GPT GROUP — Regulatory Filings 2013

Aug 11, 2013

The GPT Group ABN: 58 071 755 609

Interim Financial Report 30 June 2013

The GPT Group (GPT) comprises General Property Trust (Trust) and its controlled entities and GPT Management Holdings Limited (Company) and its controlled entities. GPT RE Limited, a wholly owned subsidiary of GPT Management Holdings Limited, is the Responsible Entity of General Property Trust.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual financial report for the year ended 31 December 2012 and any public announcements made by the GPT Group during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

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

CONTENTS

	Directors' Report	3
	Auditor's Independence Declaration	8
	Consolidated Statement of Comprehensive Income	9
	Consolidated Statement of Financial Position	10
	Consolidated Statement of Changes in Equity	11
	Consolidated Statement of Cash Flow	12
	Notes to the Financial Statements
1.	Summary of significant accounting policies	13
2.	Segment reporting	17
3.	Distributions paid and payable to securityholders	26
4.	Non-current assets held for sale	27
5.	Investment properties	28
6.	Equity accounted investments	31
7.	Borrowings	32
8.	Contributed equity	35
9.	Commitments	36
10.	Contingent assets and liabilities	36
11.	Notes to the Statement of Cash Flow	37
12.	Earnings per stapled security	38
13.	Fair value measurement of financial instruments	39
14.	Net tangible asset backing	41
15.	Events subsequent to reporting date	41
	Directors' Declaration	42
	Independent Auditor's Review Report	43

DIRECTORS' REPORT

for the half year ended 30 June 2013

The Directors of GPT RE Limited, the Responsible Entity of the General Property Trust (the Trust), present their report together with the interim financial report of the Trust and its controlled entities (Consolidated entity) for the half year ended 30 June 2013. The Consolidated entity together with GPT Management Holdings Limited and its controlled entities form the stapled entity, the GPT Group (GPT or the Group).

Directors

The Directors of GPT Management Holdings Limited and GPT RE Limited at any time during or since the end of the half year are:

(i) Chairman - Non-Executive Director

Rob Ferguson

(ii) Non-Executive Directors

Brendan Crotty Eileen Doyle Eric Goodwin Anne McDonald Gene Tilbrook

(iii) Executive Director

Michael Cameron

Principal Activities

The principal activities of the GPT Group remain unchanged from 31 December 2012 and are:

• investment in income producing retail, office and logistics & business park assets;
• development of retail, office and logistics & business park assets;
• property funds management; and
• property management.

The GPT Group

The stapled securities of the GPT Group are quoted on the Australian Securities Exchange under the code GPT and comprise one unit in General Property Trust (Trust) and one share in GPT Management Holdings Limited (Company). Each entity forming part of the Group continues as a separate legal entity in its own right under the Corporations Act 2001 and is therefore required to comply with the reporting and disclosure requirements of the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board.

Review of operations

The following provides a summary of GPT's performance for the half year ended 30 June 2013.

To provide information that reflects the Directors' assessment of the net profit attributable to stapled securityholders calculated in accordance with Australian Accounting Standards, certain significant items that are relevant to an understanding of GPT's result have been identified. The reconciliation of Realised Operating Income (ROI) to Net profit after tax is useful as ROI is the measure of how GPT's profitability is assessed.

ROI is a financial measure that is based on the profit under Australian Accounting Standards adjusted for certain unrealised items, non-cash items, gains or losses on investments or other items the Directors determine to be non-recurring or capital in nature. ROI is not prescribed by any Australian Accounting Standards. The adjustments that reconcile the ROI to Net profit after tax for the financial period may change from time to time, depending on changes in accounting standards and/or the Directors' assessment of items that are non-recurring or capital in nature. The ROI results are included in the Segment note (note 2) which forms part of the interim financial report.

The Net profit after tax for the half year ended 30 June 2013 is \$257.0 million (2012: \$275.5 million).

DIRECTORS' REPORT

for the half year ended 30 June 2013

Review of operations (continued)

The reconciliation of ROI to Net profit after tax is set out below:

	Consolidated entity
	6 mths to 30 Jun 2013	6 mths to 31 Dec 2012	6 mths to 30 Jun 2012
	\$M	\$M	\$M
Core operations	294.5	277.1	289.2
Non-core operations	5.6	5.8	8.7
Financing and corporate overheads	(63.6)	(53.7)	(70.7)
Realised Operating Income	236.5	229.2	227.2
Change in fair value of assets (non-cash):
Valuation movements	31.6	98.8	122.2
Financial Instruments marked to market and foreign exchange
movements	8.3	14.7	(55.1)
Other items*	(19.4)	(23.7)	(18.8)
Net profit after tax	257.0	319.0	275.5

*Other items include primarily amortisation of lease incentives and rent free, intangibles amortisation expense and relevant tax impact.

Financial results

• Realised operating income (ROI) increased by 4.1% to \$236.5 million (Jun 12: \$227.2 million)
• Net profit after tax decreased by 6.7% to \$257.0 million (Jun 12: \$275.5 million)
• Total net assets decreased by 0.5% to \$6,841.7 million (Dec 12: \$6,876.2 million)
• Headline gearing (net debt basis) decreased to 19.9% (Dec 12: 21.7%). Look through gearing (net debt basis) decreased to 21.9% (Dec 12: 23.9%)
• ROI per ordinary stapled security increased by 6.0% to 12.7 cents (Jun 12: 12.0 cents)
• Distribution per ordinary stapled security increased by 6.3% to 10.1 cents (Jun 12: 9.5 cents)
• Net tangible assets per stapled security** increased to \$3.76 (Dec 12: \$3.73)

** Includes the impact of potential securities assuming the conversion of the exchangeable securities at an exchange price of \$3.883.

DIRECTORS' REPORT

for the half year ended 30 June 2013

Review of operations (continued)

The Realised Operating Income and total assets by business unit are summarised below:

	Realised	Realised	Realised
	Operating	Operating	Operating
	Income	Income	Income
	6 mths to	6 mths to	6 mths to
	30 Jun 2013	31 Dec 2012	30 Jun 2012
	\$M	\$M	\$M
Retail Net Operating Income	139.6	140.5	160.4
Office Net Operating Income	73.1	67.6	68.0
Logistics and Business Parks Net Operating Income	37.1	36.9	32.4
Funds Distributions	35.8	34.7	33.5
Asset Income	285.6	279.7	294.3
Management Company Fees	25.2	27.8	23.6
Management Expenses	(29.5)	(39.4)	(42.3)
Tax Benefit / (Expense)	(0.6)	(0.2)	2.1
Management Company	(4.9)	(11.8)	(16.6)
Net Interest Expense	(49.8)	(44.5)	(59.2)
Non-Core	5.6	5.8	8.7
Realised Operating Income	236.5	229.2	227.2
	Total	Total
	Assets	Assets
	30 Jun 2013	31 Dec 2012
	\$M	\$M
Core
Retail	4,000.4	4,489.9
Office	2,135.7	2,085.5
Logistics and Business Parks	1,024.8	989.5
Funds Management - Australia	1,171.2	1,152.8
Non-Core	155.9	153.2
Other balance sheet items	618.7	472.3
Total	9,106.7	9,343.2
Distributions
		30 Jun 13	30 Jun 12
		cents	cents

Distribution per stapled security* 10.1 9.5

* Includes the March 2013 quarterly distribution of 5.1 cents paid on 17 May 2013 and the June 2013 quarterly distribution of 5.0 cents which is expected to be paid on 13 September 2013.

No provision for the quarterly June distribution has been recognised in the Statement of Financial Position as at 30 June 2013 as the distribution was not declared until 9 August 2013, which was after the end of the half year.

Distribution policy

GPT will distribute the greater of 70-80% of realised operating income (excluding development profits) or taxable income.

DIRECTORS' REPORT

for the half year ended 30 June 2013

Significant changes in the state of affairs

In the opinion of the Directors, other than the items noted below, there were no significant changes in the state of affairs of GPT that occurred during the half year under review:

• During January and February 2013, GPT priced HKD 800 million (AUD \$98.8 million) fixed rate Medium Term Notes (MTNs) for a term of 15 years providing additional liquidity to the Group. HKD 600 million of these MTNs were settled on 5 February 2013 and the balance was settled on 22 February 2013.
• In March 2013, GPT successfully completed a long-dated US\$250 million (A\$243.2 million) US Private Placement (USPP) issue. The USPP issuance comprised two tranches of notes, \$150 million of 12-year notes issued at a coupon rate of 3.6% and \$100 million of 15 year notes issued at a coupon rate of 3.8%. US\$65 million of the issuance was settled on 28 May 2013 and the balance was settled on 19 June 2013.
• On 28 March 2013, the GPT Group changed the frequency of distribution payments from quarterly to half yearly to take effect from 1 July 2013.
• On 4 April 2013, GPT acquired 3 Figtree Drive Sydney Olympic Park, NSW for a total consideration of \$19.4 million.
• On 1 May 2013, the GPT Group internalised the property management function of the MLC building. Prior to May 2013, the property management function of this asset, jointly owned with QIC, had been outsourced to Jones Lang LaSalle (JLL).

In June 2013, the Board of GPT Funds Management Limited as the Trustee of the GPT Wholesale Office Fund approved a proposal to internalise the property management function of certain assets held by GWOF. The property management function of these assets had been previously outsourced to JLL.

The internalisation was undertaken to reinforce GPT's core business strategy to own and actively manage quality Australian property assets, as well as delivering great customer experiences and performance outcomes.

• On 8 May 2013, The GPT Group announced that a settlement has been reached in relation to the class action with Slater & Gordon.
• On 10 May 2013, GPT announced the extension of the on-market buy-back for an additional 12 months until May 2014. During the six months ended 30 June 2013, GPT has acquired 25.2 million GPT stapled securities for a total consideration of \$93.9 million.
• On 17 May 2013, the GPT Group completed the divestment of the 38.04% interest in Dutch Active Fund (DAF) for nil consideration.
• On 21 June 2013, GPT sold a 50% interest in the Erina Fair shopping centre, on the NSW Central Coast for a total consideration of \$397.1 million. The 50% interest in Erina Fair includes a 33.33% interest directly owned by the GPT Trust as an investment property and a 16.67% interest owned by GPT through a joint venture with APPF, Erina Property Trust.
• On 28 June 2013, GPT invested into the Chullora Joint Venture which is a special purpose vehicle (SPV) jointly owned by GPT (50% interest) and Commercial and Industrial Properties Pty Ltd (50% interest). The SPV was set up to purchase the land for subdivision, development and sale at 14-18 Worth Street, Chullora for a total consideration of \$12.1 million.

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 both the Energy Efficiency Opportunities Act 2006 ("EEO") and the National Greenhouse and Energy Reporting Act 2007 ("NGER").

Auditor's Independence Declaration

As lead auditor for the review of General Property Trust for the half-year ended 30 June 2013, I declare that to the best of my knowledge and belief, there have been:

• a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and
• b) no contraventions of any applicable code of professional conduct in relation to the review

This declaration is in respect of General Property Trust and the entities it controlled during the period.

