GPT GROUP - Annual Report 2015 | FinancialReports.eu

The GPT Group Annual Financial Report 2015

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Annual Financial Report of General Property Trust	1
Annual Financial Report of GPT Management Holdings Limited	64
Supplementary Information	111
Directory	113

Corporate Governance

The GPT Group (GPT or the Group) comprises GPT Management Holdings Limited (ACN 113 510 188) (GPTMHL) and General Property Trust (Trust). GPT RE Limited (ACN 107 426 504) (GPTRE) AFSL (286511) is the Responsible Entity of the Trust. GPT’s stapled securities are listed on the Australian Securities Exchange (ASX).

The third edition of the ASX Corporate Governance Council’s Corporate Governance Principles and Recommendations (Principles) provides a framework for good corporate governance for listed entities. GPT’s Corporate Governance Statement sets out how the Group has complied with the Principles.

The Group’s Corporate Governance Statement is available on GPT’s website at: www.gpt.com.au/About-GPT/Corporate-Governance/Principles-and-Policies. GPT has also lodged an Appendix 4G (Key to Disclosures – Corporate Governance Principles and Recommendations) with the ASX.

ANNUAL FINANCIAL REPORT OF GENERAL PROPERTY TRUST

Year ended 31 December 2015 – THE GPT GROUP

DIRECTORS’ REPORT	2
AUDITOR’S INDEPENDENCE DECLARATION	22
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income	23
Consolidated Statement of Financial Position	24
Consolidated Statement of Changes in Equity	25
Consolidated Statement of Cash Flows	26
Notes to the Financial Statements
Result for the year
1. Segment information	27
Operating assets and liabilities
2. Investment properties	34
3. Equity accounted investments	37
4. Loans and receivables	39
5. Intangibles	40
6. Inventories	41
7. Payables	41
8. Provisions	41
9. Taxation	42
Capital structure
10. Equity and reserves	43
11. Earnings per stapled security	45
12. Distributions paid and payable	46
13. Cash flows from operating activities	46
14. Borrowings	47
15. Financial risk management	47

Other disclosure items

Other disclosure items
16. Commitments	50
17. Contingent liabilities	51
18. Security based payments	51
19. Related party transactions	52
20. Auditor’s remuneration	53
21. Parent entity financial information	54
22. Fair value disclosures	55
23. Accounting policies	58
24. Events subsequent to reporting date	60
DIRECTORS’ DECLARATION	61
INDEPENDENT AUDITOR’S REPORT	62

The GPT Group (GPT) comprises General Property Trust (Trust) and its controlled entities and GPT Management Holdings Limited (Company) and its controlled entities.

General Property Trust is a registered scheme, registered and domiciled in Australia. GPT RE Limited is the Responsible Entity of General Property Trust. GPT Management Holdings Limited is a company limited by shares, incorporated and domiciled in Australia. GPT RE Limited is a wholly owned controlled entity of GPT Management Holdings Limited.

Through our internet site, we have ensured that our corporate reporting is timely, complete and available globally at minimum cost to the Trust. All press releases, financial reports and other information are available on our website: www.gpt.com.au .

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

The Directors of GPT RE Limited, the Responsible Entity of General Property Trust, present their report together with the financial statements of the General Property Trust (the Trust) and its controlled entities (the consolidated entity) for the financial year ended 31 December 2015. The consolidated entity together with GPT Management Holdings Limited and its controlled entities form the stapled entity, The GPT Group (GPT).

General Property Trust is a registered scheme, registered and domiciled in Australia. GPT Management Holdings Limited is a company limited by shares, incorporated and domiciled in Australia. GPT RE Limited is a company limited by shares, incorporated and domiciled in Australia. The registered office and principal place of business is the MLC Centre, Level 51, 19 Martin Place, Sydney NSW 2000.

1. OPERATING AND FINANCIAL REVIEW

ABOUT GPT

GPT is an owner and manager of a $10.1 billion diversified portfolio of high quality Australian retail, office and logistics property assets and together with GPT’s funds management platform the Group has $18.1 billion of property assets under management.

GPT owns and manages some of Australia’s most significant real estate assets, including the MLC Centre and Australia Square in Sydney, Melbourne Central and Highpoint Shopping Centre in Melbourne and One One One Eagle Street in Brisbane.

Listed on the Australian Securities Exchange (ASX) since 1971, GPT is today one of Australia’s largest diversified listed property groups with a market capitalisation of approximately $8.6 billion. GPT is one of the top 50 listed stocks on the ASX by market capitalisation as at 31 December 2015.

GPT’s strategy is focussed on leveraging its extensive real estate experience to deliver strong returns through disciplined investment, asset management and development. The development capability has a focus on creating value for securityholders through the enhancement of the core investment portfolio and in the creation of new investment assets.

A key performance measure for GPT is Total Return. Total Return is calculated as the change in Net Tangible Assets (NTA) per security plus distributions per security declared over the year, divided by the NTA per security at the beginning of the year. This focus on Total Return is aligned with securityholders’ long term investment aspirations. In 2015 GPT achieved a Total Return of 11.5%.

GPT targets a Management Expense Ratio (MER) of less than 45 basis points. MER is calculated as management expenses as a percentage of assets under management. In 2015 GPT achieved an MER of 40 basis points.

GPT focusses on maintaining a strong balance sheet. GPT has moderate gearing and significant investment capacity giving it the flexibility to execute on investment opportunities as they arise. In 2015 the Weighted Average Cost of Debt was 4.6% with net gearing at 26.3%.

GPT Portfolio Diversity

Retail 50% Office 37% Logistics 13%

Retail Portfolio

Office Portfolio

14 shopping centres 24 assets 990,000 sqm GLA 1,190,100 sqm NLA* 3,400+ tenants 450+ tenants $5.0b direct investment $3.7b direct investment $7.9b AUM $8.5b AUM

Logistics Portfolio

31 assets 810,000 sqm GLA 90+ tenants $1.3b direct investment $1.7b AUM

*Gross lettable area
**Net lettable area

REVIEW OF OPERATIONS

Funds from Operations (FFO) represents GPT’s underlying and recurring earnings from its operations. This is determined by adjusting statutory net profit after tax under Australian Accounting Standards for certain items which are non-cash, unrealised or capital in nature. FFO has been determined in accordance with the guidelines established by the Property Council of Australia.

2 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

The reconciliation of FFO to net profit after tax is set out below:

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31 Dec 15 31 Dec 14 Change
$M $M %
Retail net operating income 251.7 248.7 1.2%
Office net operating income 153.8 141.8 8.5%
Logistics net operating income 91.4 85.9 6.4%
Income from funds 98.2 87.1 12.7%
Investment management expenses (6.3) (7.6) (17.1%)
Investment management 588.8 555.9 5.9%
Asset management 7.8 5.6 39.3%
Development - retail & major projects 1.8 1.9 (5.3%)
Development - logistics 2.2 6.5 (66.2%)
Funds management 44.6 32.5 37.2%
Corporate management expenses (33.1) (30.1) 10.0%
Net finance costs (115.9) (103.5) 12.0%
Tax expenses (4.9) (2.8) 75.0%
Non-core 12.1 11.1 9.0%
Less: distribution to exchangeable securities (1.7) (25.0) (93.2%)
Funds from Operations (FFO) 501.7 452.1 11.0%
Other non-FFO items:
Valuation increase - core operations 432.1 249.5 73.2%
Financial Instruments mark to market value and net foreign exchange movements (74.0) (89.1) (16.9%)
Other items 6.6 7.8 (15.4%)
Exclude distributions on exchangeable securities in FFO 1.7 25.0 (93.2%)
Net profit after tax 868.1 645.3 34.5%
FFO per ordinary stapled security (cents) 28.28 26.81 5.5%
Distribution per ordinary stapled security (cents) 22.5 21.2
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Other items include amortisation of intangibles, profit on disposal of assets, uplift of loan receivables, write offs of software and IT development costs and related tax impact.

Operating result

GPT delivered FFO of $501.7 million for the 2015 financial year, an increase of 11.0% on the prior year. Allowing for the new equity raised in January 2015, FFO per security was up 5.5% to 28.28 cents.

GPT’s statutory net profit after tax was $868.1 million, an increase of 34.5% on the prior year, and included $432.1 million of property revaluation gains offset by a mark to market loss on financial instruments of $74.0 million.

Total Return at the direct investment portfolio level was 10.9% for 2015 with the split between portfolios detailed in the following chart.

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14 13.7%
12.8%
12
10.9%
10
8.9%
8
6
4
2
0
Retail Office Logistics Total Portfolio
(Inc GWSCF (Inc GWOF (Inc GMF (Inc Equity
Interests) Interests) Interests) Interests)
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GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

GPT has maintained strong metrics across its core portfolios:

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Overall Portfolios Retail Portfolio Office Portfolio Logistics Portfolio
Value of Portfolio $5.04 billion portfolio $3.71 billion portfolio $1.35 billion portfolio
including GPT’s equity including GPT’s equity including GPT’s equity
interest in the GPT interest in the GPT interest in the GPT Metro
Wholesale Shopping Centre Wholesale Office Fund Office Fund (GMF)
Fund (GWSCF) (GWOF) (2014: $1.31 billion)
(2014: $4.77 billion) (2014: $3.35 billion)
Occupancy 95.3% 99.2% 96.0% 92.3%
(2014: 96.4%) (2014: 99.5%) (2014: 91.4%) (2014: 95.1%)
Weighted average lease 5.3 years 4.0 years 5.8 years 8.2 years
expiry (WALE) (2014: 5.0 years) (2014: 3.9 years) (2014: 6.3 years) (2014: 6.2 years)
Structured rental reviews 72% of specialty tenants 87% of tenants subject to 92% of tenants subject to
subject to average increases average increases of 3.8% average increases of 3.3%
of 4.5% (2014: 89% subject to (2014: 86% subject to
(2014: 72% subject to average increases of 3.9%) average increases of 3.3%)
average increases of 4.5%)
Comparable income growth 3.8% 3.0% 6.3% 0.7%
(2014: 0.9%) (2014: 2.9%) (2014:-1.1%) (2014:-0.5%)
Weighted average 5.90% 5.58% 5.94% 7.03%
capitalisation rate (2014: 6.27%) (2014: 5.87%) (2014: 6.41%) (2014: 7.72%)
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(i) Retail portfolio

Over the year the value of the retail portfolio increased by $0.27 billion. The underlying portfolio quality in conjunction with strong investor sentiment has resulted in further firming in investment metrics. A net revaluation uplift of $127.4 million, including GPT’s equity interest in GWSCF, was achieved across the portfolio primarily through valuation uplifts from Melbourne Central, Highpoint Shopping Centre, Rouse Hill and Westfield Penrith offset by the negative contribution from the equity interest in the GWSCF portfolio.

Like for like income growth of 3.0% was driven by a high proportion of structured rental increases in addition to an increased focus on expense management across the portfolio. Retail sales improved over 2015 with weighted total centre annual sales up 4.1% and specialty annual sales up 6.5%. The retail portfolio continues to be well leased with occupancy remaining high at 99.2%. There are currently 41 vacant tenancies (excluding Dandenong).

(ii) Office portfolio

The office portfolio achieved a net revaluation uplift of $212.7 million in 2015, including GPT’s equity interest in GWOF, as a result of firming investment metrics and market rental growth.

Like for like income growth of 6.3% was achieved as a result of occupancy increasing 4.6% to 96.0% (including signed leases) as a result of continued leasing success across the portfolio. The main contribution to income growth was from Melbourne Central, One One One Eagle Street, 2 Park Street and Australia Square due to higher occupancy.

(iii) Logistics portfolio

The logistics portfolio achieved a net revaluation uplift of $88 million, including GPT’s equity interest in GMF, in 2015. This uplift is attributed to a $20.3 million increase in value from the completion of developments (Rand Transport and Coles RRM facilities) at Erskine Park and $22.4 million from the divestment of assets where significant premiums were achieved on 15, 17 and 19 Berry Street along with 92-116 Holt Street, Pinkenba. The remainder of the valuation uplift was driven by leasing success, with new deals secured across the portfolio and further complemented by firming investment metrics.

Occupancy has decreased to 92.3%, driven primarily by lease expiry at the Citiwest Industrial Estate. The weighted average lease expiry (WALE) has increased significantly to 8.2 years with the inclusion of both the Rand Transport and Coles RRM facilities at Erskine Park which both have lease terms of 20 years.

(iv) Income from funds and funds management

GPT manages and has ownership interests in two wholesale funds, the GPT Wholesale Office Fund (GWOF) and the GPT Wholesale Shopping Centre Fund (GWSCF), and an ASX-listed fund, GPT Metro Office Fund (GMF). Collectively these ownership interests amount to $1.6 billion.

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As at 31 Dec 2015 GWOF GWSCF GMF Total
Funds under management $5.8bn $3.8bn $0.4bn $10.0bn
Number of assets 19 9 6 34
GPT interest 20.43% 20.22% 12.98% -
GPT investment $980.3m $623.2m $36.0m $1,639.5m
One year Equity IRR (post-fees) 14.9% 4.4% 13.6% -
Share of profit - FFO $58.5m $36.9m $2.8m $98.2m
Funds management fee income $24.5m $17.4m $2.5m $44.4m
Performance fee income $13.9m - - $13.9m
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4 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

The performance of GWOF continues to be strong, achieving a one year equity IRR of 14.9% for the year. GWSCF delivered a one year equity IRR of 4.4% that was impacted by a material revaluation loss on the Wollongong Central asset. GMF achieved a one year IRR of 13.6%.

GWOF

GWOF’s assets under management have grown to $5.8 billion, up $0.5 billion in 2015. The management fees earned from GWOF increased by $18.2 million in 2015 due to a $13.9 million performance fee, the acquisition of four assets in Melbourne in 2014 and strong upward revaluations across the portfolio.

GWSCF

GWSCF’s assets under management remained flat at $3.8 billion. The management fee earned from GWSCF increased by $2.8 million in 2015 due to a higher asset base as a result of the Northland Shopping Centre acquisition and upward revaluations in 2014.

GMF

GPT listed GMF on the Australian Securities Exchange in October 2014. GPT’s holding in the Fund increased to 12.98% in 2015 (2014: 12.46%) through the participation in the distribution reinvestment plan for the June 2015 distribution. GMF’s assets under management have grown to $0.4 billion, up $52.4 million in 2015. The management fee earned from GMF increased by $2.1 million in 2015 due to completion of the 3 Murray Rose Avenue development, strong upward revaluations and a full year of trading since listing.

Asset management

The asset management team is responsible for property management activities for 52 assets across the retail, office and logistics sectors as well as managing initiatives such as Space & Co. The operating profit of asset management increased to $7.8 million (2014: $5.6 million) due to leasing fees achieved for the office portfolio combined with other income initiatives.

Development retail & major projects

In 2015, the development – retail & major projects team focused on the master planning of development opportunities within its $3.5 billion retail and office development pipeline. This includes the repositioning of the MLC Centre, expansions of Rouse Hill and Casuarina Square.

For 2015, the business unit contributed $1.8 million to GPT’s FFO (31 Dec 2014: $1.9 million).

Development logistics

In 2015 the development logistics business unit delivered the successful completion of the RAND and Coles RRM facilities at Erskine Park which have been retained as investment assets by GPT and 3 Murray Rose at Sydney Olympic Park which was acquired by GMF. The combined end value of these assets was $300.2 million.

In 2015, the business unit generated a total contribution of $31.6 million across all projects, comprising FFO of $2.2 million, NTA uplift on assets of $17.9 million and profit on sale of assets of $11.5 million. Of the $300.2 million of assets completed in 2015 an average yield on cost of 9.1% and an average WALE of 16.1 years was achieved.

Management expenses

The management expenses increased to $73.6 million (2014: $65.9 million) predominantly caused by one-off corporate restructuring costs to realign the business to a sector-based structure. In 2015 GPT achieved an MER of 40 basis points.

Non - core operations

Hotel/Tourism portfolio

On 23 May 2011, GPT completed the sale of Ayers Rock Resort to the Indigenous Land Corporation (ILC). Total consideration for the sale was $300.0 million, to be received in three instalments with $81.0 million paid on settlement, $81.0 million paid 12 months after settlement and $138.0 million to be received on 23 May 2016, five years after settlement. Proceeds from the first and second instalments have been received when due.

GPT has been provided with a guarantee on the payments of the deferred considerations and receives interest income at a rate of 6.5% per annum. GPT shares in 46% of any increase in capital value of Ayers Rock Resort over $300.0 million plus capital expenditure committed over the period with a minimum guaranteed payment to GPT of $17.0 million at the end of the five year period. GPT accrue increments of the $17.0 million guaranteed payment over the five year period resulting in an additional 2% return per annum bringing the total return to 8.5% per annum.

During 2015, GPT has worked with the Indigenous Land Corporation (ILC) on a debt restructuring arrangement which includes a repayment of $90.0 million and the extension of the remaining receivable until 2024 at an interest rate of 9.0% per annum. The term sheet has been executed by the ILC and legal documentation is expected to be finalised in early 2016.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

Distribution

GPT’s distribution policy is a payout ratio of approximately 95-105% of Adjusted Funds from Operations (AFFO) which is defined as FFO less maintenance capex and lease incentives.

For the financial year ended 31 December 2015, distributions paid and payable to stapled securityholders totalled $401.9 million (2014: $357.3 million), representing an annual distribution of 22.5 cents, up 6.1% on 2014 (2014: 21.2 cents). This includes 11.5 cents ($206.4 million) in respect of the second half of 2015, which was declared on 22 December 2015 and is expected to be paid on 29 February 2016.

FINANCIAL POSITION

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Net Assets Net Assets
31 Dec 15 31 Dec 14 Change
$M $M %
Core
Retail 4,454.3 4,161.5 7.0%
Office 2,721.4 2,458.4 10.7%
Logistics 1,391.7 1,319.9 5.4%
Funds 1,639.5 1,543.6 6.2%
Total core assets 10,206.9 9,483.4 7.6%
Non-core 162.5 154.7 5.0%
Financing and corporate assets 637.1 521.0 22.3%
Total assets 11,006.5 10,159.1 8.3%
Borrowings 2,948.0 2,718.5 8.4%
Other liabilities 533.4 508.9 4.8%
Total liabilities 3,481.4 3,227.4 7.9%
Net assets 7,525.1 6,931.7 8.6%
Total number of ordinary stapled securities (million) 1,794.8 1,685.5 6.5%
NTA ($) 4.17 3.94 5.8%
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Balance sheet

Total Return of 11.5% (2014: 9.6%) being the growth of NTA per stapled security of 23.0 cents to $4.17 plus the distribution paid / payable per stapled security of 22.5 cents, divided by the opening NTA per stapled security.
Total core assets increased by 7.6% primarily due to acquisitions, development capital expenditure, positive property revaluations and further investments in the wholesale funds.
Total borrowings increased by $229.5 million due to additional funding required for net asset acquisitions, developments (including land acquisitions at Rouse Hill and Berrinba offset by the sale of 1-2 Murray Rose in Sydney Olympic Park, 92 Holt Street in Pinkenba and 15 – 19 Berry Street in Granville) plus fair value and other adjustments to the carrying value of foreign currency debt and the CPI bonds, offset by proceeds from equity raisings.

Capital management

Average cost of debt: 4.6% (2014: 4.8%).
Net gearing: 26.3% (2014: 26.3%). Target net gearing range is 25% to 35%.
Weighted average debt maturity: 5.1 years (2014: 5.8 years).
S&P/Moody’s credit rating: A-(Positive)/A3 (stable) (2014: A-(Positive)/A3 (stable)).

GPT continues to maintain a strong focus on capital management. Key highlights for the year include:

Reduced weighted average cost of debt by 20 basis points due to lower fixed and floating interest rates for the period and renegotiation of bank facilities at lower margins and fees.
Net gearing remains unchanged as a result of net increase in borrowings during the period offset by valuation increases in the investment portfolio.
Investment capacity at 30% net gearing is $570.0 million (2014: $530.0 million).
In conjunction with the sale of Dandenong, a review of GPT’s capital management strategy was undertaken resulting in GPT reducing its level of interest rate hedging. GPT is 63.2% hedged as at 31 December 2015.
Net profit and other comprehensive income were impacted by a $80.8 million loss on net mark to market movements on derivatives and foreign bonds (largely due to decrease in market swap rates during the period), loss on repurchase of $10.0 million CPI bonds and re-estimation of the amortised costs of the remaining $75.0 million CPI bonds.

On 21 January 2015, GPT announced that it would redeem the Exchangeable Securities owned by an affiliate of GIC for $325.0 million, plus accrued distribution. The redemption was funded by an equity raising comprising a $325.0 million institutional placement and a $50.0 million security purchase plan. The institutional placement and the security purchase plan were completed on 22 January and 3 March respectively, at a fixed price of $4.23 per security which represented a 3.0% discount to the GPT closing price on 21 January 2015, being the last trading day prior to the announcement of the equity raising. As a result, a total of 88.7 million stapled securities were issued.

On 22 April 2015, GPT announced the extension of the on market buy back for an additional 12 months until May 2016.

6 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

CASH FLOWS

The cash balance as at December 2015 increased to $79.3 million (2014: $72.4 million).

Operating activities

The following table shows the reconciliation from FFO to the cash flow from the operating activities:

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31 Dec 15 31 Dec 14 Change
$M $M %
FFO 501.7 452.1 11.0%
Add back: distribution to exchangeable securities included in FFO 1.7 25.0 (93.2%)
Add back: non-cash expenses items included in FFO 16.3 10.0 63.0%
Less: non-cash revenue items included in FFO (21.2) (23.6) (10.2%)
Less: interest capitalised on developments (5.7) (9.5) (40.0%)
Less: payments for inventory for development (49.6) (43.6) 13.8%
Timing differences in receivable and payables (0.9) (5.7) (84.2%)
Net cash inflows from operating activities 442.3 404.7 9.3%
Add back: payments for inventory for development 49.6 43.6 13.8%
Add back: interest capitalised on developments 5.7 9.5 (40.0%)
Less: maintanance capex (45.7) (42.1) 8.6%
Less: lease incentives (including rent free from JVs) (51.7) (29.5) 75.3%
Less: distribution to exchangeable securities (1.7) (25.0) (93.2%)
Free cash flow 398.5 361.2 10.3%
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The Non-IFRS Information included above has not been specifically audited in accordance with Australian Auditing Standards, but has been derived from note 1 and note 13 of the accompanying financial statements.

Investing activities

Investing cash outflows included acquisitions of Rouse Hill Northern Frame land parcels, operating capital expenditures, lease incentives, development capital expenditures and capital injections to the equity accounted investments, offset by cash inflows for the net proceeds from the disposals of 1 & 2 Murray Rose in Sydney Olympic Park, 15 – 19 Berry Street assets in Granville and 92 Holt St in Pinkenba.

Financing activities

Significant financing cash out flows during the year included redemption of the exchangeable securities, distributions paid and payments for termination and restructure of derivatives, offset by net proceeds from borrowings and a new equity raising.

PROSPECTS

(i) Group

Market conditions remain challenging as the Australian economy continues to adjust to lower commodity prices and lower global growth expectations. GPT remains well positioned with high quality assets, strong occupancy levels, a conservative approach to capital management and a healthy development pipeline. In December 2015 GPT announced a move from an operational structural model to a sector based approach. The change was made to better position GPT to deliver on our strategy and to provide strong performance across our direct investment portfolio and managed funds.

Retail: Retail trade growth performed strongly in 2015 driven by low interest rates and rising house prices, particularly in the nonresource influenced states of NSW and Victoria. The acceleration in retail trade growth was evident in the improvement in GPT’s shopping centre sales growth (6.5% for specialty). GPT expects that larger regional centres which dominate strong and growing trade areas will outperform other retail asset classes in the longer term.

Office: The Eastern Seaboard CBD office markets ended the year on a positive note, with all markets exhibiting stronger fundamentals than the same time last year. Sydney and Melbourne continued their positive momentum with office demand and rental growth. Brisbane, which experienced weak market fundamentals in 2014 and early 2015, is now showing an improving trend in office demand. The Perth market deteriorated further in 2015 with negative net absorption resulting in rising vacancy rates. GPT’s office portfolio is heavily weighted to the Sydney and Melbourne markets, and is well placed to benefit from the improving conditions.

Logistics: A strong investment market for institutional grade product remains in the industrial sector despite patchy fundamentals. Tenant demand improved over the course of 2015 although this was coupled with increased supply. The medium term outlook is for a stabilisation of rents and improved land values. GPT will continue to opportunistically acquire logistics assets as it looks to increase exposure to the sector. GPT will also continue to develop out its land banks and seek new development investment opportunities using its development capability.

Funds Management: GPT has a strong Funds Management platform which has experienced significant growth over the past two years. The funds management team will continue to actively manage the existing portfolios, with new acquisitions and divestments reviewed based on meeting the relevant investment objectives of the respective funds.

(ii) Guidance for 2016

In 2016 GPT expects to deliver between 4.0 and 5.0% growth in FFO per ordinary security. Achieving this target is subject to risks detailed in the following section.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

RISKS

The Board is ultimately accountable for corporate governance and the appropriate management of risk. The Board determines the risk appetite and oversees the risk profile to ensure activities are consistent with GPT’s strategy and values. The Audit and Risk Management Committee (ARMC) supports the Board and is responsible for overseeing and reviewing the effectiveness of the risk management framework. The ARMC and through it, the Board, receive reports on GPT’s risk management practices and control systems including the effectiveness of GPT’s management of its material business risks.

GPT has an active enterprise-wide risk management framework. Within this framework the Board has adopted a policy setting out the principles, objectives and approach established to maintain GPT’s commitment to integrated risk management. GPT recognises the requirement for effective risk management as a core capability and consequently all employees are expected to be managers of risk. GPT’s risk management approach incorporates culture, people, processes and systems to enable the organisation to realise potential opportunities whilst managing adverse effects. The approach is consistent with AS/NZS ISO 31000:2009: Risk Management.

The key components of the approach include the following:

The GPT Board, Leadership Team, employees and contractors all understand their risk management accountabilities, promote the risk awareness and risk management culture and apply risk processes to achieve the organisation’s objectives.
Specialist risk management expertise is developed and maintained internally and provides coaching, guidance and advice.
Risks are identified and assessed in a timely and consistent manner.
Controls are effectively designed, embedded and assessed.
Material risks and critical controls are monitored and reported to provide transparency and assurance that the risk profile is aligned with GPT’s risk appetite, strategy and values.

The following table sets out the key inherent risks to GPT’s main investment objectives, and the strategies GPT uses to manage them:

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Level Risk description Strategic impact Mitigation
Operational Investments do not perform in line • Investments deliver lower investment • Formal deal management process
performance with forecast performance than target • Active asset management including
• Credit downgrade regular forecasting and monitoring of
performance
• High quality property portfolio
• Development program to enhance
asset returns
• Comprehensive asset insurance
program
Inability to lease assets in line with • Investments deliver lower investment • Large and diversified tenant base
forecast performance than target • High quality property portfolio
• Experienced leasing team
• Development program to enhance
asset returns
Market risk Volatility and speed of changes in • Investments deliver lower investment • Holistic capital management
market conditions returns than target • Large multi asset portfolio
• Monitoring of asset concentration
Capital Re-financing and liquidity risk • Limits ability to meet debt maturities • Diversity of funding sources and
management • Constrains future growth spreading of debt maturities with a
• Limits ability to execute strategy long weighted average debt term
• May impact distributions • Maintaining a minimum liquidity
• Failure to continue as a going buffer in cash and surplus committed
concern credit facilities for the forward rolling
twelve month period
Interest rate risk – higher interest • Detrimental impact to investment • Interest rate exposures are actively
rate cost than forecast performance hedged
• Adversely affect GPT’s operating
results
Health and safety Risk of incidents, causing injury to • Criminal/civic proceedings and • Formalised Health and Safety
tenants, visitors to the properties, resultant reputation damage management system including
employees and contractors • Financial impact of remediation and policies and procedures for managing
restoration safety
• Training and education of staff and
contractors
People Inability to attract, retain and • Limits the ability to deliver the • Competitive remuneration
develop talented people business objectives • Structured development planning
• Succession planning and talent
management
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8 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

2. ENVIRONMENTAL REGULATION

GPT has policies and procedures in place that are designed to ensure that where operations are subject to any particular and significant environmental regulation under a law of Australia (for example property development and property management), those obligations are identified and appropriately addressed. This includes obtaining and complying with conditions of relevant authority consents and approvals and obtaining necessary licences. GPT is not aware of any breaches of any environmental regulations under the laws of the Commonwealth of Australia or of a State or Territory of Australia and has not incurred any significant liabilities under any such environmental legislation.

GPT is also subject to the reporting requirements of the National Greenhouse and Energy Reporting Act 2007 (“NGER Act”). The NGER Act requires GPT to report its annual greenhouse gas emissions and energy use. The measurement period for GPT is 1 July 2015 to 30 June 2016. GPT has implemented systems and processes for the collection and calculation of the data required which enabled submission of its report to the Department of Climate Change and Energy Efficiency within the legislative deadline of 31 October 2015. GPT has submitted its report to the Department of Climate Change and Energy Efficiency for the period ended 30 June 2015.

More information about the GPT’s participation in the NGER program is available at www.gpt.com.au .

3. EVENTS SUBSEQUENT TO REPORTING DATE

The Directors are not aware of any matter or circumstances occurring since 31 December 2015 that has significantly or may significantly affect the operations of GPT, the results of those operations or the state of affairs of GPT in the subsequent financial years.

4. DIRECTORS AND SECRETARY

INFORMATION ON DIRECTORS

Rob Ferguson – Chairman

Rob joined the Board in May 2009 and is also a member of the Nomination and Remuneration Committee. He brings a wealth of knowledge and experience in finance, investment management and property as well as corporate governance.

Rob currently holds Non-Executive directorships in the following listed and other entities:

Primary Health Care Limited (since 2009) – Chairman
Watermark Market Neutral Fund Limited (since 2013)
Tyro Payments Limited (since 2005)
Smartward Limited (since 2012)

He was also a Non-Executive Chairman of IMF Bentham Limited from 2004 to January 2015.

As at the date of this report, he holds 207,628 GPT stapled securities.

Robert Johnston – Chief Executive Officer

Bob was appointed to the Board as Chief Executive Officer and Managing Director in September 2015. He has 28 years’ experience in the property sector including investment, development, project management and construction in Australia, Asia, the US and UK. Prior to joining GPT, Bob was the Managing Director of listed Australand Property Group which became Frasers Australand in September 2014.

As at the date of this report, he holds 116,279 GPT stapled securities.

Michael Cameron – Chief Executive Officer and Managing Director

Michael joined The GPT Group as Chief Executive Officer and Managing Director in May 2009 and retired as a director in September 2015. He has over 30 years’ experience in Finance and Business, including Group CFO at Commonwealth Bank of Australia and then St George Bank. Before that, he worked 10 years with Lendlease and MLC Limited before moving to the US in 1994 with The Yarmouth Group, Lendlease’s US property business.

Since 2012, Michael has held the position of Non-Executive Director in listed entity, Suncorp Group Limited.

As at the date of his retirement as a director of the GPT Group, Michael owned 1,663,779 GPT stapled securities.

Brendan Crotty

Brendan was appointed to the Board in December 2009 and is also a member of the Audit and Risk Management Committee and the Sustainability Committee. He brings extensive property industry experience to the Board, including 17 years as Managing Director of Australand until his retirement in 2007.

Brendan is currently a director of Brickworks Limited (since 2008), Chairman of Cloud FX Pte Ltd, as well as being the Chairman of Western Sydney Parklands Trust. Brendan is also a member of the Investment Committee of CIMB Trust Cap Advisors.

As at the date of this report, he holds 67,092 GPT stapled securities.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

Eileen Doyle

Eileen was appointed to the Board in March 2010. She is also the Chair of the Sustainability Committee and a member of the Nomination and Remuneration Committee. She has diverse and substantial business experience having held senior executive roles and directorships in a wide range of industries, including research, financial services, building and construction, steel, mining, logistics and export.

Eileen currently holds the position of Non-Executive Director in the following listed and other entities:

Boral Limited (since 2010)
Hunter Valley Research Foundation (Chairman)

Eileen was also a director of Bradken Limited from 2011 to November 2015 and will be a Non-Executive Director of Oil Search Limited with effect from 18 February 2016.

As at the date of this report, she holds 41,597 GPT stapled securities.

Eric Goodwin

Eric was appointed to the Board in November 2005 and retired as a director in May 2015. During his appointment as a Director, Eric was also a member of the Audit and Risk Management Committee and the Sustainability Committee. Eric has extensive experience in design, construction, project management, general management and funds management. He was the founding Fund Manager of the Australian Prime Property Fund and his experience includes fund management of the MLC Property Portfolio.

Since June 2004, Eric has held the position of Non-Executive Director of listed entity Duet Group.

As at the date of his retirement as a director of GPT, Eric owned 34,801 GPT stapled securities.

Swe Guan Lim

Swe Guan was appointed to the Board in March 2015 and is also a member of the Audit and Risk Management Committee and the Sustainability Committee. Swe Guan brings significant Australian real estate skills and experience and capital markets knowledge to the Board, having spent most of his executive career as a Managing Director in the Government Investment Corporation (GIC) in Singapore.

Swe Guan is currently a director of Sunway Berhad in Malaysia (since 2011) and Global Logistics Properties in Singapore (since 2012). Swe Guan is also a member of the Investment Committee of CIMB Trust Cap Advisors.

As at the date of this report, he holds no GPT stapled securities.

Anne McDonald

Anne was appointed to the Board in August 2006 and is also the Chair of the Audit and Risk Management Committee. She is a chartered accountant and was previously a partner of Ernst & Young for 15 years specialising as a company auditor and advising multinational and local companies on governance, risk management and accounting issues.

Anne currently holds the position of Non-Executive Director in the following listed and other entities:

Specialty Fashion Group Limited (since 2007)
Spark Infrastructure Group (since 2009)
Sydney Water Corporation (since 2013)

As at the date of this report, she holds 23,364 GPT stapled securities and 10,000 units in GPT Metro Office Fund.

Michelle Somerville

Michelle was appointed to the Board in December 2015 and is also a member of the Audit and Risk Management Committee. She was previously a partner of KPMG for 14 years specialising in external audit and advising Australian and international clients both listed and unlisted primarily in the financial services market in relation to business, finance risk and governance issues.

Michelle currently holds the position of Non-Executive Director in the following entities:

Mecu Limited (trading as Bank Australia) (since 2014)
Challenger Retirement and Investment Services Ltd (since 2014)
Save the Children (Australia) (since 2012)
Down Syndrome Australia (since 2011)

Michelle is also an independent consultant to the UniSuper Ltd Audit, Risk and Compliance Committee since 2015.

As at the date of this report, she holds no GPT stapled securities.

Gene Tilbrook

Gene was appointed to the Board in May 2010 and is also the Chair of the Nomination and Remuneration Committee. He brings extensive experience in finance, corporate strategy, investments and capital management.

Gene currently holds the position of Non-Executive Director in the following listed entities:

Orica Limited (since 2013)
Woodside Petroleum Limited (since 2014)

Gene was also a Director of listed entities Transpacific Industries Group Limited from 2009 to 2013, Fletcher Building Limited from 2009 to April 2015 and Aurizon Holdings Limited from 2010 to February 2016.

As at the date of this report, he holds 48,546 GPT stapled securities and 20,000 units in GPT Metro Office Fund.

10 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

James Coyne – General Counsel and Company Secretary

James is responsible for the legal, compliance and company secretarial activities of GPT. He was appointed as the General Counsel and Company Secretary of GPT in 2004. His previous experience includes company secretarial and legal roles in construction, infrastructure, and the real estate funds management industry (listed and unlisted).

Lisa Bau – Senior Legal Counsel and Company Secretary

Lisa was appointed as a Company Secretary of GPT in September 2015. Her previous experience includes legal roles in mergers and acquisitions, capital markets, funds management and corporate advisory.

