capitalisation rates and discount rate:

	Fair value at 31 December	Capitalisation	rate impact
	2020	-0.25%	+0.25%
	$'000	$'000	$'000
Investment properties	155,750	5,990	(5,563)

Management acknowledges the current valuation is subject to ongoing valuation uncertainty as a consequence of this. To date, there has been little evidence to suggest that capitalisation and discount rates have softened since the onset of COVID-19. As the COVID-19 pandemic progresses, the Group has continued to re-assess the valuation method to ensure appropriate consideration is given to inputs used.

C5 Property held for development

Property Opening Balance Capital expenditure Foreign currency translation Acquisitions Acquisition of subsidiary balance	31 December 30 June 2020 2020 $'000 $'000 31,295 - 936 - 109 - - 1,295 - 30,000
	32,340 31,295

Properties held for development relates to land and property developments that are held for sale or development and sale in the normal course of the Group’s business. Properties held for development are carried at the lower of cost or net realisable value. The calculation of net realisable value requires estimates and assumptions which are regularly evaluated and are based on historical experience and expectations of future events that are believed to be reasonable under the circumstances. Properties held for development are classified as non-current assets unless they are contracted to be sold within 12 months of the end of the reporting period, in which case they are classified as current assets.

Property 54 Cook Street, Auckland 17 - 19 Mann Street, Queenstown 27 - 29 Young St, West Gosford	Carrying value at 31 December 2020 Carrying value at 30 June 2020 $'000 $'000 20,532 19,884 10,513 10,116 1,295 1,295
	32,340 31,295

Centuria Capital Group 26 31 December 2020

Assets and liabilities

C6 Intangible assets

C6 Intangible assets
Goodwill Indefinite life management rights Opening balance Acquired goodwill Acquired indefinite life management rights Foreign currency translation Purchase price accounting adjustments	31 December 2020 $'000 30 June 2020 $'000 168,718 167,938 112,237 112,182
	280,955 280,120
	31 December 2020 $'000 30 June 2020 $'000 280,120 157,663 - 102,403 - 20,054 263 - 572 -
	280,955 280,120

Goodwill and management rights are solely attributable to the Property Funds Management cash generating unit with recoverability determined by a value in use calculation using profit and loss projections covering a five year period, with a terminal value determined after five years.

C7 Payables

Sundry creditors (i) Dividend/distribution payable Accrued expenses	31 December 2020 $'000 30 June 2020 $'000 19,636 36,498 27,014 25,110 6,399 14,924
	53,049 76,532

(i) Sundry creditors are non-interest bearing liabilities and are payable on commercial terms of 7 to 60 days.

Centuria Capital Group 27 31 December 2020

Assets and liabilities

C8 Borrowings

C8 Borrowings
		31 December	30 June
		2020	2020
	Notes	$'000	$'000
Fixed rate secured notes	C8(a)	93,823	93,823
Floating rate secured notes	C8(a)	75,000	75,000
Reverse mortgage bill facilities and notes	C8(b)	7,112	7,422
Secured facility - Augusta	C8(c)	-	5,610
Secured bank loans - Controlled Property Funds	C8(d)	83,873	85,920
Development facilities	C8(e)	20,268	-
Borrowing costs capitalised		(2,862)	(2,724)
		277,214	265,051

The terms and conditions relating to the above facilities are set out below.

(a) Secured notes

The Group has issued fixed and floating corporate notes as per below:

Classification Coupon Rate Due Date Fixed Tranche 1 Current 7.0% 21 April 2021 Tranche 2 Non-current 6.5% 21 April 2023 Tranche 3 Non-current 5.0% 21 April 2024 Classification Coupon Rate Due Date Variable Tranche 1 Current BBSW +4.5% 21 April 2021 Tranche 2 Non-current BBSW +4.25% 21 April 2023 Tranche 3 Non-current BBSW +4.5% 21 April 2024	31 December 2020 30 June 2020 $'000 $'000 19,447 30,708 45,000 45,000 29,376 18,115
	93,823 93,823
	31 December 2020 30 June 2020 $'000 $'000 8,350 26,040 35,000 35,000 31,650 13,960
	75,000 75,000

(b) Reverse mortgage bill facilities and notes (secured)

As at 31 December 2020, the Group had $7,112,000 (30 June 2020: $7,422,000) non-recourse notes on issue to ANZ Bank, secured over the remaining reverse mortgages held in Senex Warehouse Trust No.1 (a subsidiary of the Group) currently due to mature on 30 September 2021.

The facility limit is $8,200,000 (30 June 2020: $8,200,000) and is reassessed every 6 to 12 months with a view to reducing the facility in line with the reduction in the reverse 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.

Facility Amount used at reporting date Amount unused at reporting date	31 December 2020 $'000 30 June 2020 $'000 8,200 8,200 (7,112) (7,422) 1,088 778

(c) Secured facility - Augusta

Borrowings facilities acquired as part of Augusta are outlined as follows:

	Current/		Facility	Funds	Draw	Borrowing
	non-current		limit	available	down	costs	Total
Fund	**classification **	Maturity date	$'000	$'000	$'000	$'000	$'000
30 June 2020
Augusta Warehouse Facility	Current	30 June 2021	5,610	-	5,610	-	5,610
			5,610	-	5,610	-	5,610

Centuria Capital Group 28 31 December 2020

Assets and liabilities

C8 Borrowings (continued)

(d) Bank Loans - Controlled Property Funds (secured)

Each controlled property fund has debt facilities secured by first mortgage over each of the fund’s investment property and a first ranking fixed and floating charge over all assets of each of the funds. Details of the amounts drawn and the maturity of each facility are as follows:

	Current/		Facility	Funds	Draw	Borrowing
	non-current		limit	available	down	costs	Total
Fund	classification	Maturity date	$'000	$'000	$'000	$'000	$'000
31 December 2020
Centuria 111 St Georges
Terrace Fund	Non-current	30 June 2022	90,000	5,956	84,044	(171)	83,873
			90,000	5,956	84,044	(171)	83,873
30 June 2020
Centuria 111 St Georges
Terrace Fund	Non-current	30 June 2022	90,000	6,644	83,356	(193)	83,163
Nexus Property Unit Trust	Non-current 4 December 2022		2,805	-	2,805	(48)	2,757
			92,805	6,644	86,161	(241)	85,920

(e) Development facilities

Details of the amounts drawn and the maturity of each development facility are as follows:

	Current/		Facility	Funds	Draw	Borrowing
Social affordable housing	non-current		limit	available	down	costs	Total
development	classification	Maturity date	$'000	$'000	$'000	$'000	$'000
31 December 2020
45 Pendlebury Road (Cardiff)	Non-current	7 April 2022	10,842	7,667	3,175	-	3,175
357 - 359 Mann Street	Non-current	7 April 2022	10,258	7,020	3,238	-	3,238
316 Maitland Road (Mayfield)	Non-current	7 April 2022	10,097	2,882	7,215	-	7,215
23 - 25 Young Street	Non-current	7 April 2022	14,016	7,376	6,640	-	6,640
			45,213	24,945	20,268	-	20,268

C9 Contributed equity

Centuria Capital Limited Opening balance Equity settled share based payments expense Stapled securities issued Cost of equity raising Centuria Capital Fund (non-controlling interests) Opening balance Equity settled share based payments expense Stapled securities issued Cost of equity raising	31 December 2020 30 June 2020 No. of securities $'000 No. of securities $'000 509,998,482 177,149 383,557,332 128,164 1,921,149 1,482 1,529,427 795 88,316,492 39,506 124,911,723 49,845 - (714) - (1,655)
	600,236,123 217,423 509,998,482 177,149
	31 December 2020 30 June 2020 No. of securities $'000 No. of securities $'000 509,998,482 545,744 383,557,332 343,438 1,921,149 - 1,529,427 - 88,316,492 137,483 124,911,723 205,216 - (1,939) - (2,910)
	600,236,123 681,288 509,998,482 545,744

Fully paid ordinary securities carry one vote per security and carry the right to distributions.

Centuria Capital Group 29 31 December 2020

Assets and liabilities

C9 Contributed equity (continued)

On 29 June 2017, the Group issued 20,098,470 options to subscribe for stapled securities. The options have an exercise price of $1.30 per stapled security and expire on 29 June 2022. Half of these options (10,049,235) were exercised on 12 December 2019 with the remaining 10,049,235 being exercised on 9 December 2020.

The Group issued 24,832,025 stapled securities in relation to the completion of the Augusta Capital Limited acquisition during the half-year ended 31 December 2020.