Matthew Lunn Sydney Partner 9 August 2013 PricewaterhouseCoopers

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 DX 77 Sydney, Australia T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the half year ended 30 June 2013

		Consolidated entity
		30 Jun 13	30 Jun 12
	Note	\$M	\$M
Revenue
Rent from property investments		288.7	303.7
Property and fund management fees Development project revenue		21.6 3.6	18.9 4.7
Management fees		0.3	-
		314.2	327.3
Other income
Fair value adjustments to investment properties		10.0	107.2
Fair value adjustments of unlisted equity investments		0.5	-
Share of after tax profit of equity accounted investments		85.8	77.7
Interest revenue - cash and short term money market securities		3.8	1.5
Net gain on fair value of borrowings		27.1	-
Net gain on fair value of derivatives		25.7	-
		152.9	186.4
Total revenue and other income		467.1	513.7
Expenses
Property expenses and outgoings		78.9	84.2
Management and other administration costs		29.3	43.8
Depreciation and amortisation expense		3.6	3.3
Finance costs		53.6	60.7
Net loss on fair value of derivatives		-	55.2
Net loss on disposal of assets		1.8	2.5
Net foreign exchange loss		44.7	-
Total expenses		211.9	249.7
Profit before income tax expense		255.2	264.0
Income tax (expense) / benefits		(3.5)	2.5
Profit after income tax expense		251.7	266.5
Profit from discontinued operations	2(a)	5.3	9.0
Net profit for the half year		257.0	275.5
Other comprehensive income
Items that will be reclassified to profit or loss
Changes in the fair value of cash flow hedges		(8.0)	-
Net foreign exchange translation adjustments Total comprehensive income for the half year		1.5 250.5	(0.3) 275.2
Net profit / (loss) attributable to:
- Securityholders of the Trust		243.4	287.4
- Securityholders of other entities stapled to the Trust		13.6	(11.9)
Total comprehensive income / (loss) attributable to:
- Securityholders of the Trust		236.7	287.1
- Securityholders of other entities stapled to the Trust		13.8	(11.9)
Basic and diluted earnings per security attributable to ordinary securityholders of the Trust
Earnings per unit (cents per unit) - profit from continuing operations	12(a)	12.7	14.8
Earnings per unit (cents per unit) - profit from discontinued operations	12(a)	0.4	0.5
Earnings per unit (cents per unit) - Total	12(a)	13.1	15.3
Basic earnings per security attributable to ordinary stapled securityholders of the GPT Group
Earnings per security (cents per security) - profit from continuing operations	12(b)	13.5	14.2
Earnings per security (cents per security) - profit from discontinued operations	12(b)	0.3	0.5
Earnings per security (cents per security) - Total	12(b)	13.8	14.7
Diluted earnings per security attributable to ordinary stapled securityholders of the GPT Group
Earnings per security (cents per security) - profit from continuing operations	12(c)	13.5	14.1
Earnings per security (cents per security) - profit from discontinued operations	12(c)	0.3	0.5
Earnings per security (cents per security) - Total	12(c)	13.8	14.6

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

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 June 2013

		Consolidated entity
		30 Jun 13	31 Dec 12
	Note	\$M	\$M
ASSETS
Current Assets
Cash and cash equivalents	11(b)	300.8	159.9
Loans and receivables		76.6	71.7
Derivative assets	13	2.6	5.1
Prepayments		7.5	4.8
		387.5	241.5
Non-current assets classified as held for sale	4	113.5	203.1
Total Current Assets		501.0	444.6
Non-Current Assets
Investment properties	5	6,311.6	6,500.6
Equity accounted investments	6	1,906.3	2,010.8
Property, plant & equipment		11.6	10.7
Loans and receivables		156.8	152.0
Other assets		5.2	4.1
Intangible assets		50.9	49.9
Derivative assets	13	133.1	135.7
Deferred tax assets		30.2	34.8
Total Non-Current Assets		8,605.7	8,898.6
Total Assets		9,106.7	9,343.2
LIABILITIES
Current Liabilities
Payables		126.0	167.9
Borrowings	7	416.0	211.0
Derivative liabilities	13	1.6	0.1
Provisions		14.0	14.0
Total Current Liabilities		557.6	393.0
Non-Current Liabilities
Borrowings	7	1,629.9	1,932.6
Derivative liabilities	13	76.0	140.1
Provisions		1.5	1.3
Total Non-Current Liabilities		1,707.4	2,074.0
Total Liabilities		2,265.0	2,467.0
Net Assets		6,841.7	6,876.2
EQUITY Equity attributable to securityholders of the Trust (parent entity)
Contributed equity	8	7,794.5	7,883.5
Reserves		(21.9)	(15.2)
Accumulated losses		(317.4)	(368.1)
Total equity of GPT Trust securityholders		7,455.2	7,500.2
Equity attributable to securityholders of other entities stapled to the Trust
Contributed equity	8	321.1	321.8
Reserves		47.4	49.8
Accumulated losses		(982.0)	(995.6)
Total equity of other stapled securityholders		(613.5)	(624.0)
Total Equity		6,841.7	6,876.2

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

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the half year ended 30 June 2013

			Consolidated Entity
			Attributable to the Securityholders of the General Property Trust			Attributable to the Securityholders of other entities stapled to the General Property Trust
		Contributed	Reserves	Accumulated	Total	Contributed	Reserves	Accumulated	Total	Total
		equity		losses		equity		losses		equity
	Note	\$M	\$M	\$M	\$M	\$M	\$M	\$M	\$M	\$M
Balance at 1 January 2012		8,030.2	(15.2)	(625.8)	7,389.2	323.0	41.1	(966.9)	(602.8)	6,786.4
Movement in foreign currency translation reserve		-	(0.3)	-	(0.3)	-	-	-	-	(0.3)
Net (loss) recognised directly in equity		-	(0.3)	-	(0.3)	-	-	-	-	(0.3)
Profit / (loss) for the half year		-	-	287.4	287.4	-	-	(11.9)	(11.9)	275.5
Total comprehensive income / (loss) for the half year		-	(0.3)	287.4	287.1	-	-	(11.9)	(11.9)	275.2
Transactions with Securityholders in their capacity as Securityholders:
On-market securities buy-back		(146.7)	-	-	(146.7)	(1.2)	-	-	(1.2)	(147.9)
Movement in treasury stock reserve		-	-	-	-	-	0.1	-	0.1	0.1
Movement in employee incentive security scheme reserve		-	-	-	-	-	3.4	-	3.4	3.4
Distribution paid and payable	3	-	-	(183.3)	(183.3)	-	-	-	-	(183.3)
Balance at 30 June 2012		7,883.5	(15.5)	(521.7)	7,346.3	321.8	44.6	(978.8)	(612.4)	6,733.9
Balance at 1 January 2013		7,883.5	(15.2)	(368.1)	7,500.2	321.8	49.8	(995.6)	(624.0)	6,876.2
Other comprehensive income		-	(6.7)	-	(6.7)	-	0.2	-	0.2	(6.5)
Net (loss) / profit recognised directly in equity		-	(6.7)	-	(6.7)	-	0.2	-	0.2	(6.5)
Profit for the half year		-	-	243.4	243.4	-	-	13.6	13.6	257.0
Total comprehensive income / (loss) for the half year		-	(6.7)	243.4	236.7	-	0.2	13.6	13.8	250.5
Transactions with Securityholders in their capacity as Securityholders:
On-market securities buy-back		(93.2)	-	-	(93.2)	(0.7)	-	-	(0.7)	(93.9)
New issue of securities		4.2	-	-	4.2	-	-	-	-	4.2
Movement in treasury stock reserve		-	-	-	-	-	0.1	-	0.1	0.1
Movement in employee incentive security scheme reserve		-	-	-	-	-	(2.7)	-	(2.7)	(2.7)
Distribution paid and payable	3	-	-	(192.7)	(192.7)	-	-	-	-	(192.7)
Balance at 30 June 2013		7,794.5	(21.9)	(317.4)	7,455.2	321.1	47.4	(982.0)	(613.5)	6,841.7

The above Consolidated Statement of Changes in Equity should be read in conjunction with the accompanying notes.

CONSOLIDATED STATEMENT OF CASH FLOW

for the half year ended 30 June 2013

		Consolidated entity
		30 Jun 13	30 Jun 12
	Note	\$M	\$M
Cash flows from operating activities
Cash receipts in the course of operations (inclusive of GST)		334.5	360.4
Cash payments in the course of operations (inclusive of GST)		(156.8)	(163.0)
Distributions received from equity accounted investments		60.3	59.3
Interest received		7.8	8.2
		245.8	264.9
Finance costs		(55.6)	(71.4)
Net cash inflows from operating activities	11(a)	190.2	193.5
Cash flows from investing activities
Payments for investment properties		(58.1)	(93.5)
Proceeds from disposal of investment properties		353.6	595.3
Payments for properties under development		(26.8)	(49.8)
Payments for property, plant and equipment		(0.7)	(0.2)
Proceeds from sale of property, plant & equipment		-	58.8
Payments for intangibles		(2.7)	(0.7)
Investment in equity accounted investments		(3.8)	(1.1)
Proceeds from disposal of equity accounted investments		130.9	-
Loan to joint ventures and associates		(3.3)	-
Loan repayments in equity accounted investments		-	1.4
Payments for cost to sell on assets held for sale		-	(0.4)
Net cash inflows from investing activities		389.1	509.8
Cash flows from financing activities
Net repayments of bank facilities		(536.7)	(232.2)
Proceeds from issue of medium term notes and USPP notes		422.0	-
Purchase of securities for the employee incentive scheme		-	(0.2)
Payments on termination and restructure of derivatives		(39.8)	(49.3)
Payments for the on-market buy-back of securities		(91.1)	(147.9)
Distributions paid to securityholders		(192.8)	(183.4)
Net cash (outflows) from financing activities		(438.4)	(613.0)
Net increase in cash and cash equivalents		140.9	90.3
Cash and cash equivalents at the beginning of the half year		159.9	43.0
		300.8	133.3
Less: Cash balance classified as assets held for sale		-	(1.2)
Cash and cash equivalents at the end of the half year	11(b)	300.8	132.1

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

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

1. Summary of significant accounting policies

(a) Basis of preparation

This general purpose financial report for the interim half year reporting period ended 30 June 2013 has been prepared in accordance with General Property Trust's Constitution, Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001.

This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual financial report for the year ended 31 December 2012 and any public announcements made by the Group during the interim period in accordance with the continuous disclosure requirements of the Corporations Act 2001.

The interim financial report complies with Australian Accounting Standards and was approved by the Board of Directors on 9 August 2013.