ATTENDANCE OF DIRECTORS AT MEETINGS

The number of Board meetings, including meetings of Board Committees, held during the financial year and the number of those meetings attended by each Director is set out below:

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Board Audit and Risk Nomination and Sustainability
Management Committee Remuneration Committee Committee
Number of Number of Number of Number of Number of Number of Number of Number of
meetings meetings meetings meetings meetings meetings meetings meetings
attended eligible to attended eligible to attended eligible to attended eligible to
attend attend attend attend
Chair Rob Ferguson Anne McDonald Gene Tilbrook Eileen Doyle
Rob Ferguson 11 11 - - 8 8 - -
Michael Cameron 7 7 - - - - - -
Robert Johnston 4 4 - - - - - -
Brendan Crotty 11 11 5 5 - - 3 3
Eileen Doyle 10 11 - - 7 8 3 3
Eric Goodwin 5 5 2 2 - - 1 1
Swe Guan Lim 9 9 3 3 - - 2 2
Anne McDonald 11 11 5 5 - - - -
Michelle Somerville 2 2 1 1 - - - -
Gene Tilbrook 11 11 - - 8 8 - -
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5. OTHER DISCLOSURES

INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITOR

GPT provides a Deed of Indemnity and Access (Deed) in favour of each of the Directors and Officers of GPT and its subsidiary companies and each person who acts or has acted as a representative of GPT serving as an officer of another entity at the request of GPT. The Deed indemnifies these persons on a full indemnity basis to the extent permitted by law for losses, liabilities, costs and charges incurred as a Director or Officer of GPT, its subsidiaries or such other entities.

Subject to specified exclusions, the liabilities insured are for costs that may be incurred in defending civil or criminal proceedings that may be brought against directors and officers in their capacity as Directors and Officers of GPT, its subsidiary companies or such other entities, and other payments arising from liabilities incurred by the Directors and Officers in connection with such proceedings. GPT has agreed to indemnify the auditors out of the assets of GPT if GPT has breached the agreement under which the auditors are appointed.

During the financial year, GPT paid insurance premiums to insure the Directors and Officers of GPT and its subsidiary companies. The terms of the contract prohibit the disclosure of the premiums paid.

NON-AUDIT SERVICES

During the year PricewaterhouseCoopers, GPT’s auditor, has performed other services in addition to their statutory duties. Details of the amounts paid to the auditor, which includes amounts paid for non-audit services and other assurance services, are set out in note 20 to the financial statements.

The Directors have considered the non-audit services and other assurance services provided by the auditor during the financial year. In accordance with advice received from the Audit and Risk Management Committee, the Directors are satisfied that the provision of nonaudit services by the auditor is compatible with, and did not compromise, the auditor independence requirements of the Corporations Act 2001 for the following reasons:

the Audit & Risk Management Committee reviewed the non-audit services and other assurance services at the time of appointment to ensure that they did not impact upon the integrity and objectivity of the auditor;
the Board’s own review conducted in conjunction with the Audit and Risk Management Committee, having regard to the Board’s policy with respect to the engagement of GPT’s auditor; and
the fact that none of the non-audit services provided by PricewaterhouseCoopers during the financial year had the characteristics of management, decision-making, self-review, advocacy or joint sharing of risks.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

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 22 and forms part of the Directors’ Report.

ROUNDING OF AMOUNTS

The amounts contained in this report and in the financial statements have been rounded to the nearest million dollars unless otherwise stated (where rounding is applicable) under the option available to the company under ASIC Class Order 98/100. The company is an entity to which the class order applies.

6. REMUNERATION REPORT

The Nomination & Remuneration Committee (the Committee) of the Board presents the Remuneration Report (Report) for the GPT Group. This Report has been audited in accordance with section 308(3C) of the Corporations Act 2001.

The Board aims to communicate the remuneration outcomes with full transparency, demonstrate that the GPT Group’s remuneration platform is both market competitive and fair to all stakeholders, and has performance measures aligned to the achievement of GPT’s strategic objectives.

GOVERNANCE

GOVERNANCE
Who are the members of the Committee?	The Committee consists of 3 Non-Executive Directors: • Gene Tilbrook (Committee Chairman) • Eileen Doyle • Rob Ferguson
What is the scope of work of the Committee?	The Committee provides advice and recommendations to the Board on: • Criteria for selection of Directors; • Nominations for appointment of Directors; • Criteria for reviewing the performance of Directors individually and the GPT Board collectively; • Remuneration policies for Directors and Committee members; • Remuneration amounts for Directors from within the overall Directors fee cap approved by security holders; • Remuneration policy for the CEO and employees; • Incentive plans for the CEO and employees, including exercising discretion where appropriate in determining Short term incentive compensation (STIC) and Long term incentive compensation (LTI) outcomes; and • Any other related matters regarding executives or the Board1.
Who is included in the Remuneration Report?	GPT’s Key Management Personnel (KMP) are the individuals responsible for planning, controlling and managing the GPT Group (being the Non-Executive Directors, the CEO and certain other key Executives). Since the prior year, the number of Executive members has reduced to only include the “C-suite” executives under the new organisation structure implemented in December 2015.

1 Further information about the role and responsibility of the Committee is set out in its Charter which is available on GPT’s website (www.gpt.com.au).

12 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

COMMITTEE KEY DECISIONS AND OUTCOMES IN 2015

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Platform component Key decisions and outcomes
Base pay (fixed) • Implemented a review of employee base pay, effective 1 January 2015, with an average increase of 2.23%.
• Reviewed Non-Executive Director fees [2] , effective 1 January 2015, with an average increase of 4.62%.
Short term incentive • Maintained Total Return as the primary measure of Group financial performance with a target of 9%.
compensation • The Group achieved an 11.5% Total Return which exceeded the stretch target of 10% and created a STIC pool of
$14.86 million.
Long term incentive • The Group achieved a Total Return for the 2013-15 period of 9.86%, exceeding the stretch target of 9.5%, and
compensation delivering a Relative Total Securityholder Return (Relative TSR) [3] of 56.32%, which ranked 6th out of 12 against the
comparator group and exceeded the threshold target for vesting.
• As a result, the vesting outcome for the 2013-15 LTI plan was 78.70% of the performance rights for each of the 23
participants in the LTI plan.
• Launched the 2015-2017 LTI with two performance measures, Total Return and Relative TSR.
Other employee • Continued the General Employee Security Ownership Plan (GESOP) for 97 STIC eligible employees not in the LTI.
ownership plans Under GESOP participants receive an amount equal to 10% of STIC (less tax) delivered in GPT securities, which
must be held for at least 1 year.
• Continued the Broad Based Employee Security Ownership Plan (BBESOP) for 307 employees ineligible for GESOP.
Under BBESOP, participants receive $1,000 worth of GPT securities that cannot be transferred or sold until the
earlier of 3 years from the allocation date or cessation of employment.
Policy & governance • The appointment of Bob Johnston as CEO of the GPT Group on 7 September 2015, following the resignation of
Michael Cameron.
• The appointment of Lim Swe Guan as a Non-Executive Director on 23 March 2015, following the notification of the
retirement of Eric Goodwin, which occurred in May 2015.
• The appointment of Michelle Somerville as a Non-Executive Director on 1 December 2015, in anticipation of the
retirement of Anne McDonald from the Board at the May 2016 AGM.
• Utilised external advice on market compensation benchmarks and practice, prevailing regulatory and governance
standards, and drafting of incentive plan documentation from Ernst & Young and Conari Partners.
Diversity • The percentage of females in senior leadership roles increased from 34% to 37%, falling short of the 2015 target
of 40%.
• The percentage of Aboriginal and Torres Strait Islander employees increased from 1.8% to 3%, exceeding the 2015
target of 2.5%.
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2 The last review of Non-Executive Director base fees was effective 1 January 2008.

3 TSR represents an investor’s return, calculated as the percentage difference between the initial amount invested in stapled securities and the final value of those stapled securities at the end of the relevant period, assuming distributions were reinvested.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

GPT’S PURPOSE & GOALS AND THE LINK TO REMUNERATION STRUCTURES

	GPT’s purpose & goals (measured over 1, 3 & 5 years)	GPT’s purpose & goals (measured over 1, 3 & 5 years)
Property to Prosperity
We maximise the financial potential
of Australian property with	Total Return	Generate competitive Relative	Average FFO Growth
solutions that fulfil the aspirations	> 9%	Total Securityholder Return	> CPI plus 1%
of our investors, tenants and
communities

GPT’s purpose & goals (measured over 1, 3 & 5 years)	GPT’s purpose & goals (measured over 1, 3 & 5 years)	GPT’s purpose & goals (measured over 1, 3 & 5 years)	GPT’s purpose & goals (measured over 1, 3 & 5 years)
Property to Prosperity We maximise the financial potential of Australian property with solutions that fulfil the aspirations of our investors, tenants and communities	Total Return > 9%	Generate competitive Relative Total Securityholder Return	Average FFO Growth > CPI plus 1%

Total remuneration components
Base pay (fixed) • Base level of reward. • Set around Australian market median using external benchmark data (including AON Hewitt and the Financial Institutions Remuneration Group (FIRG)). • Varies based on employee’s responsibilities, experience, skill and performance. • External & internal relativities considered.	STIC (variable) • Discretionary, at risk, and with aggregate STIC funding aligned to overall Group financial outcomes. • Set around market median for target performance with potential to approach top quartile for stretch outcomes. • Determined by GPT and individual performance against a mix of balanced scorecard measures which include financial & non-financial measures. • Financial measures include Total Return and FFO per security, portfolio and/or property level metrics. • Non-financial objectives focus on execution of strategy, delivery of key projects and developments, cultural change, sustainability, innovation, people management and development, and process optimisation, as applicable. • Delivered in cash, or (for senior executives), a combination of cash and equity with deferred vesting for 1 and 2 years.	LTI (variable) • Discretionary, at risk, and aligned to overall Group financial outcomes. • Set around market median for target performance with potential to achieve top quartile for stretch outcomes. • Determined by GPT performance against Total Return and Relative TSR financial performance. • Relative TSR is measured against relevant comparators from the AREIT sector. • Assessed over a 3 year performance period, no re- testing. • No value derived unless GPT meets or exceeds defined performance measures. • Delivered in restricted GPT securities to align executive and securityholder interests.	Other employee ownership plans (variable) GESOP • For STIC eligible individuals who are ineligible for LTI. • Equal to 10% of STIC (less tax) delivered in GPT securities, which must be held for at least 1 year. BBESOP • For individuals ineligible for STIC or LTI. • GPT must achieve at least Target outcome on the annual Total Return of 9%. • A grant of $1,000 worth of GPT securities which must be held until the earlier of 3 years or end of employment.

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Attract, retain, motivate and reward high calibre executives to deliver Align executive rewards to GPT’s performance and security holder superior performance by: interests by:

Providing competitive rewards. • Assessing incentives against multiple financial and non-financial
• Opportunity to achieve incentives beyond base pay based on high business measures that are aligned with GPT strategy, with an performance. equity component.
Putting significant components of total remuneration at risk.

14 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

EMPLOYMENT TERMS

1. Employment terms – Chief Executive Officer and Managing Director

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Term Conditions
Contract duration Open-ended.
Termination by Executive 6 months’ notice. GPT may elect to make a payment in lieu of notice.
Remuneration package In 2015, Michael Cameron’s annual remuneration mix and potential incentives remained unchanged from the 2014
level as:
• Fixed pay: $1,500,000.
• STIC: $0 to $1,875,000 (ie 0% to 125% of base pay) based on performance and paid in an equal mix of cash and
deferred GPT securities, with the securities component vesting in two equal tranches 1 year and 2 years after
the conclusion of the performance year.
• LTI: $0 to $2,250,000 (ie 0% to 150% of base pay) based on performance and continued service and delivered in
restricted GPT securities.
On appointment, Bob Johnston’s annual remuneration mix and potential incentives were:
• Fixed pay: $1,400,000.
• STIC: $0 to $1,750,000 (ie 0% to 125% of base pay) based on performance and paid in an equal mix of cash and
deferred GPT securities, with the securities component vesting in two equal tranches 1 year and 2 years after
the conclusion of the performance year.
• LTI: $0 to $2,100,000 (ie 0% to 150% of base pay) based on performance and continued service and delivered in
restricted GPT securities.
Termination by Company No notice requirement or termination benefits (other than accrued entitlements).
for cause
Termination by Company 12 months’ notice. Treatment of unvested STIC and LTI will be at Committee discretion under the terms of the
(other) relevant plans and GPT policy.
Post-employment 6 months’ Non-Compete, 12 months Non-soliciation of GPT employees.
restraints
External Directorships Under GPT policy Michael Cameron was eligible to take up one external Directorship. In 2012 he joined the Suncorp
Group Board. All Board fees received by Michael Cameron associated with this appointment were paid to GPT. Bob
Johnston is an unpaid Director on the Property Industry Foundation (PIF) Board.
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2. Employment terms – Executive KMP

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Term Conditions
Contract duration Open ended.
Termination by executive 3 months’ notice. GPT may elect to make a payment in lieu of notice.
Remuneration package Component Mark Fookes Anastasia Clarke [4] Carmel Hourigan [5]
Fixed pay $800,000 $575,000 $775,000
STIC [6] $0 to $800,000 $0 to $431,250 $0 to $775,000
LTI $0 to $800,000 $0 to $431,250 $0 to $775,000
Termination by Company No notice requirement or termination benefits (other than accrued entitlements).
for cause
Termination by Company 3 months’ notice. Severance payments may be made subject to GPT policy and capped at the three year average of
(other) the executive’s annual base (fixed) pay. Treatment of unvested STIC and LTI will be at Committee discretion under the
terms of the relevant plans and GPT policy.
Post-employment 12 months Non-solicitation of GPT employees.
restraints
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4 Figures listed are 2015 package prior to a remuneration review in line with Ms Clarke’s appointment to Chief Financial Officer effective 1 December 2015. Her revised package is fixed pay of $650,000 and STIC range of $0 to $650,000; LTI range will be determined when the 2016-18 LTI is launched in May 2016.

5 Ms Hourigan resigned on 30 October 2015; the figures listed in this table are full year equivalent figures.

6 The STIC is paid in an equal mix of cash and deferred GPT securities, with the securities component vesting in two equal tranches 1 year and 2 years after the conclusion of the performance year.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

3. Compensation mix

	Fixed remuneration Variable or “at risk” remuneration7
Senior executives	Basepay STIC LTI
Bob Johnston Chief Executive Officer and ManagingDirector	26.7% 33.3% 40.0%
Anastasia Clarke8 Chief Financial Officer	40.0% 30.0% 30.0%
Mark Fookes Chief OperatingOfficer	33.4% 33.3% 33.3%

7 The percentage of each component of total remuneration is calculated with reference to maximum or stretch potential outcomes as set out under Remuneration Package in Tables 1 and 2 above. As Mr Cameron and Ms Hourigan resigned during the course of 2015 their packages were 100% base pay and hence they have not been included in the table.
8 Figures listed are 2015 package prior to a remuneration review in line with Ms Clarke’s appointment to Chief Financial Officer effective 1 December 2015. Her revised package is fixed pay of $650,000 and STIC range of $0 to $650,000; LTI range will be determined when the 2016-18 LTI is launched in May 2016.

GROUP FINANCIAL PERFORMANCE & INCENTIVE OUTCOMES

1. Five year Group financial performance

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2015 2014 2013 2012 2011
Total Shareholder Return (TSR) % 15.4 34.5 4.1 26.9 10.5
Total Return % 11.5 9.6 8.5 9.5 4.9
NTA (per security) $ 4.17 3.94 3.79 3.73 3.59
FFO (per security) [9] cents 28.3 26.8 25.7 24.2 22.4
Security price at end of calendar year $ 4.78 4.35 3.40 3.68 3.07
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9 Represents Realised Operating Income (ROI) until 2013.

2. Group performance driving the 2015 STIC result

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STIC pool funding at each
Performance range Total Return 2015 Total Return outcome 2015 STIC pool
performance benchmark
Threshold 8.0% $1.07 million
8.5% $5.10 million
Target 9.0% $9.28 million 11.5% $14.86 million
9.5% $12.10 million
Stretch 10.0% $14.86 million
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3. 2015 STIC outcomes by Executive KMP[10]

Senior executive Actual STIC awarded ($) Actual STIC awarded as a % of maximum STIC % of maximum STIC award forfeited	Cash component ($)	Equity component (# of GPT securities)11
Bob Johnston Chief Executive Officer and ManagingDirector $353,000 80% 20% $176,500 39,69412
Anastasia Clarke Chief Financial Officer $400,000 93% 7% $200,000 48,687
Mark Fookes Chief OperatingOfficer $800,000 100% 0% $400,000 97,373

10 Excluding the impact of movements in the GPT security price on deferred STIC value received. This table does not include former executives Mr Cameron and Ms Hourigan as they did not receive any STIC for 2015.

11 The deferred GPT securities that have been allocated will vest subject to service in two equal tranches on 31 December 2016 and 31 December 2017.

12 As Mr Johnston commenced part way through the calendar year, the VWAP that was used to calculate the number of securities to be granted under his pro-rata 2015 STIC was based on GPT’s June to August (ie 3 month) 2015 VWAP of $4.4465, subject to approval at the May 2016 AGM.

16 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

4. Group Performance measures for LTI Plans

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LTI
performance Vesting % by
measurement performance
LTI period Performance measure Performance measure hurdle Weighting Results measure
2013 2013-2015 Relative TSR versus 50% of rights vest at 51st percentile, up
comparator group. to 100% at the 75th percentile (pro rata 50% 56.32%, 6th out of 12 57.39%
vesting in between).
Total Return 50% of rights vest at 9% Total Return, up
to 100% at 9.5% Total Return (pro-rata
vesting in between). 50% 9.86% 100%
2014 2014-2016 Relative TSR versus 50% of rights vest at 51st percentile, up
comparator group. to 100% at the 75th percentile (pro rata 50%
vesting in between).
N/A N/A
Total Return 25% of rights vest at 9% Total Return, up
to 100% at 9.75% Total Return (pro-rata 50%
vesting in between).
2015 2015-2017 Relative TSR versus 50% of rights vest at 51st percentile, up
comparator group. to 100% at the 75th percentile (pro rata 50%
vesting in between).
N/A N/A
Total Return 25% of rights vest at 9% Total Return, up
to 100% at 9.75% Total Return (pro-rata 50%
vesting in between).
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5. 2013-2015 LTI outcomes by Executive KMP[13]

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Performance Performance Performance
Senior executive rights granted rights vested rights lapsed
Anastasia Clarke
98,475 77,495 20,980
Chief Financial Offier
Mark Fookes
218,834 172,211 46,623
Chief Operating Officer
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13 This excludes Mr Johnston as he was not a participant in the 2013-15 LTI plan, and does not include former executives Mr Cameron and Ms Hourigan as their LTI participation lapsed upon the cessation of their employment during 2015.

6. LTI outcomes – fair value and maximum value recognised in future years

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Performance
Fair value per rights Maximum value
LTI performance granted as at to be recognised
Senior executive Scheme Grant date right 31 Dec 15 Vesting date in future years
Bob Johnston 2015 8 Sept 15 $2.21 430,476 31 Dec 17 $821,514
Chief Executive Officer and Managing Director
Anastasia Clarke 2015 18 May 15 $2.48 104,981 31 Dec 17 $198,742
Chief Financial Officer 2014 26 May 14 $2.09 114,706 31 Dec 16 $92,787
Mark Fookes 2015 18 May 15 $2.48 194,747 31 Dec 17 $368,680
Chief Operating Officer 2014 26 May 14 $2.09 217,087 31 Dec 16 $175,604
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GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

7. Reported remuneration – Executive KMP - cash[14]

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Fixed pay Variable or “at risk” [15]
Senior executive Base pay Superannuation Other [16] STIC LTI Total
Bob Johnston [17] 2015 $419,518 $4,827 $608,734 $361,633 - $1,394,712
Chief Executive Officer
and Managing Director
Anastasia Clarke [18] 2015 $562,204 $19,046 $2,314 $427,076 $361,437 $1,372,077
Chief Financial Officer
Mark Fookes 2015 $780,954 $19,046 $9,599 $854,148 $803,192 $2,466,939
Chief Operating Officer 2014 $756,720 $18,279 $7,583 $634,448 $575,254 $1,992,284
Senior Executives - Former
Michael Cameron [19] 2015 $1,380,845 $14,219 $13,279 - - $1,408,343
Chief Executive Officer 2014 $1,481,721 $18,279 $9,514 $1,290,402 $1,614,421 $4,414,337
and Managing Director
Carmel Hourigan [20] 2015 $675,400 $19,046 $3,521 - - $697,967
Chief Investment Officer 2014 $733,357 $18,279 $6,206 $602,187 $372,624 $1,732,653
2015 $3,818,921 $76,184 $637,447 $1,642,857 $1,164,629 $7,340,038
Total 2014 $2,971,798 $54,837 $23,303 $2,527,037 $2,562,299 $8,139,274
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14 This table discloses the cash and other benefits received by GPT’s executive KMP, as distinct from the accounting expense. As a result, it does not align to Australian accounting standards.

15 For the purpose of recording a gross dollar value for the deferred equity component of STIC & the 2013-15 LTI outcome, the equity awarded has been multiplied by GPT’s fourth quarter 2015 volume weighted average security price (VWAP) of $4.6645 to derive a dollar value.

16 Other may include sign on payments totalling $608,100 to Mr Johnston, death & total/permanent disability insurance premiums, service awards, superannuation plan administration fees, executive health assessments and/or other benefits.

17 Mr Johnston commenced employment with the Group on 7 September 2015.

18 Ms Clarke was not KMP in 2014 hence only 2015 remuneration is reported.

19 Mr Cameron resigned on 2 September 2015.

20 Ms Hourigan resigned on 30 October 2015.

8. Reported remuneration – Executive KMP – AIFRS Accounting[21]

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Fixed pay Variable or “at risk”
Grant or
vesting
of non
STIC STI or LTI
(cash plus LTI award performance
Senior executive - Current Base pay Superannuation Other [22] accrual) [23, 24] accrual [25] rights [26] Total
Bob Johnston 2015 $458,781 $4,827 $634 $176,500 $128,116 $552,086 $1,320,944
Chief Executive Officer and
Managing Director
Anastasia Clarke [27 ] 2015 $594,237 $19,046 $2,314 $348,719 $233,384 - $1,197,700
Chief Financial Officer
Mark Fookes 2015 $780,626 $19,046 $9,599 $679,759 $465,467 - $1,954,497
Chief Operating Officer 2014 $771,813 $18,279 $7,583 $420,510 $456,709 - $1,674,894
Senior executive - Former
Michael Cameron [28] 2015 $1,380,845 $14,219 $13,279 - - - $1,408,343
Chief Executive Officer and 2014 $1,580,276 $18,279 $9,514 $855,274 $1,308,764 - $3,772,107
Managing Director
Carmel Hourigan [29] 2015 $675,400 $19,046 $3,521 - - - $697,967
Chief Investment Officer 2014 $746,088 $18,279 $6,206 $399,127 $398,671 $53,687 $1,622,058
2015 $3,889,889 $76,184 $29,347 $1,204,978 $826,967 $552,086 $6,579,451
Total 2014 $3,098,177 $54,837 $23,303 $1,674,911 $2,164,144 $53,687 $7,069,059
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21 This table provides a breakdown of remuneration for executive KMP in accordance with statutory requirements and Australian accounting standards.

22 Other may include death & total/permanent disability insurance premiums, GPT superannuation plan administration fees, service awards, executive health assessments and other benefits.

23 This column includes the cash value of the STIC award and an accounting valuation of the deferred equity component, with the exception of the amount recorded for Mr Johnston which is cash only.

24 In addition to the cash amount noted, approval will be sought at the May 2016 AGM to grant a further 39,694 deferred GPT securities to Mr Johnston to vest in two equal tranches on 31 December 2016 and 31 December 2017 respectively.

25 This column records the amount of the fair value of performance rights under the various LTI plans expensed in the relevant financial years, and does not represent actual LTI awards made to executives.

26 Grant or vesting of one off non STI or LTI performance rights includes a sign on package for Mr Johnston and the sign on package of Ms Hourigan.

27 Ms Clarke was not KMP in 2014 hence only 2015 remuneration is reported.

28 Mr Cameron resigned on 2 September 2015.

29 Ms Hourigan resigned on 30 October 2015.

18 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

9. Security ownership and performance rights entitlements of GPT’s Executive KMP

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Current GPT security ownership at 31 Dec 15 Performance rights
Securities Performance Performance
Vested allocated rights that rights still on
security and still lapsed in foot at
holding [30] deferred [31] Private holdings 2015 [33] 31 Dec 15 [34]
(# of (# of Balance Purchase/ Balance MSHR [32]
Senior executive securities) securities) (31 Dec 14) (Sale) (31 Dec 15) (Y/N) (# of rights) (# of rights)
Bob Johnston 116,279 - - - - N - 455,615
Chief Executive Officer and
Managing Director
Anastasia Clarke 277,912 71,796 - 3,546 3,546 Y 24,783 219,687
Chief Financial Officer
Mark Fookes 644,642 138,690 - 3,546 3,546 Y 46,623 411,834
Chief Operating Officer
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30 This number may include LTI plans up to and including the 2013-15 outcome and deferred 2014 STIC that has vested.
31 This number may include 2014 and 2015 STIC deferred equity that remains subject to further service conditions prior to vesting. For Mr Johnston, 39,694 deferred GPT securities for his 2015 STIC are still subject to securityholder approval at the May 2016 AGM and hence are not included in this column.
32 This shows whether the Minimum Security Holding Requirement (MSHR) has been met at a GPT security price of $4.664 (the Q4 2015 GPT VWAP).
33 The number of performance rights that were awarded to a participant in the 2013 LTI that did not vest at the end of the 2013-2015 performance period, and as a result, lapsed. It also includes performance rights granted under the 2015 STIC that also lapsed.
34 The total of unvested performance rights currently on foot and excludes any GPT securities or performance rights that may have lapsed up to 31 December 2015. This represents the current maximum number of additional GPT securities to which the individual may become entitled subject to satisfying the various applicable performance measures; as such, these performance rights are “at risk” and may never vest.

REMUNERATION – NON-EXECUTIVE DIRECTORS

What are the key elements of • The Board determines the remuneration structure for Non-Executive Directors based on recommendations the Non-Executive Director from the Committee. Remuneration Policy? •
Non-Executive Directors are paid one fee for participation as a Director in all GPT related companies (principally GPT RE Limited, the Responsible Entity of General Property Trust and GPT Management Holdings Limited).
Non-Executive Director remuneration is composed of three main elements: - Main Board fees
- Committee fees
- Superannuation contributions at the statutory superannuation guarantee contribution rate.
Non-Executive Directors do not participate in any short or long term incentive arrangements and are not entitled to any retirement benefits other than compulsory superannuation.
Non-Executive Director remuneration is set by reference to comparable entities listed on the ASX (based on GPT’s industry sector and market capitalisation).
External independent advice on remuneration levels for Non-Executive Directors is sought on an annual basis. In the event that a review is conducted, the new Board and Committee fees are effective from the 1st of January in the applicable year and advised in the ensuing Remuneration Report.
Fees (including superannuation) paid to Non-Executive Directors are drawn from a remuneration pool of $1,800,000 per annum which was approved by GPT security holders at the Annual General Meeting on 5 May 2015. As an executive director, Mr Johnston does not receive fees from this pool as he is remunerated as one of GPT’s senior executives.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

1. Board and Committee fees[35, 36]

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Audit and Risk Nomination and
Sustainability Project Control
Board Management Remuneration
Committee Group
Committee Committee
Chairman 2015 $362,500 $36,000 $30,000 $30,000 $20,000
2014 $346,500 $34,650 $11,000 $23,100 $20,000
Members 2015 $145,000 $18,000 $15,000 $15,000 N/A
2014 $138,600 $17,325 $8,000 $11,550 N/A
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2. Reported Remuneration - Non-Executive Directors – AIFRS Accounting[37,38]

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Fixed pay
Non-Executive Directors - Current Salary & fees Superannuation Other [39] Total
Rob Ferguson 2015 $362,500 $19,046 - $381,546
Chairman 2014 $346,500 $18,279 - $364,779
Brendan Crotty 2015 $198,000 $18,797 - $216,797
2014 $183,925 $16,171 - $200,096
Eileen Doyle 2015 $190,000 $18,050 - $208,050
2014 $161,150 $15,108 - $176,258
Swe Guan Lim [40] 2015 $129,154 $12,270 $551 $141,975
Anne McDonald 2015 $181,000 $17,195 $3,350 $201,545
2014 $173,250 $16,242 $1,329 $190,821
Michelle Somerville [41] 2015 $13,583 $1,291 - $14,874
Gene Tilbrook 2015 $175,000 $16,625 $1,446 $193,071
2014 $161,700 $15,159 $736 $177,595
Non-Executive Directors - Former
Eric Goodwin [42] 2015 $68,285 $6,480 - $74,765
2014 $183,925 $16,171 - $200,096
Total 2015 $1,317,522 $109,754 $5,347 $1,432,623
2014 $1,210,450 $97,130 $2,065 $1,309,645
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35 ‘Chairman’ used in this sense may refer to the chairperson of the board or a particular committee.
36 In addition to the fees noted in the table, all non-executive directors receive reimbursement for reasonable travel, accommodation and other expenses incurred while undertaking GPT business.
37 This table provides a breakdown of remuneration for non-executive directors in accordance with statutory requirements and Australian accounting standards.
38 No termination benefits were paid during the financial year.
39 Other may include death & total/permanent disability insurance premiums and/or GPT superannuation plan administration fees.
40 Mr Lim joined the GPT Board on 23 March 2015.
41 Ms Somerville joined the GPT Board on 1 December 2015.
42 Mr Goodwin retired from the GPT Board on 5 May 2015.

20 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – THE GPT GROUP

3. Non-Executive Director - GPT security holdings

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Private holdings (# of securities) MSHR
Director Balance 31 Dec 14 Purchase / (Sale) Balance 31 Dec 15 (Y/N)
Rob Ferguson 204,082 3,546 207,628 Y
Brendan Crotty 60,000 7,092 67,092 Y
Eileen Doyle 31,450 10,147 41,597 Y
Swe Guan Lim - - - N
Anne McDonald 21,000 2,364 23,364 N
Michelle Somerville - - - N
Gene Tilbrook 45,000 3,546 48,546 Y
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The Directors’ Report, including the Remuneration Report, is signed in accordance with a resolution of the Directors of the GPT Group.

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______ Rob Ferguson Chairman Sydney 17 February 2016

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Bob Johnston

Chief Executive Officer and Managing Director

GPT ANNUAL FINANCIAL REPORT 2015

AUDITOR’S INDEPENDENCE DECLARATION

Year ended 31 December 2015 – THE GPT GROUP

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22 GPT ANNUAL FINANCIAL REPORT 2015

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 December 2015 – THE GPT GROUP

Note	31 Dec 15 $M 31 Dec 14 $M
Revenue Rent from investment properties Property and fund management fees Development revenue Development management fees Other income Fair value gain to investment properties Share of after tax profit of equity accounted investments Interest revenue Net foreign exchange gain Net profit on disposal of assets Reversal of prior year impairment expense Total revenue and other income Expenses Property expenses and outgoings Management and other administration costs Development costs Depreciation expense Amortisation expense Impairment expense Finance costs Fair value loss / (gain) of unlisted equity investments Net loss on fair value movements of derivatives Loss on redemption of financial liability Loss on re-estimation of financial liability at amortised cost Net impact of foreign currency borrowings and associated hedging loss Total expenses Profit before income tax expense Income tax expense / (credit) 9(a) Profit after income tax expense Profit from discontinued operations Net profit for the year Other comprehensive income Items that may be reclassified to profit or loss Revaluation of available for sale financial asset 10(b) Net foreign exchange translation adjustments 10(b) Changes in the fair value of cash flow hedges 10(b) Total other comprehensive income Total comprehensive income for the year Net profit attributable to: - Securityholders of the Trust - Securityholders of other entities stapled to the Trust Total comprehensive income attributable to: - Securityholders of the Trust - Securityholders of other entities stapled to the Trust Basic earnings per unit attributable to ordinary unitholders of the Trust Earnings per unit (cents per unit) - profit from continuing operations 11(a) Basic earnings per stapled security attributable to ordinary stapled securityholders of the GPT Group Earnings per stapled security (cents per stapled security) - profit from continuing operations 11(b)	588.5 573.5 79.9 52.5 16.0 17.1 4.0 5.1
	688.4 648.2
	325.9 208.9 276.8 202.4 1.8 5.8 0.1 0.2 9.8 3.7 12.7 -
	627.1 421.0
	1,315.5 1,069.2
	163.8 158.5 71.3 64.0 9.5 13.3 2.3 1.9 6.8 6.7 5.9 - 117.7 109.3 6.0 (1.2) 25.5 84.8 5.6 - 41.1 - 0.8 3.6
	456.3 440.9
	859.2 628.3
	2.4 (4.3)
	856.8 632.6 11.3 12.7
	868.1 645.3
	8.6 - 0.5 (7.9) (7.8) (5.6)
	1.3 (13.5)
	869.4 631.8
	847.8 656.2 20.3 (10.9) 840.4 640.9 29.0 (9.1) 47.1 36.4 48.2 36.0

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

GPT ANNUAL FINANCIAL REPORT 2015

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2015 – THE GPT GROUP

Note	31 Dec 15 $M 31 Dec 14 $M
ASSETS Current assets Cash and cash equivalents Loans and receivables 4 Derivative assets 15(a) Prepayments Non-current assets held for sale Total current assets Non-current assets Investment properties 2 Equity accounted investments 3 Loans and receivables 4 Intangible assets 5 Inventories 6 Property, plant & equipment Derivative assets 15(a) Deferred tax assets 9 Other assets Total non-current assets Total assets LIABILITIES Current liabilities Payables 7 Borrowings 14 Derivative liabilities 15(a) Provisions 8 Total current liabilities Non-current liabilities Borrowings 14 Derivative liabilities 15(a) Provisions 8 Total non-current liabilities Total liabilities Net assets EQUITY Securityholders of the Trust (parent entity) Contributed equity 10(a) Reserves 10(b) Retained earnings 10(c) Total equity of Trust securityholders Securityholders of other entities stapled to the Trust Contributed equity 10(a) Reserves 10(b) Accumulated losses 10(c) Total equity of other stapled securityholders Total equity	79.3 72.4 200.9 104.4 - 3.5 7.3 6.2
	287.5 186.5 197.2 4.3
	484.7 190.8
	7,375.9 7,093.5 2,525.1 2,334.8 82.2 156.3 35.5 43.7 101.5 43.6 14.1 14.4 342.5 237.8 30.2 32.4 14.8 11.8
	10,521.8 9,968.3
	11,006.5 10,159.1
	390.8 338.8 6.7 7.0 0.3 4.4 24.8 23.8
	422.6 374.0
	2,941.3 2,711.5 115.6 139.9 1.9 2.0
	3,058.8 2,853.4
	3,481.4 3,227.4
	7,525.1 6,931.7
	7,709.4 7,585.1 (43.9) (34.2) 477.8 29.7
	8,143.3 7,580.6
	325.3 319.3 59.1 57.5 (1,002.6) (1,025.7)
	(618.2) (648.9)
	7,525.1 6,931.7

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

24 GPT ANNUAL FINANCIAL REPORT 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2015 – THE GPT GROUP

				Total	equity	$M		6,714.8	(7.9)	(5.6)	(13.5)	645.3	631.8		(41.0)	5.7	2.7	(382.3)	6,931.7	6,931.7	8.6	0.5	(7.8)	1.3	868.1	869.4		455.4	(325.1)	(9.4)		6.7	(403.6)	7,525.1
				Total		$M		(642.3)	1.8	-	1.8	(10.9)	(9.1)		(0.2)	-	2.7	-	(648.9)	(648.9)	8.6	0.1	-	8.7	20.3	29.0		6.0	-	(7.1)		2.8	-	(618.2)
Other entities stapled to	the General Property Trust			Contributed Reserves Accumulated	equity losses	$M $M $M		319.5 53.0 (1,014.8)	- 1.8 -	- - -	- 1.8 -	- - (10.9)	- 1.8 (10.9)		(0.2) - -	- - -	- 2.7 -	- - -	319.3 57.5 (1,025.7)	319.3 57.5 (1,025.7)	- 8.6 -	- 0.1 -	- - -	- 8.7 -	- - 20.3	- 8.7 20.3		6.0 - -	- - -	- (7.1) -		- - 2.8	- - -	325.3 59.1 (1,002.6)
				Total		$M		7,357.1	(9.7)	(5.6)	(15.3)	656.2	640.9		(40.8)	5.7	-	(382.3)	7,580.6	7,580.6	-	0.4	(7.8)	(7.4)	847.8	840.4		449.4	(325.1)	(2.3)		3.9	(403.6)	8,143.3
	General Property Trust	Retained	earnings /	Contributed Reserves accumulated	equity losses	Note $M $M $M	Equity attributable to securityholders:	Balance at 1 January 2014 7,620.2 (18.9) (244.2)	Foreign currency translation reserve 10 (b) - (9.7) -	Cash flow hedge reserve 10 (b) - (5.6) -	Other comprehensive income / (loss) for the year - (15.3) -	Profit / (loss) for the year - - 656.2	Total comprehensive income / (loss) for the year - (15.3) 656.2	Transactions with Securityholders in their capacity as Securityholders:	On-market securities buy-back 10 (a) (40.8) - -	Issue of stapled securities 10 (a) 5.7 - -	Movement in employee incentive security scheme reserve net of tax 10 (b) - - -	Distribution paid and payable 12 - - (382.3)	Balance at 31 December 2014 7,585.1 (34.2) 29.7	Balance at 1 January 2015 7,585.1 (34.2) 29.7	Revaluation of available for sale financial asset - - -	Foreign currency translation reserve 10 (b) - 0.4 -	Cash flow hedge reserve 10 (b) - (7.8) -	Other comprehensive income for the year - (7.4) -	Profit for the year - - 847.8	Total comprehensive income for the year - (7.4) 847.8	Transactions with Securityholders in their capacity as Securityholders:	Issue of stapled securities 10(a) 449.4 - -	Redemption of exchangeable securities 10(a) (325.1) - -	Movement in employee incentive security scheme reserve net of tax 10 (b) - (2.3) -	Reclassifcation of employee incentive security scheme reserve to -	retained earnings / accumulated losses 10 (c) - 3.9	Distribution paid and payable 12 - - (403.6)	Balance at 31 December 2015 7,709.4 (43.9) 477.8

GPT ANNUAL FINANCIAL REPORT 2015

CONSOLIDATED STATEMENT OF CASH FLOWS

Year ended 31 December 2015 – THE GPT GROUP

Note	31 Dec 15 $M 31 Dec 14 $M
Cash flows from operating activities Cash receipts in the course of operations (inclusive of GST) Cash payments in the course of operations (inclusive of GST) Cash receipts from development activities Payments for development activities Payment for inventories 13 Distributions received from equity accounted investments Interest received Income taxes paid Finance costs Net cash inflows from operating activities 13 Cash flows from investing activities Acquisitions of investment properties Payments for operating capital expenditure of investment properties Payments for development capital expenditure of investment properties Proceeds from disposal of investment properties Payments for property, plant and equipment Payments for intangibles Investment in unlisted equities Investment in equity accounted investments Proceeds from disposal of subsidiaries Proceed from loan repayments Net cash outflows from investing activities Cash flows from financing activities Proceeds from issue of stapled securities net of transaction costs Payment for the redemption of exchangeable securities including transaction costs Proceeds from borrowings Repayment of borrowings Redemption of CPI bonds Payment for termination and restructure of derivatives Purchase of securities for the employee incentive scheme Payments for the on-market buy-back of securities Distributions paid to securityholders Net cash outflows from financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year	706.1 633.9 (265.7) (219.6) 32.8 0.4 (11.7) (5.4) (49.6) (43.6) 139.5 137.6 11.2 17.6 - (0.8) (120.3) (115.4)
	442.3 404.7
	(47.7) (392.6) (54.0) (59.7) (143.7) (261.7) 110.2 165.3 (2.3) (0.2) (4.6) (2.3) - (0.3) (53.1) (289.7) - 355.5 4.4 6.4
	(190.8) (479.3)
	443.8 - (325.1) - 526.4 1,453.3 (423.6) (1,167.0) (15.6) - (70.2) - (0.3) (0.4) - (41.0) (380.0) (376.6)
	(244.6) (131.7)
	6.9 (206.3) 72.4 278.7
	79.3 72.4

The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

26 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

These are the consolidated financial statements of the consolidated entity, GPT Group (GPT), which consists of General Property Trust (the Trust), GPT Management Holdings Limited (the Company) and their controlled entities.