The Group issued 53,336,998 stapled securities in relation to a $120.0m equity raising completed in October 2020.

Recognition and measurement

Incremental costs directly attributed to the issue of ordinary shares are accounted for as a deduction from equity, net of any tax effects.

C10 Commitments and contingencies

Australian Guarantees

The Group has provided bank guarantees of $3,349,911 for commercial leases with respect to its Sydney and Melbourne office premises. These bank guarantees are cash collateralised.

The above guarantees are issued in respect of the Group and do not constitute an additional liability to those already existing in interest bearing liabilities on the statement of financial position.

Construction Contracts

As at 31 December 2020, the Group was committed to expenditure of $13,732,052 (excluding GST) in relation to construction contracts in relation to its social affordable housing developments.

Social affordable housing development guarantees

As at 31 December 2020, the Group has provided guarantees of $4,084,091 with respect to its social affordable housing developments.

New Zealand Guarantees

Under the Development Agreement with Queenstown Lakes District Council (QLDC) as part of the Lakeview joint venture, the Group have provided a guarantee of the Partnership’s obligations under the Development Agreement, with a maximum capital commitment of NZ$14.0 million. The Group 's total aggregate liability under this guarantee is capped at NZ$4.25 million. Refer to Note E1 Interests in associates and joint ventures for more information.

Capital Commitments

At 31 December 2020 the Group has capital commitments of NZ$1.3 million. In addition, the Company has committed up to a further NZ$12.8 million of capital over approximately the next 10 years in its joint venture partnership with Ninety Four Feet.

The directors of the Group are not aware of any other commitments and contingencies in relation to the Group, other than those disclosed in the financial statements, which should be brought to the attention of securityholders as at the date of completion of this report.

Centuria Capital Group 30 31 December 2020

D Cash flows

D1 Operating segment cash flows

(i)

For the half year ended 31 December 2020

Cash flows from operating activities Management fees received Performance fees received Distributions received Interest received Other income received Payments to suppliers and employees Income tax paid Interest paid Net cash (used in)/provided by operating activities Cash flows from investing activities Purchase of investments in related parties Loans to related parties Purchase of subsidiaries Proceeds from sale of related party investments Proceeds from sale of investments Repayment of loans by related parties Collections from reverse mortgage holders Purchase of other investments Payments for plant and equipment Acquisition of Heathley Cash on acquisition of Heathley Loans repaid by other parties Purchase of Property Held for Development Purchase of equity accounted investments Net cash used in investing activities Cash flows from financing activities Proceeds from issue of securities Equity raising costs paid Proceeds from borrowings Repayment of borrowings Costs paid to issue debt Distributions paid Net cash provided by financing activities Net increase/(decrease) in operating cash and cash equivalents Cash and cash equivalents at the beginning of the period Effects of exchange rate changes on cash and cash equivalents Cash and cash equivalents at the end of the period	31 December 2020 $'000 31 December 2019 $'000 55,244 45,661 394 27,092 17,194 14,350 273 226 87 276 (81,220) (41,916) (5,797) (4,160) (3,591) (4,589)
	(17,416) 36,940
	(63,507) (102,874) (19,842) (11,800) (12,950) - 11,753 31,573 868 - - 11,800 695 893 - (124) (1,347) (1,545) - (20,429) - 4,140 2,541 - (936) - (586) (20,477)
	(83,311) (108,843)
	133,072 125,858 (2,653) (2,129) 20,268 - (6,024) (35,602) (481) - (25,118) (19,180)
	119,064 68,947
	18,337 (2,956) 149,461 87,759 154 -
	167,952 84,803

(i) The operating segment cash flows support the segment note disclosures of the Centuria Capital Limited and provide details in relation to the Operating Segment cash flows performance of the Group. The Operating Segment cash flows exclude the impact of cash flows attributable to Benefit Funds and Controlled Property Funds. Refer to page 10 of the consolidated interim financial statements for the full statutory cash flow statement of the Group.

Centuria Capital Group 31 31 December 2020

E Group Structure

E1 Interests in associates

As at 26 February 2020, the Group increased its ownership stakes in Centuria Diversified Property Fund to 22.7%. From that date, the Group has equity accounted its interest in that fund.

The Group’s subsidiary, Augusta Lakeview Holdings Limited (Lakeview Holdings) has signed a partnership agreement with NFF QT Development Unit Trust (NFF) to establish QT Lakeview Partnership (the Joint Venture) to develop the Lakeview site in Queenstown, New Zealand. Lakeview Holdings has a 25% interest in the Joint Venture which represents a maximum capital commitment to Lakeview Holdings of NZ$14.0 million. The Joint Venture has entered into a development agreement with the Queenstown Lakes District Council to develop a range of residential, hotels, co-working, co-living, hospitality and retail options on the 3 hectare site on a staged basis, with construction estimated to take more than 10 years and phased over 7 stages.

% of ownership interest Principal activity 31 December 2020 % 30 June 2020 % QT Lakeview Developments Limited 25.00 25.00 Property investment Centuria Diversified Property Fund 24.27 22.68 Property investment 49.27 47.68	Quoted fair value Carrying amount 31 December 2020 $'000 30 June 2020 $'000 31 December 2020 $'000 30 June 2020 $'000 1,719 1,125 1,719 1,125 31,634 31,830 31,634 31,830
	33,353 32,955 33,353 32,955

The below table shows the movement in carrying amounts of equity accounted investments from 1 July 2020 to 31 December 2020.

Movements in carrying amounts of equity accounted investments Opening balance at 1 July 2020 Capital contribution Share of net profit after tax Distributions received/receivable Foreign exchange translation Closing balance at 31 December 2020	QT Lakeview Developments Limited $'000 Centuria Diversified Property Fund $'000 Total $'000 1,125 31,830 32,955 586 - 586 - 608 608 - (804) (804) 8 - 8
	1,719 31,634 33,353

Centuria Capital Group 32 31 December 2020

Group Structure

E1 Interests in associates (continued)

The below table shows the movement in carrying amounts of equity accounted investments from 1 July 2019 to 30 June 2020.

June 2020.
Movements in carrying amounts of equity accounted investments Opening balance at 1 July 2019 Carrying value transferred from/(to) financial assets Acquisition of investments Acquisition of subsidiary that held significant influence Share of net (loss)/profit after tax Distributions received/receivable Fair value gain/(loss) Gain of control of Augusta Capital Limited on 30 June 2020 Closing balance at 30 June 2020	Augusta Capital Limited $'000 QT Lakeview Developments Limited $'000 Centuria Diversified Property Fund $'000 Centuria Office REIT $'000 Centuria Industrial REIT $'000 Total $'000 - - - 203,435 183,278 386,713 - - 31,830 (210,429) (199,808) (378,407) 20,285 - - 7,500 12,976 40,761 - 1,125 - - - 1,125 (584) - (502) 2,785 6,611 8,310 - - 502 (3,291) (3,057) (5,846) 16,517 - - - - 16,517 (36,218) - - - - (36,218)
	- 1,125 31,830 - - 32,955

Centuria Capital Group 33 31 December 2020

Group Structure

E1 Interests in associates (continued)

(a) Summarised financial information for associates

The tables below provide summarised financial information for those associates that were material to the Group. The information disclosed reflects the amounts presented in the consolidated interim financial statements of the relevant associates and not the Group share of those amounts.

Summarised balance sheet Cash and cash equivalents Other current assets Total current assets < blank header row > Other non-current assets Total tangible non-current assets Other current liabilities Total current liabilities < blank header row > Borrowings Other non-current liabilities Total non-current liabilities < blank header row > Net tangible assets < blank header row > Group share in % Group share Goodwill Carrying amount	QT Lakeview Developments Limited Centuria Diversified Property Fund 31 December 2020 $'000 30 June 2020 $'000 31 December 2020 $'000 30 June 2020 $'000 - - 7,561 18,013 - - 12,746 11,633
	- - 20,307 29,646 6,876 4,501 166,412 166,588
	6,876 4,501 166,412 166,588 - - 2,711 3,812
	- - 2,711 3,812 - - 65,150 64,988 - - - 351
	- - 65,150 65,339
	6,876 4,501 118,858 127,083
	25.00% 25.00% 24.27% 22.68% 1,719 1,125 28,848 28,822 - - 2,786 3,008 1,719 1,125 31,634 31,830

Centuria Capital Group 34 31 December 2020

Group Structure

E1 Interests in associates (continued)

(a) Summarised financial information for associates (continued)

Summarised statement of comprehensive income Revenue Interest income Net gain on fair value of investment properties and other investments Finance costs Other expenses Other income < blank header row > Profit from continuing operations < blank header row > Profit for the period Other comprehensive income Total comprehensive income	QT Lakeview Investments Limited Centuria Diversified Property Fund Total 31 December 2020 $'000 31 December 2019 $'000 31 December 2020 $'000 31 December 2019 $'000 31 December 2020 $'000 - - 6,715 - 6,715 - - 2 - 2 - - 1,154 - 1,154 - - (699) - (699) - - (5,961) - (5,961) - - 3 - 3 - - 1,214 - 1,214
	- - 1,214 - 1,214 - - - - -
	- - 1,214 - 1,214

Centuria Capital Group 35 31 December 2020

F Other

F1 Fair value of financial instruments

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value.