(b) Significant accounting policies

The interim financial report is prepared on a going concern basis in the belief that the Group 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 interim financial report. With respect to the net deficiency of current assets over current liabilities at 30 June 2013 of \$56.6 million, the Group has access to undrawn financing facilities of \$394.2 million and forward start facilities of \$650.0 million as set out in note 7.

The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period with the exception of new amended standards and interpretations mandatory for 2013 which have been applied as required.

There are no significant changes to GPT's financial performance, financial position or accounting principles as a result of the application of the new and amended standards and Interpretations, mandatory for annual reporting periods beginning on or after 1 January 2013.

Where applicable, certain comparative figures are restated in order to comply with the current period presentation of the financial report.

Newly adopted accounting policies

(i) Hedging

GPT's treasury and risk management policy sets out the application of hedge accounting to the derivatives used to hedge exposures arising from fluctuations in interest rates and foreign currency exchange rates. During the half year, GPT adopted hedge accounting for foreign currency bonds only, for which at inception, GPT formally designates and documents the relationship between the hedge derivative instruments (cross currency interest rate swaps only) and the hedged items (foreign currency bonds only).

Fair value hedge

A fair value hedge is a hedge of the exposure to changes in fair value of an asset or liability that is attributable to a particular risk and could affect the statement of comprehensive income. Changes in the fair value of derivatives (hedging instruments) that are designated as fair value hedges are recorded in the statement of comprehensive income, together with any changes in the fair value of the hedged asset/liability that are attributable to the hedged risk (hedged item).

Hedge accounting is discontinued when the hedging instrument expires, is terminated, is no longer in an effective hedge relationship or is dedesignated; any gain or loss is recognised immediately in the statement of comprehensive income.

Cash flow hedge

A cash flow hedge is a hedge of the exposure to variability in cash flows attributable to a particular risk to a highly probable forecast transaction pertaining to an asset or liability. The effective portion of changes in the fair value of derivatives that are designated as cash flow hedges is recognised in other comprehensive income in equity via the cash flow hedge reserve. Any gain/loss pertaining to ineffectiveness is recognised in the statement of comprehensive income immediately.

Hedge accounting is discontinued when the hedging instrument expires, is terminated, is no longer in an effective hedge relationship, or is dedesignated; the cumulative gain or loss in equity is recognised in the statement of comprehensive income when the forecast transaction is recognised in the statement of comprehensive income. If the highly probable forecast transaction was no longer expected to occur, the cumulative gain/loss in equity is recognised in the statement of comprehensive income immediately.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

1. Summary of significant accounting policies (continued)

(b) Significant accounting policies (continued)

Newly adopted accounting policies (continued)

(ii) Hedging foreign currency fluctuations

The most significant foreign exchange risk is associated with borrowings denominated in foreign currencies. In the absence of offshore assets in foreign currency that naturally hedge borrowings denominated in foreign currency, GPT minimises foreign exchange risk with cross currency swaps which converts the foreign currency exposure into Australian dollar exposure.

(iii) Borrowings

Borrowings are initially recognised at fair value and subsequently measured at amortised cost using the effective interest rate method or at their fair value at the time of acquisition in the case of assumed liabilities in a business combination. Under the effective interest rate method, any transaction fees, costs, discounts and premiums directly related to the borrowings are recognised in the 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 the borrowings are carried at fair value and any changes in the fair value are recognised in the statement of comprehensive income. All borrowings with maturities greater than twelve months after reporting date are classified as non-current liabilities.

New accounting standards and interpretations

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements (effective 1 July 2013)

In July 2011 the AASB decided to remove the individual key management personnel (KMP) disclosure requirements from AASB 124 Related Party Disclosures, to achieve consistency with the international equivalent standard and remove a duplication of the requirements with the Corporations Act 2001. While this will reduce the disclosures that are currently required in the notes to the financial statements, it will not affect any of the amounts recognised in the financial statements. The amendments apply from 1 July 2013 and cannot be adopted early. The Corporations Act requirements in relation to remuneration reports will remain unchanged for now, but these requirements are currently subject to review and may also be revised in the near future.

AASB 9 Financial Instruments, AASB 2009-11 Amendments to Australian Accounting Standards arising from AASB 9, AASB 2010-7 Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) and 2012-6 Mandatory Effective Date of AASB 9 and Transition Disclosures (effective for annual reporting periods beginning on or after 1 January 2015)

AASB 9 Financial Instruments addresses the classification, measurement and de-recognition of financial assets and financial liabilities. The standard is not applicable until 1 January 2015 but is available for early adoption. When adopted, this could change the classification and measurement of financial assets and financial liabilities. The GPT Group may adopt this standard early and does not expect a significant impact from its early application.

(c) Critical accounting estimates and judgements

The preparation of the financial report requires management to make judgements, estimates and assumptions that affect the reported amounts in the financial report. Management bases its judgements and estimates on historical experience and other various factors it believes to be reasonable under the circumstances, but which are inherently uncertain and unpredictable, the result of which form the basis of the carrying values of assets and liabilities. The resulting accounting estimates may differ from the actual results under different assumptions and conditions.

The key estimates and assumptions that have a significant risk of causing a material adjustment within the next reporting period to the carrying amounts of assets and liabilities recognised in this financial report are:

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

1. Summary of significant accounting policies (continued)

(c) Critical accounting estimates and judgements (continued)

(i) Valuation of property investments

Critical judgements are made by GPT in respect of the fair values of investments in associates and joint ventures, which are equity accounted for, and investment properties including investment properties under development at 30 June 2013. The fair value of these investments are reviewed annually by management with reference to external independent property valuations, recent offers and market conditions existing at reporting date, using generally accepted market practices. The critical assumptions underlying management's estimates of fair values are those relating to the receipt of contractual rents, expected future market rentals, maintenance requirements, discount rates that reflect current market uncertainties and current and recent property investment prices. If there is any change in these assumptions or regional, national or international economic conditions, the fair value of property investments may differ.

(ii) Valuation of financial instruments

The fair values of derivative assets and liabilities are based on assumptions of future events and involve significant estimates. The basis of valuation for GPT's derivatives may differ if there is volatility in market rates, indexes, equity prices or foreign exchange rates in future periods.

(iii) Impairment of loans and receivables

Assets are assessed for impairment each reporting date by evaluating whether any impairment triggers exist. Where impairment triggers exist, management review the allocation of cash flows to those assets and estimate a fair value for the assets. Critical judgements are made by GPT in setting appropriate impairment triggers for its assets and the assumptions used when determining fair values for assets where triggers exist.

(iv) Impairment of intangibles

The Group assesses impairment of intangible assets at each reporting date by evaluating conditions specific to the Group and to the particular intangible asset that may lead to impairment.

(v) Share based payment transactions

The Group measures the cost of equity settled securities allocated to employees by reference to the fair value of the equity instruments at the date at which they are granted. For the GPT Group Stapled Security Rights Plan, the fair value of the performance share rights is determined using Monte-Carlo simulation and Binomial tree pricing models. The accounting estimates and assumptions relating to equity-settled sharebased payments would have no impact on the carrying amounts of assets and liabilities within the next reporting period but may impact the share based payment expense and equity.

(vi) Recoverability of deferred tax assets

Deferred tax assets are recognised for deductible temporary differences and unused tax losses as management considers that it is probable that future taxable profits will be available to utilise those temporary differences and unused tax losses. Significant management judgement is required to determine the amount of deferred tax assets that can be recognised, based upon the likely timing and the level of future taxable profits, which may lead to impairment of the Deferred Tax Asset.

(d) Principles of consolidation

As a result of the implementation of AASB 10, 11, 12, GPT has adopted new principles of consolidation.

(i) Controlled entities

The consolidated financial report comprises the assets and liabilities of all controlled entities and the results of all controlled entities for the financial year. The Trust and its controlled entities are collectively referred to in this financial report as GPT or the consolidated entity.

Subsidiaries are all entities (including structured entities) over which the GPT Group has control. GPT controls an entity when the Group 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. Subsidiaries are fully consolidated from the date on which control is transferred to the GPT Group. They are deconsolidated from the date that control ceases.

The acquisition method of accounting is used to account for the acquisition of controlled entities by GPT. All inter-entity transactions, balances and unrealised gains on transactions between GPT entities have been eliminated in full. Unrealised losses are eliminated.

Non-controlling interests (previously referred to as minority interest) not held by GPT are allocated their share of net profit after income tax expense in the statement of comprehensive income and are presented within equity in the statement of financial position, separately from the Trust's equity.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

1. Summary of significant accounting policies (continued)

(d) Principles of consolidation (continued)

(ii) Associates

Associates are entities over which GPT has significant influence but not control, generally accompanying a shareholding of between 20% and 50% of the voting rights. Investments in associates are accounted for in the consolidated statement of financial position using the equity method. Under this method, GPT's share of the associates' post acquisition net profits after income tax expense is recognised in the consolidated statement of comprehensive income and its share of post-acquisition movements in reserves is recognised in reserves in the consolidated statement of financial position. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Distributions and dividends received from associates are recognised in the consolidated financial report as a reduction of the carrying amount of the investment. GPT's investment in associates includes goodwill (net of any accumulated impairment loss) identified on acquisition.

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.

(iii) Joint arrangements

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 GPT Group has assessed the nature of its joint arrangements and determined to have both joint operations and joint ventures.

Joint venture assets

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's proportionate share of revenues, expenses, assets and liabilities in property interests held as tenants in common are included in their respective items of the consolidated statement of financial position and statement of comprehensive income.

Joint venture entities

Investments in joint venture entities are accounted for in the consolidated statement of financial position using the equity method. Under this method, GPT's share of the joint ventures' post-acquisition net profits after income tax expense is recognised in the consolidated statement of comprehensive income and its share of post-acquisition movements in reserves is recognised in reserves in the consolidated statement of financial position. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Distributions and dividends received from joint venture entities are recognised in the consolidated financial report as a reduction of the carrying amount of the investment.

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.

Where controlled entities, associates or joint ventures adopt accounting policies which differ from the Parent entity, adjustments have been made so as to ensure consistency within the GPT Group.

(e) Rounding of amounts

The Group is of a kind referred to in Class Order 98/0100, issued by the Australian Securities and Investments Commission, relating to the "rounding off" of amounts in the financial report. Amounts shown in the financial report have been rounded off to the nearest tenth of a million dollars in accordance with that Class Order, unless stated otherwise.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

2. Segment reporting

(a) Financial Performance by Segment

The segment information provided to the Chief Executive Officer (CEO) for the reportable segments (discussed at note 2(e)) for the half year ended 30 June 2013 is set out below.