The notes to these financial statements have been organised into sections to help users find and understand the information they need to know. GPT has also provided additional information where it is helpful to understand GPT’s performance.

The notes to the financial statements are organised into the following sections:

Note 1 - Results for the year: focusses on results and performance of GPT.

Notes 2 to 9 - Operating assets and liabilities: provides information on the assets and liabilities used to generate GPT’s trading performance.

Notes 10 to 15 - Capital structure: outlines how GPT manages its capital structure and various financial risks.

Notes 16 to 24 - Other disclosure items: provides information on other items that must be disclosed to comply with Australian Accounting Standards and other regulatory pronouncements.

Key judgements, estimates and assumptions

In applying GPT’s accounting policies, management has made a number of judgements and estimates regarding future events.

The following judgements and estimates have the potential to have a material impact on the financial statements:

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Area of estimates Assumptions underlying Note
Management rights with indefinite life Impairment trigger and recoverable amounts 5
IT development and software Impairment trigger and recoverable amounts 5
Inventories Lower of cost and net realisable value 6
Deferred tax assets Recoverability 9
Security based payments Fair value 18
Derivatives Fair value 22
Investment properties Fair value 22
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RESULT FOR THE YEAR

1. SEGMENT INFORMATION

GPT’s operating segments are described in the table below. The chief operating decision maker monitors the performance of the business on the basis of Funds from Operations (FFO) for each segment. FFO represents GPT’s underlying and recurring earnings from its operations, and is determined by adjusting the statutory net profit after tax for items which are non-cash, unrealised or capital in nature. FFO has been determined based on guidelines established by the Property Council of Australia.

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Segment Types of products and services which generate the segment result
Retail Ownership and management of predominantly regional and sub-regional shopping centres, including property
management and development activities.
Office Ownership and management of prime CBD office properties with some associated retail space, including
property management and development activities.
Logistics Ownership and management of established logistics and business park assets, including property
management and development activities.
Funds Management Management of three Australian property funds covering the retail, office and metropolitan office and business
parks sectors, as well as equity investments by GPT in GPT Wholesale Shopping Centre Fund, GPT Wholesale
Office Fund and GPT Metro Office Fund.
Corporate Cash, borrowings and intangible assets plus resulting net interest costs and corporate operating costs.
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GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(a) Segment financial information

31 December 2015

The segment financial information provided to the chief operating decision maker for the year ended 31 December 2015 is set out below.

Financial performance by segment

		Core operations Retail Office Logistics Funds Management Corporate Total Core Total Non-Core(1) Total $M $M $M $M $M $M $M $M
	Note
Investment Management Rent from investment properties Share of after tax profits of investments in associates and joint ventures (excluding fair value adjustments) Other income Property expenses and outgoings Property net income Management & administrative expenses Net contribution - Investment Management Asset Management Property management fees Management & administrative expenses Net contribution - Asset Management Development - Retail and Major Projects Development fees Management & administrative expenses Net contribution - Development Retail and Major Projects Development - Logistics Development fees Development revenue Development costs Share of after tax profits of investments in joint ventures Management & administrative expenses Net contribution - Development Logistics Funds Management Funds Management fees Performance management fees Management & administrative expenses Net Contribution - Funds Management Corporate Management & administrative expenses Interest income Finance costs Segment result before tax Income tax expense Distributions on exchangeable securities Funds from Operations (FFO)	(b)(ii) (b)(iii) (b)(iv) (b)(iv) (b)(iv) (b)(iii) (b)(iv) (b)(iv) (b)(iv) (b)(v) (b)(i)	360.7 204.8 108.2 - - 673.7 (61.8) 611.9 - - - 98.2 - 98.2 48.8 147.0 2.2 1.7 1.3 - - 5.2 (5.2) - (109.0) (51.0) (16.8) - - (176.8) 13.0 (163.8)
		253.9 155.5 92.7 98.2 - 600.3 (5.2) 595.1 (6.9) (2.5) (1.5) - (0.6) (11.5) 5.2 (6.3)
		247.0 153.0 91.2 98.2 (0.6) 588.8 - 588.8
		21.3 2.9 1.7 16.2 - 42.1 (20.5) 21.6 (9.5) (2.3) (2.5) (20.0) - (34.3) 20.5 (13.8)
		11.8 0.6 (0.8) (3.8) - 7.8 - 7.8
		4.5 2.8 - 3.6 - 10.9 (6.9) 4.0 (5.0) (1.5) - (2.6) - (9.1) 6.9 (2.2)
		(0.5) 1.3 - 1.0 - 1.8 - 1.8
		- - 1.7 - - 1.7 (1.7) - - - 16.0 - - 16.0 - 16.0 - - (9.5) - - (9.5) - (9.5) - - 0.2 - - 0.2 - 0.2 - - (6.2) - - (6.2) 1.7 (4.5)
		- - 2.2 - - 2.2 - 2.2
		- - - 44.4 - 44.4 - 44.4 - - - 13.9 - 13.9 - 13.9 - - - (13.7) - (13.7) - (13.7)
		- - - 44.6 - 44.6 - 44.6
		- - - - (33.1) (33.1) (0.1) (33.2) - - - - 23.7 23.7 (9.1) 14.6 - - - - (139.6) (139.6) 21.9 (117.7)
		258.3 154.9 92.6 140.0 (149.6) 496.2 12.7 508.9 - - - - (4.9) (4.9) (0.6) (5.5) - - - - (1.7) (1.7) - (1.7)
		258.3 154.9 92.6 140.0 (156.2) 489.6 12.1 501.7

(1) Includes non-core operations, consolidation and eliminations.

28 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

31 December 2015

Reconciliation of segment assets and liabilities to the Consolidated Statement of Financial Position

	Core operations Retail Office Logistics Funds Management Corporate Total Core Total Non-Core(1) Total $M $M $M $M $M $M $M $M
Current assets Current assets Total current assets Non-current assets Investment properties Equity accounted investments Inventories Other non-current assets Total non-current assets Total assets Current and non-current liabilities Total liabilities Net assets	197.0 - - - 197.5 394.5 90.2 484.7
	197.0 - - - 197.5 394.5 90.2 484.7
	4,200.8 1,862.4 1,312.7 - - 7,375.9 - 7,375.9 23.4 858.0 - 1,639.5 4.2 2,525.1 - 2,525.1 22.6 - 78.9 - - 101.5 - 101.5 10.5 1.0 0.1 - 435.4 447.0 72.3 519.3
	4,257.3 2,721.4 1,391.7 1,639.5 439.6 10,449.5 72.3 10,521.8
	4,454.3 2,721.4 1,391.7 1,639.5 637.1 10,844.0 162.5 11,006.5
	- - - - 3,481.4 3,481.4 - 3,481.4
	- - - - 3,481.4 3,481.4 - 3,481.4
	4,454.3 2,721.4 1,391.7 1,639.5 (2,844.3) 7,362.6 162.5 7,525.1

(1) Includes non-core operations, consolidation and eliminations.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

31 December 2014

The segment financial information provided to the chief operating decision maker for the year ended 31 December 2014 is set out below.

Financial performance by segment

Financial performance by segment
		Core operations Retail Office Logistics Funds Management Corporate Total Core Total Non-Core(1) Total $M $M $M $M $M $M $M $M
	Note
Investment Management Rent from investment properties Share of after tax profits of investments in associates and joint ventures (excluding fair value adjustments) Other Income Property expenses and outgoings Property net income Management & administrative expenses Net contribution - Investment Management Asset Management Property management fees Management & administrative expenses Net contribution - Asset Management Development - Retail and Major Projects Development fees Management & administrative expenses Net contribution - Development Retail and Major Projects Development - Logistics Development fees Development revenue Development costs Share of after tax profits of investments in joint ventures Management & administrative expenses Net contribution - Development Logistics Funds Management Rent from investment properties Property expenses and outgoings Property net income Funds management fees Management & administrative expenses Net contribution - Funds Management Corporate Management & administrative expenses Interest income Finance costs Segment result before tax Income tax expense Distributions on exchangeable securities Funds from Operations (FFO)	(b)(ii) (b)(iii) (b)(iv) (b)(iv) (b)(iv) (b)(iii) (b)(iv) (b)(ii) (b)(iv) (b)(iv) (b)(v) (b)(i)	355.5 188.2 101.9 - - 645.6 (62.2) 583.4 - - - 87.1 - 87.1 49.4 136.5 2.2 1.7 1.1 - - 5.0 (5.0) - (106.8) (46.4) (16.0) - - (169.2) 12.8 (156.4)
		250.9 143.5 87.0 87.1 - 568.5 (5.0) 563.5 (7.9) (2.4) (1.4) - (0.9) (12.6) 5.0 (7.6)
		243.0 141.1 85.6 87.1 (0.9) 555.9 - 555.9
		20.0 1.5 2.0 13.2 - 36.7 (19.4) 17.3 (11.8) (1.5) (2.4) (15.4) - (31.1) 19.4 (11.7)
		8.2 - (0.4) (2.2) - 5.6 - 5.6
		4.7 2.3 - 3.8 - 10.8 (6.3) 4.5 (4.1) (1.2) - (3.6) - (8.9) 6.3 (2.6)
		0.6 1.1 - 0.2 - 1.9 - 1.9
		- - 5.9 - - 5.9 (5.3) 0.6 - - 17.1 - - 17.1 - 17.1 - - (13.3) - - (13.3) - (13.3) - - 3.0 - - 3.0 - 3.0 - - (6.2) - - (6.2) 5.3 (0.9)
		- - 6.5 - - 6.5 - 6.5
		- - 12.4 - - 12.4 - 12.4 - - (2.1) - - (2.1) - (2.1)
		- - 10.3 - - 10.3 - 10.3 - - - 35.2 - 35.2 - 35.2 - - - (13.0) - (13.0) - (13.0)
		- - 10.3 22.2 - 32.5 - 32.5
		- - - - (30.1) (30.1) (0.1) (30.2) - - - - 31.0 31.0 (12.1) 18.9 - - - - (134.5) (134.5) 25.2 (109.3)
		251.8 142.2 102.0 107.3 (134.5) 468.8 13.0 481.8 - - - - (2.8) (2.8) (1.9) (4.7) - - - - (25.0) (25.0) - (25.0)
		251.8 142.2 102.0 107.3 (162.3) 441.0 11.1 452.1

(1) Includes non-core operations, consolidation and eliminations.

30 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

31 December 2014

Reconciliation of segment assets and liabilities to the Consolidated Statement of Financial Position

	Core operations Retail Office Logistics Funds Management Corporate Total Core Total Non-Core(1) Total $M $M $M $M $M $M $M $M
Current assets Current assets Total current assets Non-current assets Investment properties Equity accounted investments Inventories Other non-current assets Total non-current assets Total assets Current and non-current liabilities Total liabilities Net assets	- - - - 186.5 186.5 4.3 190.8
	- - - - 186.5 186.5 4.3 190.8
	4,128.6 1,688.6 1,276.3 - - 7,093.5 - 7,093.5 22.2 769.0 - 1,543.6 - 2,334.8 - 2,334.8 - - 43.6 - - 43.6 - 43.6 10.7 0.8 - - 334.5 346.0 150.4 496.4
	4,161.5 2,458.4 1,319.9 1,543.6 334.5 9,817.9 150.4 9,968.3
	4,161.5 2,458.4 1,319.9 1,543.6 521.0 10,004.4 154.7 10,159.1
	- - - - 3,227.4 3,227.4 - 3,227.4
	- - - - 3,227.4 3,227.4 - 3,227.4
	4,161.5 2,458.4 1,319.9 1,543.6 (2,706.4) 6,777.0 154.7 6,931.7

(1) Includes non-core operations, consolidation and eliminations.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(b) Reconciliation of segment result to the Consolidated Statement of Comprehensive Income

	31 Dec 15 $M 31 Dec 14 $M
(i) FFO to Net profit for the year Segment result FFO Adjustments Fair value gain on investment properties Fair value gain and other adjustments to equity accounted investments Net loss on fair value movements of derivatives Net impact of foreign currency borrowings and associated hedging loss Net foreign exchange loss Loss on redemption of financial liability Loss on re-estimation of financial liability at amortised cost Reversal of prior year impairment - loan and receivables Amortisation of lease incentives Straightlining of leases Other items Exclude distributions on exchangeable securities included in FFO Consolidated Statement of Comprehensive Income Net profit for the year (ii) Rent from investment properties Segment result Rent from investment properties (Investment Management) Rent from investment properties (Funds Management) Adjustments Amortisation of lease incentives Straightlining of leases Consolidated Statement of Comprehensive Income Rent from investment properties (iii) Share of after tax profits of equity accounted investments Segment result Share of after tax profits of investments in associates and joint ventures, excluding fair value adjustments (Investment Management) Share of after tax profits of investments in associates and joint ventures, excluding fair value adjustments (Development - Logistics) Adjustment Fair value gain and other adjustments to equity accounted investments Consolidated Statement of Comprehensive Income Share of after tax profits of equity accounted investments (iv) Management and administration expenses Segment result Investment Management Asset Management Development - Retail & Major Projects Development - Logistics Funds Management Corporate - core operations Less: depreciation expense Consolidated Statement of Comprehensive Income Management and administration expenses (v) Income tax expense Segment result Income tax expense - core operations Adjustment Tax impact on reconciling items from segment result to net profit / (loss) for the year - core operations Consolidated Statement of Comprehensive Income Income tax expense / (credit)	501.7 452.1 325.9 208.9 129.6 62.9 (25.5) (84.8) (0.8) (3.6) (1.0) (0.7) (5.6) - (41.1) - 12.7 - (32.4) (29.8) 9.0 7.5 (6.1) 7.8 1.7 25.0
	868.1 645.3
	611.9 583.4 - 12.4 (32.4) (29.8) 9.0 7.5
	588.5 573.5
	147.0 136.5 0.2 3.0 129.6 62.9
	276.8 202.4
	6.3 7.6 13.8 11.7 2.2 2.6 4.5 0.9 13.7 13.0 33.1 30.1 (2.3) (1.9)
	71.3 64.0
	4.9 2.8 (2.5) (7.1)
	2.4 (4.3)

32 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(c) Net profit / (loss) on disposal of assets

(c) Net profit / (loss) on disposal of assets
	Logistics Total Core Total Non-Core 31 Dec 15 31 Dec 14 $M $M $M $M $M
Details of disposals during the year: Cash consideration Less transaction costs Net consideration Carrying amount of net assets sold Foreign exchange gain realised on disposal Profit on sale before income tax The carrying amounts of assets and liabilities as at the date of disposal were: Investment properties Other assets Other liabilities Net assets	111.9 111.9 - 111.9 520.0 (1.6) (1.6) - (1.6) (0.9)
	110.3 110.3 - 110.3 519.1 (100.5) (100.5) - (100.5) (515.4) - - - - 7.2
	9.8 9.8 - 9.8 10.9
	100.5 100.5 - 100.5 506.9 - - - - 15.0 - - - - (6.5)
	100.5 100.5 - 100.5 515.4

Revenue

Rental revenue from investment properties is recognised on a straight line basis over the lease term. An asset is also recognised as a component of investment properties relating to fixed increases in operating lease rentals in future periods. When GPT provides lease incentives to tenants, any cost is recognised on a straight line basis over the lease term. Contingent rental income is recognised as revenue in the period in which it is earned.

Property, development and fund management fee revenue is recognised on an accruals basis, in accordance with the terms of the relevant contracts.

Development revenue is recognised on the percentage of completion basis, using the proportion of development completed at reporting date.

Revenue from dividends and distributions is recognised when they are declared.

Interest income is recognised on an accruals basis using the effective interest method.

Profit or loss on disposal of assets is recognised as the difference between the carrying amount and the net proceeds from disposal. Where revenue is obtained from the sale of properties or assets, it is recognised when the significant risks and rewards have transferred to the buyer.

Expenses

Property expenses and outgoings which include rates, taxes and other property outgoings, are recognised on an accruals basis.

Finance costs

Finance costs include interest, amortisation of discounts or premiums relating to borrowings and amortisation of ancillary costs incurred in connection with the arrangement of borrowings. Finance costs are expensed as incurred unless they relate to a qualifying asset.

A qualifying asset is an asset under development which generally takes a substantial period of time to bring to its intended use or sale. Finance costs incurred for the acquisition and construction of a qualifying asset are capitalised to the cost of the asset for the period of time that is required to complete the asset. Where funds are borrowed specifically for a development project, finance costs associated with the development facility are capitalised. Conversely, where funds are used from group borrowings, finance costs are capitalised using an appropriate capitalisation rate.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

OPERATING ASSETS AND LIABILITIES

2. INVESTMENT PROPERTIES

2. INVESTMENT PROPERTIES
Note	31 Dec 15 $M 31 Dec 14 $M
Retail (a) Office (b) Logistics (c) Properties under development (d) Total investment properties (e)	4,144.9 4,128.6 1,862.4 1,688.6 1,271.1 1,047.2 97.5 229.1
	7,375.9 7,093.5

(a) Retail

(a) Retail
						Latest
	Ownership			Fair Value	Fair Value	Independent
	Interest(9)		Acquisition	31 Dec 15	31 Dec 14	Valuation
	%		Date	$M	$M	Date	Valuer
Casuarina Square, NT		50.0	Oct 1973	285.5	271.7	Dec 2015	CB Richard Ellis Pty Ltd
Charlestown Square, NSW	100.0		Dec 1977	853.5	835.3	Jun 2015	Savills Australia
Pacific Highway, Charlestown, NSW	100.0		Oct 2002 / Jul 2003	5.7	5.7	Jun 2015	Savills Australia
Dandenong Plaza, VIC(1)	100.0		Dec 1993 / Dec 1999	-	188.0	Dec 2014	Savills Australia
Highpoint Shopping Centre, VIC		16.7	Aug 2009	335.7	320.3	Sep 2015	CB Richard Ellis Pty Ltd
Homemaker City, Maribyrnong, VIC		16.7	Aug 2009	9.0	8.8	Sep 2015	CB Richard Ellis Pty Ltd
Westfield Penrith, NSW		50.0	Jun 1971	591.8	566.1	Jun 2015	Jones Lang LaSalle
Sunshine Plaza, QLD	**	50.0	Dec 1992 / Sep 2004	381.7	378.2	Jun 2015	CB Richard Ellis Pty Ltd
Plaza Parade, QLD		50.0	Jun 1999	10.7	10.3	Jun 2015	CB Richard Ellis Pty Ltd
Rouse Hill Town Centre, NSW	100.0		Dec 2005	542.0	495.0	Dec 2015	Jones Lang LaSalle
Melbourne Central,VIC - retailportion(2)	100.0		May1999 / May2001	1,129.3	1,049.2	Dec 2015	Savills Australia
Total Retail				4,144.9	4,128.6
(b) Office
Australia Square, Sydney, NSW		50.0	Sep 1981	342.4	327.0	Jun 2015	Savills Australia
MLC Centre, Sydney, NSW		50.0	Apr 1987	459.8	383.2	Dec 2015	Knight Frank Valuations
One One One Eagle Street, Brisbane, QLD		33.3	Apr 1984	273.7	246.7	Sep 2015	Colliers International
Melbourne Central, VIC - office portion(2)	100.0		May 1999 / May 2001	469.0	427.0	Dec 2015	Knight Frank Valuations
Corner of Bourke and William,VIC		50.0	Oct 2014	317.5	304.7	Sep2015	Jones LangLaSalle
Total Office				1,862.4	1,688.6

34 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(c) Logistics

(c) Logistics
						Latest
	Ownership			Fair Value	Fair Value	Independent
	Interest(9)		Acquisition	31 Dec 15	31 Dec 14	Valuation
		%	Date	$M	$M	Date Valuer
2-4 Harvey Road, Kings Park, NSW		100.0	May 1999	46. 7	46.5	Jun 2014 Savills Australia
Citi-West Industrial Estate, Altona North, VIC		100.0	Aug 1994	66.6	67.5	Dec 2015 Savills Australia
Quad 1, Sydney Olympic Park, NSW	*	100.0	Jun 2001	24.9	21.4	Jun 2015 Savills Australia
Quad 4, Sydney Olympic Park, NSW	*	100.0	Jun 2004	41.4	31.2	Jun 2015 Savills Australia
6 Herb Elliott Avenue, Sydney Olympic Park, NSW	*	100.0	Jun 2010	13.2	13.0	Dec 2014 CB Richard Ellis Pty Ltd
8 Herb Elliott Avenue, Sydney Olympic Park, NSW	*	100.0	Aug 2004	10.6	10.6	Dec 2014 CB Richard Ellis Pty Ltd
3 Figtree Drive, Sydney Olympic Park, NSW	*	100.0	Apr 2013	21.0	21.0	Dec 2014 CB Richard Ellis Pty Ltd
5 Figtree Drive, Sydney Olympic Park, NSW	*	100.0	Jul 2005	23.8	23.8	Jun 2014 CB Richard Ellis Pty Ltd
7 Figtree Drive, Sydney Olympic Park, NSW	*	100.0	Jul 2004	13.8	13.8	Dec 2014 CB Richard Ellis Pty Ltd
Rosehill Business Park, Camellia, NSW		100.0	May 1998	79.0	75.0	Dec 2015 Urbis
15 Berry Street, Granville, NSW(3)		-	Nov 2000	-	13.0	Dec 2014 Savills Australia
19 Berry Street, Granville, NSW(3)		-	Dec 2000	-	28.1	Dec 2014 Savills Australia
16-34 Templar Road, Erskine Park, NSW		100.0	Jun 2008	51.5	41.0	Dec 2015 CB Richard Ellis Pty Ltd
67-75 Templar Road, Erskine Park, NSW		100.0	Jun 2008	22.5	20.5	Dec 2015 CB Richard Ellis Pty Ltd
Austrak Business Park, Somerton, VIC		50.0	Oct 2003	155.0	144.4	Dec 2015 M3 Property
116 Holt Street, Pinkenba, QLD(4)		-	Mar 2006	-	14.1	Jun 2014 M3 Property
4 Holker Street, Silverwater, NSW		100.0	Mar 2006	30.5	24.2	Jun 2014 Colliers International
372-374 Victoria Street, Wetherill Park, NSW		100.0	Jul 2006	19.0	21.0	Dec 2015 Jones Lang LaSalle
18 - 24 Abbott Road, Seven Hills, NSW(5)		100.0	Oct 2006	-	9.1	Jun 2015 Urbis
Citiport Business Park, Port Melbourne, VIC		100.0	Mar 2012	68.4	60.0	Jun 2015 Urbis
83 Derby Street, Silverwater, NSW		100.0	Aug 2012	29.3	28.4	Dec 2015 M3 Property
10 Interchange Drive, Eastern Creek, NSW		100.0	Aug 2012	30.8	30.0	Dec 2015 Jones Lang LaSalle
407 Pembroke Rd, Minto, NSW		50.0	Oct 2008	25.0	25.0	Dec 2014 M3 Property
Corner Pine Road and Loftus Road, Yennora, NSW		100.0	Nov 2013	50.5	45.8	Jun 2015 CB Richard Ellis Pty Ltd
16-28 Quarry Road, Yatala, QLD		100.0	Nov 2013	47.4	47.3	Dec 2014 Knight Frank Valuations
Toll NQX, Karawatha, QLD		100.0	Dec 2012	98.6	94.5	Jun 2015 M3 Property
TNT, 29-55 Lockwood Road, Erskine Park, NSW		100.0	Jun 2008	81.5	77.0	Dec 2015 CB Richard Ellis Pty Ltd
RAND, 36-52 Templar Road, Erskine Park, NSW(6)		100.0	Jun 2008	84.3	-	Feb 2015 CB Richard Ellis Pty Ltd
RRM,54-70 Templar Road,Erskine Park,NSW(6)		100.0	Jun 2008	135.8	-	Jun 2015 Jones LangLaSalle
Total Logistics				1,271.1	1,047.2
(d) Properties under development
17 Berry St, Granville, NSW(3)	-		Sep 2009	-	3.0	Jun 2012 Savills Australia
Erskine Park, NSW(6)	100.0		Jun 2008	3.4	176.7	Jun 2015 CB Richard Ellis Pty Ltd
407 Pembroke Rd, Minto, NSW	50.0		Oct 2008	4.7	4.7	Jun 2013 Knight Frank Valuations
Austrak Business Park, Somerton, VIC	50.0		Oct 2003	21.4	24.0	Dec 2015 M3 Property
18-24 Abbott Road, Seven Hills, NSW(5)	100.0		Oct 2006	9.0	-	Jun 2015 Urbis
1 & 2 Murray Rose Drive, Sydney Olympic Park, NSW(7)	-		May 2002	-	18.0	Dec 2014 CB Richard Ellis Pty Ltd
4 Murray Rose Drive, Sydney Olympic Park, NSW	* 100.0		May 2002	3.1	2.7	Dec 2014 CB Richard Ellis Pty Ltd
Rouse Hill Land,NSW(8)	* 100.0		Apr 2015	55.9	-	Mar 2015 CB Richard Ellis PtyLtd
Total Properties under development				97.5	229.1

(1) Dandenong Plaza has been classified as an asset held for sale as at 31 December 2015.

(2) Melbourne Central: 70.7% Retail and 29.3% Office (Dec 14: 71.1% Retail and 28.9% Office). Melbourne Central – Retail Includes 100% of Melbourne Central car park and 100% of 202 Little Lonsdale Street.

(3) On 10 December 2015 GPT sold its 100% interest in 15, 17 and 19 Berry Street, Granville for a total consideration of $65.0 million.

(4) On 11 August 2015 GPT sold its 100% interest in 116 Holt Street, Pinkenba for a consideration of $16.4 million.

(5) 18 - 24 Abbott Road has been classified as property under development as at 31 December 2015.

(6) Following practical completion in February and June 2015 respectively, RAND, 36-52 Templar Road, Erskine Park and RRM, 54-70 Templar Road, Erskine Park have been reclassified from properties under development to investment property in the Logistics portfolio. The remaining plot of land at Erskine Park continues to be classified as properties under development.

(7) On 30 June 2015 GPT sold its 100% interest in Lots 1 and 2 Murray Rose Avenue, Sydney Olympic Park, NSW 2127 for a total consideration of $30.5 million.

(8) On 10 April 2015 GPT acquired a 100% interest in land at Rouse Hill for a total consideration of $42.9 million.

(9) Freehold, unless otherwise marked with a * which denotes leasehold and ** denotes a combination of freehold and leasehold respectively.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(e) Reconciliation

(e) Reconciliation
	Retail $M Office $M Logistics $M Properties under development $M 31 Dec 15 $M 31 Dec 14 $M
Carrying amount at the beginning of the year Additions - operating capital expenditure Additions - interest capitalised(1) Additions - development capital expenditure Asset acquisitions Transfers to assets held for sale Transfers to / (from) properties under development Transfer to inventory Lease incentives Amortisation of lease incentives Disposals Fair value adjustments Leasing costs (net of amortisation) Straightlining of rental income Carrying amount at the end of the year	4,128.6 1,688.6 1,047.2 229.1 7,093.5 6,678.2 12.7 16.7 7.9 0.2 37.5 38.7 0.2 - (0.1) 3.7 3.8 9.1 50.7 46.0 6.5 41.0 144.2 264.6 3.2 - - 44.5 47.7 392.7 (197.0) - - - (197.0) - - - 211.1 (211.1) - - - - - (4.1) (4.1) - 9.1 26.2 8.9 - 44.2 29.7 (10.4) (19.1) (2.9) - (32.4) (29.8) - - (77.3) (23.0) (100.3) (506.9) 148.6 97.8 66.4 13.1 325.9 208.9 1.9 1.7 0.3 - 3.9 0.8 (2.7) 4.5 3.1 4.1 9.0 7.5
	4,144.9 1,862.4 1,271.1 97.5 7,375.9 7,093.5

(1) A capitalisation interest rate of 4.7% (2014: 5.3%) has been applied when capitalising interest on qualifying assets.

Land and buildings held for the long-term for rental yields and which are not occupied by GPT, are classified as investment properties.

Investment properties are initially recognised at cost and subsequently stated at fair value at each balance date. Fair value is based on the latest independent valuation adjusting for capital expenditure and capitalisation and amortisation of lease incentives since the date of the independent valuation report. Any change in fair value is recognised in the Consolidated Statement of Comprehensive Income in the period.

Properties under development are stated at fair value at each balance date. Fair value is assessed with reference to reliable estimates of future cash flows, status of the development and the associated risk profile. Finance costs incurred on properties undergoing development are included in the cost of the development.

Critical judgements are made by GPT in respect of the fair values of investment properties. Fair values are reviewed regularly by management with reference to external independent property valuations, recent offers and market conditions, using generally accepted market practices. The valuation process, critical assumptions underlying the valuations and information on sensitivity are disclosed in note 22.

Lease incentives provided by GPT to lessees are included in the measurement of fair value of investment property and are amortised over the lease term using a straight-line basis.

(f) Operating lease receivables

Non-cancellable operating leases receivables not recognised in the financial statements at balance date:

	Consolidated entity 31 Dec 15 $M 31 Dec 14 $M
Due within one year Due between one and five years Due after five years Total operating lease receivables	474.6 454.6 1,328.9 1,215.5 1,098.9 864.6
	2,902.4 2,534.7

36 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

3. EQUITY ACCOUNTED INVESTMENTS

3. EQUITY ACCOUNTED INVESTMENTS	3. EQUITY ACCOUNTED INVESTMENTS
Note		31 Dec 15 $M 31 Dec 14 $M
Investments in joint ventures (i) Investments in associates (ii) Total equity accounted investments (a) Details of equity accounted investments Name Principal Activity Ownership Interest 31 Dec 15 % 31 Dec 14 %		885.6 791.2 1,639.5 1,543.6
		2,525.1 2,334.8
		31 Dec 15 $M 31 Dec 14 $M
(i) Joint ventures 2 Park Street Trust(1) Investment property 50.00 50.00 1 Farrer Place Trust(1) Investment property 50.00 50.00 Horton Trust Investment property 50.00 50.00 Lendlease GPT (Rouse Hill) Pty Limited(1) (2) Property development 50.00 50.00 DPT Operator Pty Limited(1) Managing property 50.00 50.00 Total investment in joint ventures (ii) Associates GPT Wholesale Office Fund(1) Property investment 20.43 20.36 GPT Wholesale Shopping Centre Fund(1) Property investment 20.22 20.11 GPT Metro Office Fund(1) (3) Property investment 12.98 12.46 Total investments in associates		492.5 431.8 365.4 337.1 23.4 22.2 4.2 - 0.1 0.1
		885.6 791.2
		980.3 890.3 623.2 622.9 36.0 30.4
		1,639.5 1,543.6

(1) The entity has a 30 June balance date.

(2) GPT has 50% interest in Lendlease GPT (Rouse Hill) Pty Limited, a joint venture developing residential and commercial land at Rouse Hill, in partnership with Urban Growth and the NSW Department of Planning.

(3) The fair value of GPT Metro Office Fund based on the quoted market price is $34.4 million. There are no quoted market prices for GPT’s other associates and joint ventures.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(b) Summarised financial information for associates and joint ventures

The information disclosed reflects the amounts presented in the financial statements of the relevant associates and joint ventures and not GPT’s share of those amounts. They have been amended to reflect adjustments made by GPT when using the equity method, including fair value adjustments and modifications for differences in accounting policies.

(i) Joint ventures

(i) Joint ventures
	2 Park Street Trust 1 Farrer Place Trust Others Total 31 Dec 15 $M 31 Dec 14 $M 31 Dec 15 $M 31 Dec 14 $M 31 Dec 15 $M 31 Dec 14 $M 31 Dec 15 $M 31 Dec 14 $M
Current assets Cash and cash equivalents Other current assets Total current assets Total non-current assets Current liabilities Financial liabilities (excluding trade payables, other payables and provisions) Other current liabilities Total current liabilities Non-current liabilities Financial liabilities (excluding trade payables, other payables and provisions) Total non-current liabilities Negative net assets not recognised(1) Net assets Reconciliation to carrying amounts: Opening net assets 1 January Profit for the year Issue of equity Distributions paid / payable Closing net assets GPT’s share Summarised statement of comprehensive income Revenue Profit for the year Other comprehensive income Total comprehensive income	9.7 7.9 8.5 4.6 68.5 15.0 86.7 27.5 - 10.1 1.5 3.2 0.9 2.5 2.4 15.8
	9.7 18.0 10.0 7.8 69.4 17.5 89.1 43.3 980.0 865.0 755.3 680.8 49.5 80.5 1,784.8 1,626.3 4.6 19.5 30.3 14.5 4.4 9.3 39.3 43.3 0.2 - 4.2 - 2.0 3.2 6.4 3.2
	4.8 19.5 34.5 14.5 6.4 12.5 45.7 46.5 - - - - 57.1 57.1 57.1 57.1
	- - - - 57.1 57.1 57.1 57.1 - - - - - 16.2 - 16.2
	984.9 863.5 730.8 674.1 55.4 44.6 1,771.1 1,582.2
	863.5 769.0 674.1 664.5 44.6 42.2 1,582.2 1,475.7 140.5 80.3 67.7 44.9 13.5 10.8 221.7 136.0 29.2 61.3 25.5 6.0 - - 54.7 67.3 (48.3) (47.1) (36.5) (41.3) (2.7) (8.4) (87.5) (96.8)
	984.9 863.5 730.8 674.1 55.4 44.6 1,771.1 1,582.2
	492.5 431.8 365.4 337.1 27.7 22.3 885.6 791.2
	60.8 60.4 45.8 52.6 0.6 6.2 107.2 119.2 140.5 80.3 67.7 44.9 13.5 10.8 221.7 136.0 - - - - - - - -
	140.5 80.3 67.7 44.9 13.5 10.8 221.7 136.0

(1) This represents the negative net assets of Lendlease GPT (Rouse Hill) Pty Limited.