The table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

There were no transfers between Level 1, 2 and 3 in the period.

There were no transfers between Level 1, 2 and 3 in	the period.
					Carrying
	Measurement	Fair value			amount	Fair value
31 December 2020	basis		hierarchy		$'000	$'000
Financial assets
Cash and cash equivalents	Amortised cost	Not applicable			202,515	202,515
Receivables	Amortised cost	Not applicable			119,110	119,110
Financial assets	Fair value		Level 1		692,137	692,137
Financial assets	Fair value		Level 2		87,369	87,369
Financial assets - mortgage backed assets	Fair value		Level 3		1,182	1,182
Financial assets - Reverse mortgages receivables	Fair value		Level 3		58,977	58,977
				1,161,290		1,161,290
space
Financial liabilities
Payables	Amortised cost	Not applicable			53,049	53,049
Benefit Funds policy holders' liability	Amortised cost	Not applicable			315,694	315,694
Borrowings (net of borrowing costs)	Amortised cost	Not applicable			277,214	279,719
Interest rate swaps - controlled property funds	Fair value		Level 2		814	814
Interest rate swaps - reverse mortgage fixed-for-life	Fair value		Level 3		33,881	33,881
Call/Put option liability	Fair value		Level 3		21,138	21,138
					701,790	704,295
					Carrying
	Measurement		Fair value		amount	Fair value
30 June 2020		basis	hierarchy		$'000	$'000
Financial assets
Cash and cash equivalents	Amortised cost		Not applicable		174,458	174,458
Receivables	Amortised cost		Not applicable		68,729	68,729
Financial assets	Fair	value	Level	1	639,398	639,398
Financial assets	Fair	value	Level	2	73,920	73,920
Financial assets - mortgage backed assets	Fair	value	Level	3	1,195	1,195
Financial assets - Reverse mortgages receivables	Fair	value	Level	3	58,904	58,904
					1,016,604	1,016,604

Centuria Capital Group 36 31 December 2020

Other

F1 Fair value of financial instruments (continued)

			Carrying
	Measurement	Fair value	amount	Fair value
30 June 2020	basis	hierarchy	$'000	$'000
Financial liabilities
Payables	Amortised cost Not applicable		76,532	76,532
Benefit Funds policy holders' liability	Amortised cost Not applicable		311,535	311,535
Borrowings (net of borrowing costs)	Amortised cost Not applicable		265,051	267,907
Interest rate swaps - controlled property funds	Fair value	Level 2	636	636
Interest rate swaps - reverse mortgage fixed-for-life	Fair value	Level 3	32,752	32,752
Call/Put option liability	Fair value	Level 3	17,167	17,167
			703,673	706,529

The Group determines Level 2 fair values for financial assets and liabilities without an active market based on broker quotes. Level 2 fair values for simple over-the-counter derivatives are also based on broker quotes. Those quotes are tested for reasonableness by discounting expected future cash flows using market interest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the entity and counterparty where appropriate.

The Level 3 financial asset held by the Group is the fair value of the residential mortgage receivables attributable to interest rate risk. The Level 3 financial liability held by the Group is the fixed-for-life interest rate swaps. These items are designated in a fair value hedging relationship, with the fair value movements on the swaps offset by the fair value movements in the mortgage receivables. However, as the Group has only designated the fair value movements attributable to interest rate risk in the hedging relationship, any other fair value movements impact the profit and loss directly, such as credit risk movements.

(a) Reconciliation of Level 3 fair value measurements of financial assets and liabilities

Half year ended 31 December 2020 Opening balance Loan repaid Accrued interest Attributable to interest rate and other risk Attributable to credit risk Call/Put option liability Year ended 30 June 2020 Opening balance Loan repaid Accrued interest Attributable to interest rate and other risk Call/Put option liability Attributable to credit risk	Other mortgage backed assets at fair value $'000 Reverse mortgages fair value $'000 Fixed-for-life interest rate swaps $'000 Call/put option liability $'000 Total $'000 1,195 58,904 (32,752) (17,167) 10,180 (13) (724) 249 - (488) - 1,379 (958) - 421 - (848) 4,538 - 3,690 - 266 (4,958) - (4,692) - - - (3,971) (3,971)
	1,182 58,977 (33,881) (21,138) 5,140
	Other mortgage backed assets at fair value $'000 Reverse mortgages fair value $'000 Fixed-for-life interest rate swaps $'000 Call/put Option Liability $'000 Total $'000 1,215 53,720 (28,083) - 26,852 (20) (1,646) 465 - (1,201) - 2,871 (1,760) - 1,111 - 4,782 (4,669) - 113 - - - (17,167) (17,167) - (823) 1,295 - 472
	1,195 58,904 (32,752) (17,167) 10,180

Centuria Capital Group 37 31 December 2020

Other

F1 Fair value of financial instruments (continued)

Key estimates and judgements

The fair value of the 50-year residential mortgage loans and 50-year swaps are calculated using a valuation technique based on assumptions that are not supported by prices from observable current market transactions in the same instrument and not based on available observable market data due to the illiquid nature of the instruments. A discounted cash flow model is used for fair valuation using expected net cash flows and a discount factor derived from a 20-year yield curve, with the yield curve rates at 20 years employed as the best proxy over the remaining life expectancy of the borrowers.

Assumptions and inputs used for valuation of reverse mortgage loan receivables:

• The loan interest compounding period is the expected remaining life of the borrower;

• Mortality rates for males and females are based on portfolio-adjusted 2013-2015 Life Tables;

• The compounding interest rate is the fixed rate of loan for the period from day 1 up to the point of time when loan carrying amount equals the property value. After that point of time, the loan compounding rate will be reduced to the same as long term residential property growth rate determined by Management, on the grounds that any fixed rate exceeding the property growth rate will not be recovered after that point of time;

• For 31 December 2020 valuation, the property growth rates are 0.00% for FY21, 0.75% for FY22, then reverted

• back to 3.4% flat rate from FY23 onwards;

• Discount factors are calculated based on the market quoted long term rates on 31 December 2020;

• The 1% flat credit risk premium, reflecting the portfolio default profile on 31 December 2020, is added to the monthly cash flow discount factors to discount future cash flows generated by the reverse mortgage loans.

Assumptions and inputs used for valuation of the 50-year interest rate swaps:

• Mortality rates for males and females based on portfolio-adjusted 2013-2015 Life Tables. The improvement factor

• tapers down to 1% p.a. at age 90 and then zero at age 100;

• Joint life mortality is calculated based on last death for loans with joint borrowers;

• 34% of the residential mortgage loan portfolio consists of joint lives;

• Discount factors are calculated based on the market quoted long term rates on 31 December 2020;

• The 1.135% flat credit risk premium, reflecting the business default profile on 31 December 2020, is added to the monthly cash flow discount factors to discount future cash flows generated by the interest rate swaps.

F2 Events subsequent to the reporting date

There has not arisen in the interval between 31 December 2020 and the date hereof any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.

Centuria Capital Group 38 31 December 2020

Directors' declaration

In the opinion of the Directors' of Centuria Capital Limited:

• (a) the consolidated interim financial statements and notes set out on pages 5 to 38 are in accordance with the Corporations Act 2001 , including:

• (i) complying with Australian Accounting Standard AASB 134 Interim Financial Reportin g and the Corporations Regulations 2001; and

• (ii) giving a true and fair view of the Group's financial position as at 31 December 2020 and of its performance for the half year ended on that date, and

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

Signed in accordance with a resolution of the Directors.