			Core operations
	Retail	Office	Logistics and Business Parks	Funds Management	Corporate	Total Core Operations	Total Non-Core Operations, Consolidation & Eliminations	Total
	\$M	\$M	\$M	\$M	\$M	\$M	\$M	\$M
Investment Management
Rent from investment properties	196.7	94.5	45.1	-	-	336.3	(36.0)	300.3
Share of after tax profits of investments in associates and joint ventures	-	-	-	35.8	-	35.8	28.4	64.2
(excluding fair value adjustments)
Other Income	1.0	0.6	0.3	-	-	1.9	(1.9)	-
Property expenses and outgoings	(57.1)	(21.4)	(8.0)	-	-	(86.5)	7.6	(78.9)
Property Net Income	140.6	73.7	37.4	35.8	-	287.5	(1.9)	285.6
Management & administrative expenses	(2.8)	(1.1)	(0.6)	(0.6)	-	(5.1)	1.9	(3.2)
Net Contribution - Investment Management	137.8	72.6	36.8	35.2	-	282.4	-	282.4
Asset Management Property management fees	8.1	0.5	0.9	5.4	-	14.9	(8.2)	6.7
Management & administrative expenses	(3.1)	(1.3)	(1.1)	(7.3)	-	(12.8)	8.1	(4.7)
Net Contribution - Asset Management	5.0	(0.8)	(0.2)	(1.9)	-	2.1	(0.1)	2.0
Development - Retail and Major Projects
Development fees	1.6	1.1	-	3.2	-	5.9	(2.3)	3.6
Management & administrative expenses	(1.0)	(0.4)	-	(3.3)	-	(4.7)	2.3	(2.4)
Net Contribution - Development Retail and Major Projects	0.6	0.7	-	(0.1)	-	1.2	-	1.2
Development - Logistics and Business Parks
Development fees	-	-	0.1	-	-	0.1	(0.1)	-
Management & administrative expenses	-	-	(1.4)	-	-	(1.4)	0.1	(1.3)
Net Contribution - Development Logistics and Business Parks	-	-	(1.3)	-	-	(1.3)	-	(1.3)
Funds Management
Funds management fees	-	-	-	14.9	-	14.9	-	14.9
Management & administrative expenses	-	-	-	(4.8)	-	(4.8)	-	(4.8)
Net Contribution - Funds Management	-	-	-	10.1	-	10.1	-	10.1
Support Functions
Unallocated management & administrative expenses	-	-	-	-	(13.2)	(13.2)	(0.1)	(13.3)
Interest income	-	-	-	-	15.7	15.7	(5.2)	10.5
Interest expense	-	-	-	-	(65.5)	(65.5)	11.9	(53.6)
Segment Result Before Tax	143.4	72.5	35.3	43.3	(63.0)	231.5	6.5	238.0
Income tax expense	-	-	-	-	(0.6)	(0.6)	(0.9)	(1.5)
Segment Result for the half year*	143.4	72.5	35.3	43.3	(63.6)	230.9	5.6	236.5
Fair value adjustments to investment properties	(19.2)	21.9	7.3	-	-	10.0	-	10.0
Fair value and other adjustments to equity accounted investments	-	3.2	-	18.4	-	21.6	-	21.6
Fair value adjustments of unlisted equity investments	-	-	-	-	0.5	0.5	-	0.5
Amortisation expense - intangibles	(0.1)	(0.1)	-	-	(2.4)	(2.6)	-	(2.6)
Fair value movement of derivatives not qualifying as hedges Fair value movement of derivatives qualifying as fair value hedges	- -	- -	- -	- -	3.2 22.5	3.2 22.5	- -	3.2 22.5
Net gain on fair value of borrowings	-	-	-	-	27.1	27.1	-	27.1
Net foreign exchange gain / (loss)	-	-	-	-	(44.7)	(44.7)	0.2	(44.5)
Net loss on disposal of assets	(1.8)	-	-	-	-	(1.8)	(0.3)	(2.1)
Amortisation of lease incentives and rent free	(5.0)	(5.5)	(1.1)	-	-	(11.6)	-	(11.6)
Tax impact on reconciling items from Segment result to Net profit / (loss) for the half year
Others	- 0.1	- (0.1)	- 0.2	- -	(2.9) (0.7)	(2.9) (0.5)	(0.2) -	(3.1) (0.5)
Net profit / (loss) for the half year	117.4	91.9	41.7	61.7	(61.0)	251.7	5.3	257.0

* The segment result is based on Realised Operating Income (ROI).

In 2012, GPT's management changed the presentation of the segment information to align to the core businesses and allow transparency of the underlaying profitability of those businesses. Prior period comparatives have been restated to be consistent with the presentation of current period.

ROI is a financial measure that is based on the profit under Australian Accounting Standards adjusted for certain unrealised items, non-cash items, gains or losses on investments or other items the Directors determine to be non-recurring or capital in nature. ROI is not prescribed by any Australian Accounting Standards. The adjustments that reconcile the Segment Result to the net profit / (loss) for the half year may change from time to time, depending on changes in accounting standards and/or the Directors' assessment of items that are non-recurring or capital in nature. A description of the material adjustments is included in note 2(b) and (c).

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

2. Segment reporting (continued)

(a) Financial Performance by Segment (continued)

The segment information provided to the CEO for the reportable segments (discussed at note 2(e)) for the half year ended 30 June 2012 is set out below.

		Core Operations
	Retail		Office Logistics and Business Parks	Funds Management	Corporate	Total Core Operations	Total Non-Core Operations, Consolidation & Eliminations	Total
	\$M	\$M	\$M	\$M	\$M	\$M	\$M	\$M
Investment Management Rent from investment properties	224.0	88.2	39.8	-	-	352.0	(36.2)	315.8
Share of after tax profits of investments in associates and joint	-	-	-	33.5	-	33.5	29.2	62.7
ventures (excluding fair value adjustments)
Other Income	1.5	0.5	0.3	-	-	2.3	(2.3)	-
Property expenses and outgoings	(63.6)	(20.2)	(7.4)	-	-	(91.2)	7.0	(84.2)
Property Net Income	161.9	68.5	32.7	33.5	-	296.6	(2.3)	294.3
Management & administrative expenses	(2.9)	(2.1)	(0.7)	(0.5)	(0.2)	(6.4)	2.3	(4.1)
Net Contribution - Investment Management	159.0	66.4	32.0	33.0	(0.2)	290.2	-	290.2
Asset Management
Property management fees	9.1	0.2	0.4	5.1	-	14.8	(8.5)	6.3
Management & administrative expenses	(9.1)	(2.3)	(1.3)	(6.0)	-	(18.7)	8.3	(10.4)
Net Contribution - Asset Management	-	(2.1)	(0.9)	(0.9)	-	(3.9)	(0.2)	(4.1)
Development - Retail and Major Projects
Development fees	2.6	0.6	-	3.8	-	7.0	(2.3)	4.7
Management & administrative expenses	(4.1)	(1.9)	-	(5.8)	-	(11.8)	2.4	(9.4)
Net Contribution - Development Retail and Major Projects	(1.5)	(1.3)	-	(2.0)	-	(4.8)	0.1	(4.7)
Development - Logistics & Business Parks
Development fees	-	-	1.1	-	-	1.1	(1.1)	-
Management & administrative expenses	-	-	(1.0)	-	-	(1.0)	1.1	0.1
Net Contribution - Development Logistics & Business Parks	-	-	0.1	-	-	0.1	-	0.1
Funds Management
Funds management fees Management & administrative expenses	- -	- -	- -	12.6 (5.2)	- -	12.6	-	12.6
Net Contribution - Funds Management	-	-	-	7.4	-	(5.2) 7.4	- -	(5.2) 7.4
Support Functions
Unallocated management & administrative expenses	-	-	-	-	(13.5)	(13.5)	0.2	(13.3)
Interest income	-	-	-	-	16.3	16.3	(5.8)	10.5
Interest expense Segment Result Before Tax	- 157.5	- 63.0	- 31.2	- 37.5	(75.4) (72.8)	(75.4) 216.4	14.7 9.0	(60.7) 225.4
Income tax credit	-	-	-	-	2.1	2.1	(0.3)	1.8
Segment Result for the half year	157.5	63.0	31.2	37.5	(70.7)	218.5	8.7	227.2
Fair value adjustments to investment properties	72.2	31.2	3.8	-	-	107.2	-	107.2
Fair value and other adjustments to equity accounted investments	3.2	(0.4)	-	12.2	-	15.0	0.3	15.3
Amortisation expense - intangibles	(0.1)	-	-	-	(2.1)	(2.2)	-	(2.2)
Fair value movement of derivatives	-	-	-	-	(55.2)	(55.2)	-	(55.2)
Net foreign exchange gain	-	-	-	-	-	-	0.1	0.1
Net loss on disposal of assets	(1.8)	-	(0.7)	-	-	(2.5)	-	(2.5)
Amortisation of lease incentives and rent free Tax impact on reconciling items from Segment result to Net	(5.6)	(4.5)	(2.0)	-	-	(12.1)	-	(12.1)
profit / (loss) for the half year	(0.2)	-	-	-	0.6	0.4	(0.1)	0.3
Others	(0.6)	(0.2)	-	-	(1.8)	(2.6)	-	(2.6)
Net profit / (loss) for the half year	224.6	89.1	32.3	49.7	(129.2)	266.5	9.0	275.5

* The segment result is based on Realised Operating Income (ROI).

In 2012, GPT's management changed the presentation of the segment information to align to the core businesses and allow transparency of the underlying profitability of those businesses. Prior period comparatives have been restated to be consistent with the presentation of current period.

ROI is a financial measure that is based on the profit under Australian Accounting Standards adjusted for certain unrealised items, non-cash items, gains or losses on investments or other items the Directors determine to be non-recurring or capital in nature. ROI is not prescribed by any Australian Accounting Standards. The adjustments that reconcile the Segment Result to the net profit / (loss) for the half year may change from time to time, depending on changes in accounting standards and/or the Directors' assessment of items that are non-recurring or capital in nature. A description of the material adjustments is included in note 2(b) and (c).