(ii) Associates

(ii) Associates
	GPT Wholesale Office Fund GPT Wholesale Shopping Centre Fund GPT Metro Office Fund Total 31 Dec 15 $M 31 Dec 14 $M 31 Dec 15 $M 31 Dec 14 $M 31 Dec 15 $M 31 Dec 14 $M 31 Dec 15 $M 31 Dec 14 $M
Total current assets 332.3 41.1 39.4 24.2 11.1 10.9 382.8 76.2 Total non-current assets 5,512.7 5,334.8 3,727.0 3,818.4 406.4 352.5 9,646.1 9,505.7 Total current liabilities 147.6 125.2 119.5 111.4 15.6 14.7 282.7 251.3 Total non-current liabilities 899.6 878.3 564.4 633.8 124.9 104.6 1,588.9 1,616.7 Net assets 4,797.8 4,372.4 3,082.5 3,097.4 277.0 244.1 8,157.3 7,713.9 Reconciliation to carrying amounts: Opening net assets 1 January 4,372.4 3,524.4 3,097.4 2,578.2 244.1 - 7,713.9 6,102.6 Profit / (loss) for the year 644.1 483.4 136.5 176.4 54.7 (2.5) 835.3 657.3 Issue of equity 57.1 616.5 29.8 504.2 1.2 246.6 88.1 1,367.3 Distributions paid / payable (275.8) (251.9) (181.2) (161.4) (23.0) - (480.0) (413.3) Closing net assets 4,797.8 4,372.4 3,082.5 3,097.4 277.0 244.1 8,157.3 7,713.9 GPT’s share 980.3 890.3 623.2 622.9 36.0 30.4 1,639.5 1,543.6 Summarised statement of comprehensive income Revenue 525.1 427.1 321.0 277.9 33.7 5.6 879.8 710.6 Profit for the year 644.1 483.4 136.5 176.4 54.7 (2.5) 835.3 657.3 Total comprehensive income 644.1 483.4 136.5 176.4 54.7 (2.5) 835.3 657.3 Distributions received from their associates 44.8 35.0 - - - - 44.8 35.0	332.3 41.1 39.4 24.2 11.1 10.9 382.8 76.2 5,512.7 5,334.8 3,727.0 3,818.4 406.4 352.5 9,646.1 9,505.7 147.6 125.2 119.5 111.4 15.6 14.7 282.7 251.3 899.6 878.3 564.4 633.8 124.9 104.6 1,588.9 1,616.7
	4,797.8 4,372.4 3,082.5 3,097.4 277.0 244.1 8,157.3 7,713.9
	4,372.4 3,524.4 3,097.4 2,578.2 244.1 - 7,713.9 6,102.6 644.1 483.4 136.5 176.4 54.7 (2.5) 835.3 657.3 57.1 616.5 29.8 504.2 1.2 246.6 88.1 1,367.3 (275.8) (251.9) (181.2) (161.4) (23.0) - (480.0) (413.3)
	4,797.8 4,372.4 3,082.5 3,097.4 277.0 244.1 8,157.3 7,713.9
	980.3 890.3 623.2 622.9 36.0 30.4 1,639.5 1,543.6
	644.1 483.4 136.5 176.4 54.7 (2.5) 835.3 657.3
	44.8 35.0 - - - - 44.8 35.0

38 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

4. LOANS AND RECEIVABLES

4. LOANS AND RECEIVABLES
	31 Dec 15 $M 31 Dec 14 $M
Current assets Trade receivables Less: impairment of trade receivables Distributions receivable from joint ventures Distributions receivable from associates Related party receivables(1) Loan receivables(2) Other receivables Total current loans and receivables Non-current assets Loan receivables(2) Loan advanced to Lendlease GPT (Rouse Hill) Pty Limited Total non-current loans and receivables	20.1 15.3 (0.6) (0.4)
	19.5 14.9 9.0 8.1 23.5 24.1 32.5 27.0 90.0 - 26.4 30.3
	200.9 104.4
	63.7 150.4 18.5 5.9
	82.2 156.3

(1) The related party receivables are on commercial terms and conditions.

(2) Includes $153.7 million (2014: $150.4 million) deferred consideration from the Indigenous Land Corporation (ILC) relating to the sale of Ayers Rock Resort. GPT has been provided with security guaranteeing the deferred payment and therefore the receivable is considered as recoverable. GPT has worked with the ILC on a debt restructuring arrangement which includes an immediate repayment of $90.0 million and the extension of the remaining receivable until December 2024 at an interest rate of 9.0% per annum. Hence the $90.0 million has been classified as current receivables and the remaining balance as non-current receivables.

The table below shows the ageing analysis of GPT’s loans and receivables.

Current receivables Impairment of current receivables Current loans and receivables Non current loans and receivables Total loans and receivables	31 December 2015	31 December 2014
	Not Due 0-30 days 31-60 days 61-90 days 90+ days Total	Not Due 0-30 days 31-60 days 61-90 days90+ days Total
	$M $M $M $M $M $M	$M $M $M $M $M $M
	- 106.7 1.2 0.2 3.4 111.5 - - - - (0.6) (0.6) 90.0 - - - - 90.0 82.2 - - - - 82.2	- 100.3 1.1 0.7 2.7 104.8 - - - - (0.4) (0.4) - - - - - - 156.3 - - - - 156.3
	172.2 106.7 1.2 0.2 2.8 283.1	156.3 100.3 1.1 0.7 2.3 260.7

Loans and receivables are initially recognised at fair value and subsequently at amortised cost using the effective interest rate method less any allowance for impairment. All loans and receivables with maturities greater than 12 months after balance date are classified as non-current assets.

Recoverability of trade receivables

Recoverability of trade receivables is assessed on an ongoing basis. Impairment is recognised in the Consolidated Statement of Comprehensive Income when there is objective evidence that GPT will not be able to collect the debts. Financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial re-organisation and default or delinquency in payments are considered objective evidence of impairment. See note 15(e) for more information on management of credit risk relating to trade receivables.

The amount of the impairment loss is the receivable carrying amount compared to the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short-term receivables are not discounted if the effect of discounting is immaterial. Debts that are known to be uncollectable are written off when identified.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

5. INTANGIBLES

5. INTANGIBLES
	Management rights $M IT development & software $M Total $M
Costs Balance as at 31 December 2013 Additions Transfer to other assets Balance as at 31 December 2014 Additions Balance as at 31 December 2015 Accumulated amortisation and impairment Balance as at 31 December 2013 Amortisation Balance as at 31 December 2014 Amortisation Impairment Balance as at 31 December 2015 Carrying amounts Balance as at 31 December 2014 Balance as at 31 December 2015	78.0 58.0 136.0 0.2 2.3 2.5 - (2.8) (2.8)
	78.2 57.5 135.7 0.1 4.4 4.5
	78.3 61.9 140.2 (66.4) (18.9) (85.3) (0.6) (6.1) (6.7)
	(67.0) (25.0) (92.0) (0.3) (6.5) (6.8) - (5.9) (5.9)
	(67.3) (37.4) (104.7) 11.2 32.5 43.7 11.0 24.5 35.5

Management rights

Management rights include property management and development management rights. Rights are initially measured at cost and subsequently amortised over their useful life, which ranges from 3 to 10 years.

For the management rights of Highpoint Shopping Centre, management considers the useful life as indefinite as there is no fixed term included in the management agreement. Therefore, GPT tests for impairment at balance date. Assets are impaired if the carrying value exceeds their recoverable amount. The recoverable amount is determined using a value in use calculation based on cash flow projections for a five year period. The discount rate applied to these asset-specific cash flow projections is 5.6% and the growth rate used to extrapolate the cash flows beyond the five year period is 4.0%.

IT development and software

Costs incurred in developing systems and acquiring software and licenses that will contribute future financial benefits are capitalised. These include external direct costs of materials and services and direct payroll and payroll related costs of employees’ time spent on the project. Amortisation is calculated on a straight-line basis over the length of time over which the benefits are expected to be received, generally ranging from 3 to 10 years.

IT development and software are assessed for impairment at each reporting date by evaluating if any impairment triggers exist. Where impairment triggers exist, management calculate the recoverable amount. The asset will be impaired if the recoverable amount exceeds the carrying value. Critical judgements are made by GPT in setting appropriate impairment triggers and assumptions used to determine the recoverable amount.

40 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

6. INVENTORIES

6. INVENTORIES
	31 Dec 15 $M 31 Dec 14 $M
Development properties held for resale Total inventories	101.5 43.6
	101.5 43.6

During the year, GPT has acquired land parcels adjacent to the Rouse Hill Town Centre from Urban Growth for $19.9 million in April 2015 and two land parcels located on Wembley Road in Berrinba from Logan City Council for $25.0 million in June 2015.

Development properties held for resale are stated at the lower of cost and net realisable value.

Cost

Cost includes the cost of acquisition, development, finance costs and all other costs directly related to specific projects including an allocation of direct overhead expenses. Post completion of the development, finance costs and other holding charges are expensed as incurred.

Net realisable value (NRV)

The NRV is the estimated selling price in the ordinary course of business less estimated costs to sell. At each reporting date, management reviews these estimates by taking into consideration:

the most reliable evidence and
any events which confirm conditions existing at the year end and cause any fluctuations of selling price and costs to sell.

The amount of any write-down is recognised as an impairment expense in the Consolidated Statement of Comprehensive Income. No impairment expense has been recognised for the year ended 31 December 2015 (2014: nil).

7. PAYABLES

7. PAYABLES
	31 Dec 15 $M 31 Dec 14 $M
Trade payables and accruals GST payables Distribution payable to stapled securityholders Interest payable Related party payables Other payables Total payables	152.8 128.8 0.4 - 206.4 180.3 18.4 16.7 7.6 5.6 5.2 7.4
	390.8 338.8

Trade payables and accruals represent liabilities for goods and services provided to GPT prior to the end of the financial year which are unpaid. They are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

8. PROVISIONS

8. PROVISIONS
	31 Dec 15 $M 31 Dec 14 $M
Current provisions Employee benefits Provision for levies Other Total current provisions Non-current provisions Employee benefits Total non-current provisions Provisions are recognised when:	7.0 6.9 13.6 11.6 4.2 5.3
	24.8 23.8
	1.9 2.0
	1.9 2.0

GPT has a present obligation (legal or constructive) as a result of a past event,
it is probable that resources will be expended to settle the obligation and
a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the obligation.

Provision for employee benefits

The provision for employee benefits represents annual leave and long service leave entitlements accrued for employees. The employee benefit liability expected to be settled within twelve months after the end of the reporting period is recognised in current liabilities.

Employee benefits expenses in the Consolidated Statement of Comprehensive Income

Employee benefits expenses

122.5 105.2

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

9. TAXATION

9. TAXATION
	31 Dec 15 $M 31 Dec 14 $M
(a) Income tax expense Deferred income tax expense / (credit) Income tax expense / (credit) in the Statement of Comprehensive Income Income tax expense / (credit) attributable to: (Loss) / profit from continuing operations (Loss) / profit from discontinued operations Aggregate income tax expense / (credit) Reconciliation of Income tax expense / (credit) to prima facie tax payable: Net profit before income tax expense Less: profit attributed to entities not subject to tax Net profit / (loss) before income tax expense Prima facie income tax at 30% tax rate (2014: 30%) (Non-assessable) / non-deductible items Deferred tax asset not recognised Prior years adjustments Previously unrecognised tax losses used to reduce deferred tax expense Income tax expense / (credit) (b) Deferred tax assets Employee benefits Provisions and accruals Tax losses recognised Other Net deferred tax asset Movement in temporary differences during the year Opening balance at beginning of the year Charged to the income statement Charged to the reserves Tax losses (utilised) / recognised Closing balance at end of the year	2.4 (1.7)
	2.4 (1.7)
	2.4 (4.3) - 2.6
	2.4 (1.7)
	870.5 643.5 (838.4) (659.1)
	32.1 (15.6)
	9.6 (4.7) (7.0) 5.3 3.8 5.3 - (7.6) (4.0) -
	2.4 (1.7)
	14.0 15.2 2.9 3.2 15.8 15.8 (2.5) (1.8)
	30.2 32.4
	32.4 25.0 1.5 (4.5) 0.3 5.7 (4.0) 6.2
	30.2 32.4

Trusts

Under current tax legislation, Trusts are not liable for income tax, provided their security holders are presently entitled to the taxable income of the Trust including realised capital gains each financial year.

Company and other taxable entities

Income tax expense / credit for the financial year is the tax payable / receivable on the current year’s taxable income. This is adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Deferred income tax liabilities and assets - recognition

Deferred income tax liabilities are recognised for all taxable temporary differences.

Deferred income tax assets are recognised for all deductible temporary differences, carried forward unused tax assets and unused tax losses, to the extent it is probable that taxable profit will be available to utilise them. The carrying amount of deferred income tax assets is reviewed and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to utilise them.

Deferred income tax liabilities and assets – measurement

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively enacted at the balance sheet date.

Deferred income tax is provided on temporary differences at the reporting date between accounting carrying amounts and the tax bases of assets and liabilities, other than for the following:

Where they arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither the accounting profit nor taxable profit or loss.
Where taxable temporary differences relate to investments in subsidiaries, associates and interests in joint ventures:
Deferred tax liabilities are not recognised if the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are not recognised if it is not probable that the temporary differences will reverse in the foreseeable future and taxable profit will not be available to utilise the temporary differences. Unused tax losses for which no deferred tax asset has been recognised are $45.0 million (2014: $44.1 million).

42 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

Tax relating to equity items

Income taxes relating to items recognised directly in equity are recognised in equity and not in the Consolidated Statement of Comprehensive Income.

CAPITAL STRUCTURE

Capital is defined as the combination of securityholders’ equity, reserves and net debt (borrowings less cash). The Board is responsible for monitoring and approving the capital management framework within which management operates. The purpose of the framework is to safeguard GPT’s ability to continue as a going concern while optimising its debt and equity structure. GPT aims to maintain a capital structure which includes net gearing levels within a range of 25% to 35% (based on net debt to total tangible assets less cash) that is consistent with a stable investment grade credit rating in the “A category”.

At 31 December 2015, GPT is credit rated A- Positive /A3 stable by Standard and Poor’s (S&P) and Moody’s Investor Services (Moody’s) respectively. The ratings are important as they reflect the investment grade credit rating of GPT which allows access to global capital markets to fund its development pipeline and future acquisition investment opportunities. The stronger ratings improve both the availability of capital, in terms of amount and tenor, and reduce the cost at which it can be obtained.

GPT is able to vary the capital mix by:

issuing stapled securities,
buying back stapled securities,
activating the distribution reinvestment plan,
adjusting the amount of distributions paid to stapled security holders, or
selling assets to reduce borrowings.

10. EQUITY AND RESERVES

(a) Contributed equity

(a) Contributed equity
	Number Trust $M Other entities Stapled to GPT $M Total $M
(i) Ordinary stapled securities Opening securities on issue as at 31 December 2013 Securities issued On-market buy-back Closing securities on issue as at 31 December 2014 Opening securities on issue as at 31 December 2014 Securities issued - institutional placement(1) Transaction costs Securities issued - Long Term Incentive Plan Securities issued - Security Purchase Plan(1) Securities issued - Deferred Short Term Incentive Plan Securities issued - Broad Based Employee Security Ownership Plan Distribution reinvestment plan for 6 month period ended 30 June 2015(2) Closing securities on issue as at 31 December 2015 (ii) Exchangeable securities Opening securities on issue Closing securities on issue as at 31 December 2014 Opening securities on issue Redemption Transaction costs Closing securities on issue as at 31 December 2015(3) Total Contributed Equity - 31 December 2014 Total Contributed Equity - 31 December 2015	1,694,888,638 7,379.6 319.5 7,699.1 1,980,505 5.7 - 5.7 (11,408,188) (40.8) (0.2) (41.0)
	1,685,460,955 7,344.5 319.3 7,663.8
	1,685,460,955 7,344.5 319.3 7,663.8 76,832,152 321.0 4.0 325.0 - (5.5) (0.1) (5.6) 2,169,649 6.2 0.1 6.3 11,820,458 49.3 0.7 50.0 1,236,353 5.0 0.1 5.1 59,514 0.3 - 0.3 17,237,448 73.1 1.2 74.3
	1,794,816,529 7,793.9 325.3 8,119.2
	2,500 240.6 - 240.6
	2,500 240.6 - 240.6
	2,500 240.6 - 240.6 (2,500) (325.0) - (325.0) - (0.1) - (0.1)
	- (84.5) - (84.5)

	- 7,585.1 319.3 7,904.4
	- 7,709.4 325.3 8,034.7

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

Ordinary stapled securities are classified as equity and recognised at the fair value of the consideration received by GPT. Any transaction costs arising on the issue and buy back of ordinary securities are recognised directly in equity as a reduction, net of tax, of the proceeds received.

(1) Securities issued – institutional placement and stapled security purchase plan
Equity raising comprised a $325.0 million institutional placement and a $50.0 million security purchase plan. The funding was used to fund the redemption of exchangeable securities. Refer to note (3) below.
(2) Distribution reinvestment plan

The distribution reinvestment plan was activated for the six months to 30 June 2015 distribution at a 1.0% discount to the volume weighted average GPT trading price for a period of 15 business days commencing from the business day following the record date (30 June 2015).

(3) Exchangeable securities

On 27 November 2008, 2,500 Exchangeable Securities (ES) were issued to an affiliate of GIC Real Estate Pty Limited (GIC RE) at $100,000 per exchangeable security. The ES were exchangeable into stapled securities at GIC RE’s option subject to obtaining necessary approvals at an initial exchange price of $3.883 per stapled security in accordance with the terms of the agreement. The ES offered discretionary distributions of 10% per annum and carried voting rights in GPT. On 28 January 2015, GPT redeemed the ES with GIC for $325.0 million, plus the accrued distribution.

(b) Reserves

(b) Reserves
	Foreign currency translation reserve Cash flow hedge reserve Employee incentive scheme reserve Available for sale reserve Total reserve Trust $M Other entities stapled to GPT $M Trust $M Other entities stapled to GPT $M Trust $M Other entities stapled to GPT $M Trust $M Other entities stapled to GPT $M Trust $M Other entities stapled to GPT $M
Balance at 1 January 2014 Net foreign exchange translation adjustments Changes in the fair value of cash flow hedges Security-based payment transactions Balance at 31 December 2014 Balance at 1 January 2015 Revaluation of available for sale financial asset Net foreign exchange translation adjustments Changes in the fair value of cash flow hedges Security-based payment transactions Balance at 31 December 2015	(15.3) 32.2 (5.9) - 2.3 20.8 - - (18.9) 53.0 (9.7) 1.8 - - - - - - (9.7) 1.8 - - (5.6) - - - - - (5.6) - - - - - - 2.7 - - - 2.7
	(25.0) 34.0 (11.5) - 2.3 23.5 - - (34.2) 57.5
	(25.0) 34.0 (11.5) - 2.3 23.5 - - (34.2) 57.5 - - - - - - - 8.6 - 8.6 0.4 0.1 - - - - - - 0.4 0.1 - - (7.8) - - - - - (7.8) - - - - - (2.3) (7.1) - - (2.3) (7.1)
	(24.6) 34.1 (19.3) - - 16.4 - 8.6 (43.9) 59.1

Nature and purpose of reserves

Foreign currency translation reserve

The reserve is used to record exchange differences arising on translation of foreign controlled entities and associated funding of foreign controlled entities. The movement in the reserve is recognised in the net profit when the investment in the foreign controlled entity is disposed.

Cash flow hedge reserve

The reserve records the portion of the unrealised gain or loss on a hedging instrument in a cash flow hedge that is determined to be an effective hedge relationship.

Employee incentive scheme reserve

The reserve is used to recognise the fair value of equity-settled security based payments provided to employees, including key management personnel, as part of their remuneration. Refer to note 18 for further details of the security based payments.

Available for sale reserve

The reserve is used to recognise the changes in the fair value of the available for sale financial assets.

44 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(c) Retained earnings / accumulated losses

(c) Retained earnings / accumulated losses
Note	Trust $M Other entities stapled to GPT $M Total $M
Consolidated entity Balance at 1 January 2014 Net profit / (loss) for the financial year Less: Distributions paid/payable to ordinary stapled securityholders 12(a) Less: Distributions paid/payable to exchangeable securities securityholders 12(b) Balance at 31 December 2014 Balance at 1 January 2015 Net profit for the financial year Less: Distributions paid/payable to ordinary stapled securityholders 12(a) Less: Distributions paid/payable to exchangeable securities securityholders 12(b) Reclassification of employee incentive security scheme reserve to retained earnings / accumulated losses Balance at 31 December 2015	(244.2) (1,014.8) (1,259.0) 656.2 (10.9) 645.3 (357.3) - (357.3) (25.0) - (25.0)
	29.7 (1,025.7) (996.0)
	29.7 (1,025.7) (996.0) 847.8 20.3 868.1 (401.9) - (401.9) (1.7) - (1.7) 3.9 2.8 6.7
	477.8 (1,002.6) (524.8)

11. EARNINGS PER STAPLED SECURITY

11. EARNINGS PER STAPLED SECURITY
	31 Dec 15 Cents 31 Dec 15 Cents 31 Dec 14 Cents
(a) Attributable to ordinary securityholders of the Trust Basic and diluted earnings per security - profit from continuing operations Basic and diluted earnings per security - profit from discontinued operations Total basic and diluted earnings per security attributable to ordinary securityholders of the Trust (b) Attributable to ordinary stapled securityholders of GPT Group Basic and diluted earnings per security - profit from continuing operations Basic and diluted earnings per security - profit from discontinued operations Total basic and diluted earnings per security attributable to ordinary stapled securityholders of The GPT Group	Basic Diluted Basic and Diluted 47.1 47.0 36.4 0.6 0.6 1.0
	47.7 47.6 37.4
	48.2 48.1 36.0 0.6 0.6 0.8
	48.8 48.7 36.8

The earnings and weighted average number of ordinary securities (WANOS) used in the calculations of basic and diluted earnings	The earnings and weighted average number of ordinary securities (WANOS) used in the calculations of basic and diluted earnings	per ordinary	stapled
security are as follows:
(c) Reconciliation of earnings used in calculating earnings per ordinary stapled security	$M	$M	$M
Net profit from continuing operations attributable to the securityholders of the Trust	836.4	836.4	639.0
Net profit from discontinued operations attributable to the securityholders of the Trust	11.4	11.4	17.2
	847.8	847.8	656.2
Less: distribution to the holders of Exchangeable Securities(1)	(1.7)	(1.7)	(25.0)
Basic and diluted earnings of the Trust	846.1	846.1	631.2
Add: Net profit / (loss) from continuing operations attributable to the securityholders of other stapled entities	20.4	20.4	(6.4)
Add: Net loss from discontinued operations attributable to the securityholders of other stapled entities	(0.1)	(0.1)	(4.5)
Basic and diluted earnings of the Company	20.3	20.3	(10.9)
Basic and diluted earnings of The GPT Group	866.4	866.4	620.3
(d) WANOS	Millions	Millions	Millions
WANOS used as the denominator in calculating basic earnings per ordinary stapled security	1,773.9	1,773.9	1,686.3
Performance security rights at weighted average basis(2)	3.8	3.8	2.8
WANOS used as the denominator in calculating diluted earnings per ordinary stapled security	1,777.7	1,777.7	1,689.1

(1) These securities are not considered dilutive as the distribution per exchangeable security is higher than the basic EPS per stapled security. Refer to note 10(a) for further details on the Exchangeable Securities.

(2) Performance security rights granted under the Long Term Incentive plan are only included in dilutive earnings per ordinary stapled security where the performance hurdles are met as at the year end.

GPT ANNUAL FINANCIAL REPORT 2015 45

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

Calculation of earnings per stapled security

Basic earnings per stapled security is calculated as net profit attributable to ordinary stapled securityholders of GPT, divided by the weighted average number of ordinary stapled securities outstanding during the financial year which is adjusted for bonus elements in ordinary stapled securities issued during the financial year. Diluted earnings per stapled security is calculated as net profit attributable to ordinary stapled securityholders of GPT divided by the weighted average number of ordinary stapled securities and dilutive potential ordinary stapled securities. Where there is no difference between basic earnings per stapled security and diluted earnings per stapled security, the term basic and diluted earnings per stapled ordinary security is used.

12. DISTRIBUTIONS PAID AND PAYABLE

Distributions are paid to GPT securityholders and exchangeable securities securityholders half yearly.

	Cents per stapled security Total amount $M
(a) Stapled Securityholders Distibutions paid and payable 2015 6 months period ended 30 June 2015 6 months period ended 31 December 2015(1) Total distributions paid / payable 2014 6 months period ended 30 June 2014 6 months period ended 31 December 2014 Total distributions paid / payable (b) Exchangeable Securities Securityholders(2) (i) Distibutions paid Period from 28 November 2014 to 28 January 2015 (2014: 28 November 2013 to 27 November 2014) 10% per exchangeable security (ii) Distibutions payable Period from 28 November 2014 to 31 December 2014 10% per exchangeable security	11.0 195.5 11.5 206.4
	22.5 401.9
	10.5 177.0 10.7 180.3
	21.2 357.3
	31 Dec 15 31 Dec 14 $M $M
	1.7 25.0 - 2.4

(1) December 2015 half yearly distribution of 11.5 cents per stapled security has been declared on 22 December 2015 and is expected to be paid on 29 February 2016 based on the record date of 31 December 2015.

(2) The exchangeable securities were redeemed on 28 January 2015 for $325.0 million, plus accrued distribution.

13. CASH FLOWS FROM OPERATING ACTIVITIES

Reconciliation of net profit after tax to net cash inflows from operating activities

Reconciliation of net profit after tax to net cash inflows from operating activities
Net profit for the year Fair value gain to investment properties Fair value loss to derivatives Net impact of foreign currency borrowings and associated hedging loss Loss on re-estimation of financial liability at amortised cost Loss on redemption of financial liability Impairment expense Share of after tax profit of equity accounted investments (net of distributions) Fair value loss of unlisted equity investments Net gain on disposal of assets Depreciation and amortisation Non-cash employee benefits - security based payments Non-cash revenue adjustments Interest capitalised Increase in operating assets Payment for inventories(1) Increase in operating liabilities Net foreign exchange loss Reversal of prior year impairment Others Net cash inflows from operating activities	31 Dec 15 $M 31 Dec 14 $M
	868.1 645.3 (325.9) (208.9) 25.5 84.8 0.8 3.6 41.1 - 5.6 - 5.9 - (137.0) (70.0) 6.0 (1.2) (9.8) (10.9) 9.1 8.6 5.8 3.1 9.6 9.6 (5.7) (9.5) (16.7) (16.5) (49.6) (43.6) 18.2 5.9 1.0 - (12.7) - 3.0 4.4
	442.3 404.7

(1) This represents payment for land parcels adjacent to the Rouse Hill Town Centre acquired in April 2015 and two land parcels located on Wembley Road in Berrinba acquired in June 2015 (Dec 14: Metroplex development at Westgate).

46 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

14. BORROWINGS

14. BORROWINGS
	31 Dec 15 $M 31 Dec 14 $M
Current borrowings - unsecured Current borrowings - secured Current borrowings Non-current borrowings - unsecured Non-current borrowings - secured Non-current borrowings Total borrowings(1) - carrying amount Total borrowings(2) - fair value	- - 6.7 7.0
	6.7 7.0
	2,840.4 2,617.9 100.9 93.6
	2,941.3 2,711.5
	2,948.0 2,718.5
	2,958.3 2,781.9

(1) Including unamortised establishment costs and fair value adjustments

(2) For the majority of borrowings, the carrying amount approximates its fair value due to the short term nature of borrowings. Where material differences arise, the fair value is calculated using market observable inputs (level 2) and unobservable inputs (level 3). Excluding unamortised establishment costs.

Borrowings are either initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method or at their fair value. Under the amortised cost method, any transaction fees, costs, discounts and premiums directly related to the borrowings are recognised in the Consolidated Statement of Comprehensive Income over the expected life of the borrowings unless there is an effective fair value hedge of the borrowings, in which case a fair value adjustment will be applied based on the mark to market movement in the benchmark component of the borrowings and this movement is recognised in the Consolidated Statement of Comprehensive Income.

During the period, $10.0 million of CPI bonds were repurchased for $15.6 million, giving rise to a realised loss on redemption of $5.6 million. GPT further re-estimated the amortised cost for the remaining $75.0 million CPI bonds and as a result, a $41.1 million loss was recognised in the Consolidated Statement of Comprehensive Income.

All borrowings with maturities greater than 12 months after reporting date are classified as non-current liabilities.

The maturity profile of borrowings is provided below.

	Total facility(1) $M Used facility(1) $M	Unused facility $M
Due within one year Due between one and five years Due after five years Cash and cash equivalents Total financing resources available at the end of the year	9.8 6.7 2,337.0 2,026.0 655.4 655.4	3.1 311.0 -
	3,002.2 2,688.1	314.1 79.3
		393.4

(1) Excluding unamortised establishment costs and fair value adjustments.

Cash and cash equivalents includes cash on hand, cash at the bank and short term money market deposits.

Debt covenants

GPT’s borrowings are subject to a range of covenants, according to the specific purpose and nature of the loans. Most bank facilities include one or more of the following covenants:

Gearing: total debt must not exceed 50% of total tangible assets; and
Interest coverage: the ratio of earnings before interest and taxes (EBIT) to finance costs is not to be less than 2 times.
A breach of these covenants may trigger consequences ranging from rectifying and/or repricing to repayment of outstanding amounts. GPT performed a review of debt covenants as at 31 December 2015 and no breaches were identified.

15. FINANCIAL RISK MANAGEMENT

The GPT Board approve GPT’s treasury and risk management policy which:

establishes a framework for the management of risks inherent to the capital structure,
defines the role of GPT’s treasury, and
sets out the policies, limits, monitoring and reporting requirements for cash, borrowings, liquidity, credit risk, foreign exchange, interest rate and other derivative instruments.

GPT ANNUAL FINANCIAL REPORT 2015 47

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(a) Interest rate risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. GPT’s primary interest rate risk arises from borrowings. The table below provides a summary of GPT’s gross interest rate risk exposure as at 31 December 2015 on interest bearing borrowings together with the net effect of interest rate risk management transactions. This excludes unamortised establishment costs and fair value and other adjustments.

	Gross exposure Net exposure 2015 $M 2014 $M 2015 $M 2014 $M
Fixed rate interest-bearing borrowings Floating rate interest-bearing borrowings	1,055.4 1,390.4 1,700.0 2,175.0 1,632.7 1,202.8 988.1 418.2
	2,688.1 2,593.2 2,688.1 2,593.2

Interest rate risk – sensitivity analysis

The impact on interest expense and interest revenue of a 1% increase or decrease in market interest rates is shown below. Interest expense is sensitive to movements in market interest rates on floating rate debt (net of any derivatives).

A 1% increase or decrease is used for consistency of reporting interest rate risk across GPT and represents management’s assessment of the potential change in interest rates.

assessment of the potential change in interest rates.
	2015	2015	2014	2014
	(+1%)	(-1%)	(+1%)	(-1%)
	$M	$M	$M	$M
Impact on Statement of Comprehensive Income
Impact on interest revenue increase / (decrease)	0.8	(0.8)	0.7	(0.7)
Impact on interest expense (increase) / decrease	(9.9)	9.9	(4.2)	4.2

Hedging interest rate risk

Interest rate risk inherent in borrowings issued at floating rates is managed by entering into interest rate swaps that are used to convert floating interest rate borrowings to fixed interest rates, which reduces GPT’s exposure to interest rate volatility.

The derivative financial instruments used to hedge interest rate risk which are presented in the Consolidated Statement of Financial Position comprise the following:

Position comprise the following:
	31 Dec 15 $M 31 Dec 14 $M
Current derivative assets Non-current derivative assets Total derivative assets Subject to master netting but not offset Net derivative assets post offset Current derivative liabilities Non-current derivative liabilities Total derivative liabilities Subject to master netting but not offset Net derivative liabilities post offset	- 3.5 342.5 237.8
	342.5 241.3 111.9 125.5
	230.6 115.8 0.3 4.4 115.6 139.9
	115.9 144.3 111.9 125.5
	4.0 18.8

All of the Group’s derivatives were valued using market observable inputs (level 2) with the exception of a year on year inflation swap. For additional fair value disclosures refer to note 22.

Derivative financial assets and liabilities are not offset in the Consolidated Statement of Financial Position. Agreements with derivative counterparties are based on the ISDA (International Swap Derivatives Association) Master Agreement, which in certain circumstances (such as default) confers a right to set-off the position owing/receivable to a single counterparty to a net position as long as all outstanding derivatives with that counterparty are terminated. As GPT does not presently have a legally enforceable right to set-off, these amounts have not been offset in the Consolidated Statement of Financial Position, but have been presented separately.

Derivatives are carried in the Consolidated Statement of Financial Position at fair value and classified according to their contractual maturities. If they do not qualify for hedge accounting, changes in fair value are recognised in the Consolidated Statement of Comprehensive Income including gains or losses on maturity or close-out. Where derivatives qualify for hedge accounting and are designated in hedge relationships, the recognition of any gain or loss depends on the nature of the item being hedged. Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recorded in profit or loss, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. For cash flow hedges, the effective portion of changes in the fair value of derivatives is recognised in other comprehensive income and accumulated in reserves in equity. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss.

GPT applies hedge accounting to borrowings denominated in foreign currencies only. GPT designates and documents the relationship between hedging instruments and hedged items and the proposed effectiveness of the risk management objective the hedge relationship addresses. On an ongoing basis, GPT documents its assessment of retrospective and prospective hedge effectiveness.

Hedge accounting is discontinued when the hedging instrument expires, is terminated, or is no longer in an effective hedge relationship.

48 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(b) Liquidity risk

Liquidity risk is the risk that GPT, as a result of its operations:

will not have sufficient funds to settle a transaction on the due date,
will be forced to sell financial assets at a value which is less than what they are worth, or
may be unable to settle or recover a financial asset at all.

GPT manages liquidity risk by:

maintaining sufficient cash,
maintaining an adequate amount of committed credit facilities,
maintaining a minimum liquidity buffer in cash and surplus committed facilities for the forward rolling twelve month period,
minimising debt maturity concentration risk by diversifying sources and spreading maturity dates of committed credit facilities and maintaining a minimum weighted average debt maturity of 4 years, and
maintaining the ability to close out market positions.

The table below shows an analysis of the undiscounted contractual maturities of liabilities which forms part of GPT’s assessment of liquidity risk.