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Mr Garry S. Charny Director

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Mr Peter J. Done Director

Sydney 10 February 2021

Centuria Capital Group 39 31 December 2020

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Independent Auditor’s Review Report

To the stapled security holders of Centuria Capital Group

Conclusion

We have reviewed the accompanying Interim Financial Report of Centuria Capital Limited (the Company) as the deemed parent presenting the stapled security arrangement of the Centuria Capital Group (the Stapled Group Financial Report).

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 Group does not comply with the Corporations Act 2001 , including:

• [giving a true and fair view of the ] [Stapled ] Group’s financial position as at 31 December 2020 and of its performance for the Interim Period ended on that date; and

• [complying with ] [Australian Accounting ] Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

The Interim Financial Report comprises:

• [Consolidated interim statement of financial ] position as at 31 December 2020;

• [Consolidated interim statement of ] comprehensive income, Consolidated interim statement of changes in equity and Consolidated interim statement of cash flows for the Interim Period ended on that date;

• [Notes A1 to F2 comprising a summary of ] significant accounting policies and other explanatory information; and

• [The Directors’ Declaration. ]

The Stapled Group comprises Centuria Capital Limited (the Company) and the entities it controlled at the Interim Period’s end or from time to time during the Interim Period and Centuria Capital Fund and the entities it controlled at the Interim Period’s end or from time to time during the Interim Period.

The Interim Period is the 6 months ended on 31 December 2020.

Basis for Conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity . Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report.

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

©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.

40

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Responsibilities of the Directors 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

• such internal control as the Directors determine is necessary to enable the preparation of the Interim Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibilities for the Review of the Interim Financial Report

Our responsibility is to express a conclusion on the Interim Financial Report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the Interim Financial Report does not comply with the Corporations Act 2001 including giving a true and fair view of the Stapled Group’s financial position as at 31 December 2020 and its performance for the Interim Period ended on that date, and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 . 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.

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KPMG

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Paul Thomas Partner Sydney 10 February 2021

41

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Centuria Capital Fund Interim Financial Report for the half year ended 31 December 2020

Centuria Capital Fund comprises of Centuria Capital Fund ARSN 613 856 358 (the 'Fund') and its subsidiaries. The Responsible Entity of the Fund is Centuria Funds Management Limited (the 'Company') ACN 607 153 588, AFSL 479 873.

Centuria Capital Fund Interim Financial Report - 31 December 2020

Contents

Contents
	Page
Directors' report	1
Auditor's Independence Declaration	3
Consolidated interim financial statements	4
Independent auditor's review report to the members	28

These consolidated interim financial statements are the interim financial statements of the consolidated entity consisting of Centuria Capital Fund and its subsidiaries. The interim financial statements are presented in Australian currency.

Centuria Capital Fund is a trust, registered and domiciled in Australia. Its registered office and principal place of business is:

Centuria Capital Fund Level 41, Chifley Tower 2 Chifley Square Sydney NSW 2000

The consolidated interim financial statements were authorised for issue by the Directors of the Responsible Entity on 10 February 2021.

Directors' report

The directors of Centuria Funds Management Limited (the 'Company') as the Responsible Entity for Centuria Capital Fund (the 'Fund') present their interim report together with the consolidated interim financial statements of the Fund and its controlled entities (the 'Fund') for the half year ended 31 December 2020 and the auditor’s review report thereon.

Directors

The following persons were directors of the Company during the half year and up to the date of this report:

Director	Role	Appointment Date
Mr GarryS. Charny	Independent Non-Executive Director and Chairman	8 August 2016
Mr Peter J. Done	Independent Non-Executive Director	8 August 2016
Mr John R. Slater	Independent Non-Executive Director	8 August 2016
Ms Susan Wheeldon	Independent Non-Executive Director	31 August 2016
Mr John E. McBain	Executive Director and Chief Executive Officer	8 August 2016
Mr Jason C. Huljich	Executive Director	8 August 2016
Mr Nicholas R. Collishaw	Non-Executive Director	8 August 2016

Operating and financial review

The Fund's profit from continuing operations for the half year ended 31 December 2020 was $27,974,000 (half year ended 31 December 2019: profit of $69,653,000).

Earnings per security (EPS)

Earnings per security (EPS)
Basic earnings per unit (cents/unit) Diluted earnings per unit (cents/unit)	31 December 2020 31 December 2019
	4.7 16.6 4.6 16.1

Distributions

Distributions paid or declared by the Fund during the current half year were:

	Cents	.	Total amount	Date
Distributions paid during the half year	per security	.	$'000	paid/payable
Final 2020 Trust distribution	3.40		16,420	8 July 2020
Distributions declared during the halfyear
Interim 2021 Trust distribution	3.30 $19,750.00		19,811	29 January2021
Total amount	6.70	.	36,231

Centuria Capital Fund 1 31 December 2020

Directors' report

Rounding of amounts

The Fund is an entity of a kind referred to in ASIC Legislative Instrument 2016/191, related to the ‘rounding off’ of amounts in the Directors’ Report and interim financial statements. Amounts in the Directors’ Report and interim financial statements have been rounded off, in accordance with the instrument to the nearest thousand dollars, unless otherwise indicated.

This report is made in accordance with a resolution of Directors.

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Mr Garry S. Charny Director

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Mr Peter J. Done Director

Sydney 10 February 2021

Centuria Capital Fund 2 31 December 2020

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

To the Directors of Centuria Funds Management Limited, the Responsible Entity of Centuria Capital Fund

I declare that, to the best of my knowledge and belief, in relation to the review of Centuria Capital Fund for the half-year ended 31 December 2020 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.

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KPMG

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Paul Thomas Partner Sydney 10 February 2021

3

©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.

Centuria Capital Fund

Interim financial report 31 December 2020

Contents

Contents	Page
Consolidated interim statement of comprehensive income	5
Consolidated interim balance sheet	6
Consolidated interim statement of changes in equity	7
Consolidated interim statement of cash flows	9
Notes to the consolidated interim financial statements	10
A About the report	10
A1 General information	10
A2 Coronavirus (COVID-19) impact	11
A3 Significant accounting policies	12
A4 Other new accounting standards and interpretations	12
A5 Use of judgements and estimates	12
B Business performance	13
B1 Revenue	13
B2 Expenses	13
B3 Finance costs	14
B4 Distributions	14
C Assets and liabilities	15
C1 Receivables	15
C2 Financial assets at fair value	15
C3 Investment properties	18
C4 Payables	19
C5 Borrowings	20
C6 Contributed equity	21
D Group Structure	22
D1 Interests in associates	22
E Other	25
E1 Fair value of financial instruments	25
E2 Events subsequent to the reporting date	26
Directors' declaration	27
Independent auditor's review report to the members	28

Centuria Capital Fund 4 31 December 2020

Consolidated interim statement of comprehensive income

For the half year ended 31 December 2020

Notes Revenue B1 Share of net profit of equity accounted investments Expenses B2 Fair value movements of financial instruments and property Finance costs B3 Profit after tax Profit is attributable to: Centuria Capital Fund Non-controlling interests Profit after tax Other comprehensive income Total comprehensive income for the period Total comprehensive income for the period is attributable to: Centuria Capital Fund Non-controlling interests Total comprehensive income Total comprehensive income for the period is attributable to unitholders of Centuria Capital Fund Earnings per Centuria Capital Fund unit: Basic (cents per unit) Diluted (cents per unit)	31 December 2020 $'000 31 December 2019 $'000 31,105 19,030 608 8,634 (3,626) (4,718) 6,816 55,069 (6,929) (8,362)
	27,974 69,653
	26,606 68,707 1,368 946
	27,974 69,653 - -
	27,974 69,653
	26,606 68,707 1,368 946
	27,974 69,653
	26,606 68,707
	Cents Cents 4.7 16.6 4.6 16.1

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

Centuria Capital Fund 5 31 December 2020

Consolidated interim balance sheet

As at 31 December 2020

Notes Assets Cash and cash equivalents Receivables C1 Financial assets at fair value C2 Investment properties C3 Other assets Equity accounted investments D1 Total assets Liabilities Payables C4 Borrowings C5 Interest rate swaps at fair value Total liabilities Net assets Equity Equity attributable to Centuria Capital Fund Contributed equity Retained earnings Total equity attributable to Centuria Capital Fund Equity attributable to external non-controlling interests Contributed equity Retained earnings Total equity attributable to external non-controlling interests Total equity	31 December 2020 $'000 30 June 2020 $'000 96,002 53,059 14,849 7,329 685,362 581,670 155,750 167,110 1,295 1,295 31,634 31,830
	984,892 842,293
	26,516 23,531 251,021 253,211 814 636
	278,351 277,378
	706,541 564,915
	681,288 545,744 (15,644) (22,439)
	665,644 523,305
	12,798 14,248 28,100 27,362
	40,898 41,610
	706,542 564,915

The above consolidated interim balance sheet should be read in conjunction with the accompanying notes.