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

2. Segment reporting (continued)

(b) Reconciliation of Segment Revenue and Result to the Statement of Comprehensive Income – Continuing Operations

30 June 2013

		Total Core Operations	Consolidation & Eliminations	Total Continuing Operations	ROI Adjustments and Reclassifications	Total Statement of Comprehensive Income
	Note	\$M	\$M	\$M	\$M	\$M
Investment Management
Rent from investment properties	(i)	336.3	(36.0)	300.3	-	300.3
Share of after tax profits of investments in associates and joint ventures	(ii)	35.8	28.4	64.2	-	64.2
(excluding fair value adjustments)
Other Income Property expenses and outgoings		1.9 (86.5)	(1.9) 7.6	- (78.9)	- -	- (78.9)
Property Net Income		287.5	(1.9)	285.6	-	285.6
Management & administrative expenses	(iii)	(5.1)	1.9	(3.2)	-	(3.2)
Net Contribution - Investment Management		282.4	-	282.4	-	282.4
Asset Management
Property management fees		14.9	(8.2)	6.7	-	6.7
Management & administrative expenses	(iii)	(12.8)	8.1	(4.7)	-	(4.7)
Net Contribution - Asset Management		2.1	(0.1)	2.0	-	2.0
Development - Retail and Major Projects Development fees		5.9	(2.3)	3.6	-	3.6
Management & administrative expenses	(iii)	(4.7)	2.3	(2.4)	-	(2.4)
Net Contribution - Development Retail and Major Projects		1.2	-	1.2	-	1.2
Development - Logistics and Business Parks
Development fees		0.1	(0.1)	-	-	-
Management & administrative expenses	(iii)	(1.4)	0.1	(1.3)	-	(1.3)
Net Contribution - Development Logistics and Business Parks		(1.3)	-	(1.3)	-	(1.3)
Funds Management
Funds management fees		14.9	-	14.9	-	14.9
Management & administrative expenses	(iii)	(4.8)	-	(4.8)	-	(4.8)
Net Contribution - Funds Management		10.1	-	10.1	-	10.1
Support Functions
Unallocated management & administrative expenses	(iii), (iv)	(13.2)	0.1	(13.1)	-	(13.1)
Interest income		15.7	(11.9)	3.8	-	3.8
Interest expense		(65.5)	11.9	(53.6)	-	(53.6)
Segment Result Before Tax		231.5	-	231.5	-	231.5
Income tax expense	(v)	(0.6)	-	(0.6)	-	(0.6)
Segment Result for the half year		230.9	-	230.9	-	230.9
Fair value adjustments to investment properties	2(c)(iii)
Fair value and other adjustments to equity accounted investments	(ii), 2(c)(ii)				10.0 21.6	10.0 21.6
Fair value adjustments of unlisted equity investments	2(c)(ix)				0.5	0.5
Amortisation expense - intangibles	(iv), 2(c)(iv)				(2.6)	(2.6)
Impairment expense - other	2(c)(v)				-	-
Fair value movement of derivatives not qualifying as hedges	2(c)(vi)				3.2	3.2
Fair value movement of derivatives qualifying as fair value hedges	2(c)(vi)				22.5	22.5
Net gain on fair value of borrowings	2(c)(x)				27.1	27.1
Net foreign exchange loss Net loss on disposal of assets	2(c)(vii) 2(c)(viii)				(44.7) (1.8)	(44.7) (1.8)
Amortisation of lease incentives and rent free	(i), 2(c)(i)				(11.6)	(11.6)
Tax impact on reconciling items from Segment result to Net profit / (loss) for	(v)
the half year					(2.9)	(2.9)
Others	(iii)				(0.5)	(0.5)
Net profit / (loss) for the half year		230.9	-	230.9	20.8	251.7

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

2. Segment reporting (continued)

(b) Reconciliation of Segment Revenue and Result to the Statement of Comprehensive Income – Continuing Operations (continued)

30 June 2013 (continued)

	\$M
(i)
Rent from investment properties	300.3
Less: Amortisation of lease incentives and rent free	(11.6)
Rent from property investments	288.7
(ii) Share of after tax profits of investments in associates and joint ventures
(excluding fair value adjustments)	64.2
Fair value and other adjustments to equity accounted investments	21.6
Share of after tax profits of equity accounted investments	85.8
(iii)
Management & administrative expenses (Investment Management)	3.2
Management & administrative expenses (Asset Management) Management & administrative expenses (Development Management - Retail	4.7
& Major Projects)	2.4
Management & administrative expenses (Development Management -
Logistics & Business Parks)	1.3
Management & administrative expenses (Funds Management)	4.8
Unallocated management & administrative expenses	13.1
Less: Depreciation expense - refer to (iv) below	(1.0)
Add back: Management fee income	0.3
Others	0.5
Management and other administration costs	29.3
(iv)
Amortisation expense - intangibles	2.6
Depreciation expense - refer to (iii) above	1.0
Depreciation and amortisation expense	3.6
(v)
Income tax expense	(0.6)
Tax impact on reconciling items from Segment result to Net profit / (loss) for
the half year	(2.9)
Income tax expense	(3.5)

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

2. Segment reporting (continued)

(b) Reconciliation of Segment Revenue and Result to the Statement of Comprehensive Income – Continuing Operations (continued)

30 June 2012

		Total Core Operations	Eliminations & Consolidation	Total Continuing Operations	ROI Adjustments	Total Statement of Comprehensive Income
		\$M	\$M	\$M	\$M	\$M
Investment Management
Rent from investment properties	(i)	352.0	(36.2)	315.8	-	315.8
Share of after tax profits of investments in associates and joint ventures	(ii)	33.5	29.2	62.7	-	62.7
(excluding fair value adjustments)
Other Income		2.3	(2.3)	-	-	-
Property expenses and outgoings		(91.2)	7.0	(84.2)	-	(84.2)
Property Net Income		296.6	(2.3)	294.3	-	294.3
Management & administrative expenses	(iii)	(6.4)	2.3	(4.1)	-	(4.1)
Net Contribution - Investment Management		290.2	-	290.2	-	290.2
Asset Management
Property management fees		14.8	(8.5)	6.3	-	6.3
Management & administrative expenses	(iii)	(18.7)	8.3	(10.4)	-	(10.4)
Net Contribution - Asset Management		(3.9)	(0.2)	(4.1)	-	(4.1)
Development - Retail and Major Projects
Development fees		7.0	(2.3)	4.7	-	4.7
Management & administrative expenses	(iii)	(11.8)	2.4	(9.4)	-	(9.4)
Net Contribution - Development Retail and Major Projects		(4.8)	0.1	(4.7)	-	(4.7)
Development - Logistics & Business Parks
Development fees		1.1	(1.1)	-	-	-
Management & administrative expenses	(iii)	(1.0)	1.1	0.1	-	0.1
Net Contribution - Development Logistics & Business Parks		0.1	-	0.1	-	0.1
Funds Management
Funds management fees		12.6	-	12.6	-	12.6
Management & administrative expenses	(iii)	(5.2)	-	(5.2)	-	(5.2)
Net Contribution - Funds Management		7.4	-	7.4	-	7.4
Support Functions
Unallocated management & administrative expenses	(iii), (iv)	(13.5)	0.2	(13.3)	-	(13.3)
Interest income		16.3	(14.8)	1.5	-	1.5
Interest expense		(75.4)	14.7	(60.7)	-	(60.7)
Segment Result Before Tax		216.4	-	216.4	-	216.4
Income tax credit	(v)	2.1	-	2.1	-	2.1
Segment Result for the half year		218.5	-	218.5	-	218.5
Fair value adjustments to investment properties	2(c)(iii)				107.2	107.2
Fair value and other adjustments to equity accounted investments	(ii), 2(c)(ii)				15.0	15.0
Amortisation expense - intangibles	(iv), 2(c)(iv)				(2.2)	(2.2)
Fair value movement of derivatives Net loss on disposal of assets	2(c)(vi) 2(c)(viii)				(55.2) (2.5)	(55.2) (2.5)
Amortisation of lease incentives and rent free	(i), 2(c)(i)				(12.1)	(12.1)
Tax impact on reconciling items from Segment result to Net profit / (loss) for	(v)
the half year					0.4	0.4
Others	(iii)				(2.6)	(2.6)
Net profit / (loss) for the half year		218.5	-	218.5	48.0	266.5

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

2. Segment reporting (continued)

(b) Reconciliation of Segment Revenue and Result to the Statement of Comprehensive Income – Continuing Operations (continued)

30 June 2012 (continued)

	\$M
(i)
Rent from investment properties	315.8
Less: Amortisation of lease incentives and rent free	(12.1)
Rent from property investments	303.7
(ii)
Share of after tax profits of investments in associates and joint ventures (excluding fair value adjustments)	62.7
Fair value and other adjustments to equity accounted investments	15.0
Share of after tax profits of equity accounted investments	77.7
(iii)
Management & administrative expenses (Investment Management)	4.1
Management & administrative expenses (Asset Management)	10.4
Management & administrative expenses (Development Management - Retail
& Major Projects) Management & administrative expenses (Development Management -	9.4
Logistics & Business Parks)	(0.1)
Management & administrative expenses (Funds Management)	5.2
Unallocated management & administrative expenses	13.3
Less: Depreciation expense - refer to (iv) below	(1.1)
Others	2.6
Management and other administration costs	43.8
(iv) Amortisation expense - intangibles
Depreciation expense - refer to (iii) above	2.2 1.1
Depreciation and amortisation expense	3.3
(v)
Income tax credit	2.1
Tax impact on reconciling items from Segment result to Net profit / (loss) for
the half year	0.4
Income tax credit	2.5

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

2. Segment reporting (continued)

(c) Description of adjustments from Segment Result ("ROI") to profit for the half year

The CEO assesses the performance of the operating segments on a ROI basis. The material adjustments to the Segment Result to arrive at the net profit shown in the financial report are set out below:

• (i) Non-cash IFRS adjustments primarily comprise amounts for straight lining rental revenue and amortising lease incentives. These are required for Australian Accounting Standards purposes but are non-cash amounts, therefore have been excluded from ROI to better reflect revenue on a cash basis in ROI.
• (ii) Fair value and other adjustments to equity accounted investments comprise the movements in the value of the underlying assets of GPT's investments in joint ventures and associates as required by Australian Accounting Standards. These do not reflect the cash distributions received from these investments. As such, GPT has excluded these amounts from ROI to better reflect a cash basis in ROI.
• (iii) Fair value adjustments to investment properties comprise movements in fair value of investment properties required by Australian Accounting Standards for valuation purposes and are non-cash. Therefore, GPT has excluded this amount from ROI to better reflect a cash basis in ROI.
• (iv) Amortisation expense is required for Australian Accounting Standards and is a non-cash transaction. Therefore, GPT has excluded this amount from ROI to better reflect a cash basis in ROI.
• (v) Impairment expense is required for Australian Accounting Standards and is a non-cash transaction. Therefore, GPT has excluded this amount from ROI to better reflect a cash basis in ROI.
• (vi) Fair value movement of derivatives comprise mark-to-market movements required by Australian Accounting Standards for valuation purposes and are non-cash. Therefore, GPT has excluded this amount from ROI to better reflect a cash basis in ROI.
• (vii) Net foreign exchange gain / (loss) is required for Australian Accounting Standards and is a non-cash transaction. Therefore, GPT has excluded this amount from ROI to better reflect a cash basis in ROI.
• (viii) Net profit / (loss) on disposal is capital in nature therefore GPT has excluded this amount from ROI.
• (ix) Fair value adjustments of unlisted equity investments comprises the movement in the fair value required by Australian Accounting Standards for valuation purposes and are non-cash. Therefore, GPT has excluded this amount from ROI to better reflect a cash basis in ROI.
• (x) Net gain on fair value of borrowings comprises the movement in the fair value required by Australian Accounting Standards for valuation purposes and are non-cash. Therefore, GPT has excluded this amount from ROI to better reflect a cash basis in ROI.

Revenues are derived from a large number of tenants and no single tenant or group under common control contributes more than 10% of the Group's revenues.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

2. Segment reporting (continued)

(d) Reconciliation of Segment Assets and Liabilities to the Statement of Financial Position

The amounts provided to the CEO in respect of total assets and total liabilities are measured in a manner consistent with that of the financial report and allocated based on the operations of the segment.