Liabilities Non-derivatives Payables Borrowings Projected interest cost on borrowings(1) Derivatives Projected interest cost on derivative liabilities(1)(2) Total liabilities Less cash and cash equivalents Total liquidity exposure Projected interest income on derivative assets Net liquidity exposure	31 December 2015	31 December 2014
	1 year or less Over 1 year to 2 years Over 2 years to 5 years Over 5 years Total $M $M $M $M $M	1 year or less Over 1 year to 2 years Over 2 years to 5 years Over 5 years Total $M $M $M $M $M
	390.8 - - - 390.8 6.7 518.6 1,507.4 655.4 2,688.1 109.4 99.1 178.6 282.9 670.0 15.8 16.4 51.5 17.7 101.4	338.8 - - - 338.8 7.0 681.8 1,089.0 815.4 2,593.2 120.9 100.6 223.4 350.9 795.8 18.3 18.0 50.7 20.1 107.1
	522.7 634.1 1,737.5 956.0 3,850.3	485.0 800.4 1,363.1 1,186.4 3,834.9
	79.3 - - - 79.3	72.4 - - - 72.4
	443.4 634.1 1,737.5 956.0 3,771.0	412.6 800.4 1,363.1 1,186.4 3,762.5
	13.3 13.5 53.8 56.9 137.5	15.5 12.5 24.3 60.4 112.7
	430.1 620.6 1,683.7 899.1 3,633.5	397.1 787.9 1,338.8 1,126.0 3,649.8

(1) Projection is based on the likely outcome of contracts given the interest rates, margins, forecast exchange rates and interest rate forward curves as at 31 December 2015 and 31 December 2014 up until the contractual maturity of the contract. The projection is based on future non-discounted cash flows and does not ascribe any value to optionality on any instrument which may be included in the current market values. Projected interest on foreign currency borrowings is shown after the impact of associated hedging.

(2) In accordance with AASB 7, the future value of contractual cash flows of non-derivative and derivative liabilities only is to be included in liquidity risk disclosures. As derivatives are exchanges of cash flows, the positive cash flows from derivative assets have been disclosed separately to provide a more meaningful analysis of GPT’s net liquidity exposure. The methodology used in calculating projected interest income on derivative assets is consistent with the above liquidity risk disclosures.

(c) Refinancing risk

Refinancing risk is the risk that credit is unavailable or available at unfavourable interest rates and credit market conditions resulting in an unacceptable increase in GPT’s interest cost. Refinancing risk arises when GPT is required to obtain debt to fund existing and new debt positions. GPT manages this risk by spreading sources and maturities of borrowings in order to minimise debt concentration risk, allow averaging of credit margins over time and reducing refinance amounts.

As at 31 December 2015, GPT’s exposure to refinancing risk can be monitored by the spreading of its contractual maturities on borrowings in the liquidity risk table above or with the information in note 14.

(d) Foreign exchange risk

Foreign exchange risk refers to the risk that the value of a financial commitment, asset or liability will fluctuate due to changes in foreign exchange rates. GPT’s foreign exchange risk arises primarily from:

firm commitments of highly probable forecast transactions for receipts and payments settled in foreign currencies or with prices dependent on foreign currencies; and
investments in foreign assets.

The foreign exchange risk arising from borrowings denominated in foreign currency is managed with cross currency interest rate swaps which convert foreign currency exposures into Australian dollar exposures. Sensitivity to foreign exchange is deemed insignificant.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

Foreign currency assets and liabilities

The following table shows the Australian dollar equivalents of amounts within the Consolidated Statement of Financial Position which are denominated in foreign currencies.

Assets Cash and cash equivalents Interests in equity accounted investments Interests in unlisted investments Derivative financial instruments Loans and receivables Liabilities Other liabilities Borrowings(1)	Euros United States Dollars Hong Kong Dollars 31 Dec 15 $M 31 Dec 14 $M 31 Dec 15 $M 31 Dec 14 $M 31 Dec 15 $M 31 Dec 14 $M
	1.3 1.4 0.2 0.2 - - - - - 0.2 - - - - - 6.0 - - - - 162.6 101.8 44.5 20.5 - 4.5 - - - -
	1.3 5.9 162.8 108.2 44.5 20.5
	0.3 0.3 - - - - - - 616.4 543.7 137.9 117.1
	0.3 0.3 616.4 543.7 137.9 117.1

(1) Excluding unamortised establishment costs

(e) Credit risk

Credit risk is the risk that a contracting entity will not complete its obligations under a contractual agreement, resulting in a financial loss to GPT. GPT has exposure to credit risk on all financial assets included on the Consolidated Statement of Financial Position. GPT manages this risk by:

establishing credit limits for financial institutions and monitoring credit exposures for customers to ensure that GPT only trades and invests with approved counterparties,
investing and transacting derivatives with multiple counterparties that have a minimum long term credit rating of A- from S&P, or equivalent if an S&P rating is not available, minimising exposure to any one counterparty,
providing loans into joint ventures, associates and third parties, only where GPT is comfortable with the underlying property exposure within that entity,
regularly monitoring loans and receivables balances,
regularly monitoring the performance of its associates, joint ventures and third parties, and
obtaining collateral as security (where appropriate).

Receivables are reviewed regularly throughout the year. A provision for doubtful debts is made where collection is deemed uncertain. Part of GPT’s policy is to hold collateral as security over tenants via bank guarantees (or less frequently collateral such as bond deposits or cash).

The maximum exposure to credit risk as at 31 December 2015 is the carrying amounts of financial assets recognised on GPT’s Consolidated Statement of Financial Position. For more information refer to note 4.

OTHER DISCLOSURE ITEMS

16. COMMITMENTS

(a) Capital expenditure commitments

Commitments arising from contracts principally relating to the capital expenditure on investment properties which are contracted for at balance date but not recognised on the Consolidated Statement of Financial Position.

	31 Dec 15 $M 31 Dec 14 $M
Retail Office Logistics Properties under development Total capital expenditure commitments (b) Operating lease commitments(1) Due within one year Due between one and five years Over five years Total operating lease commitments	36.1 3.4 54.7 61.4 11.5 5.8 - 21.9
	102.3 92.5
	2.3 2.3 9.5 8.0 0.7 1.5
	12.5 11.8

(1) Contracted non-cancellable future minimum lease payments expected to be payable but not recognised on the Consolidated Statement of Financial Position.

50 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(c) Commitments relating to equity accounted investments

GPT’s share of equity accounted investments’ commitments at balance date are set out below:

(c) Commitments relating to equity accounted investments GPT’s share of equity accounted investments’ commitments at balance date are set out below:
Capital expenditure Total joint ventures and associates’ commitments	31 Dec 15 $M 31 Dec14 $M 62.1 38.2
	62.1 38.2

17. CONTINGENT LIABILITIES

A contingent liability is a liability that is not sufficiently certain to qualify for recognition as a provision where uncertainty may exist regarding the outcome of future events.

Highpoint Shopping Centre

Highpoint Property Group has the right to sell, via a put option that expires in July 2016, between 8.33% and 25% being all of its interest in Highpoint Shopping Centre and the adjacent Maribyrnong Homemaker City Centre to the GPT Wholesale Shopping Centre Fund (GWSCF). The GPT Group would be required to acquire the interest if GWSCF does not acquire it and another party is not nominated to do so. The price would be determined by an independent market valuation process.

In 2014, the Highpoint Property Group exercised its option to put 8.33% of their interest to GWSCF and the Board of GWSCF agreed to acquire this interest. The settlement occurred in September 2014. After this transaction, Highpoint Property Group has a remaining interest of 25%.

18. SECURITY BASED PAYMENTS

GPT currently has four employee security schemes – the General Employee Security Ownership Plan (GESOP), the Broad Based Employee Security Ownership Plan (BBESOP), the Deferred Short Term Incentive Plan (DSTI) and the Long Term Incentive (LTI) Scheme.

(a) GESOP

The Board believes in creating ways for employees to build an ownership stake in the business. As a result, the Board introduced the GESOP in March 2010 for individuals who do not participate in the LTI.

Under the plan individuals who participate receive an additional benefit equivalent to 10% of their short term incentives (STIC) which is (after the deduction of income tax) invested in GPT securities to be held for a minimum of 1 year.

(b) BBESOP

Under the plan individuals who are not eligible to participate in any other employee security scheme may receive $1,000 worth of GPT securities if GPT achieves at least target level performance. Securities must be held for the earlier of 3 years or the end of employment.

(c) DSTI

Since 2014, STIC is delivered to the senior executives as 50% in cash and 50% in GPT stapled securities (a deferred component). The deferred component is initially awarded in the form of performance rights, with the rights converting to restricted GPT stapled securities to the extent the performance conditions are met. Half of the awarded stapled securities will vest one year after conversion with the remaining half vesting two years after conversion, subject to continued employment up to the vesting dates.

(d) LTI

At the 2009 AGM, GPT securityholders approved the introduction of a LTI plan based on performance rights. Any subsequent amendments to the LTI plan have been approved by GPT securityholders.

The LTI plan covers each 3 year period. Awards under the LTI to eligible participants are in the form of performance rights which convert to GPT stapled securities for nil consideration if specified performance conditions for the applicable 3 year period are satisfied. Please refer to the Remuneration Report for detail on the performance conditions.

The Board determines those executives eligible to participate in the plan and, for each participating executive, grants a number of performance rights calculated as a percentage of their base salary divided by GPT’s volume weighted average price (VWAP) for the final quarter of the year preceding the plan launch.

Fair value of performance security rights issued under DSTI and LTI

The fair value of the performance rights is recognised as an employee benefit expense with a corresponding increase in the employee security scheme reserve in equity. Fair value is measured at grant date, recognised over the period during which the employees become unconditionally entitled to the rights and is adjusted to reflect market vesting conditions. Non-market vesting conditions are included in assumptions about the number of rights that are expected to be vested. At each reporting date, GPT revises its estimate of the number of performance rights that are expected to be exercisable and the employee benefit expense recognised each reporting period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the Consolidated Statement of Comprehensive Income with a corresponding adjustment to equity.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

Fair value of the performance rights has been independently determined using the Monte Carlo simulation methodology for those rights issued under LTI and the Black Scholes methodology for those rights issued under DSTI. The following key inputs are taken into account:

account:
	2015 LTI	2015 DSTI
Fair value of rights	$2.48	$4.19
Security price at valuation date	$4.47	$4.78
Grant dates	18 May 2015	6 May 2015
Expected vesting dates	31 December 2017	50% on 31 Dec 2016,
		50% on 31 Dec 2017
Security Price at the grant date	$4.47	N/A
Expected life	3 years (2 years	50% - 1 year, 50% -
	remaining)	2 years
Distribution yield	5.4%	5.4%
Risk free interest rate	2.0%	N/A
Volatilty(1)	18.5%	N/A

(1) The volatility is based on the historic volatility of the security.

(e) Summary table of all employee security schemes

(e) Summary table of all employee security schemes
	Number of rights DSTI LTI Total
Rights outstanding at the beginning of the year Rights granted during the year Rights forfeited during the year Rights converted to GPT stapled securities during the year(1) Rights outstanding at the end of the year (1) Rights under the 2014 DSTI plan were converted to GPT stapled securities on 18 March 2015 and rights under the 2012 LTI on 23 February 2015.	1,872,133 12,026,315 13,898,448 1,473,587 3,895,599 5,369,186 (826,935) (4,653,486) (5,480,421) (1,236,353) (2,350,540) (3,586,893)
	1,282,432 8,917,888 10,200,320
	Plan were converted to GPT stapled securities Number of stapled securities GESOP DSSP Total
Securities outstanding at the beginning of the year Securities granted during the year Securities vested during the year Securities outstanding at the end of the year	77,024 284,315 361,339 74,715 - 74,715 (84,011) (284,315) (368,326)
	67,728 - 67,728

19. RELATED PARTY TRANSACTIONS

General Property Trust is the ultimate parent entity.

Equity interests in joint ventures and associates are set out in note 3. Loans provided to joint ventures and associates as part of the funding of those arrangements are set out in note 4.

Key management personnel

Key management personnel compensation was as follows.

	31 Dec 15 $’000 31 Dec 14 $’000
Short term employee benefits Post employment benefits Long term incentive award accural Other long term benefits Total key management personnel compensation	6,447.1 7,266.6 185.9 170.2 827.0 2,591.4 552.1 53.7
	8,012.1 10,081.9

Information regarding individual Directors’ and Senior Executives’ remuneration is provided in the Remuneration Report on page 12 to 21 of the Directors’ Report.

There have been no other transactions with key management personnel during the year.

52 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

Transactions with related parties

Transactions with related parties
	Consolidated entity 31 Dec 15 $M 31 Dec 14 $M
Transactions with related parties other than associates and joint ventures Expenses Contributions to superannuation funds on behalf of employees Transactions with associates and joint ventures Revenue and expenses Responsible Entity fees from associates Property management fees Development management fees from associates Development revenue from associate Site access fee paid Management fees from associates Performance fee from associate Distributions received/receivable from joint ventures Distributions received/receivable from associates Payroll costs recharged to associates Other transactions Loan repayments from joint ventures Increase in units in joint ventures Increase in units in associates Capital expenditures paid on behalf of associates 20. AUDITOR’S REMUNERATION	(6.1) (5.8) 44.4 35.2 15.2 12.6 4.5 4.7 16.0 17.1 (0.8) (0.6) 4.5 3.5 13.9 - 43.9 48.4 96.0 84.0 12.6 10.6 - 4.1 (27.4) (33.6) (25.7) (254.5) - 2.7 31 Dec 15 $’000 31 Dec 14 $’000
Audit services PricewaterhouseCoopers Australia Statutory audit and review of financial reports Total remuneration for audit services Other assurance services PricewaterhouseCoopers Australia Regulatory and contractually required audits Total remuneration for other assurance services Total remuneration for audit and assurance services Non audit related services PricewaterhouseCoopers Australia Other services Taxation services Total remuneration for non audit related services Total auditor's remuneration	1,126.3 1,084.5
	1,126.3 1,084.5
	215.6 235.2
	215.6 235.2
	1,341.9 1,319.7
	- 43.1 5.1 18.1
	5.1 61.2
	1,347.0 1,380.9

GPT ANNUAL FINANCIAL REPORT 2015 53

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

21. PARENT ENTITY FINANCIAL INFORMATION

21. PARENT ENTITY FINANCIAL INFORMATION
	Parent entity 31 Dec 15 $M 31 Dec 14 $M
Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Equity attributable to securityholders of the parent entity Contributed equity Reserves Accumulated losses Total equity Profit attributable to members of the parent entity Total comprehensive income for the year, net of tax, attributable to members of the parent entity Capital expenditure commitments Retail Office Logistics Properties under development Total capital expenditure commitments	133.1 98.8 10,907.9 9,843.6
	11,041.0 9,942.4
	428.6 330.3 2,955.9 2,835.0
	3,384.5 3,165.3
	7,656.5 6,777.1
	7,716.3 7,587.6 (19.3) (11.6) (40.5) (798.9)
	7,656.5 6,777.1
	1,161.9 573.6 1,161.9 573.6 33.9 1.1 40.3 57.5 6.8 5.8 - 21.2
	81.0 85.6

As at 31 December 2015, the Parent entity had a deficiency of current net assets of $295.5 million (2014: $231.5 million) arising as a result of the inclusion of the provision for distribution payable to stapled securityholders. The Parent has access to undrawn financing facilities of $305.0 million.

Parent entity financial information

The financial information for the parent entity of GPT, General Property Trust, has been prepared on the same basis as the consolidated financial statements, excepted as set out below:

Investments in subsidiaries, associates and joint ventures

Investments in subsidiaries, associates and joint ventures are accounted for at cost in the financial statements of the parent entity. Distributions received are recognised in the parent entity’s profit or loss rather than being deducted from the carrying amount of these investments.

54 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

22. FAIR VALUE DISCLOSURES

The most significant categories of assets for which fair values are used are investment properties and financial instruments. Information about how those values are calculated, and other information required by the accounting standards, is provided below. The valuation process, critical assumptions underlying the valuations and information on sensitivity are disclosed below.

(i) Fair value measurement, valuation techniques and inputs

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Range of unobservable inputs
Class of assets / Fair value
liabilities hierarchy [(1)] Valuation technique Inputs used to measure fair value 31 Dec 15 31 Dec 14
Retail [(2)] Level 3 Discounted cash flow (DCF) and 10 year average specialty market rental growth 3.2% - 4.2% 3.2% - 4.6%
income capitalisation method Gross market rent (per sqm p.a.) $1,039 - $2,068 $1,039 - $2,044
Adopted capitalisation rate 5.1% - 8.0% 5.3% - 8.0%
Adopted terminal yield 5.3% - 8.3% 5.4% - 8.3%
Adopted discount rate 8.0% - 9.5% 8.3% - 9.5%
Office Level 3 DCF and income capitalisation Net passing rent (per sqm p.a.) $269 - $1,508 $270 - $1,300
method Net market rent (per sqm p.a.) $380 - $1,344 $380 - $1,345
10 year average market rental growth 2.9% - 4.0% 3.0% - 4.1%
Adopted capitalisation rate 5.5% - 6.3% 6.0% - 6.8%
Adopted terminal yield 5.8% - 6.5% 6.1% - 6.9%
Adopted discount rate 7.4% - 7.8% 8.0% - 8.5%
Lease incentives (gross) 23.3% - 34.5% 27.5% - 34.5%
Logistics Level 3 DCF and income capitalisation Net passing rent (per sqm p.a.) $63 - $579 $60 - $603
method Net market rent (per sqm p.a.) $60 - $500 $51 - $575
10 year average market rental growth 3.0% - 3.6% 3.0% - 3.5%
Adopted capitalisation rate 6.0% - 9.0% 6.0% - 9.0%
Adopted terminal yield 6.5% - 9.8% 6.3% - 9.8%
Adopted discount rate 7.5% - 10.0% 8.0% - 10.5%
Lease incentives (gross) 7.0% - 25.0% 8.0% - 43.0%
Properties under Level 3 Development feasibility Net market rent (per sqm p.a.) $65 - $395 $80 - $430
development 10 year average market rental growth 1.0% - 3.0% 2.0% - 3.3%
Adopted capitalisation rate 6.25% - 7.25% 6.0% - 8.3%
Derivative financial Level 2 DCF (adjusted for counterparty Interest rates
instruments credit worthiness) Basis
Not applicable - all inputs are
CPI
market observable inputs
Volatility
Foreign exchange rates
Not applicable - market
Interest rates
Level 3 observable input
CPI Volatility 0.96% 0.97%
Available for sale Level 3 Discounted cash flow Discount rate 30% Not applicable
financial assets Foreign exchange rates Not applicable - Not applicable
observable input
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(1) Level 1 - quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 - 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 - inputs for the asset or liability that are not based on observable market data (unobservable inputs).

(2) Excludes Homemaker City, Maribyrnong.

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Discounted cash flow method Under the DCF method, the fair value is estimated using explicit assumptions regarding the benefits and liabilities
of ownership over the assets’ or liabilities’ life including an exit or terminal value. The DCF method involves the
projection of a series of cash flows from the assets or liabilities. To this projected cash flow series, an appropriate,
market-derived discount rate is applied to establish the present value of the cash flow stream associated with the
assets or liabilities.
Income capitalisation method This method involves assessing the total net market income receivable from the property and capitalising this in
perpetuity to derive a capital value, with allowances for capital expenditure reversions.
Development feasibility Development feasibility is used to evaluate the residual land value of a property based on total development costs,
revenue and an acceptable profit margin in line with risk of the development.
Net passing rent Net passing rent is the contracted amount for which a property or space within a property is leased. In a net rent, the
owner recovers outgoings from the tenant on a pro-rata basis (where applicable).
Gross market rent A gross market rent is the estimated amount of rent for which a property or space within a property should lease
between a willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper
marketing and wherein the parties have each acted knowledgeably, prudently and without compulsion. The gross
market rent is all inclusive and takes into account outgoings and potential turnover rent.
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GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

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Net market rent A net market rent is the estimated amount for which a property or space within a property should lease between a
willing lessor and a willing lessee on appropriate lease terms in an arm’s length transaction, after proper marketing
and wherein the parties have each acted knowledgeably, prudently and without compulsion. In a net rent, the owner
recovers outgoings from the tenant on a pro-rata basis (where applicable).
10 year average specialty An average of a 10 year period of forecast annual percentage growth rates in Retail specialty tenancy rents. Specialty
market rental growth tenants are those tenancies with a gross lettable area of less than 400 square metres (excludes ATMs and kiosks).
10 year average market rental The expected annual rate of change in market rent over a 10 year forecast period in alignment with expected market
growth movements.
Adopted capitalisation rate The rate at which net market income is capitalised to determine the value of a property. The rate is determined with
regards to market evidence and the prior external valuation.
Adopted terminal yield The capitalisation rate used to convert income into an indication of the anticipated value of the property at the end
of the holding period when carrying out a discounted cash flow calculation. The rate is determined with regards to
market evidence and the prior external valuation.
Adopted discount rate The rate of return used to convert a monetary sum, payable or receivable in the future, into present value.
Theoretically it should reflect the opportunity cost of capital, that is, the rate of return the capital can earn if put
to other uses having similar risk. The rate is determined with regards to market evidence and the prior external
valuation.
Lease incentives A lease incentive is often provided to a lessee upon the commencement of a lease. Incentives can be a combination of,
or, one of the following; a rent free period, a fit-out contribution, a cash contribution or rental abatement.
Counterparty credit Credit value adjustments: these are applied to derivatives assets based on that counterparty’s credit risk using the
worthiness observable credit default swaps curve as a benchmark for credit risk.
Debit value adjustments: these are applied to derivatives liabilities based on GPT’s credit risk using GPT’s credit
default swaps curve as a benchmark for credit risk.
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(ii) Valuation process – investment properties

GPT’s investment management team manages the semi-annual valuation process to ensure that investment properties are held at fair value in GPT’s accounts and that GPT is compliant with applicable regulations (for example the Corporations Act 2001 and ASIC regulations), the GPT RE Constitution and Compliance Plan.

External valuations

GPT’s external valuations are performed by independent professionally qualified valuers who hold recognised relevant professional qualifications and have specialised expertise in the investment properties being valued.

The GPT RE Limited Compliance Plan requires an independent valuation at least once every calendar year for properties with a most recent book value of greater than $50 million. Properties under $50 million are independently valued on a three year rolling cycle.

Internal tolerance checks

Every six months, with the exception of properties independently valued, investment management prepares an internal tolerance check. The internal tolerance check involves the preparation of a DCF and income capitalisation valuation for each property. These are produced using a capitalisation rate, terminal yield and discount rates based on comparable market evidence and recent independent valuations. The indicative value is generally a mid-point of these two approaches.

These internal tolerance checks are used to determine whether the book value is in line with the fair value or whether an independent valuation is required.

The valuation of the properties under development is determined by a development feasibility analysis for each parcel of land within each asset. The development feasibility is prepared on an “as if complete” basis and is a combination of the income capitalisation method and where appropriate, the discounted cash flow method. The cost to complete the development includes development costs, finance costs and an appropriate profit and risk margin. These costs are deducted from the “as if complete” valuation to determine the “as is” basis or “current fair value.”

Highest and best use

Fair value for investment properties is calculated for the highest and best use whether or not current use reflects highest and best use. For all GPT investment properties current use equates to the highest and best use, with the exception of the following:

7 Figtree Drive, Sydney Olympic Park
6 Herb Elliott Avenue, Sydney Olympic Park
8 Herb Elliott Avenue, Sydney Olympic Park
18-24 Abbott Road, Seven Hills, NSW

The underlying zoning of 7 Figtree Drive and 6 and 8 Herb Elliott Avenue, all located at Sydney Olympic Park, allow for mixed use development which would provide significantly higher floor space ratio than what is currently being achieved. These properties are currently being leased and any potential redevelopment is subject to the expiry of these leases. 18-24 Abbott Road, Seven Hills was operated as a foundry and manufacturing facility but has the potential to be developed as a bulky goods retail asset. The existing tenant vacated in the first half of 2015 and the facility will be demolished, with the resulting site area to be prepared for redevelopment.

56 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(iii) Sensitivity information – investment properties

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Significant inputs Fair value measurement sensitivity to Fair value measurement sensitivity to
significant increase in input significant decrease in input
Net passing rent
Net market rent
Increase Decrease
10 year average specialty market rental growth
10 year average market rental growth
Adopted capitalisation rate
Adopted terminal yield
Decrease Increase
Adopted discount rate
Lease incentives
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Generally, if the assumption made for the adopted capitalisation rate changes, the adopted terminal yield will change in the same direction. The adopted capitalisation rate forms part of the income capitalisation approach and the adopted terminal yield forms part of the discounted cash flow approach. The mid-point of the two valuations is then adopted.

Income capitalisation approach

When calculating income capitalisation, the net market rent has a strong interrelationship with the adopted capitalisation rate. This is because the methodology involves assessing the total net market income receivable from the property and capitalising this in perpetuity to derive a capital value. In theory, an increase in the net market rent and an increase (softening) in the adopted capitalisation rate could potentially offset the impact to the fair value. The same can be said for a decrease in the net market rent and a decrease (tightening) in the adopted capitalisation rate. If the net market rent increases but the capitalisation rate goes down (or vice versa), this may magnify the impact on fair value.

Discounted cash flow approach

When assessing a discounted cash flow, the adopted discount rate and adopted terminal yield have a strong interrelationship because the discount rate will determine the rate at which the terminal value is discounted to the present value.

In theory, an increase (softening) in the adopted discount rate and a decrease (tightening) in the adopted terminal yield could potentially offset the impact on fair value, and vice versa. If both the discount rate and terminal yield moved in the same direction, the impact on fair value would be magnified.

(iv) Financial instruments

The following table presents the changes in level 3 instruments for recurring fair value measurements. GPT’s policy is to recognise transfers into and transfers out of fair value hierarchy levels as at the end of the reporting period.

	Unlisted equity securities $M Available for sale financial asset $M Derivative assets $M Derivative liabilities $M Total $M
Opening balance 1 January 2014 Fair value movements in comprehensive income - Still held Additions Closing balance 31 December 2014 Opening balance 1 January 2015 Fair value movements in comprehensive income - Still held Closing balance 31 December 2015	4.5 - - (20.6) (16.1) 1.2 - - (2.0) (0.8) 0.3 - - - 0.3
	6.0 - - (22.6) (16.6) 6.0 - - (22.6) (16.6) (6.0) 8.6 - 4.2 6.8
	- 8.6 - (18.4) (9.8)

Sensitivities

The table below summarises the impact of an increase/decrease in unlisted equity prices and interest rates on GPT’s profit and on equity for the period. For level 3 unlisted equity securities, the analysis is based on the assumption that equity prices increase/ decrease by 10%. For level 3 derivatives, the analysis is based on the assumption that interest rates increase/decrease by 1% with all other variables held constant, as interest rates are the only significant input.

31 Dec 15 $M Fair value of level 3 derivatives (18.4) 1% increase in interest rates gain 5.5 1% decrease in interest rates (loss) (5.6) Fair value of level 3 available for sale financial asset 8.6 5% increase in discount rate - gain/(loss) (1.8) 5% decrease in discount rate - gain/(loss) 2.3	31 Dec 14 $M
	(22.6) 6.9 (7.2) - - -

GPT ANNUAL FINANCIAL REPORT 2015 57

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

23. ACCOUNTING POLICIES

(a) Basis of preparation

The financial report has been prepared:

In accordance with the requirements of the Trust’s Constitution, Corporations Act 2001, Australian Accounting Standards (AAS) and other authoritative pronouncements of the Australian Accounting Standards Board and International Financial Reporting Standards.
On a going concern basis in the belief that GPT will realise its assets and settle its liabilities and commitments in the normal course of business and for at least the amounts stated in the financial statements.
Under the historical cost convention, as modified by the revaluation for financial assets and liabilities and investment properties at fair value through the Consolidated Statement of Comprehensive Income.
Using consistent accounting policies and adjustments are made to bring into line any dissimilar accounting policies being adopted by the controlled entities, associates or joint ventures.
In Australian dollars with all values rounded to the nearest million dollars, unless otherwise stated.

In accordance with AAS, the stapled entity reflects the consolidated entity. Equity attributable to other stapled entities is a form of noncontrolling interest and, in the consolidated entity column, represents the contributed equity of the Company. GPT has relied on class order 13/1050 and therefore continues to present consolidated financial statement of all the entities in a stapled group in one financial report.

As a result of the stapling, investors in GPT will receive payments from each component of the stapled security comprising distributions from the Trust and dividends from the Company.

The financial report was approved by the Board of Directors on 17 February 2016.

(b) Basis of consolidation

Controlled entities

The consolidated financial statements of GPT report the assets, liabilities and results of all controlled entities for the financial year.

Controlled entities are all entities over which GPT has control. GPT controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

Controlled entities are consolidated from the date on which control is obtained to the date on which control is disposed. The acquisition of controlled entities is accounted for using the acquisition method of accounting. All intercompany balances and transactions, income and expenses and profits and losses resulting from intra-group transactions have been eliminated.

Associates

Associates are entities over which GPT has significant influence but not control, generally accompanying a shareholding of between 10% and 50% of the voting rights. Management considered if GPT controls its associates (GPT Wholesale Shopping Centre Fund, GPT Wholesale Office Fund and GPT Metro Office Fund) and concluded that it does not. The primary basis for conclusion was that other investors have substantive right to remove GPT as a responsible entity of the associates and therefore GPT has power over the associates’ as an agent rather than a principal.

Investments in associates are accounted for using the equity method. Under this method, GPT’s investment in associates is carried in the Consolidated Statement of Financial Position at cost plus post acquisition changes in GPT’s share of net assets. GPT’s share of the associates’ result is reflected in the Consolidated Statement of Comprehensive Income. Where GPT’s share of losses in associates equals or exceeds its interest in the associate, including any other unsecured long term receivables, GPT does not recognise any further losses, unless it has incurred obligations or made payments on behalf of the associate.

Joint arrangements

Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations each investor has, rather than the legal structure of the joint arrangement. GPT has assessed the nature of its joint arrangements and determined it has both joint operations and joint ventures.

Joint operations

GPT has significant co-ownership interests in a number of properties through unincorporated joint ventures. These interests are held directly and jointly as tenants in common. GPT recognises its direct share of jointly held assets, liabilities, revenues and expenses in the consolidated financial statements under the appropriate headings. The investment properties that are directly owned as tenants in common are disclosed in note 2.

Joint ventures

Investments in joint ventures are accounted for in the Consolidated Statement of Financial Position using the equity method which is the same method adopted for associates.

58 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(c) Other accounting policies

Significant accounting policies that summarise the recognition and measurement basis used and are relevant to an understanding of the financial statements are provided throughout the notes to the financial statements.

Other accounting policies include:

(i) Available for sale financial assets

Available for sale financial assets are recognised at fair value. Gains/losses arising from changes in the fair value of the carrying amount of available for sale financial assets that are monetary securities denominated in a foreign currency are recognised in other comprehensive income.

(ii) Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the GPT entities are measured using the currency of the primary economic environment in which they operate (‘the functional currency’).

Transactions and balances

Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the Consolidated Statement of Comprehensive Income.

Foreign operations

Non-monetary items that are measured in terms of historical cost are converted using the exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency are translated using the exchange rates at the date when the fair value was determined. Translation differences of non-monetary items, such as equities held at fair value through profit or loss, are reported as part of the fair value gain or loss.

Exchange differences arising on monetary items that form part of the net investment in a foreign operation are taken against a foreign currency translation reserve on consolidation.

Where forward foreign exchange contracts are entered into to cover any anticipated excesses of revenue less expenses within foreign joint venture entities, they are converted at the ruling rates of exchange at the reporting period. The resulting foreign exchange gains and losses are taken to the Consolidated Statement of Comprehensive Income.

(iii) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST (or equivalent tax in overseas locations) except where the GST incurred on purchase of goods and services is not recoverable from the tax authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable. Receivables and payables are stated inclusive of the amount of GST. The net amount of GST receivable from, or payable to, the taxation authority is included with other receivables or payables in the Consolidated Statement of Financial Position.

Cash flows are presented on a gross basis in the Statement of Cash flows. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the taxation authority are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority .

(d) New and amended accounting standards and interpretations adopted from 1 January 2015

There are no significant changes to GPT’s financial performance and position as a result of the adoption of the new and amended accounting standards and interpretations effective for annual reporting periods beginning on or after 1 January 2015.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – THE GPT GROUP

(e) New accounting standards and interpretations issued but not yet applied

The following standards and amendments to standards are relevant to GPT.

Reference Description	Reference Description	Application of Standard
AASB 15 Revenue from Contracts with Customers AASB 15 will replace AASB 118 Revenue and AASB 111 Construction Contracts. It is based on the principle that revenue is recognised when control of a good or service is transferred to a customer. It contains a single model that applies to contracts with customers and two approaches to recognising revenue: at a point in time or over time. The model features a contract– based five-step analysis of transactions to determine whether, how much and when revenue is recognised. It applies to all contracts with customers except leases, financial instruments and insurance contracts. It requires reporting entities to provide users of financial statements with more informative and relevant disclosures. GPT is in the process of assessing any implications of this new standard to its operation and financial results and does not expect a significant impact from its application.		1 January 2018
AASB 9 Financial Instruments	AASB 9 addresses the classification, measurement and	1 January 2018
	de-recognition of financial assets and financial liabilities
	and also introduces expanded disclosure requirements and
	changes in presentation. When adopted, this could change the
	classification and measurement of financial assets and financial
	liabilities. The new hedging rules align hedge accounting more
	closely with the reporting entity’s risk management practices.
	As a general rule it will be easier to apply hedge accounting
	going forward. Changes in own credit risk in respect of liabilities
	designated at fair value through profit and loss must now
	be presented in other comprehensive income. In December
	2014, the AASB made further changes to the classification and
	measurement rules and also introduced a new impairment
	model.
	GPT is in the process of assessing any implications of this new
	standard to its operation and financial results and the potential
	effects have not been fully determined.

24. EVENTS SUBSEQUENT TO REPORTING DATE

The Directors are not aware of any matter or circumstance occurring since 31 December 2015 that has significantly or may significantly affect the operations of GPT, the results of those operations or the state of affairs of GPT in the subsequent financial years.

60 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ DECLARATION

Year ended 31 December 2015 – THE GPT GROUP

In the directors of the Responsible Entity’s opinion:

(a) the financial statements and notes set out on pages 23 to 60 are in accordance with the Corporations Act 2001, including:
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
giving a true and fair view of GPT’s financial position as at 31 December 2015 and of its performance for the financial year ended on that date; and
(b) the financial statements and notes comply with International Financial Reporting Standards as disclosed in note 23 to the financial statements.
(c) there are reasonable grounds to believe that GPT will be able to pay its debts as and when they become due and payable.

The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer as required by Section 295A of the Corporations Act 2001.

This declaration is made in accordance with a resolution of the directors.

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Rob Ferguson Chairman

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_______ Bob Johnston Chief Executive Officer and Managing Director

GPT RE Limited

Sydney 17 February 2016

GPT ANNUAL FINANCIAL REPORT 2015

INDEPENDENT AUDITOR’S REPORT

Year ended 31 December 2015 – THE GPT GROUP

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62 GPT ANNUAL FINANCIAL REPORT 2015

INDEPENDENT AUDITOR’S REPORT

Year ended 31 December 2015 – THE GPT GROUP

GPT ANNUAL FINANCIAL REPORT 2015

ANNUAL FINANCIAL REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

DIRECTORS’ REPORT	65
AUDITOR’S INDEPENDENCE DECLARATION	81
FINANCIAL STATEMENTS
Consolidated Statement of Comprehensive Income	82
Consolidated Statement of Financial Position	83
Consolidated Statement of Changes in Equity	84
Consolidated Statement of Cash Flow	85
Notes to the Financial Statements
Result for the year
1. Segment information	86
Operating assets and liabilities
2. Equity accounted investments	87
3. Loans and receivables	88
4. Intangibles	89
5. Inventories	89
6. Property, plant and equipment	90
7. Other assets	91
8. Payables	91
9. Provisions	91
10. Taxation	92
Capital structure
11. Equity and reserves	93
12. Earnings per share	95
13. Dividends paid and payable	95
14. Cash flows from operating activities	95
15. Borrowings	96
16. Financial risk management	97

Other disclosure items
17. Commitments	99
18. Contingent liabilities	99
19. Security based payments	99
20. Related party transactions	101
21. Auditor’s remuneration	102
22. Parent entity financial information	102
23. Fair value disclosures - financial instruments	103
24. Discontinued operations and non current assets
held for sale	103
25. Accounting policies	104
26. Events subsequent to reporting date	106
DIRECTORS’ DECLARATION	107
INDEPENDENT AUDITOR’S REPORT	108

This financial report covers both GPT Management Holdings Limited (the Company) as an individual entity and the consolidated entity consisting of GPT Management Holdings Limited and its controlled entities.

GPT Management Holdings Limited is a company limited by shares, incorporated and domiciled in Australia.

Through our internet site, we have ensured that our corporate reporting is timely, complete and available globally at minimum cost to the Company. All press releases, financial reports and other information are available on our website: www.gpt.com.au .