Centuria Capital Fund 6 31 December 2020

Consolidated interim statement of changes in equity

For the half year ended 31 December 2020 Balance at 1 July 2020 Profit for the period Total comprehensive income for the period Distributions paid/accrued Stapled securities issued Cost of equity raising Deconsolidation of controlled property funds Balance at 31 December 2020	Centuria Capital Fund Non-controlling interests Contributed equity $'000 Retained earnings $'000 Equity attributable to Centuria Capital Fund unitholders $'000 Contributed equity $'000 Retained earnings $'000 Total $'000 Total equity $'000 545,744 (22,439) 523,305 14,248 27,362 41,610 564,915
	- 26,606 26,606 - 1,368 1,368 27,974
	- 26,606 26,606 - 1,368 1,368 27,974 - (19,811) (19,811) - (1,423) (1,423) (21,234) 137,483 - 137,483 - - - 137,483 (1,939) - (1,939) - - - (1,939) - - - (1,450) 793 (657) (657)
	681,288 (15,644) 665,644 12,798 28,100 40,898 706,542

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

Centuria Capital Fund 7 31 December 2020

Consolidated interim statement of changes in equity

For the period ended 31 December 2019 Balance at 1 July 2019 Profit for the period Total comprehensive income for the period Dividends and distributions paid/accrued Stapled securities issued Cost of equity raising Balance at 31 December 2019	Centuria Capital Fund Non-controlling interests Contributed equity $'000 Retained earnings $'000 Equity attributable to Centuria Capital Fund unitholders $'000 Contributed equity $'000 Retained earnings $'000 Total $'000 Total equity $'000 343,438 6,399 349,837 32,927 13,156 46,083 395,920
	- 68,707 68,707 - 946 946 69,653
	- 68,707 68,707 - 946 946 69,653 - (12,567) (12,567) - (1,647) (1,647) (14,214) 96,439 - 96,439 - - - 96,439 (1,535) - (1,535) - - - (1,535)
	438,342 62,539 500,881 32,927 12,455 45,382 546,263

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

Centuria Capital Fund 8 31 December 2020

Consolidated interim statement of cash flows

For the half year ended 31 December 2020

Cash flows from operating activities Distributions received Rent received Interest received Payments to suppliers Interest paid Other income Net cash provided by operating activities Cash flows from investing activities Purchase of investments in related parties Loans to related parties Proceeds from sale of related party investments Payments in relation to investment properties Deposits paid Repayment of loans by related parties Purchase of other investments Purchase of equity accounted investments Net cash used in investing activities Cash flows from financing activities Proceeds from issues of units to unitholders of Centuria Capital Fund Equity raising costs paid Distributions paid to unitholders of Centuria Capital Fund Proceeds from borrowings Repayment of borrowings Costs paid to issue debt Distributions paid to non-controlling interests Net cash provided by financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial period Cash and cash equivalents at end of period	31 December 2020 $'000 31 December 2019 $'000 14,438 12,302 7,601 9,537 68 - (4,251) (7,634) (6,043) (5,585) 91 35
	11,904 8,655
	(45,603) (94,639) (9,462) (37,800) 9,060 31,573 (1,376) (9,981) (3,181) - 693 46,988 - (124) - (20,477)
	(49,869) (84,460)
	100,483 96,439 (1,939) (1,535) (16,420) (17,262) 688 732 - (35,000) (481) - (1,423) (1,647)
	80,908 41,727
	42,943 (34,078) 53,059 68,018
	96,002 33,940

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

Centuria Capital Fund 9 31 December 2020

A About the report

A1 General information

The units in the Fund and the shares in Centuria Capital Limited ('CCL') are stapled to trade together as a single stapled security ('Stapled Security') on the ASX as 'Centuria Capital Group' under the ticker code, 'CNI'.

The Fund and its controlled entities (the 'Fund') is a for-profit entity and its principal activities are holding direct interest in property funds and other liquid investments.

Statement of compliance

The consolidated interim financial statements are general purpose financial statements which have been prepared in accordance with Australian Accounting Standards adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001. The consolidated interim financial statements comply with International Financial Reporting Standards (IFRS) adopted by the International Accounting Standards Board (IASB).

The consolidated interim financial statements of the Fund comprising the Fund (as 'Parent') and its controlled entities for the half year ended 31 December 2020 were authorised for issue by the Board of Directors of Centuria Funds Management Limited as the Responsible Entity on 10 February 2021.

The Fund was established on 20 July 2016.

Basis of preparation

The consolidated interim financial statements have been prepared on the basis of historical cost, except for financial assets at fair value through profit and loss, investment properties, derivative financial instruments and other financial assets which have been measured at fair value at the end of each reporting period. Cost is based on the fair values of the consideration given in exchange for assets. All amounts are presented in Australian dollars, which is the Fund's functional currency, unless otherwise noted.

Assets and liabilities have been presented on the face of the statement of financial position in decreasing order of liquidity and do not distinguish between current and non-current items.

Going concern

The consolidated interim financial statements have been prepared on a going-concern basis, which assumes continuity of normal business activities and the realisation of assets and settlement of liabilities in the ordinary course of business. The COVID-19 pandemic creates uncertainty on the global and local financial markets. The Fund has completed an extensive assessment on its key investments and receivables and the directors remain confident that the Fund will be able to continue as a going concern. Refer to note C1.

Rounding of amounts

The Fund is of a kind referred to in ASIC Legislative Instrument 2016/191, related to the ‘rounding off’ of amounts in the consolidated interim financial statements. Amounts in the consolidated interim financial statements have been rounded off, in accordance with the instrument to the nearest thousand dollars, unless otherwise indicated.

Centuria Capital Fund 10 31 December 2020

About the report

A2 Coronavirus (COVID-19) impact

Background

COVID-19 was declared a worldwide pandemic by the World Health Organisation in March 2020. COVID-19, as well as measures to slow the spread of the virus, have since had a significant impact on global financial markets. Governments across the globe have enforced restrictions to limit the spread of the virus, with most governments having implemented economic stimulus packages. Despite these measures, there is still considerable economic uncertainty.

COVID-19 has presented a fast evolving and significant challenge to global and local economies. The real estate sector specifically has been impacted by concerns surrounding security of income and uncertainty around property valuations. In addition, this uncertainty and associated market volatility has resulted in a significant slowdown of transactional activity and investment in most real estate markets.

The Fund has considered the continuing impact of COVID-19 and other market volatility in preparing its financial statements. While the specific areas of judgement as noted in Note A5 did not change, the impact of COVID-19 resulted in the application of further judgement within those identified areas. Given the evolving nature of COVID-19 and the limited recent experience of the economic and financial impacts of such a pandemic, changes to the estimates and outcomes that have been applied in the measurement of the Fund's assets and liabilities may arise in the future. Other than adjusting events that provide evidence of conditions that existed at the end of the reporting period, the impact of events that arise after the reporting period will be accounted for in future reporting periods.

Processes applied

As a consequence of COVID-19 and in preparing these financial statements, Management:

• re-evaluated whether there were any additional areas of judgement or estimation uncertainty;

• assessed the carrying values of its assets and liabilities and determined the impact thereon as a result of market inputs and variables impacted by COVID-19; and

• considered the impact of COVID-19 on the Fund's financial statement disclosures.

Consideration of the statements of financial position and further disclosures

Key statement of financial position items and related disclosures that have been impacted by COVID-19 were as follows:

Financial assets

The Fund carries significant investments in entities that directly own real estate, such as external funds that are managed by subsidiaries of the Fund. These investments are impacted by stock market volatility (for investments in ASX-listed securities) and by property valuations (for investments in unlisted securities). Refer to Note C2.

Investment properties

As a result of COVID-19, there is continuing valuation uncertainty in global financial markets and has affected the ability of impacted tenants to meet their rental obligations. The Fund has completed an extensive assessment of trade receivables to determine the recoverability of rental income.

Financial instruments

Given recent market volatility as a result of COVID-19, the Fund reviewed the appropriateness of the inputs to its valuations of financial instruments including receivables, payables and derivative instruments. The impact of changes of inputs to the valuations has also been considered in terms of the classification of exposures in the fair value hierarchy and transfers within the fair value hierarchy. Refer to Note E1.