Given some of the assets and liabilities relate mainly to Corporate activities and have not been allocated to a reportable segment, a reconciliation of the reportable segments' assets and liabilities to total assets and liabilities as at 30 June 2013 and 31 December 2012 is set out below:

30 June 2013

			Core Operations
	Retail	Office	Logistics and	Funds	Corporate	Total Core	Total Non-Core	Total
			Business Parks	Management		Operations	Operations
	\$M	\$M	\$M	\$M	\$M	\$M	\$M	\$M
Current Assets
Current assets	103.2	-	-	-	387.5	490.7	10.3	501.0
Total Current Assets	103.2	-	-	-	387.5	490.7	10.3	501.0
Non-Current Assets Investment properties
Equity accounted investments	3,865.4	1,421.4	1,024.8	-	-	6,311.6	-	6,311.6
Property, plant and equipment	21.0	714.0	-	1,171.2	0.1	1,906.3	-	1,906.3
Loans and receivables	- -	- -	- -	- -	11.6 11.2	11.6 11.2	- 145.6	11.6 156.8
Intangible assets	10.8	0.3	-	-	39.8	50.9	-	50.9
Other non-current assets	-	-	-	-	168.5	168.5	-	168.5
Total Non-Current Assets	3,897.2	2,135.7	1,024.8	1,171.2	231.2	8,460.1	145.6	8,605.7
Total Assets	4,000.4	2,135.7	1,024.8	1,171.2	618.7	8,950.8	155.9	9,106.7
Current and non-current liabilities	-	-	-	-	2,265.0	2,265.0	-	2,265.0
Total Liabilities	-	-	-	-	2,265.0	2,265.0	-	2,265.0
Net Assets	4,000.4	2,135.7	1,024.8	1,171.2	(1,646.3)	6,685.8	155.9	6,841.7
31 December 2012
Current assets	194.0	-	-	-	241.5	435.5	9.1	444.6
Total Current Assets	194.0	-	-	-	241.5	435.5	9.1	444.6
Non-Current Assets
Investment properties	4,132.3	1,378.8	989.5	-	-	6,500.6	-	6,500.6
Equity accounted investments	151.6	706.3	-	1,152.8	0.1	2,010.8	-	2,010.8
Property, plant and equipment	-	-	-	-	10.7	10.7	-	10.7
Loans and receivables	-	-	-	-	7.9	7.9	144.1	152.0
Intangible assets	12.0	0.4	-	-	37.5	49.9	-	49.9
Other non-current assets	-	-	-	-	174.6	174.6	-	174.6
Total Non-Current Assets	4,295.9	2,085.5	989.5	1,152.8	230.8	8,754.5	144.1	8,898.6
Total Assets	4,489.9	2,085.5	989.5	1,152.8	472.3	9,190.0	153.2	9,343.2
Current and non-current liabilities	-	-	-	-	2,467.0	2,467.0	-	2,467.0
Total Liabilities	-	-	-	-	2,467.0	2,467.0	-	2,467.0
Net Assets	4,489.9	2,085.5	989.5	1,152.8	(1,994.7)	6,723.0	153.2	6,876.2

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

2. Segment reporting (continued)

(e) Identification of Reportable Segments

The Group's operating segments which are based on internal reports reviewed by the CEO are:

Segment Retail	Types of products and services which generate segment revenues Regional, sub-regional and community shopping centres. Retail re-developments and new retail developments as well as development and property management of retail assets.
Office	Office space with associated retail space and office developments.
Logistics and Business Parks	Traditional logistics and business park assets with capacity for organic growth through the development of vacant land as well as logistics and business park re-developments and property management of logistics and business park assets.
Funds Management	Asset and funds management of Australian wholesale fund vehicles, investments by the Group in GPT Wholesale Shopping Centre Fund and GPT Wholesale Office Fund.
Corporate	Finance, principally interest costs and Group operating costs.
Non-Core Operations, Consolidation and Eliminations include:
Discontinued operation - US Seniors Housing	GPT completed the sale of this portfolio on 29 March 2011 and the balances represent miscellaneous balances that will be realised once liquidation of the remaining entity occurs.
Discontinued operation - Funds Management – Europe	Equity investments in two small closed-end funds (a legacy of GPT's ownership of GPT Halverton) managed by Internos Real Investors.
Discontinued operation - Hotel / Tourism	GPT has divested all of its resorts after completing the sale of Ayers Rock Resort on 23 May 2011 and now earns interest income on the deferred settlement proceeds. Final proceeds will be received in May 2016. The remaining balances represent miscellaneous balances that will be realised once liquidation of those entities occurs.
Consolidation and Eliminations	Elimination of inter-company transactions and conversion of the proportionally consolidated result from joint ventures and associates to equity accounted results.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

3. Distributions paid and payable to securityholders

		Consolidated entity
	30 Jun 13 \$M	30 Jun 12 \$M
5.1 cents per stapled security paid on 14 March 2013 (4.9 cents per stapled security paid on 16 March 2012)	90.1	88.7
5.1 cents per stapled security paid on 17 May 2013 (4.6 cents per stapled security paid on 25 May 2012)	90.2	82.2
	180.3	170.9
(ii) Distributions proposed and not recognised as a liability (1)
5.0 cents per stapled security expected to be paid on 13 September 2013 (4.9 cents per stapled security paid on 7 September 2012)	87.2	86.6
(b) Exchangeable Securities Securityholders (2)
10% per exchangeable security	12.4	12.4
10% per exchangeable security	2.4	2.4

at 30 June 2013 and will be finalised on the record date of 21 August 2013, taking into account further on-market buy-back activities up until that day. the Statement of Financial Position as at 30 June 2013 as the distribution had not been declared by that date. This distribution is based on the number of securities (2) Refer to note 8(c) for further information on the Exchangeable Securities. (1) June quarter distribution of 5.0 cents per stapled security is expected to be paid on 13 September 2013. No provision for the distribution has been recognised in

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

4. Non-current assets held for sale

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 Group at 30 June 2013 but are classified as held for sale. These assets and liabilities are presented as an aggregate amount on the lines "assets and liabilities held for sale" in the Statement of Financial Position.

		Consolidated entity
		Discontinued Operations
		Funds Management	US Seniors	Investment	Total	Total
		Europe	Housing	Properties
		30 Jun 13	30 Jun 13	30 Jun 13	30 Jun 13	31 Dec 12
	Note	\$M	\$M	\$M	\$M	\$M
Assets classified as held for sale
Loans and receivables	(i)	10.2	-	-	10.2	9.0
Investment properties	(ii)	-	-	103.2	103.2	194.0
Equity accounted investments	(iii)	-	0.1	-	0.1	0.1
Other assets	(iv)	-	-	-	-	-
Total assets classified as held for sale		10.2	0.1	103.2	113.5	203.1

(i) Loans and receivables mainly comprise a loan receivable of \$10.2 million from German Retail Fundco SARL.

(ii) Investment properties comprise of Brisbane Homemaker Centre at Fortitude Valley which has been sold subsequent to balance date.

(iii) Equity accounted investments comprise:

• the 50% investment in B&B GPT Alliance 1 LLC and B&B GPT Alliance 2 LLC with a nil carrying value at 30 June 2013; and
• the 95% investment in B-VII Operations Holding Co LLC, properties held by this entity were sold on 29 March 2011 but it is in the process of being liquidated. This investment is held at \$0.1 million as at 30 June 2013.

GPT held a 38.04% interest in DAF at nil carrying value as at 31 December 2012. This investment was divested during the period.

(iv) Other assets comprise a 5.3% interest in GPT MaltaCo 1 with a nil carrying value as at 30 June 2013.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

5. Investment properties

	Consolidated entity
		30 Jun 13	31 Dec 12
	Note	\$M	\$M
Retail	(b)	3,865.4	4,132.3
Office	(c)	1,421.4	1,378.8
Logistics and Business Parks	(d)	908.3	880.5
Properties under development	(e)	116.5	109.0
Total investment properties		6,311.6	6,500.6

(a) Reconciliation

A reconciliation of the carrying amount of investment properties at the beginning and end of the half year is as follows:

	For the 6 months to	For the 12 months to
	30 Jun 13	31 Dec 12
	\$M	\$M
Carrying amount at the beginning of the financial period	6,500.6	6,423.6
Additions - operating capex	11.5	24.5
Additions - interest capitalised	0.6	8.8
Additions - development capex	17.7	72.7
Asset acquisitions	20.5	151.4
Transfers from non-current assets classified as held for sale	-	235.1
Lease incentives	27.4	50.8
Amortisation of lease incentives	(11.3)	(24.9)
Disposals	(262.4)	(618.6)
Fair value adjustments	9.7	175.1
Leasing costs (net of amortisation)	(2.7)	2.1
Carrying amount at the end of the financial period	6,311.6	6,500.6

Details of the Group's Investment Properties

(b) Retail

	Ownership	Acquisition	Fair Value	Fair Value	Latest	Valuer
	Interest (1)	Date	30 Jun 13	31 Dec 12	Independent
					Valuation
	%		\$M	\$M	Date
Casuarina Square, NT	50.0	Oct 1973	239.9	239.5		Dec 2012 CB Richard Ellis Pty Limited
Charlestown Square, NSW	100.0	Dec 1977	822.0	840.3		Jun 2013 Savills Australia
Pacific Highway, Charlestown, NSW	100.0	Oct 2002 / Jul 2003	6.0	9.7		Jun 2013 Savills Australia
Dandenong Plaza, VIC	100.0	Dec 1993 / Dec 1999	155.0	170.0		Jun 2013 Colliers International
Erina Fair, NSW (2)	-	Jun 1992	-	262.1		Jun 2012 Savills Australia
Highpoint Shopping Centre, VIC	16.7	Aug 2009	283.4	274.2		Jun 2012 CB Richard Ellis Pty Limited
Homemaker City, Maribyrnong, VIC	16.7	Aug 2009	8.1	7.5		Sept 2012 CB Richard Ellis Pty Limited
Westfield Penrith, NSW	50.0	Jun 1971	552.5	546.4		Jun 2013 Knight Frank Valuations
Sunshine Plaza, QLD	50.0	Dec 1992 / Sep 2004	363.6	350.8		Jun 2013 Savills Australia
Plaza Parade, QLD	50.0	Jun 1999	10.5	9.5		Jun 2013 Savills Australia
Rouse Hill Town Centre, NSW	100.0	Dec 2005	462.7	461.1		Jun 2012 CB Richard Ellis Pty Limited
Melbourne Central, VIC - retail portion (3)	100.0	May 1999 / May 2001	961.7	961.2		Dec 2012 CB Richard Ellis Pty Limited
Total consolidated entity			3,865.4	4,132.3

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

5. Investment properties (continued)

Details of the Group's Investment Properties (continued)