64 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

The Directors of GPT Management Holdings Limited (the Company), present their report together with the financial statements of GPT Management Holdings Limited and its controlled entities (the Consolidated Entity) for the financial year ended 31 December 2015. The Consolidated Entity is stapled to the General Property Trust and the GPT Group (GPT or the Group) financial statements include the results of the stapled entity as a whole.

GPT Management Holdings Limited is a company limited by shares, incorporated and domiciled in Australia. The registered office and principal place of business is MLC Centre, Level 51, 19 Martin Place, Sydney NSW 2000.

1. OPERATING AND FINANCIAL REVIEW

ABOUT GPT

GPT’s strategy is focused on leveraging its extensive real estate experience to deliver strong returns through disciplined investment, asset management and development. The development capability has a focus on creating value for securityholders through the enhancement of the core investment portfolio and in the creation of new investment assets.

REVIEW OF OPERATIONS

The Consolidated Entity’s financial performance for the year ended 31 December 2015 is summarised below.

The net profit after tax for the year ended 31 December 2015 is $32.4 million (2014: $36.2 million).

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31 Dec 15 31 Dec 14 Change
$’000 $’000 %
Fund management fees 85,580 61,246 40%
Property management fees 41,467 36,833 13%
Development management fees and revenue 31,623 40,460 (22%)
Management costs recharged 35,543 32,541 9%
Other income 28,794 51,082 (44%)
Expenses (190,717) (185,179) 3%
Profit from continuing operations before income tax 32,290 36,983 (13%)
Income tax credit 318 7,144 (96%)
Profit after income tax expense for continuing operations 32,608 44,127 (26%)
Loss from discontinued operations (183) (7,916) (98%)
Net profit for the year 32,425 36,211 (10%)
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Consolidated Entity result

The decrease in profit after tax compared with 2014 is largely attributable to the revaluation of financial arrangements reflected in other income. This is offset by increased fund management fees due to a performance fee in 2015.

GPT ANNUAL FINANCIAL REPORT 2015 65

DIRECTORS’ REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

Funds management

GWOF

GWSCF

GMF

Asset management

The asset management team is responsible for property management activities for 17 assets across the retail, office and logistics sectors as well as managing initiatives such as Space & Co. The operating profit of asset management increased to $7.8 million (2014: $5.6 million) due to leasing fees achieved for the office portfolio combined with expense savings.

Development retail & major projects

In 2015 the development – retail & major projects team focused on the master planning of development opportunities within its $3.5 billion retail and office development pipeline. This includes the repositioning of the MLC Centre, expansions of Rouse Hill and the Casuarina Square.

Development logistics

Management costs recharged

Management costs recharged have increased to $35.5 million in 2015 (2014: $32.5 million) due to higher expenses, and therefore higher recharges, associated with the expansion of property management across the assets internalised at the end of 2014. GPT’s MER of 0.40 basis points remains one of the lowest in the AREIT sector.

Other income

Other income is $28.8 million in 2015 attributable to revaluation of financial arrangements in 2014.

Expenses

The Consolidated Entity continues to focus on operational efficiency. Expenses increased by 3.0% to $190.7 million (2014: $185.2 million). The balance is primarily made up of remuneration costs which can be seen on the Statement of Comprehensive Income. The primary drivers for the increase are expenses associated with the expansion of property management across the assets internalised at the end of 2014.

FINANCIAL POSITION

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31 Dec 15 31 Dec 14 Change
$’000 $’000 %
Total current assets 107,598 90,613 19%
Total non-current assets 233,379 156,126 49%
Total assets 340,977 246,739 38%
Current liabilities 88,505 79,887 11%
Non-current liabilities 87,272 46,088 89%
Total liabilities 175,777 125,975 40%
Net assets 165,200 120,764 37%
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Total assets increased by 38.2% to $341.0 million (2014: $246.7 million) primarily due to an increase in inventory which relates to land parcels at Berrinba and Rouse Hill.

Total liabilities increased by 39.5% to $175.8 million (2014: $126.0 million) due to increased borrowings to fund the land parcels at Berrinba and Rouse Hill.

66 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

Capital management

The Consolidated Entity has an external loan relating to the Metroplex joint venture.

The Consolidated Entity has non-current, related party borrowings from GPT Trust and its subsidiaries. Under Australian Accounting Standards, the loans entered into prior to 2014 have been revalued to nil based on a forecast cash flow for amounts payable.

Equity raising

On market buy back

On 22 April 2015, GPT announced the extension of the on market buy back for an additional 12 months until May 2016.

CASH FLOWS

The cash balance as at 31 December 2015 decreased to $40.4 million (2014: $50.4 million).

Operating activities:

Cash outflows from operating activities have increased in 2015 due to payments for inventory and expenses.

The following table shows the reconciliation from net profit to the cash flow from operating activities:

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31 Dec 15 31 Dec 14 Change
$’000 $’000 %
Net profit for the year 32,425 36,211 (10%)
Add back: non-cash expenses included in net profit 38,178 46,923 (19%)
Less: non-cash revenue items (27,310) (47,262) (42%)
Timing difference (87,663) (43,837) 100%
Cash flow from operating activities (44,370) (7,965) 457%
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Investing activities

There have been higher cash outflows from investing activities in 2015 due to higher payments for property, plant and equipment and intangibles.

Financing activities

There have been higher cash inflows from financing activities in 2015 due to higher proceeds from the issue of securities.

Dividends

The Directors have not declared any dividends for the year ended 31 December 2015 (2014: nil).

PROSPECTS

(i) Group

Funds Management

GPT has a strong Funds Management platform which has experienced significant growth over the past two years. The funds management team will continue to actively manage the existing portfolios, with new acquisitions and divestments reviewed based on meeting the relevant investment objectives of the respective funds.

(ii) Guidance for 2016

In 2016 GPT expects to deliver between 4.0% and 5.0% growth in FFO per ordinary security. Achieving this target is subject to risks detailed in the following section.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

RISKS

The key components of this approach include:

The Board, Leadership Team, employees and contractors all understand their risk management accountabilities, promote the risk awareness and management culture and apply risk processes to achieve the organisation’s objectives.
Specialist risk management expertise is developed and maintained internally and provides coaching, guidance and advice.
Risks are identified and assessed in a timely and consistent manner.
Controls are effectively designed, embedded and assessed.
Material risks and critical controls are monitored and reported to provide transparency and assurance that the risk profile is aligned with the Consolidated Entity’s risk appetite, strategy and values.

The following table sets out the key inherent risks to GPT’s main investment objectives, and the strategies GPT uses to manage them:

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Level Risk description Strategic impact Mitigation
Operational Investments do not perform in line • Investments deliver lower Total • Formal deal management process
performance with forecast Return than target • Active asset management including
• Credit downgrade regular forecasting and monitoring of
performance
• High quality property portfolio
• Development program to enhance
asset returns
• Comprehensive asset insurance
program
Inability to lease assets in line with • Investments deliver lower Total • Large and diversified tenant base
forecast Return than target • High quality property portfolio
• Experienced leasing team
• Development program to enhance
asset returns
Market Risk Volatility and speed of changes in • Investments deliver Lower Total • Holistic capital management
market conditions Return than target • Large multi asset portfolio
• Monitoring of asset concentration
Capital Re-financing and liquidity risk • Limits ability to meet debt maturities • Diversity of funding sources and
management • Constrains future growth spreading of debt maturities with a
• Limits ability to execute strategy long weighted average debt term
• May impact distributions • Maintaining a minimum liquidity
• Failure to continue as a going concern buffer in cash and surplus committed
credit facilities for the forward rolling
twelve month period
Interest rate risk – higher interest • Detrimental impact to asset and • Interest rate exposures are actively
rate cost than forecast portfolio performance hedged
• Adversely affect GPT’s operating
results
Health and safety Risk of incidents, causing injury to • Criminal/civic proceedings and • Formalised Health and Safety
tenants, visitors to the properties, resultant reputation damage management system including
employees and contractors • Financial impact of remediation and policies and procedures for managing
restoration safety
• Training and education of staff and
contractors
People Inability to attract, retain and develop • Limits the ability to deliver the • Competitive remuneration
talented people business objectives • Structured development planning
• Succession planning and talent
management
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68 GPT ANNUAL FINANCIAL REPORT 2015

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Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

2. ENVIRONMENTAL REGULATION

More information about the GPT’s participation in the NGER program is available at www.gpt.com.au.

3. EVENTS SUBSEQUENT TO REPORTING DATE

4. DIRECTORS AND SECRETARY

INFORMATION ON DIRECTORS

Rob Ferguson – Chairman

Rob currently holds Non-Executive directorships in the following listed entities and other entities:

Primary Health Care Limited (since 2009) – Chairman
Watermark Market Neutral Fund Limited (since 2013)
Tyro Payments Limited (since 2005)
Smartward Limited (since 2012)

He was also a Non-Executive Chairman of IMF Bentham Limited from 2004 to January 2015.

As at the date of this report, he holds 207,628 GPT stapled securities.

Robert Johnston – Chief Executive Officer

As at the date of this report, he holds 116,279 GPT stapled securities.

Michael Cameron – Chief Executive Officer and Managing Director

Michael joined The GPT Group as Chief Executive Officer and Managing Director in May 2009 and retired as a director in September 2015. He has over 30 years’ experience in Finance and Business, including Group CFO at Commonwealth Bank of Australia and then St George Bank. Before that, he worked 10 years with Lend Lease and MLC Limited before moving to the US in 1994 with The Yarmouth Group, Lend Lease’s US property business.

Since 2012, Michael has held the position of Non-Executive Director in listed entity, Suncorp Group Limited.

As at the date of his retirement as a director of the GPT Group, Michael owned 1,663,779 GPT stapled securities.

Brendan Crotty

As at the date of this report, he holds 67,092 GPT stapled securities.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

Eileen Doyle

Eileen currently holds the position of Non-Executive Director in the following listed and other entities.

Boral Limited (since 2010)
Hunter Valley Research Foundation (Chairman)

Eileen was also a director of Bradken Limited from 2011 to November 2015 and will be a Non-Executive Director of Oil Search Limited with effect from 18 February 2016.

As at the date of this report, she holds 41,597 GPT stapled securities.

Eric Goodwin

Since 2004, Eric has held the position of Non-Executive Director of listed entity Duet Group.

As at the date of his retirement as a director of GPT, Eric owned 34,801 GPT stapled securities

Swe Guan Lim

As at the date of this report, he holds no GPT stapled securities.

Anne McDonald

Anne currently holds the position of Non-Executive Director in the following listed and other entities:

Specialty Fashion Group Limited (since 2007)
Spark Infrastructure Group (since 2009)
Sydney Water Corporation (since 2013)

As at the date of this report, she holds 23,364 GPT stapled securities and 10,000 units in GPT Metro Office Fund.

Michelle Somerville

Michelle currently holds the position of Non-Executive Director in the following entities:

Mecu Limited (trading as Bank Australia) (since 2014)
Challenger Retirement and Investment Services Ltd (since 2014)
Save the Children (Australia) (since 2012)
Down Syndrome Australia (since 2011)

Michelle is also an independent consultant to the Unisuper Ltd Audit, Risk and Compliance Committee since 2015.

As at the date of this report, she holds no GPT stapled securities.

Gene Tilbrook

Gene was appointed to the Board in May 2010 and is also a Chair of the Nomination and Remuneration Committee. He brings extensive experience in finance, corporate strategy, investments and capital management.

Gene currently holds the position of Non-Executive Director in the following listed entities:

Orica Limited (since 2013)
Woodside Petroleum Limited (since 2014)

As at the date of this report, he holds 48,546 GPT stapled securities and 20,000 units in GPT Metro Office Fund.

70 GPT ANNUAL FINANCIAL REPORT 2015

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Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

James Coyne – General Counsel and Company Secretary

Lisa Bau - Senior Legal Counsel and Company Secretary

Lisa was appointed as a Company Secretary of GPT in September 2015. Her previous experience includes legal roles in mergers and acquisitions, capital markets, funds management and corporate advisory.

ATTENDANCE OF DIRECTORS AT MEETINGS

The number of Board meetings, including meetings of Board Committees, held during the financial year and the number of those meetings attended by each Director is set out below:

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5. OTHER DISCLOSURES

INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITOR

NON-AUDIT SERVICES

the Audit & Risk Management Committee reviewed the non-audit services and other assurance services at the time of appointment to ensure that they did not impact upon the integrity and objectivity of the auditor;
the Board’s own review conducted in conjunction with the Audit and Risk Management Committee, having regard to the Board’s policy with respect to the engagement of GPT’s auditor; and
the fact that none of the non-audit services provided by PricewaterhouseCoopers during the financial year had the characteristics of management, decision-making, self-review, advocacy or joint sharing of risks.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

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 18 and forms part of the Directors’ Report.

ROUNDING OF AMOUNTS

The amounts contained in this report and in the financial statements have been rounded to the nearest thousand dollars unless otherwise stated (where rounding is applicable) under the option available to the Company under ASIC Class Order 98/100. The Company is an entity to which the class order applies.

6. REMUNERATION REPORT

GOVERNANCE

strategic objectives. GOVERNANCE
Who are the members of the Committee?	The Committee consists of 3 Non-Executive Directors: • Gene Tilbrook (Committee Chairman) • Eileen Doyle • Rob Ferguson
What is the scope of work of the Committee?	The Committee provides advice and recommendations to the Board on: • Criteria for selection of Directors; • Nominations for appointment of Directors; • Criteria for reviewing the performance of Directors individually and the GPT Board collectively; • Remuneration policies for Directors and Committee members; • Remuneration amounts for Directors from within the overall Directors fee cap approved by security holders; • Remuneration policy for the CEO and employees; • Incentive plans for the CEO and employees, including exercising discretion where appropriate in determining Short Term Incentive Compensation (STIC) and Long Term Incentive Compensation (LTI) outcomes; and • Any other related matters regarding executives or the Board1.
Who is included in the Remuneration Report?	GPT’s Key Management Personnel (KMP) are the individuals responsible for planning, controlling and managing the GPT Group (being the Non-Executive Directors, the CEO and certain other key Executives). Since the prior year, the number of Executive members has reduced to only include the “C-suite” executives under the new organisation structure implemented in December 2015.

1 Further information about the role and responsibility of the Committee is set out in its Charter which is available on GPT’s website (www.gpt.com.au).

72 GPT ANNUAL FINANCIAL REPORT 2015

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Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

COMMITTEE KEY DECISIONS AND OUTCOMES IN 2015

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Platform component Key decisions and outcomes
Base pay (fixed) • Implemented a review of employee base pay, effective 1 January 2015, with an average increase of 2.23%.
• Reviewed Non-Executive Director fees [2] , effective 1 January 2015, with an average increase of 4.62%.
Short term incentive • Maintained Total Return as the primary measure of Group financial performance with a target of 9%.
compensation • The Group achieved an 11.5% Total Return which exceeded the stretch target of 10% and created a STIC pool of
$14.86 million.
Long term incentive • The Group achieved a Total Return for the 2013-15 period of 9.86%, exceeding the stretch target of 9.5%, and
compensation delivering a Relative Total Securityholder Return (Relative TSR) [3] of 56.32%, which ranked 6th out of 12 against
the comparator group and exceeded the threshold target for vesting.
• As a result, the vesting outcome for the 2013-15 LTI plan was 78.70% of the performance rights for each of the 23
participants in the LTI plan.
• Launched the 2015-2017 LTI with two performance measures, Total Return and Relative TSR.
Other employee ownership • Continued the General Employee Security Ownership Plan (GESOP) for 97 STIC eligible employees not in the LTI.
plans Under GESOP participants receive an amount equal to 10% of STIC (less tax) delivered in GPT securities, which
must be held for at least 1 year.
• Continued the Broad Based Employee Security Ownership Plan (BBESOP) for 307 employees ineligible for
GESOP. Under BBESOP, participants receive $1,000 worth of GPT securities that cannot be transferred or sold
until the earlier of 3 years from the allocation date or cessation of employment.
Policy & governance • The appointment of Bob Johnston as CEO of the GPT Group on 7 September 2015, following the resignation of
Michael Cameron.
• The appointment of Lim Swe Guan as a Non-Executive Director on 23 March 2015, following the notification of
the retirement of Eric Goodwin, which occurred in May 2015.
• The appointment of Michelle Somerville as a Non-Executive Director on 1 December 2015, in anticipation of the
retirement of Anne McDonald from the Board at the May 2016 AGM.
• Utilised external advice on market compensation benchmarks and practice, prevailing regulatory and
governance standards, and drafting of incentive plan documentation from Ernst & Young and Conari Partners.
Diversity • The percentage of females in senior leadership roles increased from 34% to 37%, falling short of the 2015 target
of 40%.
• The percentage of Aboriginal and Torres Strait Islander employees increased from 1.8% to 3%, exceeding the
2015 target of 2.5%.
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2 The last review of Non-Executive Director base fees was effective 1 January 2008.

3 TSR represents an investor’s return, calculated as the percentage difference between an initial amount invested in stapled securities and the final value of those stapled securities at the end of the relevant period, assuming distributions were reinvested.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

GPT’S PURPOSE & GOALS AND THE LINK TO REMUNERATION STRUCTURES

	GPT’s purpose & goals (measured over 1, 3 and 5 years)	GPT’s purpose & goals (measured over 1, 3 and 5 years)
Property to Prosperity
We maximise the financial potential
of Australian property with	Total Return	Generate competitive Relative	Average FFO Growth
solutions that fulfil the aspirations	> 9%	Total Securityholder Return	> CPI plus 1%
of our investors, tenants and
communities

GPT’s purpose & goals (measured over 1, 3 and 5 years)	GPT’s purpose & goals (measured over 1, 3 and 5 years)	GPT’s purpose & goals (measured over 1, 3 and 5 years)	GPT’s purpose & goals (measured over 1, 3 and 5 years)
Property to Prosperity We maximise the financial potential of Australian property with solutions that fulfil the aspirations of our investors, tenants and communities	Total Return > 9%	Generate competitive Relative Total Securityholder Return	Average FFO Growth > CPI plus 1%

Total remuneration components
Base pay (fixed) • Base level of reward. • Set around Australian market median using external benchmark data (including AON Hewitt and the Financial Institutions Remuneration Group (FIRG). • Varies based on employee’s responsibilities, experience, skills and performance. • External & internal relativities considered.	STIC (variable) • Discretionary, at risk, and with aggregate STIC funding aligned to overall Group financial outcomes. • Set around market median for target performance with potential to approach top quartile for stretch outcomes. • Determined by GPT and individual performance against a mix of balanced scorecard measures which include financial & non-financial measures. • Financial measures include Total Return and FFO per security, portfolio and/or property level metrics. • Non-financial objectives focus on execution of strategy, delivery of key projects and developments, cultural change, sustainability, innovation, people management and development, and process optimisation, as applicable. • Delivered in cash, or (for senior executives), a combination of cash and deferred vesting equity for 1 and 2 years.	LTI (variable) • Discretionary, at risk, and aligned to overall Group financial outcomes. • Set around market median for target performance with potential to achieve top quartile for stretch outcomes. • Determined by GPT performance against Total Return and Relative TSR financial performance. • Relative TSR is measured against relevant comparators from the AREIT sector. • Assessed over a 3 year performance period, no re-testing. • No value derived unless GPT meets or exceeds defined performance measures. • Delivered in restricted GPT securities to align executive and securityholder interests.	Other employee ownership plans (variable) GESOP • For STIC eligible individuals who are ineligible for LTI. • Equal to 10% of STIC (less tax) delivered in GPT securities, which must be held for at least 1 year. BBESOP • For individuals ineligible for STIC or LTI. • GPT must achieve at least Target outcome on the annual Total Return of 9%. • A grant of $1,000 worth of GPT securities which must be held until the earlier of three years or end of employment.

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Attract, retain, motivate and reward high calibre executives to deliver Align executive rewards to GPT’s performance and securityholder superior performance by: interests by: • Providing competitive rewards. • Assessing incentives against multiple financial and non-financial • Opportunity to achieve incentives beyond base pay based on high business measures that are aligned with GPT strategy, with an performance. equity component. • Putting significant components of total remuneration at risk.

74 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

EMPLOYMENT TERMS

1. Employment terms – Chief Executive Officer and Managing Director

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Term Conditions
Contract duration Open ended.
Termination entitlements 6 months’ notice. GPT may elect to make a payment in lieu of notice.
Remuneration package In 2015, Michael Cameron’s annual remuneration mix and potential incentives remained unchanged from the 2014
level as:
• Fixed pay: $1,500,000.
• STIC: $0 to $1,875,000 (ie 0% to 125% of base pay) based on performance and paid in an equal mix of cash and
deferred GPT securities, with the securities component vesting in two equal tranches 1 year and 2 years after
the conclusion of the performance year.
• LTI: $0 to $2,250,000 (ie 0% to 150% of base pay) based on performance and continued service and delivered in
restricted GPT securities.
On appointment, Bob Johnston’s annual remuneration mix and potential incentives were:
• Fixed pay: $1,400,000.
• STIC: $0 to $1,750,000 (ie 0% to 125% of base pay) based on performance and paid in an equal mix of cash and
deferred GPT securities, with the securities component vesting in two equal tranches 1 year and 2 years after
the conclusion of the performance year.
• LTI: $0 to $2,100,000 (ie 0% to 150% of base pay) based on performance and continued service and delivered in
restricted GPT securities.
Termination by Company No notice requirement or termination benefits (other than accrued entitlements).
for cause
Termination by Company 12 months’ notice. Treatment of unvested STIC and LTI will be at Committee discretion under the terms of the
(other) relevant plans and GPT policy.
Post-employment restraints 6 months Non-Compete, 12 months Non-solicitation of GPT employees.
External Directorships Under GPT policy Michael Cameron was eligible to take up one external Directorship. In 2012 he joined the Suncorp
Group Board. All Board fees received by Michael Cameron associated with this appointment were paid to GPT. Bob
Johnston is an unpaid Director on the Property Industry Foundation (PIF) Board.
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2. Employment terms – Executive KMP

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Term Conditions
Contract duration Open ended.
Termination by Executive 3 months’ notice. GPT may elect to make a payment in lieu of notice.
Remuneration Package Component Mark Fookes Anastasia Clarke [4] Carmel Hourigan [5]
Fixed pay $800,000 $575,000 $775,000
STIC [6] $0 to $800,000 $0 to $431,250 $0 to $775,000
LTI $0 to $800,000 $0 to $431,250 $0 to $775,000
Termination by Company No notice requirement or termination benefits (other than accrued entitlements).
for cause
Termination by Company 3 months’ notice. Severance payments may be made subject to GPT policy and capped at the three year average of
(other) the executive’s annual base (fixed) pay. Treatment of unvested STIC and LTI will be at Committee discretion under the
terms of the relevant plans and GPT policy.
Post-employment restraints 12 months Non-solicitation of GPT employees.
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5 Ms Hourigan resigned on 30 October 2015; the figures listed in this table are full year equivalent figures.

6 The STIC is paid in an equal mix of cash and deferred GPT securities, with the securities component vesting in two equal tranches 1 year and 2 years after the conclusion of the performance year.

3. Compensation mix

	Fixed remuneration Variable or “at risk” remuneration7
Senior executive	Basepay STI LTI
Bob Johnston Chief Executive Officer and ManagingDirector	26.7% 33.3% 40.0%
Anastasia Clarke8 Chief Financial Officer	40.0% 30.0% 30.0%
Mark Fookes Chief OperatingOfficer	33.4% 33.3% 33.3%

7 The percentage of each component of total remuneration is calculated with reference to maximum or stretch potential outcomes as set out under Remuneration Package in Tables 1 and 2 above. As Mr Cameron and Ms Hourigan resigned during the course of 2015 their packages were 100% base pay and hence they have not been included in the table.
8 Figures listed are 2015 package prior to a remuneration review in line with Ms Clarke’s appointment to Chief Financial Officer effective 1 December 2015. Her revised package is fixed pay of $650,000 and STIC range of $0 to $650,000; LTI range will be determined when the 2016-2018 LTI is launched in May 2016.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

GROUP FINANCIAL PERFORMANCE & INCENTIVE OUTCOMES

1. Five year Group financial performance

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9 Represents Realised Operating Income (ROI) until 2013.

2. Group performance driving the 2015 STIC result

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3. 2015 STIC outcomes by Executive KMP[10]

Senior executive Actual STIC awarded ($) Actual STIC awarded as a % of maximum STIC % of maximum STIC award forfeited	Cash component ($)	Equity component (# of GPT securities)11
Bob Johnston Chief Executive Officer and ManagingDirector $353,000 80% 20% $176,500 39,69412
Anastasia Clarke Chief Financial Officer $400,000 93% 7% $200,000 48,687
Mark Fookes Chief OperatingOfficer $800,000 100% 0% $400,000 97,373

10 Excluding the impact of movements in the GPT security price on deferred STIC value received. This table does not include former executives Mr Cameron and Ms Hourigan as they did not receive any STIC for 2015.

11 The deferred GPT securities that have been allocated will vest subject to service in two equal tranches on 31 December 2016 and 31 December 2017.

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Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

4. Group Performance measures for LTI plans

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LTI
performance Vesting % by
LTI
measurement performance
period Performance measure Performance measure hurdle Weighting Results measure
2013-2015 Relative TSR versus 50% of rights vest at 51st percentile, up
comparator group. to 100% at the 75th percentile (pro rata 50% 56.32%,6th out of 12 57.39%
vesting in between).
2013
Total Return 50% of rights vest at 9% Total Return, up
to 100% at 9.5% Total Return (pro-rata 50% 9.86% 100%
vesting in between).
2014-2016 Relative TSR versus 50% of rights vest at 51st percentile, up
comparator group. to 100% at the 75th percentile (pro rata 50%
vesting in between).
2014 N/A N/A
Total Return 25% of rights vest at 9% Total Return, up
to 100% at 9.75% Total Return (pro-rata 50%
vesting in between).
2015-2017 Relative TSR versus 50% of rights vest at 51st percentile, up
comparator group. to 100% at the 75th percentile (pro rata 50%
vesting in between).
2015 N/A N/A
Total Return 25% of rights vest at 9% Total Return, up
to 100% at 9.75% Total Return (pro-rata 50%
vesting in between).
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5. 2013-2015 LTI outcomes by Executive KMP[13]

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Performance Performance Performance
Senior executive rights granted rights vested rights lapsed
Anastasia Clarke
98,475 77,495 20,980
Chief Financial Officer
Mark Fookes
218,834 172,211 46,623
Chief Operating Officer
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6. LTI outcomes – fair value and maximum value recognised in future years

Senior executive	LTI Scheme	Grant date	Fair value per performance right	Performance rights granted as at 31 Dec 15	Vesting date	Maximum value to be recognised in futureyears
Bob Johnston	2015	8 Sept 15	$2.21	430,476	21 Dec 17	$821,514
Chief Executive Officer and ManagingDirector
Anastasia Clarke Chief Financial Officer	2015 2014	18 May 15 26 May14	$2.48 $2.09	104,981 114,706	31 Dec 17 31 Dec 16	$199,742 $92,787
Mark Fookes	2015	18 May 15	$2.48	194,747	31 Dec 17	$368,680
Chief OperatingOfficer	2014	26 May14	$2.09	217,087	31 Dec 16	$175,604

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

7. Reported remuneration – Executive KMP - cash[14]

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Fixed pay Variable or “at risk” [15]
Senior executive Base pay Superannuation Other [16] STIC LTI Total
Bob Johnston [17] 2015 $419,518 $4,827 $608,734 $361,633 - $1,394,712
Chief Executive Officer and Managing
Director
Anastasia Clarke [18] 2015 $562,204 $19,046 $2,314 $427,076 $361,437 $1,372,077
Chief Financial Officer
Mark Fookes 2015 $780,954 $19,046 $9,599 $854,148 $803,192 $2,466,939
Chief Operating Officer 2014 $756,720 $18,279 $7,583 $634,448 $575,254 $1,992,284
Senior Executives -
Former
Michael Cameron [19] 2015 $1,380,845 $14,219 $13,279 - - $1,408,343
Chief Executive Officer and Managing 2014 $1,481,721 $18,279 $9,514 $1,290,402 $1,614,421 $4,414,337
Director
Carmel Hourigan [20] 2015 $675,400 $19,046 $3,521 - - $697,967
Chief Investment Officer 2014 $733,357 $18,279 $6,206 $602,187 $372,624 $1,732,653
2015 $3,818,921 $76,184 $637,447 $1,642,857 $1,164,629 $7,340,038
Total 2014 $2,971,798 $54,837 $23,303 $2,527,037 $2,562,299 $8,139,274
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14 This table discloses the cash and other benefits received by GPT’s executive KMP, as distinct from the accounting expense. As a result, it does not align to Australian accounting standards.

17 Mr Johnston commenced employment with the Group on 7 September 2015.

18 Ms Clarke was not KMP in 2014 hence only 2015 remuneration is reported.

19 Mr Cameron resigned on 2 September 2015.

20 Ms Hourigan resigned on 30 October 2015.

8. Reported remuneration – Executive KMP – AIFRS Accounting[21]

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Fixed pay Variable or “at risk”
Grant or
vesting
of non
STIC STI or LTI
(cash plus LTI award performance
Senior executive Base pay Superannuation Other [22] accrual) [23,24] accrual [25] rights [26] Total
Bob Johnston 2015 $458,781 $4,827 $634 $176,500 $128,116 $552,086 $1,320,944
Chief Executive Officer and
Managing Director
Anastasia Clarke [27] 2015 $594,237 $19,046 $2,314 $348,719 $233,384 - $1,197,700
Chief Financial Officer
Mark Fookes 2015 $780,626 $19,046 $9,599 $679,759 $465,467 - $1,954,497
Chief Operating Officer 2014 $771,813 $18,279 $7,583 $420,510 $456,709 $1,674,894
Senior Executives -
Former
Michael Cameron [28] 2015 $1,380,845 $14,219 $13,279 - - - $1,408,343
Chief Executive Officer and 2014 $1,580,276 $18,279 $9,514 $855,274 $1,308,764 $3,772,107
Managing Director
Carmel Hourigan [29] 2015 $675,400 $19,046 $3,521 - - - $697,967
Chief Investment Officer 2014 $746,088 $18,279 $6,206 $399,127 $398,671 $53,687 $1,622,058
2015 $3,889,889 $76,184 $29,347 $1,204,978 $826,967 $552,086 $6,579,451
Total 2014 $3,098,177 $54,837 $23,303 $1,674,911 $2,164,144 $53,687 $7,069,059
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21 This table provides a breakdown of remuneration for executive KMP in accordance with statutory requirements and Australian accounting standards.
22 Other may include death & total/permanent disability insurance premiums, GPT superannuation plan administration fees, service awards, executive health assessments and other benefits.

23 This column includes the cash value of the STIC award and an accounting valuation of the deferred equity component, with the exception of the amount recorded for Mr Johnston which is cash only.

26 Grant or vesting of one off non STI or LTI performance rights includes a sign on package for Mr Johnston and the sign on package of Ms Hourigan.

27 Ms Clarke was not KMP in 2014 hence only 2015 remuneration is reported.

28 Mr Cameron resigned on 2 September 2015.

29 Ms Hourigan resigned on 30 October 2015.

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Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

9. Security ownership and performance rights entitlements of GPT’s Executive KMP

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Current GPT security ownership at 31 Dec 15 Performance rights
Securities Performance Performance
Vested allocated rights that rights still on
secutiry and still lapsed in foot at
holding [30] deferred [31] Private holdings 2015 [33] 31 Dec 15 [34]
(# of (# of Balance Purchase/ Balance MSHR [32]
Senior executive securities) securities) (31 Dec 14) (Sale) (31 Dec 15) (Y/N) (# of rights) (# of rights)
Bob Johnston
Chief Executive Officer and
Managing Director 116,279 0 0 0 0 N 0 455,615
Anastasia Clarke
Chief Financial Officer 277,912 71,796 0 3,546 3,546 Y 24,783 219,687
Mark Fookes
Chief Operating Officer 644,642 138,690 0 3,546 3,546 Y 46,623 411,834
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30 This number may include LTI plans up to and including the 2013-15 outcome and deferred 2014 STIC that has vested.

31 This number may include 2014 and 2015 STIC deferred equity that remains subject to further service conditions prior to vesting. For Mr Johnston, 39,694 deferred GPT securities for his 2015 STIC are still subject to securityholder approval at the May 2016 AGM and hence are not included in this column.

32 This shows whether the Minimum Security Holding Requirement (MSHR) has been met at a GPT security price of $4.664 (the Q4 2015 GPT VWAP).

33 The number of performance rights that were awarded to a participant in the 2013 LTI that did not vest at the end of the 2013-2015 performance period, and as a result, lapsed. It also includes performance rights granted under the 2015 STIC that also lapsed.

34 The total of unvested performance rights currently on foot and excludes any GPT securities or performance rights that may have lapsed up to 31 December 2015. This represents the current maximum number of additional GPT securities to which the individual may become entitled subject to satisfying the various applicable performance measures; as such, these performance rights are “at risk” and may never vest.

REMUNERATION – NON-EXECUTIVE DIRECTORS

What are the key elements • The Board determines the remuneration structure for Non-Executive Directors based on recommendations of the Non-Executive from the Committee. Director Remuneration • Non-Executive Directors are paid one fee for participation as a Director in all GPT related companies (principally Policy? GPT RE Limited, the Responsible Entity of General Property Trust and GPT Management Holdings Limited).
Non-Executive Director remuneration is composed of three main elements:
- Main Board fees
- Committee fees
- Superannuation contributions at the statutory superannuation guarantee contribution rate.
Non-Executive Directors do not participate in any short or long term incentive arrangements and are not entitled to any retirement benefits other than compulsory superannuation.
Non-Executive Director remuneration is set by reference to comparable entities listed on the ASX (based on GPT’s industry sector and market capitalisation).
External independent advice on remuneration levels for Non-Executive Directors is sought on an annual basis. In the event that a review is conducted, the new Board and Committee fees are effective from the 1st of January in the applicable year and advised in the ensuing Remuneration Report.
Fees (including superannuation) paid to Non-Executive Directors are drawn from a remuneration pool of $1,800,000 per annum which was approved by GPT security holders at the Annual General Meeting on 5 May 2015. As an executive director, Mr Johnston does not receive fees from this pool as he is remunerated as one of GPT’s senior executives.

1. Board and Committee fees[35,36]

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35 ‘Chairman’ used in this sense may refer to the chairperson of the board or a particular committee.
36 In addition to the fees noted in the table, all non-executive directors receive reimbursement for reasonable travel, accommodation and other expenses incurred while undertaking GPT business.

GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

2. Reported Remuneration - Non-Executive Directors – AIFRS Accounting[37,38]

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Fixed pay
Director Salary & fees Superannuation Other [39] Total
Rob Ferguson 2015 $362,500 $19,046 - $381,546
Chairman 2014 $346,500 $18,279 - $364,779
Brendan Crotty 2015 $198,000 $18,797 - $216,797
2014 $183,925 $16,171 - $200,096
Eileen Doyle 2015 $190,000 $18,050 - $208,050
2014 $161,150 $15,108 - $176,258
Swe Guan Lim [40] 2015 $129,154 $12,270 $551 $141,975
Anne McDonald 2015 $181,000 $17,195 $3,350 $201,545
2014 $173,250 $16,242 $1,329 $190,821
Michelle Somerville [41] 2015 $13,583 $1,291 - $14,874
Gene Tilbrook 2015 $175,000 $16,625 $1,446 $193,071
2014 $161,700 $15,159 $736 $177,595
Non-Executive Directors - Former
Eric Goodwin [42] 2015 $68,285 $6,480 - $74,765
2014 $183,925 $16,171 - $200,096
2015 $1,317,522 $109,754 $5,347 $1,432,623
Total 2014 $1,210,450 $97,130 $2,065 $1,309,645
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37 This table provides a breakdown of remuneration for non-executive directors in accordance with statutory requirements and Australian accounting standards.

38 No termination benefits were paid during the financial year.

39 Other may include death & total/permanent disability insurance premiums and/or GPT superannuation plan administration fees.

40 Mr Lim joined the GPT Board on 23 March 2015.

41 Ms Somerville joined the GPT Board on 1 December 2015.

42 Mr Goodwin retired from the GPT Board on 5 May 2015.

3. Non-Executive Director - GPT security holdings

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Private holdings
(# of securities)
Director Balance 31 Dec 14 Purchase / (Sale) Balance 31 Dec 15 MSHR(Y/N)
Rob Ferguson 204,082 3,546 207,628 Y
Brendan Crotty 60,000 7,092 67,092 Y
Eileen Doyle 31,450 10,147 41,597 Y
Swe Guan Lim - - - N
Anne McDonald 21,000 2,364 23,364 N
Michelle Somerville - - - N
Gene Tilbrook 45,000 3,546 48,546 Y
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The Directors’ Report, including the Remuneration Report, is signed in accordance with a resolution of the Directors of the GPT Group.