Centuria Capital Fund 11 31 December 2020

About the report

A3 Significant accounting policies

The accounting policies and methods of computation in the preparation of the consolidated interim financial statements are consistent with those adopted in the previous financial year ended 30 June 2020 with the exception of the adoption of new accounting standards outlined below or in the relevant notes to the consolidated interim financial statements.

When the presentation or classification of items in the consolidated interim financial statements has been amended, comparative amounts are also reclassified, unless it is impractical. Accounting policies are selected and applied in a manner that ensures that the resulting financial information satisfies the concepts of relevance and reliability, thereby ensuring that the substance of the underlying transactions or other events are reported.

A4 Other new accounting standards and interpretations

A number of new accounting standards have been published that are not effective for the 31 December 2020 reporting period. The Fund has not early adopted the new or amended standards in preparing these consolidated financial statements.

The following amended standards and interpretations are not expected to have a significant impact on the Fund's consolidated interim financial statements.

AASB 2018-6

Clarifies the definition of a business as per AASB 3 Business Combinations and is applied prospectively to future acquisitions.

AASB 2018-7

Clarifies the definition of material as applied across all reporting standards as per AASB 101 Presentation of Financial Statements with intention of increasing a user's focus on the material items in a financial report.

AASB 2014-10

Clarifies the requirements for recording the sale or contribution of assets between an investor and its associate or joint venture.

A5 Use of judgements and estimates

In preparing these consolidated interim financial statements, management has made judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense that are not readily apparent from other sources. The judgements, estimates and assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

Information about critical judgements in applying accounting policies that have the most significant effect on the amounts recognised in the consolidated interim financial statements is included in the following notes:

• Note C3 Investment properties

• Note E1 Financial instruments

Centuria Capital Fund 12 31 December 2020

B Business performance

B1 Revenue

Rent Recoverable outgoings Distribution revenue Interest revenue Other income (a) Transactions with related parties Distributions from Property Funds managed by Centuria Interest income on loan to Centuria Finance Pty Limited Interest income on loan to Centuria New Zealand Holdings Pty Ltd Interest income on loans to Property Funds managed by Centuria	31 December 2020 $'000 31 December 2019 $'000 5,233 6,924 1,677 2,115 14,116 4,630 9,464 5,326 615 35
	31,105 19,030
	31 December 2020 $ 31 December 2019 $ 13,770,897 4,190,094 7,042,255 5,048,087 2,292,522 - 345,065 229,297
	23,450,739 9,467,478

B2 Expenses

Consulting and professional fees Property outgoings and fund expenses Other expenses (a) Transactions with related parties Management and custodian fees paid to Centuria Property Funds No. 2 Limited Management and custodian fees paid to Centuria Property Funds Limited Management fees paid to Centuria Funds Management Limited	31 December 2020 $'000 31 December 2019 $'000 95 83 3,511 4,616 20 19
	3,626 4,718
	31 December 2020 $ 31 December 2019 $ 10,826 92,254 439,710 424,819 200,000 100,000
	650,536 617,073

Centuria Capital Fund 13 31 December 2020

Business performance

B3 Finance costs

B3 Finance costs
Operating interest charges Bank loans in Property Funds interest charges	31 December 2020 $'000 31 December 2019 $'000 5,837 6,885 1,092 1,477
	6,929 8,362

B4 Distributions

B4 Distributions
Distributions paid during the half year Final year-end distribution Distributions declared during the half year Interim distribution (i) Total distributions paid/declared to Centuria Capital Fund unitholders (ii)	31 December 2020 31 December 2019 Cents per unit Total $'000 Cents per unit Total $'000 3.40 16,420 4.50 17,262 3.30 19,811 2.80 12,567
	6.70 36,231 7.30 29,829

(i) The Fund declared a distribution in respect of the half year ended 31 December 2020 of 3.3 cents per unit. The interim distribution had a record date of 31 December 2020 and was paid on 29 January 2021. The total amount payable of $19,811,000 has been provided as a liability in these financial statements.

(ii) In addition to the distributions paid to Centuria Capital Fund unitholders, the Fund paid distributions of $1,423,000 to external non-controlling Interests.

Centuria Capital Fund 14 31 December 2020

C Assets and liabilities

C1 Receivables

C1 Receivables
Receivables from related parties (refer to note ) Other receivables	31 December 2020 $'000 30 June 2020 $'000 11,338 6,752 3,511 577
	14,849 7,329

The Fund does not hold any collateral or other credit enhancements over these balances nor does it have a legal right of offset against any amounts owed by the Fund to the counterparty.

Redemption receivable from Centuria Healthcare Property Fund units Distribution receivable from Centuria Industrial REIT Distribution receivable from Centuria Office REIT Distribution receivable from Centuria Heathley Direct Medical Fund No. 2 Distribution receivable from Centuria Diversified Property Fund Distribution receivable from Centuria Heathley Aged Care Fund No. 1 Distribution receivable from Centuria Scarborough House Fund

31 December 2020 $ 30 June 2020 $ 4,395,588 - 3,395,943 3,080,712 3,136,237 3,383,335 223,771 18,515 135,429 154,464 50,449 114,544 729 697

11,338,146 6,752,267

C2 Financial assets at fair value

C2 Financial assets at fair value
Notes Investments in trusts and other financial assets Loans receivable from other parties Investment in related party unit trusts C2(a) Loans receivable from related parties C2(b)	31 December 2020 $'000 30 June 2020 $'000 2,647 2,416 7,047 6,702 426,360 378,639 249,308 193,913
	685,362 581,670

Centuria Capital Fund 15 31 December 2020

Assets and liabilities

C2 Financial assets at fair value (continued)

(a) Investments in related party unit trusts carried at fair value through profit or loss

The following table details related party investments carried at fair value through profit and loss.

Financial assets held by the Fund Centuria Industrial REIT Centuria Office REIT Centuria Healthcare Direct Medical Fund No. 2 Centuria Healthcare Aged Care Property Fund No. 1 Nexus Property Unit Trust Centuria Scarborough House Fund Centuria Life Goals - Various Funds

31 December 2020 30 June 2020 Fair value Units held Ownership Fair value Units held Ownership % % 246,905,078 79,904,556 14.51% 208,895,316 65,897,576 16.46% 162,704,183 76,029,992 14.78% 153,580,584 76,029,992 14.78% 13,337,301 12,472,928 8.38% 10,305,433 11,025,391 7.48% 2,945,343 5,513,559 9.21% 5,748,988 5,513,559 9.21% 347,863 347,169 2.60% - - 0% 105,921 102,836 0.22% 97,530 102,836 0.22% 14,096 10,499 0% 11,096 10,499 0% 426,359,785 174,381,539 49.70% 378,638,947 158,579,853 48.15%

Centuria Capital Fund 16 31 December 2020

Assets and liabilities

C2 Financial assets at fair value (continued)

• (a) Investments in related party unit trusts carried at fair value through profit or loss (continued)

Related party unit trusts carried at fair value through profit and loss Opening balance Investment purchases Disposal Fair value gain/(loss) Carrying value transferred from equity accounted investments Carrying value transferred from controlled property funds Fair value gain on discontinuation of equity accounting	31 December 2020 $'000 30 June 2020 $'000 378,639 11,694 45,603 111,831 (13,563) (37,554) 5,821 (92,389) - 321,175 9,860 - - 63,882
	426,360 378,639

(b) Loans receivable from related parties

The following current loans were receivable from related parties of the Fund at the end of the financial period:

Centuria Finance Pty Limited Centuria New Zealand Holdings Limited	31 December 2020 $ 30 June 2020 $ 249,307,602 152,537,093 - 41,376,387
	249,307,602 193,913,480

The maturity date is the earliest of 23 December 2025 or such other date as the Fund and borrower may agree in writing.

Centuria Capital Fund 17 31 December 2020

Assets and liabilities

C3 Investment properties

Opening Balance Acquisition of investment properties Capital improvements and associated costs Gain/(Loss) on fair value Deconsolidation of controlled property funds Sale of investment property Change in deferred rent and lease incentives	31 December 2020 $'000 30 June 2020 $'000 167,110 177,500 - 15,116 1,376 4,660 362 (6,141) (12,110) - - (23,500) (988) (525)
	155,750 167,110

The carrying amount of investment properties includes components related to deferred rent, capitalised lease incentives and leasing fees amounting to $12,943,314 (30 June 2020: $12,704,534).

Property 111 St Georges Terrace, Perth WA 120 and 122 Spencer St, South Bunbury WA 8-10 Warneford St, Sandy Bay TAS	31 December 2020 $'000 30 June 2020 $'000 31 December 2020 Cap rate % 31 December 2020 Discount rate % 31 December 2020 valuer 155,750 155,000 6.75 7.00 Director valuation - 6,500 - - - 5,610 - - 155,750 167,110 6.8 7.0*

*111 St Georges Terrace, Perth WA was last externally valued by Colliers as at 30 June 2020.

Key estimates and judgements

(a) Valuation techniques and significant unobservable inputs

The fair values of the investment properties were determined by the Directors of the responsible entity of the relevant funds or by an external, independent valuer having an appropriate recognised professional qualification and recent experience in the location and category of the properties being valued. Fair value is based on market values, being the estimated amount for which a property could be exchanged on the date of valuation between a willing buyer and willing seller in an arm’s length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

Given the changing economic conditions as a result of the COVID-19 pandemic, there is uncertainty surrounding the potential impact on future cashflows and valuations. Rent relief allowances in accordance with the National Cabinet's Code of Conduct which set out commercial leasing principles for businesses during the pandemic were taken into consideration when determining the cashflows for the properties, however actual future cashflows may differ from this.

The valuations were prepared by considering the following valuation methodologies:

• Capitalisation Approach: the annual net rental income is capitalised at an appropriate market yield to arrive at the property's market value. Appropriate capital adjustments are then made where necessary to reflect the specific cash flow profile and the general characteristics of the property.

• Discounted Cash Flow Approach: this approach incorporates the estimation of future annual cash flows over a 10-year period by reference to expected rental growth rates, ongoing capital expenditure, terminal sale value and acquisition and disposal costs. The present value of future cash flows is then determined by the application of an appropriate discount rate to derive a net present value for the property.

• Direct Comparison Approach: this approach identifies comparable sales on a dollar per square metre of lettable area basis and compares the equivalent rates to the property being valued to determine the property's market value.

Centuria Capital Fund 18 31 December 2020

Assets and liabilities

C3 Investment properties (continued)

(a) Valuation techniques and significant unobservable inputs (continued)

The valuations reflect, when appropriate, the type of tenants actually in occupation or responsible for meeting lease commitments or likely to be in occupation after letting of vacant accommodation and the market’s general perception of their credit-worthiness; the allocation of maintenance and insurance responsibilities between the lessor and lessee; and the remaining economic life of the property. It has been assumed that whenever rent reviews or lease renewals are pending with anticipated reversionary increases, all notices and, where appropriate, counter notices have been served validly and within the appropriate time.

The fair value measurement of investment properties has been categorised as a Level 3 fair value as it is derived from valuation techniques that include inputs that are not based on observable market data (unobservable inputs).

(b) Fair value measurement

The fair value measurement of investment properties has been categorised as a Level 3 fair value as it is derived from valuation techniques that include inputs that are not based on observable market data (unobservable inputs).

		Fair value
	Fair value measurement	measurement	Inputs for half-year
	sensitivity to significant	sensitivty decrease	ended 31 December
Significant unobservable inputs	increase in input	in input	2020
Market rent	Increase	Decrease	$552 psm
Capitalisation rate	Decrease	Increase	6.75%
Discount rate	Decrease	Increase	7.0%

A further sensitivity analysis was taken to assess the fair value of investment properties given the uncertain impact of the COVID-19 pandemic on property values. The table below illustrates the valuation impact of movements in capitalisation rates and discount rates:

		Fair value at	Capitalisation rate impact	Capitalisation rate impact
	31	December 2020	-0.25%	+0.25%
		'$000	'$000	'$000
Investment property		155,750	5,990	(5,563)

Management acknowledges the current valuation is subject to ongoing valuation uncertainty as a consequence of this. To date, there has been little evidence to suggest that capitalisation and discount rates have softened since the onset of COVID-19. As the COVID-19 pandemic progresses, the Fund has continued to re-assess the valuation method to ensure appropriate consideration is given to inputs used.

C4 Payables

Sundry creditors (i) Distribution Payable Accrued expenses	31 December 2020 $'000 30 June 2020 $'000 6,193 6,521 19,811 16,420 512 590
	26,516 23,531

(i) Sundry creditors are non-interest bearing liabilities, payable on commercial terms of 7 to 60 days.

Centuria Capital Fund 19 31 December 2020

Assets and liabilities

C5 Borrowings

C5 Borrowings
Notes Fixed rate secured notes C5(a) Floating rate secured notes C5(a) Bank loans in Property Funds C5(b) Borrowing costs capitalised	31 December 2020 $'000 30 June 2020 $'000 95,000 95,000 75,000 75,000 83,873 85,920 (2,852) (2,709)
	251,021 253,211

The terms and conditions relating to the above facilities are set out below.

(a) Secured notes

The Fund issued fixed and floating corporate notes as per below:

Fixed Classification Coupon Rate Due Date Tranche 1 Current 7.0% 21 April 2021 Tranche 2 Non-current 6.5% 21 April 2023 Tranche 3 Non-current 5.0% 21 April 2024 Variable Classification Coupon Rate Due Date Tranche 1 Current 90 day BBSW +4.5% 21 April 2021 Tranche 2 Non-current 90 day BBSW +4.25% 21 April 2023 Tranche 3 Non-current 90 day BBSW +4.5% 21 April 2024	31 December 30 June 2021 2020 $'000 $'000 19,447 30,708 45,000 45,000 30,553 19,292
	95,000 95,000
	31 December 30 June 2021 2020 $'000 $'000 8,350 26,040 35,000 35,000 31,650 13,960
	75,000 75,000

(b) Bank loans - Property Funds (secured)

Each controlled property fund has debt facilities secured by first mortgage over each of the fund’s investment property and a first ranking fixed and floating charge over all assets of each of the funds. Details of the amounts drawn and the maturity of each facility are as follows:

			Facility	Funds	Draw	Borrowing
Current/non-current			limit	available	down	costs	Total
Fund	classification	Maturity date	$'000	$'000	$'000	$'000	$'000
31 December 2020
Centuria 111 St Georges
Terrace Fund		30 June 2022	90,000	5,956	84,044	(171)	83,873
			90,000	5,956	84,044	(171)	83,873
30 June 2020
Centuria 111 St Georges
Terrace Fund	Non-current	30 June 2022	90,000	6,644	83,356	(193)	83,163
		4 December
Nexus Property Unit Trust	Non-current	2022	2,805	-	2,805	(48)	2,757
			92,805	6,644	86,161	(241)	85,920

Centuria Capital Fund 20 31 December 2020

Assets and liabilities

C6 Contributed equity

C6 Contributed equity
Opening balance Equity settled share based payment expense Units issued Cost of equity raising	31 December 2020 30 June 2020 No. of securities $'000 No. of securities $'000 509,998,482 545,744 383,557,332 343,438 1,921,149 - 1,529,427 - 88,316,492 137,483 124,911,723 205,216 - (1,939) - (2,910)
	600,236,123 681,288 509,998,482 545,744

Fully paid ordinary securities carry one vote per security and carry the right to distributions.

On 29 June 2017, the Fund issued 20,098,470 options to subscribe for stapled securities. The options have an exercise price of $1.30 per stapled security and expire on 29 June 2022. Half of these options (10,049,235) were exercised on 12 December 2019 with the remaining 10,049,235 being exercised on 9 December 2020.

The Fund issued 24,832,025 stapled securities in relation to the completion of the Augusta Capital Limited acquisition during the half-year ended 31 December 2020.

The Fund issued 53,336,998 stapled securities in relation to a $120.0m equity raising completed in October 2020.

Recognition and measurement

Incremental costs directly attributed to the issue of ordinary shares are accounted for as a deduction from equity, net of any tax effects.

Centuria Capital Fund 21 31 December 2020

D Group Structure

D1 Interests in associates

Set out below are the associates of the Fund as at 31 December 2020 which, in the opinion of the Directors, were material to the Fund and were accounted for using the equity method. The entities listed below have share capital consisting solely of ordinary units, which are held directly by the Fund. The country of incorporation or registration is Australia which is also their principal place of business, and the proportion of ownership interest is the same as the proportion of voting rights held.