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______ Rob Ferguson Chairman Sydney 17 February 2016

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______ Bob Johnston Chief Executive Officer and Managing Director

80 GPT ANNUAL FINANCIAL REPORT 2015

AUDITOR’S INDEPENDENCE DECLARATION

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

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GPT ANNUAL FINANCIAL REPORT 2015 81

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

Note	31 Dec 15 $’000 31 Dec 14 $’000
Revenue Fund management fees Property management fees Development management fees Development revenue Management costs recharged Other income Share of after tax profit of equity accounted investments Interest revenue Reversal of prior year impairment expense Revaluation of financial arrangements Total revenue and other income Expenses Remuneration expenses Property expenses and outgoings Development expenses Repairs and maintenance Professional fees Depreciation Amortisation Impairment expense / (reversal) Finance costs Other expenses Total expenses Profit before income tax Income tax credit 10(a) Profit after income tax for continuing operations Loss from discontinued operations 24(c) Net profit for the year Other comprehensive income Items that may be reclassified to profit and loss Net foreign exchange translation adjustments 11(b) Revaluation of available for sale financial asset 11(b) Total comprehensive income for the year Net profit attributable to: - Members of the Company - Non-controlling interest Total comprehensive income attributable to: - Members of the Company - Non-controlling interest Earnings per share attributable to the ordinary equity holders of the Company Basic and diluted earnings per share (cents per share) from continuing operations 12(a) Basic and diluted earnings per share (cents per share) - Total 12(a)	85,580 61,246 41,467 36,833 15,558 18,799 16,065 21,661 35,543 32,541
	194,213 171,080
	4,287 3,040 1,234 901 12,650 6 10,623 47,135
	28,794 51,082
	223,007 222,162
	125,040 115,338 7,642 7,255 9,525 17,870 3,591 2,977 6,488 6,137 2,280 1,902 6,802 6,747 5,852 (14) 16,913 19,343 6,584 7,624
	190,717 185,179
	32,290 36,983
	(318) (7,144)
	32,608 44,127 (183) (7,916)
	32,425 36,211
	51 1,758 6,667 -
	39,143 37,969
	24,703 36,211 7,722 - 31,421 37,969 7,722 - 1.40 2.61 1.39 2.14

The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

82 GPT ANNUAL FINANCIAL REPORT 2015

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

Note	31 Dec 15 $’000 31 Dec 14 $’000
ASSETS Current assets Cash and cash equivalents Loans and receivables 3 Prepayments Assets held for sale Total current assets Non-current assets Intangibles 4 Property, plant & equipment 6 Inventories 5 Equity accounted Investments 2 Loans and receivables 3 Deferred tax assets 10 Deferred acquisition costs Other assets 7 Total non-current assets Total assets LIABILITIES Current liabilities Payables 8 Provisions 9 Borrowings 15 Total current liabilities Non-current liabilities Borrowings 15 Provisions 9 Other liabilities Total non-current liabilities Total liabilities Net assets EQUITY Contributed equity 11(a) Reserves 11(b) Accumulated losses 11(c) Total equity attributable to Company members Non-controlling interests Total equity	40,380 50,414 65,833 38,800 1,139 1,179
	107,352 90,393 246 220
	107,598 90,613
	35,542 43,561 14,135 14,434 101,455 43,647 4,274 89 26,047 13,397 30,240 32,452 2,504 3,159 19,182 5,387
	233,379 156,126
	340,977 246,739
	52,044 43,057 29,738 29,888 6,723 6,942
	88,505 79,887
	74,805 34,047 5,285 4,810 7,182 7,231
	87,272 46,088
	175,777 125,975
	165,200 120,764
	325,328 319,315 43,742 40,549 (216,440) (243,948)
	152,630 115,916
	12,570 4,848
	165,200 120,764

The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

GPT ANNUAL FINANCIAL REPORT 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

	Total		$’000		4,848	-	-	-	-		-	-	-	4,848	4,848	-	-	-	7,722	7,722		-	-		-	12,570
Non-controlling interests	Contributed Reserves Accumulated	equity losses	$’000 $’000 $’000		22,060 - (17,212)	- - -	- - -	- - -	- - -		- - -	- - -	- - -	22,060 - (17,212)	22,060 - (17,212)	- - -	- - -	- - -	- - 7,722	- - 7,722		- - -	- - -		- - -	22,060 - (9,490)
	Total		$’000		74,800	1,758	1,758	36,211	37,969		(287)	40	3,394	115,916	115,916	6,667	51	6,718	24,703	31,421		6,013	(3,525)		2,805	152,630
Company members	Reserves Accumulated	losses	$’000 $’000		35,397 (280,159)	1,758 -	1,758 -	- 36,211	1,758 36,211		- -	- -	3,394 -	40,549 (243,948)	40,549 (243,948)	6,667 -	51 -	6,718 -	- 24,703	6,718 24,703		- -	(3,525) -		- 2,805	43,742 (216,440)
	Contributed	equity	$’000		319,562	-	-	-	-		(287)	40	-	319,315	319,315	-	-	-	-	-		6,013	-		-	325,328
			Note			11(b)		11(c)			11(a)	11(a)	11(b)			11(b)	11(b)		11(c)			11(a)	11(b)		11(c)
				Equity attributable to Company Members	Balance at 1 January 2014	Foreign currency translation reserve	Other comprehensive income for the year	Profit for the year	Total comprehensive income for the year	Transactions with Members in their capacity as Members:	On-market securities buy-back	Issue of securities	Movement in employee incentive security scheme reserve net of tax	Balance at 31 December 2014	Balance at 1 January 2015	Revaluation of available for sale financial asset	Foreign currency translation reserve	Other comprehensive income for the year	Profit for the year	Total comprehensive income for the year	Transactions with Members in their capacity as Members:	Issue of securities	Movement in employee incentive security scheme reserve net of tax	Reclassification of employee incentive security scheme reserve to	accumulated losses	Balance at 31 December 2015

84 GPT ANNUAL FINANCIAL REPORT 2015

CONSOLIDATED STATEMENT OF CASH FLOW

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

Note	31 Dec 15 $’000 31 Dec 14 $’000
Cash flows from operating activities Cash receipts in the course of operations (inclusive of GST) Cash payments in the course of operations (inclusive of GST) Payments for inventories Cash receipts from development activities Payments for development activities Distributions and dividends received from equity accounted investments Interest received Finance costs Net cash outflows from operating activities 14 Cash flows from investing activities Payments for property, plant and equipment Payments for intangibles Investment in joint ventures Net cash outflows from investing activities Cash flows from financing activities Proceeds from issue of securities net of transaction costs Purchase of securities for the employee incentive scheme Payments for the on-market buy-back of securities Repayment of related party borrowings Proceeds from borrowings Net cash inflows from financing activities Net (decrease) / increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year	116,640 153,308 (128,542) (116,093) (53,787) (43,647) 32,820 4,877 (11,612) (10,037) 747 2,523 1,241 1,298 (1,877) (194)
	(44,370) (7,965)
	(1,737) (998) (5,172) (3,053) - (2)
	(6,909) (4,053)
	4,688 - (278) (388) - (287) (3,804) - 40,639 40,989
	41,245 40,314
	(10,034) 28,296 50,414 22,118
	40,380 50,414

The above Consolidated Statement of Cash Flow should be read in conjunction with the accompanying notes.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

These are the consolidated financial statements of GPT Management Holdings Limited and its controlled entities (the Consolidated Entity).

The notes to these financial statements have been organised into logical groupings in order to help users find and understand the information they need to know. Where possible, related information has been provided in the same place, and more detailed information has been moved to the rear of the document and cross-referenced where necessary. The Consolidated Entity has also reviewed the notes for materiality and relevance, providing additional information where it is helpful to understand the Consolidated Entity’s performance, and by removing immaterial information.

The notes to the financial statements are organised into the following sections:

Note 1 - Results for the year: focuses on results and performance of the Consolidated Entity.

Notes 2 to 10 - Operating assets and liabilities: provides information on the assets and liabilities used to generate the Consolidated Entity’s trading performance.

Notes 11 to 16 - Capital structure: outlines how the Consolidated Entity manages its capital structure and various financial risks.

Notes 17 to 26 - Other disclosure items: provides information on other items that must be disclosed to comply with Australian Accounting Standards and other regulatory pronouncements.

Key judgements and estimates

In applying GPT’s accounting policies, management has made a number of judgements and estimates regarding future events.

The following judgements and estimates have the potential to have a material impact on the financial statements.

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Area of estimates Assumptions underlying Note
Loan receivables Recoverability 3
Management rights with indefinite life Impairment and recoverable amounts 4
IT development and software Impairment trigger and recoverable amounts 4
Inventories Lower of costs and net realisable value 5
Deferred tax assets Recoverability 10
Security based payments Fair value 19
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RESULT FOR THE YEAR

1. SEGMENT INFORMATION

The Chief Operating Decision Maker has been identified as the board of directors which is accountable for the strategic decision making within the Consolidated Entity. Management of the Consolidated Entity has determined that the Consolidated Entity operates in a single segment based on the information provided to the board of directors.

The amounts provided to the board of directors in respect of the financial performance are measured in a manner consistent with that of the financial report. Refer to the Consolidated Statement of Comprehensive Income for the segment financial performance and the Consolidated Statement of Financial Position for the total assets and liabilities.

Revenue

Property, development and fund management fee revenue is recognised on an accruals basis, in accordance with the terms of the relevant contracts.

Development revenue is recognised on percentage of completion basis, using the proportion of development completed at reporting date.

Revenue from dividends and distributions is recognised when they are declared.

Interest income is recognised on an accruals basis using the effective interest method.

Gain or loss on disposal of assets is recognised as the difference between the carrying amount and the net proceeds from disposal. Where revenue is obtained from the sale of properties or assets, it is recognised when the significant risks and rewards have transferred to the buyer.

Expenses

Property expenses and outgoings include rates, taxes and other property outgoings are recognised on an accruals basis.

Finance costs

A qualifying asset is an asset under development which generally takes a substantial period of time to get ready for its intended use or sale, for example more than 12 months. Finance costs incurred for the acquisition and construction of a qualifying asset are capitalised to the cost of the asset for the period of time that is required to complete the asset. Where funds are borrowed specifically for a development project, finance costs associated with the development facility are capitalised. Conversely, where funds are used from group borrowings, finance costs are capitalised using an appropriate capitalisation rate.

86 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

OPERATING ASSETS AND LIABILITIES

2. EQUITY ACCOUNTED INVESTMENTS

Note	31 Dec 15 $’000 31 Dec 14 $’000
Investments in joint ventures (a) Total equity accounted investments (a) Details of equity accounted investments Name Principal Activity Ownership Interest 2015 % 2014 %	4,274 89 4,274 89 31 Dec 15 $’000 31 Dec 14 $’000
Entities incorporated in Australia DPT Operator Pty Limited(1) Managing property 50.00 50.00 Lendlease GPT (Rouse Hill) Pty Limited(1) (2) (3) Property development 50.00 50.00 Chullora Trust 1 Property development 50.00 50.00 Erskine Park Trust Propertydevelopment 50.00 50.00	87 85 4,183 - 2 2 2 2
Total investment injoint venture entities	4,274 89

(1) These entities have a 30 June balance date.

(2) The Consolidated Entity has a 50% interest in Lendlease GPT (Rouse Hill) Pty Limited, a joint venture developing residential and commercial land at Rouse Hill, in partnership with Urban Growth and the NSW Development of Planning.

(3) The Group interest is held through a subsidiary that is 52% owned by GMH and 48% owned by GPT Trust.

(b) Summarised financial information for joint venture entities

The information disclosed reflects the amounts presented in the financial statements of the relevant joint ventures and not the Consolidated Entity’s share of those amounts. They have been amended to reflect adjustments made by the entity when using the equity method, including fair value adjustments and modifications for differences in accounting policy.

	31 Dec 15 $’000 31 Dec 14 $’000
Cash and cash equivalents Other assets Property investments and loans Total assets Other liabilities External borrowings - non current Total liabilities Net assets Negative net assets not recognised(1) Net assets recognised Consolidated entity's share (1) This represents the negative net assets in Lendlease GPT (Rouse Hill) Pty Limited. (c) Share of joint ventures commitments and contingent liabilities	67,885 14,489 19,157 20,691 2,783 35,852
	89,825 71,032
	23,779 29,875 57,498 57,107
	81,277 86,982
	8,548 (15,950) - 16,128
	8,548 178
	4,274 89
	31 Dec 15 $’000 31 Dec 14 $’000
Capital expenditure commitments Total joint venture commitments	2,419 -
	2,419 -

The contingent liabilities in the Consolidated Entity’s joint ventures at 31 December 2015 relate to Lendlease GPT (Rouse Hill) Pty Limited (2014: nil).

(d) Reconciliation of the carrying amount of investments in joint ventures

(d) Reconciliation of the carrying amount of investments in joint ventures
	31 Dec 15 $’000 31 Dec 14 $’000
Carrying amount at the beginning of the year Acquisitions Reversal of negative net assets Share of joint venture entities’ net operating profit Distributions received/receivable from joint ventures Carrying amount at the end of the year	89 86 - 2 (8,065) - 12,352 3,040 (102) (3,039)
	4,274 89

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

3. LOANS AND RECEIVABLES

3. LOANS AND RECEIVABLES
	31 Dec 15 $’000 31 Dec 14 $’000
(a) Current assets Trade receivables(1) Distributions receivable from joint venture entities Accrued development revenue Other debtors Related party receivables(2) Total current loans and receivables (b) Non-current assets Loan to Lendlease GPT (Rouse Hill) Pty Limited(3) Loans to related parties Total non-current loans and receivables	35,892 14,977 16 515 - 11,916 1,108 2,865 28,817 8,527
	65,833 38,800
	18,500 5,850 7,547 7,547
	26,047 13,397

(1) The trade receivables balance includes amounts receivable from GWOF, GWSCF and GMF. See note 20 for more details on related party transactions.

(2) The related party receivables are from GPT Trust and have been agreed on commercial terms and conditions.

(3) The loan is provided to Lendlease GPT (Rouse Hill) Pty Limited as part of the funding of the joint venture agreement. During 2015, no loan repayments were received (2014: $1.0 million). A $12.7 million reversal of impairment has been booked in 2015 (2014: nil).

The table below shows the ageing analysis of GPT’s loans and receivables.

Current receivables Non-current loans and receivables Total loans and receivables	31 December 2015 Not Due 0-30 days 31-60 days 61-90 days 90+ days Total $’000 $’000 $’000 $’000 $’000 $’000	31 December 2014 Not Due 0-30 days 31-60 days 61-90 days 90+ days Total $’000 $’000 $’000 $’000 $’000 $’000
	- 63,082 1,085 262 1,404 65,833 26,047 - - - - 26,047	- 34,495 325 408 3,572 38,800 13,397 - - - - 13,397
	26,047 63,082 1,085 262 1,404 91,880	13,397 34,495 325 408 3,572 52,197

Recoverability of trade receivables

Recoverability of trade receivables is assessed on an ongoing basis. Impairment is recognised in the Consolidated Statement of Comprehensive Income when there is objective evidence that the Consolidated Entity will not be able to collect the debts. Financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial re-organisation and default or delinquency in payments are considered objective evidence of impairment. See note 16(e) for more information on management of credit risk in relation to trade receivables.

Recoverability of non-current loan receivables

At the end of each reporting period, the Consolidated Entity assesses whether there is objective evidence that a loan receivable is impaired. The amount of the impairment is measured as the difference between the loan receivable’s carrying amount and the present value of estimated future cash flows discounted at the loan receivable’s original effective interest rate. The carrying amount of the loan receivable is reduced and the amount of the loss is recognised in the Consolidated Statement of Comprehensive Income. In a subsequent period, if the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the reversal of the previously recognised impairment loss is recognised in the Consolidated Statement of Comprehensive Income.

For the loan advanced to Lendlease GPT (Rouse Hill) Pty Limited, which has been previously impaired, the Consolidated Entity has performed the impairment test at 30 June 2015 and 31 December 2015, resulting in a partial reversal of the prior year impairment of $12.65 million, increasing the loan receivable balance to $18.5 million.

88 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

4. INTANGIBLES

Reconciliations of the carrying amount of each class of intangible at the beginning and end of the financial year are set out below:

	Management rights $’000 IT Development and software $’000 Total $’000
Cost Balance as at 1 January 2014 Additions Transfers Balance as at 31 December 2014 Additions Transfers Balance as at 31 December 2015 Accumulated amortisation and impairment Balance as at 1 January 2014 Amortisation Balance as at 31 December 2014 Amortisation Impairment Balance as at 31 December 2015 Carrying Amounts Balance as at 31 December 2014 Balance as at 31 December 2015	55,509 58,023 113,532 197 2,746 2,943 - (3,286) (3,286)
	55,706 57,483 113,189 134 4,819 4,953 (23) (252) (275)
	55,817 62,050 117,867
	(43,904) (18,977) (62,881) (564) (6,183) (6,747)
	(44,468) (25,160) (69,628) (283) (6,519) (6,802) - (5,895) (5,895)
	(44,751) (37,574) (82,325)
	11,238 32,323 43,561
	11,066 24,476 35,542

Management rights

Management rights include property management and development management rights. Rights are initially measured at cost and rights with a definite life are subsequently amortised over their useful life, which ranges from 3 to 10 years.

For management right of Highpoint Shopping Centre, management considers the useful life as indefinite as there is no fixed term for the management agreement. Therefore, management tests for impairment at balance date. Assets are impaired if the carrying value exceeds their recoverable amount. The recoverable amount is determined using value in use calculation based on cash flow projections for a five year period. The discount rate applied to these asset-specific cash flow projections is 5.6% and the growth rate used to extrapolate the cash flows beyond the five year period is 4.0%.

IT development and software

IT development and software are assessed for impairment at each reporting date by evaluating if any impairment triggers exist. Where impairment triggers exist, management calculate the recoverable amount. The asset will be impaired if the recoverable amount exceeds the carrying value. Critical judgements are made by management in setting appropriate impairment triggers and assumptions used to determine the recoverable amount.

5. INVENTORIES

	31 Dec 15 $’000 31 Dec 14 $’000
Development properties held for resale Total inventories	101,455 43,647
	101,455 43,647

During the year, the Consolidated Entity has acquired land parcels adjacent to the Rouse Hill Town Centre from Urban Growth for $19.9 million in April 2015 and two land parcels located on Wembley Road in Berrinba from Logan City Council for $25.0 million in June 2015.

Development properties held for resale is stated at the lower of cost and net realisable value.

Cost

GPT ANNUAL FINANCIAL REPORT 2015 89

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

Net Realisable Value (NRV)

The NRV is the estimated selling price in the ordinary course of business less estimated costs to sell. At each reporting date, management reviews these estimates by taking into consideration:

the most reliable evidence and
any events which confirm conditions existing at the year end and cause any fluctuations of selling price and costs to sell.

The amount of any inventories write-down is recognised as an impairment expense in the Consolidated Statement of Comprehensive Income.

No impairment expense has been recognised for the year ended 31 December 2015 (2014: nil).

6. PROPERTY, PLANT AND EQUIPMENT

	31 Dec 15 $’000 31 Dec 14 $’000
Computers At cost Less: accumulated depreciation and impairment Total computers Office, fixtures and fittings At cost Less: accumulated depreciation and impairment Total office, fixtures and fittings Total property, plant and equipment	13,653 11,975 (8,826) (7,539)
	4,827 4,436
	14,365 14,062 (5,057) (4,064)
	9,308 9,998
	14,135 14,434

Reconciliations of the carrying amount of property, plant and equipment at the beginning and end of the financial year are set out below:

	Computers $’000 Office fixtures & fittings $’000 Total $’000
Balance as at 1 January 2014 Additions Transfers Depreciation charge Balance as at 31 December 2014 Balance as at 1 January 2015 Additions Transfers Depreciation charge Balance as at 31 December 2015	2,474 10,108 12,582 193 275 468 2,889 397 3,286 (1,120) (782) (1,902)
	4,436 9,998 14,434
	4,436 9,998 14,434 1,485 221 1,706 193 82 275 (1,287) (993) (2,280)
	4,827 9,308 14,135

The value of property, plant and equipment is measured as the cost of the asset less depreciation and impairment. The cost of the asset includes acquisition costs and any costs directly attributable to bring the asset to the location and condition necessary for it to be capable of operating in the manner intended by management. Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Consolidated Entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the Consolidated Statement of Comprehensive Income during the financial period in which they are incurred.

Depreciation

Items of property, plant and equipment are depreciated on a straight line basis over their useful lives. The estimated useful life is between 3 and 40 years.

Impairment

The Consolidated Entity tests property, plant and equipment for impairment where there is an indicator that the asset may be impaired. An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Disposals

Gains and losses on disposals are determined by comparing proceeds from disposals with the carrying amount of the property, plant & equipment and are included in the Consolidated Statement of Comprehensive Income in the year of disposal.

90 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

7. OTHER ASSETS

7. OTHER ASSETS
	31 Dec 15 $’000 31 Dec 14 $’000
Available for sale financial asset(1) Lease incentive asset Investment in financial asset	8,641 - 5,101 5,387 5,440 -
	19,182 5,387

(1) The available for sale financial asset relates to an investment in BGP, which is a European real estate investment company. This investment is held as an available for sale investment. The fair value at December 2014 was determined to be nil.

8. PAYABLES

(1) The available for sale financial asset relates to an investment in BGP, which is a European real estate investment company. This investment sale investment. The fair value at December 2014 was determined to be nil. 8. PAYABLES	19,182 5,387 is held as an available for
	31 Dec 15 $’000 31 Dec 14 $’000
Trade payables Accruals Other payables Total payables	14,488 7,523 34,829 30,562 2,727 4,972
	52,044 43,057

Trade payables and accruals represent liabilities for goods and services provided to the Consolidated Entity prior to the end of the financial year which are unpaid. They are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method.

9. PROVISIONS

		31 Dec 15 $’000 31 Dec 14 $’000
Current provisions Employee benefits Other Total current provisions Non-current provisions Employee benefits Total non-current provisions Balance as at 1 January 2014 Arising during the year Utilised during the year Balance as at 31 December 2014 Balance as at 1 January 2015 Arising during the year Utilised during the year Balance as at 31 December 2015	Employee benefits $’000	26,110 26,121 3,628 3,767
		29,738 29,888
		5,285 4,810
		5,285 4,810
		Other $’000 Total $’000
	26,659 21,079 (16,807)	4,086 30,745 1,115 22,194 (1,434) (18,241)
	30,931	3,767 34,698
	30,931 25,474 (25,010)	3,767 34,698 797 26,271 (936) (25,946)
	31,395	3,628 35,023

Provisions are recognised when:

the Consolidated Entity has a present obligation (legal or constructive) as a result of a past event,
it is probable that resources will be expended to settle the obligation and
a reliable estimate can be made of the amount of the obligation.

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the obligation.

Employee benefits

The provision for employee benefits represents annual leave and long service leave entitlements accrued for employees. The employee benefit liability is due to be settled within twelve months after the end of the reporting period is therefore recognised in current liabilities. The non-current provision relates to entitlements, including long service leave, which are due to be payable after twelve months from the balance date. It is measured as the present value of expected future payments for the services provided by employees up to the reporting date. Consideration is given to expected future wage and salary levels, experience of employee departures and periods of service. Expected future payments are discounted using market yields at balance date on national government bonds with terms to maturity and currency that match, as closely as possible, the estimated future cash outflows. Employee benefit on-costs are recognised together with the employee benefits and included in employee benefit liabilities.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

10. TAXATION

	31 Dec 15 $’000 31 Dec 14 $’000
(a) Income tax Current income tax credit Deferred income tax credit Income tax credit in the Statement of Comprehensive Income Income tax credit attributable to: Profit from continuing operations Loss from discontinued operations Aggregate income tax credit Reconciliation of income tax credit to prima facie tax payable Profit from continuing operations before income tax expense Loss from discontinued operations before income tax expense Net profit before income tax expense Prima facie income tax expense at 30% tax rate (2014: 30%) Tax effect of amounts not deductible / assessable in calculating income tax credit: Prior year adjustments Previously unrecognised tax losses used to reduce deferred tax expense Net loss on disposal of foreign investments Amortisation of intangibles Revaluation of financial arrangements Bad debt deductions allowed on related party interest Depreciation not deductible Deferred acquisition costs Deferred tax asset not recognised Reversal of impairment Loss from joint ventures Other Income tax credit (b) Deferred tax assets Employee credits Provisions and accruals Other Tax losses recognised Net deferred tax asset Movement in temporary differences during the year Opening balance at the beginning of the year Credited / (charged) to the Statement of Comprehensive Income (Charged) / credited to reserves Tax losses (utilised) / recognised Closing balance at the end of the year	- - (319) (4,582)
	(319) (4,582)
	(318) (7,144) (1) 2,562
	(319) (4,582)
	32,290 36,983 (184) (5,354)
	32,106 31,629
	9,632 9,489 - (3,422) (5,965) - - 544 40 39 (2,830) (14,141) - (4,193) 18 88 - 954 3,800 5,323 (3,795) - (1,256) - 37 737
	(319) (4,582)
	13,970 15,243 2,874 3,197 (4,416) (1,793) 17,812 15,805
	30,240 32,452
	32,452 25,021 4,276 (1,588) (2,533) 2,847 (3,955) 6,172
	30,240 32,452

Company and other taxable entities

Income tax credit for the financial year is the tax receivable on the current year’s taxable income based on the income tax rate for each jurisdiction, this is adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses.

Deferred income tax liabilities and assets - recognition

Deferred income tax liabilities are recognised for all taxable temporary differences.

92 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

Deferred income tax assets and liabilities – measurement

Deferred income tax is provided on temporary differences at the reporting date between accounting carrying amounts and the tax bases of assets and liabilities, other than for the following:

Where they arise from the initial recognition of an asset or liability in a transaction that is not a business combination and at the time of the transaction affects neither the accounting profit nor taxable profit or loss.
Where taxable temporary differences relate to investments in subsidiaries, associates and interests in joint ventures:
Deferred tax liabilities are not recognised if the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets are not recognised if it is not probable that the temporary differences will reverse in the foreseeable future and taxable profit will not be available to utilise the temporary differences.
Unused tax losses for which no deferred tax asset has been recognised are $45.0 million (2014: $81.0 million).

Tax relating to equity items

Income taxes relating to items recognised directly in equity are recognised in equity and not in Consolidated Statement of Comprehensive Income.

CAPITAL STRUCTURE

11. EQUITY AND RESERVES

(a) Contributed equity

(a) Contributed equity
	Number $’000
Ordinary stapled securities Opening securities on issue Securities issued On market buy back Closing securities on issue Opening securities on issue Securities issued - institutional placement(1) Transaction costs Securities issued - Long Term Incentive Plan Securities issued - Security Purchase Plan(1) Securities issued - Deferred Short Term Incentive Plan Securities issued - Broad Based Employee Security Ownership Plan Distribution reinvestment plan for 6 months period ended 30 June 2015(2) Closing securities on issue	1,694,888,638 319,562 1,980,505 40 (11,408,188) (287)
	1,685,460,955 319,315
	1,685,460,955 319,315 76,832,152 4,093 - (70) 2,169,649 81 11,820,458 665 1,236,353 65 59,514 4 17,237,448 1,175
	1,794,816,529 325,328

Ordinary securities are classified as equity and recognised at the fair value of the consideration received by the Consolidated Entity. Any transaction costs arising on the issue and buy back of ordinary securities are recognised directly in equity as a reduction, net of tax, of the proceeds received.

(1) Securities issued - institutional placement and stapled security purchase plan Equity raising comprised a $325.0 million institutional placement and a $50.0 million security purchase plan. The funding was used to fund the redemption of exchangeable securities.
(2) Distribution reinvestment plan
The distribution reinvestment plan was activated for the six months to 30 June 2015 distribution at a 1.0% discount to the volume weighted average GPT trading price for a period of 15 business days commencing from the business day following the record date (30 June 2015).

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

(b) Reserves

(b) Reserves
	Foreign Currency Translation Reserve Employee Incentive Scheme Reserve Fair Value Reserve Total Reserve
Balance at 1 January 2014 Net foreign exchange translation adjustments Employee incentive schemes expense, net of tax Tax on incentives valued at reporting date Purchase of securities Issue of securities Balance at 31 December 2014 Balance at 1 January 2015 Net foreign exchange translation adjustments Reclassification to accumulated losses Employee incentive schemes expense, net of tax Tax on incentives valued at reporting date Purchase of securities Issue of securities Revaluation of available for sale financial asset Balance at 31 December 2015	32,197 3,200 - 35,397 1,758 - - 1,758 - 975 - 975 - 2,847 - 2,847 - (388) - (388) - (40) - (40)
	33,955 6,594 - 40,549
	33,955 6,594 - 40,549 51 - - 51 - (2,805) - (2,805) - 265 - 265 - (558) - (558) - (278) - (278) - (149) - (149) - - 6,667 6,667
	34,006 3,069 6,667 43,742

Nature and purpose of reserves

Foreign currency translation reserve

Employee incentive scheme reserve

The reserve is used to recognise the fair value of equity-settled security-based payments provided to employees, including key management personnel, as part of their remuneration. Refer to note 19 for further details of security based payments.

Fair value reserve

The fair value reserve comprises the cumulative net change in available for sale financial assets until the assets are derecognised or impaired.

(c) Accumulated losses

(c) Accumulated losses
	Company $’000 Non- controlling interest $’000 Total $’000
Balance at 1 January 2014 Net profit for the year Balance at 31 December 2014 Balance at 1 January 2015 Net profit for the year Reclassification from employee incentive security scheme Balance at 31 December 2015	(280,159) (17,212) (297,371) 36,211 - 36,211
	(243,948) (17,212 (261,160)
	(243,948) (17,212) (261,160) 24,703 7,722 32,425 2,805 - 2,805
	(216,440) (9,490) (225,930)

94 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

12. EARNINGS PER SHARE

	31 Dec 15 cents 31 Dec 14 cents
(a) Basic and diluted earnings per share Basic and diluted earnings per share - profit from continuing operations Basic and diluted loss per share - loss from discontinued operations Total basic and diluted earnings per share (b) Weighted average number of ordinary stapled securities Weighted average number of ordinary shares used as the denominator in calculating: Basic earnings per ordinary share Performance security rights (weighted average basis)(1) Weighted average number of ordinary shares and potential ordinary shares used as the demoninator in calculating diluted earnings per ordinary share (c) The profit used in the calculation of the basic and diluted earnings per share are as follows: Profit reconciliation - basic and diluted Profit from continuing operations Loss from discontinued operations Profit attributed to external non-controlling interest	1.40 2.61 (0.01) (0.47)
	1.39 2.14
	Number of shares ‘000s Number of shares ‘000s
	1,773,920 1,686,320 3,764 2,754
	1,777,684 1,689,074
	31 Dec 15 $’000 31 Dec 14 $’000
	24,886 44,127 (183) (7,916) 7,722 -
	32,425 36,211

(1) Performance security rights granted under the Long Term Incentive plan are only included in dilutive earnings per ordinary stapled security where the performance hurdles are met as at the year end.

Calculation of earnings per stapled security

Basic earnings per share is calculated as net profit attributable to ordinary shareholders of the Company, divided by the weighted average number of ordinary shares outstanding during the financial year which is adjusted for bonus elements in ordinary shares issued during the financial year.

Diluted earnings per share is calculated as net profit attributable to ordinary shareholders of the Company divided by the weighted average number of ordinary shares and dilutive potential ordinary securities. Where there is no difference between basic earnings per share and diluted earnings per share, the term basic and diluted earnings per ordinary share is used.

13. DIVIDENDS PAID AND PAYABLE

No dividends have been paid or declared for the 2015 financial year (2014: nil).

14. CASH FLOWS FROM OPERATING ACTIVITIES

Reconciliation of net profit after income tax to net cash outflows from operating activities:

31 Dec 15
$’000
31 Dec 14
$’000

Net profit for the year
Share of after tax profit of equity accounted investments (net of distributions)
Reversal of prior year impairment expense
Net foreign exchange (gain)/loss
Impairment expense
Non-cash employee benefits - security based payments
Lease incentive amortisation
Interest capitalised
Amortisation of rental abatement
Depreciation and amortisation expense
Amortisation of deferred acquisition costs
Intercompany finance costs
Revaluation of borrowings
Payment for inventories(1)
Increase in operating assets
Decrease in operating liabilities
Net cash outflows from operating activities

32,425
36,211
(4,037)
(515)
(12,650)
-
(3)
19
5,895
1,813
8,456
13,543
238
295
(1,974)
-
474
-
9,082
8,649
653
-
15,357
22,603
(10,623)
(47,135)
(53,787)
(43,647)
(42,526)
(27,470)
8,650
27,669

(44,370)
(7,965)

GPT ANNUAL FINANCIAL REPORT 2015 95

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

15. BORROWINGS

15. BORROWINGS
	31 Dec 15 31 Dec 14 Carrying amount(1) $’000 Fair value(2) $’000 Carrying amount(1) $’000 Fair value(2) $’000
Current borrowings - secured Current borrowings Non-current borrowings - secured Related party borrowings from GPT Trust Non-current borrowings Total borrowings	6,723 6,733 6,942 6,942
	6,723 6,733 6,942 6,942
	13,580 13,619 11,947 12,000 61,225 61,794 22,100 22,497
	74,805 75,413 34,047 34,497
	81,528 82,146 40,989 41,439

(1) Net of unamortised establishment costs

(2) Excludes unamortised establishment costs.

The fair value of fixed rate interest-bearing borrowings is estimated by discounting the future contractual cash flows at the current market interest rate curve.

The following unsecured borrowings are provided by GPT Trust and its subsidiaries and have been revalued to nil (Dec 2014: nil) based on a forecast cash flow for amounts payable. As a result a revaluation adjustment of $10.2 million for both continuing and discontinued operations has been recognised in the Consolidated Statement of Comprehensive Income (2014: $47.1 million):

Loan facility to GPT Management Holdings Limited of AUD $550,000,000 was drawn to $372,860,231 (Dec 2014: $373,511,287). This facility expires on 31 December 2030.
Loan facility to GPT Property Management Ltd of AUD $50,000,000 was drawn to $33,986,204 (Dec 2014: $34,637,259). This facility expires on 31 December 2030.
Loan facility to GPT International Pty Limited of AUD $120,000,000 was drawn to $100,942,484 (Dec 2014: $102,042,484). This facility expires on 12 June 2032.
Loan facility to Voyages Hotels & Resorts of AUD $70,000,000 was drawn to $68,697,888 (Dec 2014: $70,000,000). This facility expires on 3 January 2035.
Loan facility to Voyages Hotels & Resorts of AUD $54,663,473 was drawn to $54,663,473 (Dec 2014: $54,663,473). This facility expires on 30 June 2032.

Interest of $12,751,494 is payable in connection with the above loans. It is not capitalised as per the agreements but is included in the revaluation of the loans. Interest will no longer be accrued from 3 September 2015.

Borrowings are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method or at their fair value. Under this method, any transaction fees, costs, discounts and premiums directly related to the borrowings are recognised in the Consolidated Statement of Comprehensive Income over the expected life of the borrowings. All borrowings with maturities greater than 12 months after reporting date are classified as non-current liabilities.

The maturity profile of borrowings is provided below:

	Total facility(1) $’000 Used facility(1) $’000	Unused facility $’000
Due within one year Due between one and five years Due after five years Cash and cash equivalents Total financing resources available at the end of the year	9,856 6,733 89,574 64,844 854,763 641,150	3,123 24,730 213,613
	954,193 712,727	241,466 40,380
		281,846

(1) Excluding unamortised establishment costs and fair value adjustments. Includes unsecured borrowings provided by GPT Trust and its subsidiaries which have been revalued to nil.

Cash and cash equivalents includes cash on hand, cash at bank and short term money market deposits.

96 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

16. FINANCIAL RISK MANAGEMENT

The Board approve the Consolidated Entity’s treasury and risk management policy which:

establishes a framework for the management of risks inherent to the capital structure,
defines the role of the Consolidated Entity’s treasury, and
sets out the policies, limits, monitoring and reporting requirements for cash, borrowings, liquidity, credit risk, foreign exchange and interest rate instruments.