% of ownership interest Principal activity 31 December 2020 % 30 June 2020 % Centuria Diversified Property Fund 24.27 22.68 Property Investments Total equity accounted investments 24.27% 22.68%	Quoted fair value Carrying amount 31 December 2020 $'000 30 June 2020 $ 31 December 2020 $'000 30 June 2020 $ 31,634 31,830 31,634 31,830
	31,634 31,830 31,634 31,830

The below table shows the movement in carrying amounts of equity accounted investments for the half year ended 31 December 2020.

Movement in carrying amount of equity accounted investments Opening balance Investment Carrying value transferred from/ (to) financial assets Distributions received/receivable Share of net profit after tax Closing balance	Centuria Diversified Property Fund 31,830 - - (804) 608
	31,634

The below table shows the movement in carrying amounts of equity accounted investments for the year ended 30 June 2020.

Movement in carrying amount of equity accounted investments Opening balance Investment Carrying value transferred from/ (to) financial assets Distributions received/receivable Share of net profit after tax Closing balance	Centuria Diversified Property Fund Centuria Office REIT $'000 Centuria Industrial REIT $'000 Total - 155,355 174,217 329,572 - 7,500 12,977 20,477 31,830 (162,429) (190,576) (321,175) 502 (2,773) (2,905) (5,176) (502) 2,347 6,287 8,132
	31,830 - - 31,830

Centuria Capital Fund 22 31 December 2020

Group Structure

D1 Interests in associates (continued)

(a) Summarised financial information for associates

The tables below provide summarised financial information for those associates that were material to the Fund for the year ended 31 December 2020. The information disclosed reflects the amounts presented in the consolidated interim financial statements of the relevant associates and not the Fund's share of those amounts.

Summarised balance sheet Cash and other cash equivalents Other current assets Total current assets < blank header row > 5 Non-current assets Total tangible non-current assets 6 Other current liabilities Total current liabilities < blank header row > < blank header row > Borrowings Other non-current liabilities Total non-current liabilities < blank header row > < blank header row > Net tangible assets Fund share in % Fund's share Goodwill Carrying amount	Centuria Diversified Property Fund 31 December 2020 $000 30 June 2020 $000 7,561 18,013 501 11,633
	8,062 29,646
	178,795 166,588
	178,795 166,588
	2,849 3,812
	2,849 3,812
	65,150 64,988 - 351
	65,150 65,339
	118,858 127,083
	24.27% 22.68% 28,848 28,822 2,786 3,008
	31,634 31,830

Centuria Capital Fund 23 31 December 2020

Group Structure

D1 Interests in associates (continued)

(a) Summarised financial information for associates (continued)

(a) Summarised financial information for associates (continued)
Summarised statement of comprehensive income Revenue Interest income Other income Net gain on fair value of investment properties Finance costs Other expenses < blank header row > < blank header row > Profit for the period Other comprehensive income Total comprehensive income < blank header row >	Centuria Diversified Property Fund 31 December 2020 $000 6,715 2 3 1,154 (699) (5,961) 1,214 -
	1,214

Centuria Capital Fund 24 31 December 2020

E Other

E1 Fair value of financial instruments

The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy for financial instruments measured at fair value.

The table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped into Levels 1 to 3 based on the degree to which the fair value is observable.

• Level 1 fair value measurements are those derived from quoted prices (unadjusted) in active markets for identical assets or liabilities.

• Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

• Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

There were no transfers between Level 1, 2 and 3 in the period.

			Carrying
	Measurement	Fair value	amount	Fair value
31 December 2020	basis	hierarchy	$'000	$'000
Financial assets
Cash and cash equivalents	Amortised cost	Not applicable	96,002	96,002
Receivables	Amortised cost	Not applicable	14,849	14,849
Financial assets	Fair value	Level 1	409,609	409,609
Financial assets	Fair value	Level 2	275,753	275,552
			796,213	796,012
space
Financial liabilities
Payables	Amortised cost	Not applicable	26,516	26,516
Borrowings (net of borrowing costs)	Amortised cost	Not applicable	251,021	253,535
Interest rate swaps at fair value	Fair value	Level 2	814	814
			278,351	280,865
			Carrying
	Measurement	Fair value	amount	Fair value
30 June 2020	basis	hierarchy	$'000	$'000
Financial assets
Cash and cash equivalents	Amortised cost	Not applicable	53,059	53,059
Receivables	Amortised cost	Not applicable	7,329	7,329
Financial assets	Fair value	Level 1	362,475	362,475
Financial assets	Fair value	Level 2	219,195	219,195
			642,058	642,058
space
Financial liabilities
Payables	Amortised cost	Not applicable	23,531	23,531
Borrowings (net of borrowing costs)	Amortised cost	Not applicable	253,211	253,211
Interest rate swaps at fair value	Fair value	Level 2	636	636
Total			277,378	277,378

The Fund determines Level 2 fair values for financial assets and liabilities without an active market based on broker quotes. Level 2 fair values for simple over-the-counter derivatives are also based on broker quotes. Those quotes are tested for reasonableness by discounting expected future cash flows using market interest rates for a similar instrument at the measurement date. Fair values reflect the credit risk of the instrument and include adjustments to take account of the credit risk of the entity and counterparty where appropriate.

Centuria Capital Fund 25 31 December 2020

Other

E1 Fair value of financial instruments (continued)

Recognition and measurement

The Fund enters into derivative financial instruments such as interest rate swaps to manage its exposure to interest rate risk.

E2 Events subsequent to the reporting date

Other than the above, there has not arisen in the interval between 31 December 2020 and the date hereof any item, transaction or event of a material and unusual nature likely, in the opinion of the directors of the Fund, to affect significantly the operations of the Fund, the results of those operations or the state of affairs of the Fund in future financial years.

Centuria Capital Fund 26 31 December 2020

Directors' declaration

In the opinion of the Directors' of Centuria Funds Management Limited as the Responsible Entity of Centuria Capital Fund :

• (a) the consolidated interim financial statements and notes set out on pages 4 to 26 are in accordance with the Corporations Act 2001 , including:

• (i) complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements, and

• (ii) giving a true and fair view of the consolidated entity's financial position as at 31 December 2020 and of its performance for the half year ended on that date, and

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

Signed in accordance with a resolution of the Directors.

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Mr Garry S. Charny Director

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Mr Peter J. Done Director

Sydney 10 February 2021

Centuria Capital Fund 27 31 December 2020

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Independent Auditor’s Review Report

To the stapled security holders of Centuria Capital Fund

Conclusion

We have reviewed the accompanying Interim Financial Report of Centuria Capital Fund (the Fund).

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 Fund does not comply with the Corporations Act 2001 , including:

• [giving a true and fair view of the ] [Group’s] financial position as at 31 December 2020 and of its performance for the Interim Period ended on that date; and

• [complying with ] [Australian Accounting ] Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

The Interim Financial Report comprises:

• [Consolidated interim statement of financial ] position as at 31 December 2020;

• [Consolidated interim statement of ] comprehensive income, Consolidated interim statement of changes in equity and Consolidated interim statement of cash flows for the Interim Period ended on that date;

• [Notes A1 to E2 comprising a summary of ] significant accounting policies and other explanatory information; and

• [The Directors’ Declaration. ]

The Group comprises Centuria Capital Fund and the entities it controlled at the Interim Period’s end or from time to time during the Interim Period.

The Interim Period is the 6 months ended on 31 December 2020.

Basis for Conclusion

We conducted our review in accordance with ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity . Our responsibilities are further described in the Auditor’s Responsibilities for the Review of the Financial Report section of our report.

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

©2021 KPMG, an Australian partnership and a member firm of the KPMG global organisation of independent member firms affiliated with KPMG International Limited, a private English company limited by guarantee. All rights reserved. The KPMG name and logo are trademarks used under license by the independent member firms of the KPMG global organisation. Liability limited by a scheme approved under Professional Standards Legislation.

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Responsibilities of the Directors for the Interim Financial Report

The Directors of the Centuria Funds Management Limited (the Responsible Entity) 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

• such internal control as the Directors determine is necessary to enable the preparation of the Interim Financial Report that gives a true and fair view and is free from material misstatement, whether due to fraud or error.

Auditor’s Responsibilities for the Review of the Interim Financial Report

Our responsibility is to express a conclusion on the Interim Financial Report based on our review. ASRE 2410 requires us to conclude whether we have become aware of any matter that makes us believe that the Interim Financial Report does not comply with the Corporations Act 2001 including giving a true and fair view of the Group’s financial position as at 31 December 2020 and its performance for the Interim Period ended on that date, and complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001 .

A review of an Interim Period 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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KPMG

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Paul Thomas Partner Sydney 10 February 2021

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