(a) Interest rate risk

Interest rate risk is the risk that the future cash flows of a financial instrument will fluctuate because of changes in market interest rates. The Consolidated Entity’s primary interest rate risk arises from interest bearing borrowings. The table below provides a summary of the Consolidated Entity’s gross interest rate risk exposure as at 31 December 2015 on interest bearing borrowings together with the net effect of interest rate risk management transactions. This excludes unamortised establishment costs.

	Gross exposure Net exposure 2015 $’000 2014 $’000 2015 $’000 2014 $’000
Fixed rate interest-bearing borrowings Floating rate interest-bearing borrowings	32,001 12,000 32,001 12,000 49,527 29,042 49,527 29,042
	81,528 41,042 81,528 41,042

The average fixed rate for 2015 is 7.5%.

The impact on interest expense and interest revenue of a 1% increase or decrease in market interest rates is shown below.

A 1% increase or decrease is used for consistency of reporting interest rate risk across the Consolidated Entity and represents management’s assessment of the potential change in interest rates.

management’s assessment of the potential change in interest rates.
	2015 (+1%) $’000 2015 (-1%) $’000 2014 (+1%) $’000 2014 (-1%) $’000
Impact on statement of comprehensive income Impact on interest revenue increase / (decrease) Impact on interest expense (increase) / decrease	404 (404) 504 (504) (496) 496 (290) 290
	(92) 92 214 (214)

(b) Liquidity risk

Liquidity risk is the risk that the Consolidated Entity, as a result of its operations:

will not have sufficient funds to settle a transaction on the due date,
will be forced to sell financial assets at a value which is less than what they are worth, or
may be unable to settle or recover a financial asset at all.

The Consolidated Entity manages liquidity risk by:

maintaining sufficient cash,
maintaining an adequate amount of committed credit facilities,
maintaining a minimum liquidity buffer in cash and surplus committed facilities for the forward rolling twelve month period,
the ability to close out market positions.

The table below shows an analysis of the undiscounted contractual maturities of liabilities which forms part of the Consolidated Entity’s assessment of liquidity risk.

Liabilities Non-derivatives Payables Borrowings(1) Projected interest cost on borrowings Total liabilities Less cash and cash equivalents Total liquidity exposure	31 December 2015	31 December 2014
	1 year or less Over 1 year to 2 years Over 2 years to 5 years Over 5 years Total $’000 $’000 $’000 $’000 $’000	1 year or less Over 1 year to 2 years Over 2 years to 5 years Over 5 years Total $’000 $’000 $’000 $’000 $’000
	52,044 - - - 52,044 6,733 13,619 51,225 641,150 712,727 4,910 4,093 8,060 1,689 18,752	43,057 - - - 43,057 6,942 - 24,000 10,100 41,042 3,221 2,872 6,016 2,519 14,628
	63,687 17,712 59,285 642,839 783,523	53,220 2,872 30,016 12,619 98,727
	40,380 - - - 40,380	50,414 - - - 50,414
	23,307 17,712 59,285 642,839 743,143	2,806 2,872 30,016 12,619 48,313

(1) Including unamortised establishment costs

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

(c) Refinancing risk

Refinancing risk is the risk that credit is unavailable or available at unfavourable interest rates and credit market conditions result in an unacceptable increase in the Consolidated Entity’s interest cost. Refinancing risk arises when the Consolidated Entity is required to obtain debt to fund existing and new debt positions. GPT manages this risk by spreading sources and maturities of borrowings in order to minimise debt concentration risk, allow averaging of credit margins over time and reducing refinance amounts.

As at 31 December 2015, the Consolidated Entity’s exposure to refinancing risk can be monitored by the spreading of its contractual maturities on borrowings in the liquidity risk table above or with the information in note 15.

(d) Foreign exchange risk

Foreign exchange risk refers to the risk that the value of a financial commitment, asset or liability will fluctuate due to changes in foreign exchange rates. The Consolidated Entity’s foreign exchange risk arises primarily from:

firm commitments of highly probable forecast transactions for receipts and payments settled in foreign currencies or with prices dependent on foreign currencies; and
investments in foreign assets.

Sensitivity to foreign exchange is deemed insignificant.

Foreign currency assets and liabilities

The following table shows the Australian dollar equivalents of amounts within the Consolidated Statement of Financial Position which are denominated in foreign currencies.

are denominated in foreign currencies.
	Euros United States Dollars 31 Dec 2015 $’000 31 Dec 2014 $’000 31 Dec 2015 $’000 31 Dec 2014 $’000
Assets Cash and cash equivalents Interests in equity accounted investments Liabilities Other liabilities	1,296 1,402 143 141 - - (31) -
	1,296 1,402 112 141
	333 331 - 19
	333 331 - 19

(e) Credit risk

Credit risk is the risk that a contracting entity will not complete its obligations under a contractual agreement, resulting in a financial loss to the Consolidated Entity. The Consolidated Entity has exposure to credit risk on all financial assets included on their Consolidated Statement of Financial Position.

The Consolidated Entity manages this risk by:

establishing credit limits for financial institutions and monitoring credit exposures for customers to ensure that the Consolidated Entity only trades and invests with approved counterparties,
providing loans to joint ventures, associates and third parties only where it is comfortable with the underlying property exposure within that entity,
regularly monitoring loans and receivables balances on an ongoing basis,
regularly monitoring the performance of its associates, joint ventures and third parties, and
obtaining collateral as security (where appropriate).

Receivables are reviewed regularly throughout the year. A provision for doubtful debts is made where collection is deemed uncertain.

The maximum exposure to credit risk as at 31 December 2015 is the carrying amounts of financial assets recognised on the Consolidated Statement of Financial Position. For more information refer to note 3.

98 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

OTHER DISCLOSURE ITEMS

17. COMMITMENTS

(a) Capital expenditure commitments[(1)]

The capital expenditure commitments at 31 December 2015 were $0.1 million (2014: nil)

(1) Commitments arising from purchase of plant and equipment and other intangibles, which have been approved but not recognised as liabilities in the Consolidated Statement of Financial Position.

(b) Operating lease commitments[(1)]

	31 Dec 15 $’000 31 Dec 14 $’000
Due within one year Due between one and five years Over five years Total operating lease commitments	4,355 4,454 19,412 17,722 1,896 4,642
	25,663 26,818

(1) Contracted non-cancellable future minimum lease payments on office premises and equipment expected to be payable but not recognised in the Consolidated Statement of Financial Position.

18. CONTINGENT LIABILITIES

A contingent liability is a liability that is not sufficiently certain to qualify for recognition as a provision where uncertainty may exist regarding the outcome of future events.

As part of the sale agreement of Quad 2 and Quad 3, Sydney Olympic Park between GPT Platform a trustee of GPT Metro Office Fund and GPT RE Limited a trustee of General Property Trust, GPT Management Holdings Ltd (the lessee) has entered into lease agreement with GPT Platform (the lessor). Under the agreement during the period of maximum 2 years commencing on 14 August 2014 in the event of any vacant space at Quad 2 and 3 the lessor will grant $1 million, and the lessee will accept the grant of a lease of the vacant space.

GPT Management Holdings Ltd has provided guarantees over GPT RE Limited as responsible entity of the General Property Trust’s obligations under the note purchase and guarantee agreements in relation to US Private Placement issuances totalling US$425 million until July 2029.

Apart from the matters referred to above, there are no other material contingent liabilities at reporting date.

19. SECURITY BASED PAYMENTS

The Consolidated Entity currently has four employee security schemes – the General Employee Security Ownership Plan (GESOP), Broad Based Employee Security Ownership Plan (BBESOP), Deferred Short Term Incentive Plan (DSTI) and Long Term Incentive (LTI) Scheme.

(a) GESOP

Under the plan individuals who participate receive an additional benefit equivalent to 10% of their STIC (Short Term Incentive Scheme) which is (after the deduction of income tax) invested in GPT securities to be held for a minimum of 1 year.

(b) BBESOP

Under the plan individuals who are not eligible to participate in any other employee security scheme may receive $1,000 worth of GPT securities if GPT Group achieves at least target level performance. Securities must be held for the earlier of 3 years or end of employment.

(c) DSTI

At the 2014 AGM, GPT securityholders approved a change to the way in which STIC is delivered to the senior executives, being 50% in cash and 50% in GPT stapled securities (a deferred component). The deferred component is initially awarded in the form of performance rights, with the rights converting to restricted GPT stapled securities to the extent the performance conditions are met. Half of the awarded stapled securities will vest one year after conversion with the remaining half vesting two years after conversion, subject to continued employment to the vesting dates.

(d) LTI

At the 2009 AGM, GPT securityholders approved the introduction of a more contemporary LTI plan based on performance rights. Any subsequent amendments to the LTI plan has been approved by GPT securityholders.

The LTI plan (the plan) covers each 3 year period. Awards under the plan to eligible participants are in the form of performance rights which convert to GPT stapled securities for nil consideration if specified performance conditions for the applicable 3 year period are satisfied. Please refer to the Remuneration Report for detail on the performance conditions.

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

Fair value of performance security rights issued under DSTI and LTI

The fair value of the performance rights is recognised as an employee benefit expense with a corresponding increase in liability to employees and the employee security scheme reserve in equity. Fair value is measured at each reporting date, recognised over the period during which the employees become unconditionally entitled to the rights and is adjusted to reflect market vesting conditions. Non-market vesting conditions are included in assumptions about the number of rights that are expected to become vested. At each reporting date, Management revises its estimate of the number of performance rights that are expected to be exercisable and the employee benefit expense recognised each reporting period takes into account the most recent estimate. The impact of the revision to original estimates, if any, is recognised in the Consolidated Statement of Comprehensive Income with a corresponding adjustment to equity.

Fair value of the performance rights has been independently determined using the Monte Carlo simulation methodology for those rights issued under LTI and Black Scholes methodology for those rights issued under DSTI. The following key inputs are taken into account:

account:
	2015 LTI			2015 DSTI
Fair value of rights	$2.95			$4.19
Security price at valuation date	$4.78			$4.78
Grant dates	18 May 2015			6 May 2015
Expected vesting dates	31 December 2017	50% on	31 Dec 2016, 50% on 31 Dec 2017
Security price at the grant date	$4.47			N/A
Expected life	3 years (2 years remaining)		50%-1	year, 50% - 2 years
Dividend yield	5.4%			5.4%
Risk free interest rate	2.0%			N/A
Volatilty(1)	18.5%			N/A

(1) The volatility is based on the historic volatility of the security.

(e) GPT Group deferred stapled security plan (DSSP)

Implemented in September 2008, the DSSP is the vehicle which holds the equity component of deferred short term incentive compensation.

(f) Summary table of all employee security schemes

	Number of rights DSTI LTI Total
Rights outstanding at the begining of the year Rights granted during the year Rights forfeited during the year Rights converted to GPT stapled securities during the year(1) Rights outstanding at the end of the year	1,872,133 12,026,315 13,898,448 1,473,587 3,895,599 5,369,186 (826,935) (4,653,486) (5,480,421) (1,236,353) (2,350,540) (3,586,893)
	1,282,432 8,917,888 10,200,320

(1) Rights under the 2014 DSTI plan were converted to GPT stapled securities on 18 March 2015 and rights under the 2012 LTI Plan were converted to GPT stapled securities on 23 February 2015.

on 23 February 2015.
	Number of stapled securities GESOP DSSP Total
Securities outstanding at the begining of the year Securities granted during the year Securities vested during the year Securities outstanding at the end of the year	77,024 284,315 361,339 74,715 - 74,715 (84,011) (284,315) (368,326)
	67,728 - 67,728

100 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

20. RELATED PARTY TRANSACTIONS

GPT Management Holdings Limited is the ultimate parent entity. The Consolidated Entity is stapled to the General Property Trust and the GPT Group (GPT or the Group) financial statements include the results of the stapled entity as a whole.

Equity interests in joint ventures and associates are set out in note 2. Loans provided to joint ventures and associates as part of the funding of those arrangements are set out in note 3.

Key management personnel

Key management personnel compensation was as follows.

	31 Dec 15 $’000 31 Dec 14 $’000
Short term employee benefits Post employment benefits Long term incentive award accural Other long term benefits Total key management personnel compenstation	6,447 7,267 186 170 827 2,591 552 54
	8,012 10,082

Information regarding individual Directors’ and Senior Executives’ remuneration is provided in the Remuneration Report on page 72 to 80 of the Directors’ Report.

There have been no other transactions with key management personnel during the year.

Transactions with related parties

Transactions with related parties
	31 Dec 15	31 Dec 14
	$’000	$’000
Transactions with General Property Trust (Trust):
Revenue and expenses
Fund management fees from Trust	29,106	27,757
Property management fees from Trust	13,607	16,255
Development management fees from Trust	14,162	12,801
Development revenue received from Trust	-	4,608
Management costs recharged from Trust	14,675	10,919
Property rent and outgoings paid to Trust	(4,601)	(4,627)
Interest paid to Trust	(16,215)	(21,617)
Receivables
Current receivables from Trust	28,817	8,527
Other transactions
Revaluation of arrangements with Trust - continued and discontinued operations	10,236	47,136
Purchase of inventory from Trust	4,050	-
Transactions with employees
Contributions to superannuation funds on behalf of employees	(6,110)	(5,753)
Transactions with GWOF, GWSCF & GMF:
Revenue
Responsible Entity fees	44,434	35,238
Performance fee	13,926	-
Asset management fees	15,209	12,601
Development management fees	4,521	9,792
Development revenue	16,065	21,661
Directors fees recharged	919	411
Management costs recharged	3,541	3,108
Payroll costs recharged	12,595	10,564
Expense
Site access fee paid	(786)	(590)
Receivables and payables
Current receivable outstanding	6,734	11,029
Current Performance fee receviable	15,319	-
Current FM fee receivable	13,026	-
Current payable	(144)	(16)

101

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

21. AUDITOR’S REMUNERATION

21. AUDITOR’S REMUNERATION
	31 Dec 15 $ 31 Dec 14 $
Audit services PricewaterhouseCoopers Australia Statutory audit and review of financial reports Total remuneration for audit services Other assurance services PricewaterhouseCoopers Australia Regulatory and contractually required audits Total remuneration for other assurance services Total remuneration for audit and assurance services Non audit related services PricewaterhouseCoopers Australia Other services Total remuneration for non audit related services Total auditor's remuneration 22. PARENT ENTITY FINANCIAL INFORMATION	242,893 235,819
	242,893 235,819
	59,965 66,259
	59,965 66,259
	302,858 302,078
	- 28,058
	- 28,058
	302,858 330,136
	Parent entity 31 Dec 15 $’000 31 Dec 14 $’000
Assets Current assets Non-current assets Total assets Liabilities Current liabilities Non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Accumulated losses Total equity Profit attributable to members of the parent entity Total comprehensive income for the year attributable to members of the parent entity Operating lease commitments Due within one year Due between one and five years Over five years Total operating lease commitments	191,147 146,784 144,326 183,043
	335,473 329,827
	237,821 132,938 15,285 209,803
	253,106 342,741
	82,367 (12,914)
	325,328 319,315 13,067 6,592 (256,028) (338,821)
	82,367 (12,914)
	82,793 10,827 82,793 10,827 4,355 4,454 19,412 17,722 1,896 4,642
	25,663 26,818

Capital expenditure commitments

The parent entity has $0.1 million capital expenditure commitments at 31 December 2015 (2014: nil).

As at 31 December 2015, the parent entity had a net current asset deficiency of $37.1 million. The non-current liabilities have decreased by $184.9 million due to the repayment of borrowings. The parent has access to undrawn financing facilities of $177.1 million.

Parent entity financial information

The financial information for the parent entity of the Consolidated Entity, GPT Management Holdings Limited, has been prepared on the same basis as the consolidated financial statements, except as set out below.

Investments in subsidiaries, associates and joint venture entities

Investments in subsidiaries, associates and joint ventures are accounted for at cost in the financial statements of the parent entity. Distributions received from subsidiaries, associates and joint ventures are recognised in the parent entity’s profit or loss rather than being deducted from the carrying amount of these investments.

102 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

23. FAIR VALUE DISCLOSURES - FINANCIAL INSTRUMENTS

(a) Fair value measurement, valuation techniques and inputs

Class of Asset	Fair value hierachy(1)	Valuation technique	Inputs used to measure fair value	Unobservable inputs
Available for sale financial	Level 3	Discounted cash flow (DCF)	Discount rate	30%
asset			Foreign currency exchange rate
			(AUD/EUR)

(1) Level 3 – inputs for the asset are not based on observable market data.

The available for sale asset has moved from nil opening balance at 1 January 2015 to $8.6 million at 31 December 2015 due to the movement in fair value.

DCF method

The available for sale financial asset has been valued using a discounted cash flow methodology. The expected future cash flow is converted into Australian dollars and discounted over a six year period.

(b) Sensitivities

The table below summarises the impact of a 5% increase/decrease in the discount rate, with all other variables held constant.

	31 Dec 15
	$’000
Fair value of level 3 available for sale financial asset	8,641
5% increase in discount rate - gain / (loss)	(1,751)
5% decrease in discount rate - gain / (loss)	2,293

24. DISCONTINUED OPERATIONS AND NON-CURRENT ASSETS HELD FOR SALE

(a) Discontinued operations

At 31 December 2015, there are three discontinued operations: Hotel/ Tourism portfolio, Funds Management – Europe portfolio and the US Seniors Housing portfolio.

Hotel / Tourism

The Consolidated Entity has substantially completed its exit from the Hotel/Tourism portfolio.

Funds Management - Europe

Relates to equity investments in small closed-end funds (a legacy of GPT’s ownership of GPT Halverton) managed by Internos Real Investors.

US Seniors Housing

On 29 March 2011, GPT completed the sale of its US Seniors Housing portfolio to Health Care REIT Inc. Remaining balances represent working capital in B-VII Operations Holding Co LLC, whose properties were sold on 29 March 2011. The entity is in the process of being liquidated.

(b) Details of assets and liabilities classified as held for sale

The table below sets out the assets and liabilities that continue to be owned by the Consolidated Entity as at 31 December 2015.

	Discontinued Operations US Senior Housing 31 Dec 15 $’000 31 Dec 14 $’000
Investments in joint venture entities(1) Total Assets held for sale	246 220
	246 220

(1) Investments in joint venture entities comprise a 95% investment in B-VII Operations Holding LLC held at $0.2 million.

103

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

(c) Details of financial performance and cash flow information relating to discontinued operations

The table below sets out the financial performance and cash flow information for the discontinued operations that continue to be owned by the Consolidated Entity at reporting date.

owned by the Consolidated Entity at reporting date.
	31 Dec 15 $’000 31 Dec 14 $’000
Revenue Expenses Loss before income tax Income tax (credit) / expense Loss after income tax of discontinued operations Net cash outflow from operating activities Net decrease in cash from discontinued operations	7 8 (191) (5,362)
	(184) (5,354)
	(1) 2,562
	(183) (7,916)
	(64) (64)
	(64) (64)

(d) Details of all disposals in the Consolidated Statement of Comprehensive Income and Consolidated Statement of Financial Position

The table below sets out the net loss on sale of discontinued operations and in the general course of business during the year.

	31 Dec 15 $’000 31 Dec 14 $’000
Details of disposals during the year: Consideration (net of transaction costs) Total consideration Carrying amount of net assets sold Profit on sale before income tax Income tax Foreign exchange loss realised on disposal Loss on sale after income tax	- -
	- -
	- -
	- -
	- (1,813)
	- (1,813)

Discontinued operation

A discontinued operation is a part of the Consolidated Entity’s business that:

it has disposed of or has classified as held for sale and that represents a major line of its business or geographical area of operations, or
is part of a single co-ordinated plan to dispose of such a line of business or area of operations.

The results of discontinued operations are presented separately on the face of the Consolidated Statement of Comprehensive Income and the assets and liabilities are presented separately on the face of the Consolidated Statement of Financial Position.

Assets held for sale

Non-current assets and disposal groups classified as held for sale are measured at the lower of their carrying amount and fair value less costs to sell. Investment property held for sale will continue to be carried at fair value. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered principally through a sale transaction rather than through continuing use. This condition is met only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

25. ACCOUNTING POLICIES

(a) Basis of preparation

The financial report has been prepared:

In accordance with the requirements of the Company’s constitution, Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board and International Financial Reporting Standards.
On a going concern basis in the belief that the Consolidated Entity will realise its assets and settle its liabilities and commitments in the normal course of business and for at least the amounts stated in the financial statements.
Under the historical cost convention, as modified by the revaluation for financial assets and liabilities at fair value through the Consolidated Statement of Comprehensive Income.
Using consistent accounting policies and adjustments are made to bring into line any dissimilar accounting policies being adopted by the controlled entities, associates or joint ventures.
In Australian dollars with all values rounded in the nearest thousand dollars, unless otherwise stated.
The financial report was approved by the Board of Directors on 17 February 2016.

104 GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

(b) Basis of consolidation

Controlled entities

The consolidated financial statements of the Consolidated Entity report the assets, liabilities and results of all controlled entities for the financial year.

Controlled entities are all entities over which the Consolidated Entity has control. The Consolidated Entity controls an entity when the Consolidated Entity is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power to direct the activities of the entity.

Associates

Associates are entities over which the Consolidated Entity has significant influence but not control, generally accompanying a shareholding of between 10% and 50% of the voting rights.

Investments in associates are accounted for using the equity method. Under this method, the Consolidated Entity’s investment in associates is carried in the Consolidated Statement of Financial Position at cost plus post acquisition changes in the Consolidated Entity’s share of net assets. The Consolidated Entity’s share of the associates’ result is reflected in the Consolidated Statement of Comprehensive Income. Where the Consolidated Entity’s share of losses in associates equals or exceeds its interest in the associate, including any other unsecured long term receivables, the Consolidated Entity does not recognise any further losses, unless it has incurred obligations or made payments on behalf of the associate.

Joint arrangements

Investments in joint arrangements are classified as either joint operations or joint ventures depending on the contractual rights and obligations each investor has, rather than the legal structure of the joint arrangement. The Consolidated Entity has assessed the nature of its joint arrangements and determined it has joint ventures only.

Joint ventures

Investments in joint ventures are accounted for in the Consolidated Statement of Financial Position using the equity method which is the same method adopted for associates.

(c) Other accounting policies

Other accounting policies include:

(i) Foreign currency translation

Functional and presentation currency

Items included in the financial statements of each of the GPT entities are measured using the currency of the primary economic environment in which they operate (‘the functional currency’).

Transactions and balances

Foreign operations

Exchange differences arising on monetary items that form part of the net investment in a foreign operation are taken against a foreign currency translation reserve on consolidation.

Where forward foreign exchange contracts are entered into to cover any anticipated excesses of revenue less expenses within foreign joint ventures, they are converted at the ruling rates of exchange at the reporting period. The resulting foreign exchange gains and losses are taken to the Consolidated Statement of Comprehensive Income.

105

GPT ANNUAL FINANCIAL REPORT 2015

NOTES TO THE FINANCIAL STATEMENTS

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

(ii) Goods and Services Tax (GST)

Cash flows are presented on a gross basis in the Statement of Cash Flows. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the taxation authority are presented as operating cash flows. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(iii) Deferred Acquisition Costs

Deferred acquisition costs associated with the property management business are costs that are directly related to and incremental to earning property management fee income. These costs are recorded as an asset and are amortised in the income statement on the same basis as the recognition of property management fee revenue.

(d) New and amended accounting standards and interpretations adopted from 1 January 2015

There are no significant changes to the Consolidated Entity’s financial performance and position as a result of the adoption of the new and amended accounting standards and interpretations effective for annual reporting periods beginning on or after 1 January 2015.

(e) New accounting standards and interpretations issued but not yet applied

The following standards and amendments to standards are relevant to the Consolidated Entity and the potential effects have not yet been fully determined:

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----- Start of picture text -----

Reference Description Application of
Standard
AASB 15 Revenue from Contracts with Customers AASB 15 will replace AASB 118 Revenue and AASB 111 Construction 1 January 2018
Contracts. It is based on the principle that revenue is recognised when
control of a good or service is transferred to a customer. It contains
a single model that applies to contracts with customers and two
approaches to recognising revenue: at a point in time or over time. The
model features a contract–based five-step analysis of transactions to
determine whether, how much and when revenue is recognised. It applies
to all contracts with customers except leases, financial instruments and
insurance contracts. It requires reporting entities to provide users of
financial statements with more informative and relevant disclosures.
GPT is in the process of assessing any implications of this new standard
to its operation and financial results and does not expect a significant
impact from its application.
AASB 9 Financial Instruments AASB 9 addresses the classification, measurement and de-recognition 1 January 2018
of financial assets and financial liabilities and also introduces expanded
disclosure requirements and changes in presentation. When adopted,
this could change the classification and measurement of financial assets
and financial liabilities. The new hedging rules align hedge accounting
more closely with the reporting entity’s risk management practices. As
a general rule it will be easier to apply hedge accounting going forward.
Changes in own credit risk in respect of liabilities designated at fair value
through profit and loss must now be presented in other comprehensive
income. In December 2014, the AASB made further changes to the
classification and measurement rules and also introduced a new
impairment model.
GPT is in the process of assessing any implications of this new standard
to its operation and financial results and the potential effects have not
been fully determined.
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26. EVENTS SUBSEQUENT TO REPORTING DATE

106 GPT ANNUAL FINANCIAL REPORT 2015

DIRECTORS’ DECLARATION

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

DIRECTORS DECLARATION

In the directors of GPT Management Holdings Limited’s opinion:

(a) the financial statements and notes set out on pages 82 to 106 are in accordance with the Corporations Act 2001, including:
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting requirements; and
giving a true and fair view of the Consolidated Entity’s financial position as at 31 December 2015 and of its performance for the financial year ended on that date; and
(b) the financial statements and notes comply with International Financial Reporting Standards as disclosed in note 25 to the financial statements.
(c) there are reasonable grounds to believe that the Consolidated Entity will be able to pay its debts as and when they become due and payable.

The Directors have been given the declarations by the Chief Executive Officer and Chief Financial Officer as required by Section 295A of the Corporations Act 2001.

This declaration is made in accordance with the resolution of the directors.

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Rob Ferguson Chairman GPT Management Holdings Limited

Bob Johnston

Chief Executive Officer and Managing Director

Sydney 17 February 2016

107

GPT ANNUAL FINANCIAL REPORT 2015

INDEPENDENT AUDIT REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

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108 GPT ANNUAL FINANCIAL REPORT 2015

INDEPENDENT AUDIT REPORT

Year ended 31 December 2015 – GPT MANAGEMENT HOLDINGS LIMITED AND ITS CONTROLLED ENTITIES

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109

GPT ANNUAL FINANCIAL REPORT 2015

SUPPLEMENTARY INFORMATION

Securityholder Information

Securityholder Information
Substantial Securityholders	Number of Securities
UniSuper	198,083,929
The Vanguard Group Inc	145,289,813
State Street Corporation (and subsidiaries)	133,770,769
BlackRock Group (BlackRock Inc. and subsidiaries)	118,329,615

Voting Rights

Securityholders in the GPT Group are entitled to one vote for each dollar of the value of the total securities they hold in the Group.

Distribution of Securityholders	Number of	Percentage of Total
	Securityholders	Issued Securities
1 to 1,000	14,573	0.39%
1,001 to 5,000	15,347	2.09%
5,001 to 10,000	3,983	1.57%
10,001 to 100,000	2,812	3.25%
100,001 and Over	116	92.70%
Total Number of Securityholders	36,831	100.00%

There were 935 securityholders holding less than a marketable parcel of 105 securities, based on a close price of $4.78 as at 31 December 2015, and they hold 26,637 securities.

Twenty Largest Securityholders	Number of Securities	Percentage of Total Issued
		Securities
HSBC Custody Nominees (Australia) Limited	598,542,769	33.35%
J P Morgan Nominees Australia Limited	305,913,972	17.04%
BNP Paribas Nominees Pty Ltd	229,208,345	12.77%
National Nominees Limited	225,275,140	12.55%
Citicorp Nominees Pty Limited	127,289,382	7.09%
BNP Paribas Noms Pty Ltd	54,279,414	3.02%
Citicorp Nominees Pty Limited	21,276,684	1.19%
AMP Life Limited	17,479,088	0.97%
RBC Investor Services Australia Nominees Pty Limited	7,170,018	0.40%
RBC Investor Services Australia Nominees Pty Limited	5,718,692	0.32%
HSBC Custody Nominees (Australia) Limited	5,683,123	0.32%
Pacific Custodians Pty Limited	4,450,428	0.25%
Bond Street Custodians Limited	4,274,615	0.24%
Argo Investments Limited	3,480,667	0.19%
Avanteos Investments Limited	3,322,576	0.19%
RBC Investor Services Australia Nominees Pty Limited	2,985,961	0.17%
HSBC Custody Nominees (Australia) Limited - GSCO ECA	2,553,767	0.14%
ECapital Nominees Pty Limited	2,344,120	0.13%
UBS Wealth Management Australia Nominees Pty Ltd	2,015,407	0.11%
Questor Financial Services Limited	1,926,914	0.11%
Total	1,625,191,082	90.55%
Total Securities on Issue	1,794,816,529	100.00%

110 GPT ANNUAL FINANCIAL REPORT 2015

SUPPLEMENTARY INFORMATION

GPT Issue of Securities

The following table lists the issue of GPT securities during the period from 1 January 2015 to 31 December 2015. A complete list of all securities issued since GPT’s inception in 1971 can be obtained from the Group’s website (www.gpt.com.au) or by calling the GPT Securityholder Service Centre on 1800 025 095 (freecall within Australia).

Date	Description	Number of Securities	Price ($)	Amount ($)
29.01.15	Private Placement	76,832,152	4.23	325,000,003
23.02.15	Issue of Securities	2,169,649	4.67	10,132,261
09.03.15	Security Purchase Plan	11,820,458	4.23	50,000,537
20.03.15	Issue of Securities	1,295,867	4.73	6,129,451
11.09.15	Distribution Reinvestment Plan	17,237,448	4.3122	74,331,323

Investor Information

Securityholder Services

You can access your investment online at www.linkmarketservices.com.au, signing in using your SRN/HIN, Surname and Postcode. Functions available include updating your address details and downloading a PDF of your Annual Tax Statement.

Also online at www.linkmarketservices.com.au are regularly requested forms relating to payment instructions, name corrections and changes and deceased estate packs.

For assistance with altering any of your investment details, please phone the GPT Registry on 1800 025 095 (free call within Australia) or +61 1800 025 095 (outside Australia).

Receive Your Report Electronically

Sustainability is core to GPT’s vision and values. As part of our sustainability initiatives we would like to offer you the opportunity to receive notification of GPT’s investor communications electronically, including the 2015 Annual Financial Report and the Annual Review. We encourage securityholders to visit www.gpt.com.au to view the online versions of these reports.

As an investor opting to receive your securityholder updates electronically, you will benefit by receiving prompt information and have the convenience and security associated with electronic delivery. There are also significant cost savings associated with this method of communication and above all this is a responsible and environmentally friendly option.

To receive your investor communications electronically, please go to www.linkmarketservices.com.au and register for online services.

AGM Information

GPT’s Annual General Meeting (AGM) will be held at the Swissôtel, 68 Market Street in Sydney, New South Wales on Wednesday, 4 May 2016, commencing at 2:00pm (Sydney time).

GPT encourages securityholders to attend the AGM. The AGM will also be webcast live via GPT’s website (www.gpt.com.au) for those securityholders who are unable to attend in person. Additionally, the Chairman’s address will be immediately announced to the ASX on the day.

Investor Calendar

29 February2016	December 2015 Half Year Distribution Payment
4 May2016	Annual General Meeting
23 June 2016	June 2016 Half Year Distribution Announcement
July2016	Annual Tax Statement
August 2016	2016 Interim Result Announcement
August 2016	June 2016 Half Year Distribution Payment

An investor calendar is also available on GPT’s website at www.gpt.com.au/events

Distribution Policy and Payments

GPT has a distribution policy in place that effectively aligns the Group’s capital management framework with its business strategy, which reflects a sustainable distribution level to ensure a prudent approach to managing the Group’s gearing through market and economic cycles.

GPT makes distribution payments to securityholders two times a year, for the six months ended 30 June and the six months ended 31 December. GPT declares and pays its distribution in Australian dollars.

111

GPT ANNUAL FINANCIAL REPORT 2015

Board of Directors

Auditors

PricewaterhouseCoopers Darling Park Tower 2 201 Sussex Street Sydney NSW 2000 Principal Registry Link Market Services GPT Security Registrar Locked Bag A14 South Sydney NSW 1235 Within Australia: 1800 025 095 (free call) Outside Australia: +61 1800 025 095 Fax: +61 2 9287 0303 Email: [email protected] Website: www.linkmarketservices.com.au

Stock Exchange Quotation GPT is listed on Australian Securities Exchange under ASX Listing Code GPT

Rob Ferguson (Chair) Bob Johnston Anne McDonald Brendan Crotty Dr Eileen Doyle Gene Tilbrook Lim Swe Guan Michelle Somerville Company Secretaries James Coyne Lisa Bau P: +61 2 8239 3555 F: +61 2 9225 9318 Audit and Risk Management Committee Anne McDonald Brendan Crotty Lim Swe Guan Michelle Somerville Nomination and Remuneration Committee Gene Tilbrook Eileen Doyle Rob Ferguson Sustainability Committee Eileen Doyle Brendan Crotty Lim Swe Guan

112 GPT ANNUAL FINANCIAL REPORT 2015

AI assistant

GPT GROUP — Annual Report 2015

65009_rns_2016-03-23_9cdd1fa4-0465-4a0a-937b-0338af3a8d14.pdf

Contents

Corporate Governance

Year ended 31 December 2015 – THE GPT GROUP

CONTENTS

Year ended 31 December 2015 – THE GPT GROUP

1. OPERATING AND FINANCIAL REVIEW

ABOUT GPT

GPT Portfolio Diversity

Retail Portfolio

Office Portfolio

Logistics Portfolio

REVIEW OF OPERATIONS

Operating result

Year ended 31 December 2015 – THE GPT GROUP

(i) Retail portfolio

(ii) Office portfolio

(iii) Logistics portfolio

(iv) Income from funds and funds management

GWOF

GWSCF

GMF

Asset management

Development retail & major projects

Development logistics

Management expenses

Non - core operations

Hotel/Tourism portfolio

Year ended 31 December 2015 – THE GPT GROUP

Distribution

FINANCIAL POSITION

Balance sheet

Capital management

CASH FLOWS

Operating activities

Investing activities

Financing activities

PROSPECTS

(i) Group

(ii) Guidance for 2016

Year ended 31 December 2015 – THE GPT GROUP

RISKS

2. ENVIRONMENTAL REGULATION

3. EVENTS SUBSEQUENT TO REPORTING DATE

4. DIRECTORS AND SECRETARY

INFORMATION ON DIRECTORS

Rob Ferguson – Chairman

Robert Johnston – Chief Executive Officer

Michael Cameron – Chief Executive Officer and Managing Director

Brendan Crotty

Year ended 31 December 2015 – THE GPT GROUP

Eileen Doyle

Eric Goodwin

Swe Guan Lim

Anne McDonald

Michelle Somerville

Gene Tilbrook

James Coyne – General Counsel and Company Secretary

Lisa Bau – Senior Legal Counsel and Company Secretary

ATTENDANCE OF DIRECTORS AT MEETINGS

5. OTHER DISCLOSURES

INDEMNIFICATION AND INSURANCE OF DIRECTORS, OFFICERS AND AUDITOR

NON-AUDIT SERVICES

Year ended 31 December 2015 – THE GPT GROUP

AUDITOR’S INDEPENDENCE DECLARATION

ROUNDING OF AMOUNTS

6. REMUNERATION REPORT

GOVERNANCE

COMMITTEE KEY DECISIONS AND OUTCOMES IN 2015

Year ended 31 December 2015 – THE GPT GROUP

GPT’S PURPOSE & GOALS AND THE LINK TO REMUNERATION STRUCTURES

EMPLOYMENT TERMS

1. Employment terms – Chief Executive Officer and Managing Director

2. Employment terms – Executive KMP

Year ended 31 December 2015 – THE GPT GROUP

3. Compensation mix

GROUP FINANCIAL PERFORMANCE & INCENTIVE OUTCOMES

1. Five year Group financial performance

GPT GROUP Annual Report 2015