(c) Office

	Ownership	Acquisition	Fair Value	Fair Value	Latest	Valuer
	Interest (1)	Date	30 Jun 13	31 Dec 12	Independent
					Valuation
	%		\$M	\$M	Date
Australia Square, Sydney, NSW	50.0	Sep 1981	305.0	286.1		Jun 2013 Knight Frank Valuations
MLC Centre, Sydney, NSW	50.0	Apr 1987	375.0	381.1		Jun 2013 Colliers International
One One One Eagle Street, Brisbane, QLD	33.3	Apr 1984	222.7	208.6		Mar 2013 Knight Frank Valuations
Melbourne Central, VIC - office portion (3)	100.0	May 1999 / May 2001	380.7	375.0		Dec 2012 CB Richard Ellis Pty Limited
818 Bourke St, Victoria Harbour, VIC	100.0	Jun 2006	138.0	128.0		Jun 2013 Savills Australia
Total consolidated entity			1,421.4	1,378.8

(d) Logistics and Business Parks

	Ownership	Acquisition	Fair Value	Fair Value	Latest	Valuer
	Interest (1)	Date	30 Jun 13	31 Dec 12	Independent
					Valuation
	%		\$M	\$M	Date
2-4 Harvey Road, Kings Park, NSW	100.0	May 1999	44.1	44.1		Jun 2011 Savills Australia
Citi-West Industrial Estate, Altona North, VIC	100.0	Aug 1994	66.6	66.7		Mar 2012 Jones Lang LaSalle
Quad 1, Sydney Olympic Park, NSW	* 100.0	Jun 2001	20.0	19.6		Jun 2013 Knight Frank Valuations
Quad 2, Sydney Olympic Park, NSW	* 100.0	Dec 2001	24.4	22.5		Jun 2013 Knight Frank Valuations
Quad 3, Sydney Olympic Park, NSW	* 100.0	Mar 2003	23.6	23.0		Jun 2013 Knight Frank Valuations
Quad 4, Sydney Olympic Park, NSW	* 100.0	Jun 2004	33.8	36.1		Jun 2013 Knight Frank Valuations
6 Herb Elliott, Sydney Olympic Park, NSW	* 100.0	Jun 2010	12.5	12.1		Jun 2013 Jones Lang LaSalle
8 Herb Elliott, Sydney Olympic Park, NSW	* 100.0	Aug 2004	10.2	9.4		Jun 2013 Knight Frank Valuations
3 Figtree Drive, Sydney Olympic Park, NSW (4)	* 100.0	Apr 2013	19.4	-		Mar 2013 CB Richard Ellis Pty Limited
5 Figtree Drive, Sydney Olympic Park, NSW	* 100.0	Jul 2005	20.6	20.2		Jun 2011 Colliers International
7 Figtree Drive, Sydney Olympic Park, NSW	* 100.0	Jul 2004	13.5	10.6		Jun 2013 Knight Frank Valuations
7 Parkview Drive, Sydney Olympic Park, NSW	* 100.0	May 2002	19.4	19.4		Jun 2011 Jones Lang LaSalle
5 Murray Rose, Sydney Olympic Park, NSW	* 100.0	May 2002	70.2	68.5		Jun 2013 M3 Property
Rosehill Business Park, Camellia, NSW	100.0	May 1998	67.4	67.6		Jun 2012 Jones Lang LaSalle
15 Berry Street, Granville, NSW	100.0	Nov 2000	13.3	13.3		Jun 2012 Savills Australia
19 Berry Street, Granville, NSW	100.0	Dec 2000	26.6	26.7		Jun 2012 Savills Australia
Erskine Park, NSW (Stage 1)	100.0	Jun 2008	38.8	38.8		Jun 2012 Knight Frank Valuations
Erskine Park, NSW (Stage 2)	100.0	Jun 2008	20.0	19.1		Jun 2013 CB Richard Ellis Pty Limited
Austrak Business Park, Somerton, VIC	50.0	Oct 2003	140.0	135.4		Jun 2013 CB Richard Ellis Pty Limited
134-140 Fairbairn Road, Sunshine West, VIC	100.0	Mar 2006	13.2	13.2		Dec 2011 CB Richard Ellis Pty Limited
116 Holt Street, Pinkenba, QLD	100.0	Mar 2006	13.5	13.4		Jun 2011 Jones Lang LaSalle
4 Holker Street, Silverwater, NSW	100.0	Mar 2006	26.0	30.4		Jun 2013 Colliers International
372-374 Victoria Street, Wetherill Park, NSW	100.0	Jul 2006	18.4	18.4		Jun 2012 Knight Frank Valuations
18 - 24 Abbott Road, Seven Hills, NSW	100.0	Oct 2006	13.7	13.7		Dec 2011 CB Richard Ellis Pty Limited
Citiport Business Park, Port Melbourne, VIC	100.0	Mar 2012	62.0	61.5		Feb 2012 Jones Lang LaSalle
83 Derby Street, Silverwater, NSW	100.0	Aug 2012	25.2	25.2		Jun 2012 Knight Frank Valuations
10 Interchange Drive, Eastern Creek, NSW	100.0	Aug 2012	28.6	28.6		Jul 2012 CB Richard Ellis Pty Limited
407 Pembroke Rd, Minto, NSW	50.0	Oct 2008	23.3	23.0		Jun 2013 Knight Frank Valuations
Total consolidated entity			908.3	880.5

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

5. Investment properties (continued)

(e) Properties under development

	Ownership Interest (1)	Acquisition Date	Fair Value 30 Jun 13	Fair Value 31 Dec 12	Latest Independent	Valuer
	%		\$M	\$M	Valuation Date
Logistics and Business Parks
17 Berry St, Granville, NSW	100.0	Sep 2009	2.8	2.9		Jun 2012 Savills Australia
Erskine Park, NSW	100.0	Jun 2008	51.8	51.4		Jun 2012 Knight Frank Valuations
407 Pembroke Rd, Minto, NSW	50.0	Oct 2008	4.5	4.7		Jun 2013 Knight Frank Valuations
Austrak Business Park, Somerton, VIC	50.0	Oct 2003	21.8	21.7		Jun 2013 CB Richard Ellis Pty Limited
Toll NQX, Karawatha, QLD	100.0	Dec 2012	35.6	28.3		- -
Total consolidated entity			116.5	109.0

(1) Freehold, unless otherwise marked with a * which denotes leasehold.

(2) On 17 May 2013, GPT sold a 50% interest in the Erina Fair shopping centre, on the NSW Central Coast. The 50% interest in Erina Fair includes a 33.33% interest directly owned by the GPT Trust as an investment property and a 16.67% interest owned by GPT through a joint venture with APPF, Erina Property Trust (refer note 6(a)(i)). The directly owned interest in the Erina Fair shopping centre was sold for a total consideration of \$264.7 million.

(3) Melbourne Central: 71.6% Retail and 28.4% Office (Dec 12: 71.9% Retail and 28.1% Office).

(4) On 4 April 2013, GPT acquired 3 Figtree Drive, Sydney Olympic Park for a total consideration of \$19.4 million.

Investment properties held in equity accounted investments are set out in note 6.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

6. Equity accounted investments

		30 Jun 13	31 Dec 12
	Note	\$M	\$M
Investments in joint venture entities	(a)(i)	735.1	858.0
Investments in associates	(a)(ii)	1,171.2	1,152.8
Total equity accounted investments		1,906.3	2,010.8

(a) Details of equity accounted investments

Name	Principal Activity	Ownership Interest
		30 Jun 13	31 Dec 12	30 Jun 13	31 Dec 12
		%	%	\$M	\$M
(i) Joint Venture entities
Entities incorporated in Australia
1 Farrer Place Trust (1)	Investment property	50.00	50.00	331.3	324.6
2 Park Street Trust (1)	Investment property	50.00	50.00	382.7	381.7
DPT Operator Pty Limited (1)	Managing property	50.00	50.00	0.1	0.1
Erina Property Trust (1) (3)	Investment property	-	50.00	-	130.6
Horton Trust	Investment property	50.00	50.00	21.0	21.0
Lend Lease GPT (Rouse Hill) Pty Limited (1) (2)	Property development	50.00	50.00	-	-
Chullora Trust 1 (4)	Investment property	50.00	-	-	-
Total investment in joint venture entities				735.1	858.0
(ii) Associates
Entities incorporated in Australia
GPT Wholesale Office Fund (1)	Property investment	20.10	20.37	684.1	671.6
GPT Wholesale Shopping Centre Fund (1)	Property investment	21.85	23.29	487.1	481.2
Total investments in associates				1,171.2	1,152.8

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

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

(3) On 17 May 2013 GPT sold an interest in the Erina Property Trust for a total consideration of \$132.4 million as part of the sale of a 50% interest in the Erina Fair shopping centre.

(4) On 28 June 2013, GPT invested \$2,000 into the Chullora Joint Venture which is an SPV jointly owned by GPT (50% interest) and Commercial and Industrial Properties Pty Ltd (50% interest). The SPV was set up to purchase the land at 14-18 Worth Street, Chullora for subdivision, development and sale.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

6. Equity accounted investments (continued)

(b) Share of joint ventures and associates' commitments

The Group's share of its associates and joint ventures' capital expenditure commitments which have been approved but not provided for at 30 June 2013 are as follows:

	Australia
	30 Jun 13	31 Dec 12
	\$M	\$M
Capital expenditure commitments	48.5	80.5
Total joint venture and associates' commitments	48.5	80.5

7. Borrowings

`

	Consolidated entity
		30 Jun 13	31 Dec 12
	Note	\$M	\$M
Current - unsecured
Bank facilities	(a)	125.0	-
Medium Term Notes	(b)	291.0	211.0
Total current borrowings - unsecured		416.0	211.0
Total current borrowings		416.0	211.0
Non-Current - unsecured
Bank facilities	(a)	782.0	1,442.0
Medium Term Notes	(b)	442.5	330.0
Unrealised fair value (gain)/loss on Medium Term Notes	(b)	(11.8)	-
US Private Placement	(c)	271.9	-
Unrealised fair value (gain)/loss on US Private Placement	(c)	(15.3)	-
CPI Indexed Bonds	(d)	85.0	85.0
Total non-current borrowings - unsecured		1,554.3	1,857.0
Non-Current - secured
Bank facility - Somerton	(a)	75.6	75.6
Total non-current borrowings - secured		75.6	75.6
Total non-current borrowings		1,629.9	1,932.6
Total borrowings *		2,045.9	2,143.6
* Net of unamortised establishment costs
The maturity profile of the above current and non-current borrowings is:
Due within one year		416.0	211.0
Due between one and five years		563.7	1,222.6
Due after five years		1,066.2	710.0
		2,045.9	2,143.6

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

7. Borrowings (continued)

(a) Financing facilities

A summary of borrowings and financing facilities included in the statement of financial position is provided below:

			Consolidated entity 30 Jun 13
		Used facility \$M	Facility limit \$M	Unused facility \$M	Maturity Date
Unsecured
Bank facilities
Bank bilateral	(a)(i)	195.0	200.0	5.0	11-Sep-14
Bank bilateral	(a)(ii)	325.0	325.0	-	26-Oct-18
Bank bilateral	(a)(iii)	100.0	100.0	-	15-Sep-14
Bank bilateral	(a)(iii)	125.0	125.0	-	27-May-14
Bank bilateral	(a)(iv)	-	110.0	110.0	01-Apr-15
Bank bilateral	(a)(v)	12.0	140.0	128.0	01-Apr-16
Bank bilateral	(a)(vi)	-	75.0	75.0	30-Nov-16
Bank bilateral	(a)(vii)	-	75.0	75.0	26-Oct-17
Bank bilateral	(a)(viii)	150.0	150.0	-	01-Jul-14
Total Bank facilities		907.0	1,300.0	393.0
Issues in debt capital markets
Medium Term Notes	(b)(iv)	211.0	212.0	1.0	22-Aug-13
Medium Term Notes	(b)(v)	250.0	250.0	-	24-Jan-19
Medium Term Notes	(b)(vi)	50.0	50.0	-	16-Aug-22
Medium Term Notes	(b)(vii)	30.0	30.0	-	19-Nov-17
Medium Term Notes	(b)(i)	50.0	50.0	-	19-Feb-14
Medium Term Notes	(b)(ii)	30.0	30.0	-	24-Apr-14
Medium Term Notes	(b)(iii)	98.8	98.8	-	05-Feb-28
US Private Placement	(c)	146.0	146.0	-	19-Jun-25
US Private Placement	(c)	97.2	97.2	-	19-Jun-28
CPI Indexed Bonds	(d)	85.0	85.0	-	10-Dec-29
Total Issues in debt capital markets		1,048.0	1,049.0	1.0
Secured
Bank facility - Somerton	(a)(ix)	76.0	76.2	0.2	31-Mar-16
Total Borrowings *		2,031.0	2,425.2	394.2
Cash and cash equivalents				300.8
Total financing resources available at the end of the half year				695.0

* Excluding unamortised establishment costs and fair value adjustments

Comparative information and further details on the changes to GPT's borrowings and financing facilities as presented in the Statement of Financial Position are provided below:

• i. During the half year, GPT increased the facility limit by \$50.0 million from \$150.0 million to \$200.0 million and extended the maturity date from March 2014 to September 2014. 31 Dec 12 drawn amount: \$150.0 million.
• ii. During the half year, GPT restructured this bilateral facility from a floating rate bilateral facility to a fixed rate bilateral facility. 31 Dec 12 drawn amount: \$325.0 million.
• iii. During the half year, GPT restructured an existing \$225.0 million bilateral facility by dividing it into a \$100.0 million facility maturing in September 2014 and a \$125.0 million facility maturing in May 2014 and repriced the margin and line fees on the newly established facilities. 31 Dec 12 drawn amount: \$225.0 million.
• iv. During the half year, GPT repaid and cancelled \$50.0 million of this bilateral facility. 31 Dec 12 drawn amount: \$160.0 million.
• v. 31 Dec 12 drawn amount: \$140.0 million.
• vi. During the half year, GPT repriced the margin and line fee on this bilateral facility. 31 Dec 12 drawn amount: \$26.0 million.
• vii. During the half year, GPT repriced the margin and line fee on this bilateral facility. 31 Dec 12 drawn amount: \$68.0 million.
• viii. During the half year, GPT extended the maturity date from 1 January 2014 to 1 July 2014 and repriced the margin and line fee. 31 Dec 12 drawn amount: \$150.0 million.
• ix. 31 Dec 12 drawn amount: \$76.0 million.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

7. Borrowings (continued)

(b) Medium Term Notes

During the half year, GPT issued and settled the following Medium Term Notes (MTNs) by way of new issue and/or tap of existing MTNs:

• i. \$50.0 million floating rate MTNs maturing in February 2014,
• ii. \$30.0 million floating rate MTNs maturing in April 2014; and
• iii. \$HKD 800.0m fixed rate MTN's maturing in February 2028.
• iv. 31 Dec 12 drawn amount: \$211.0 million.
• v. 31 Dec 12 drawn amount: \$250.0 million.
• vi. 31 Dec 12 drawn amount: \$50.0 million.
• vii. 31 Dec 12 drawn amount: \$30.0 million.

(c) US Private Placement

During the half year, GPT completed and settled the following US Private Placement (USPP):

• i. \$US 150.0 million fixed rate notes (3.6%) maturing in June 2025; and
• ii. \$US 100.0 million fixed rate notes (3.8%) maturing in June 2028.

(d) CPI Indexed Bonds

GPT issued a CPI coupon indexed bond in December 1999 with a current coupon of 8.83% per annum (Dec 12: 8.76%) payable quarterly in arrears and indexed by the maximum CPI since September 1999. At 30 June 2013, the principal value is AUD \$85.0 million (Dec 12: \$85.0 million). The CPI coupon indexed bonds mature on 10 December 2029. In December 2010, GPT entered into an interest rate derivative to swap from paying fixed rate plus CPI to paying fixed 5%. The CPI bonds still remain outstanding with the effect of the derivative being the removal of GPT's exposure to CPI growth and lowering of the fixed interest rate.

(e) Forward start financing facilities

The table below provides information on GPT's forward start facilities. No changes were made to forward starting facilities during the half year period.

		Consolidated entity
		Start date	Maturity date	Facility limit \$M
Unsecured
Bank facilities
Bank bilateral	(i)	11-Dec-13	11-Dec-14	150.0
Bank bilateral		31-Jan-14	31-Jan-18	100.0
Bank bilateral		31-Jul-14	31-Jul-18	100.0
Bank bilateral		22-Aug-13	11-Nov-17	150.0
Bank bilateral		22-Aug-13	11-Nov-17	150.0
Total forward start Bank facilities				650.0

i. This facility can commence earlier at GPT's option.

(f) Gearing Ratios

(i) Headline Gearing

At 30 June 2013, the percentage of debt to total tangible assets is 22.6% (Dec 12: 23.1%) and the percentage on a net debt (net of cash) basis is 19.9% (Dec 12: 21.7%).

(g) Debt Covenants

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

• a 50% maximum threshold limit on the percentage of GPT debt to total tangible assets.
• a minimum interest cover ratio of 2 times, being EBIT (Realised Operating Income before taxes and finance costs) divided by finance costs.

A breach of these covenants for individual facilities may trigger consequences ranging from rectifying and/or repricing to repayment of outstanding amounts. The Group performed a review of debt covenants as at 30 June 2013 and no breaches were identified.

The weighted average interest rate of borrowings as at 30 June 2013 is 5.2% (Dec 12: 5.1%).

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

8. Contributed equity

				GPT	Other entities stapled to GPT	Total
		Note	Number	\$M	\$M	\$M
(i) Ordinary stapled securities
1 Jan 2012	Opening securities on issue		1,813,767,108	7,789.6	323.0	8,112.6
Jul-Dec 2012	On-market buy-back	(a)	(46,982,033)	(146.7)	(1.2)	(147.9)
31 Dec 2012	Closing securities on issue		1,766,785,075	7,642.9	321.8	7,964.7
1 Jan 2013	Opening securities on issue		1,766,785,075	7,642.9	321.8	7,964.7
18 Feb 2013	Securities issued	(b)	1,946,654	4.2	-	4.2
May-Jun 2013	On-market buy-back	(a)	(25,202,180)	(93.2)	(0.7)	(93.9)
30 Jun 2013	Closing securities on issue		1,743,529,549	7,553.9	321.1	7,875.0
(ii) Exchangeable securities
1 Jan 2012	Opening securities on issue		2,500	240.6	-	240.6
31 Dec 2012	Closing securities on issue		2,500	240.6	-	240.6
1 Jan 2013	Opening securities on issue		2,500	240.6	-	240.6
30 Jun 2013	Closing securities on issue	(c)	2,500	240.6	-	240.6
Total Contributed Equity				7,794.5	321.1	8,115.6

(a) On-market buy-back

On 10 May 2013, GPT announced the extension of the on-market buy-back for an additional 12 months until May 2014. During the six month period ended 30 June 2013, GPT has acquired 25.2 million GPT stapled securities for a total consideration of \$93.9 million.

(b) Securities issued

On 18 February 2013, GPT issued 1,946,654 securities to GPT employees under the 2010 Performance Rights Long Term Incentive Plan.

(c) Exchangeable Securities

On 27 November 2008, 2,500 Exchangeable Securities were issued to an affiliate of GIC Real Estate Pty Limited (GIC RE) at \$100,000 per exchangeable security (ES). The ES are 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 offer discretionary distributions of 10% p.a and carry voting rights in GPT.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

9. Commitments

(a) Capital expenditure commitments

At 30 June 2013, GPT has commitments principally relating to the purchase and development of investment properties which have been approved but not recognised as liabilities in the Statement of Financial Position as set out below:

	Consolidated entity
	30 Jun 13 \$M	31 Dec12 \$M
Due within one year	70.1	92.9
Due between one and five years	12.6	23.4
Over five years	-	-
Total capital expenditure commitments	82.7	116.3
(b) Operating lease commitments
At 30 June 2013, future minimum rentals payable under non-cancellable operating leases are as follows:
Due within one year	2.1	2.2
Due between one and five years	8.1	9.1
Over five years	4.6	6.7
Total operating lease commitments	14.8	18.0

GPT has entered into commercial leases on office equipment and office premises.

(c) Commitments relating to associates and joint venture investments

GPT's share of commitments relating to associates and joint venture investments has been included in note 6(b).

10. Contingent assets and liabilities

Highpoint Shopping Centre

Highpoint Property Group has the right to put its 33.33% interest, or a part thereof (but not less than 8.33%), in Highpoint Shopping Centre and the adjacent Maribyrnong Homemaker City Centre to the GPT Wholesale Shopping Centre Fund (GWSCF). GWSCF already has a 50% interest in the property. The option, which was put in place at the time of GPT's acquisition of an interest in the Centre in 2006, passed to GWSCF with the creation of the fund in March 2007. The option is exercisable during a 30 day window each year commencing on 1 July, although notice of the intent to put is required to be given by the Highpoint Property Group by 31 March each year. The interest would be sold to GWSCF and the sale price would be determined by an independent market valuation process. If GWSCF does not acquire the interest and another party is not nominated to acquire it, the GPT Group would be required to do so. The board of the responsible entity of GWSCF would determine whether GWSCF acquires a further interest in Highpoint Shopping Centre and the adjacent Maribyrnong Homemaker City Centre under the put option.

The board of the responsible entity of GWSCF is independent from the board of the GPT Group. This put option expires in 2016. No notice of intent to exercise the put option was received by the required date for the current financial year's exercise period.

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

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

11. Notes to the Statement of Cash Flow

(a) Reconciliation of net profit after income tax expense to net cash inflows from operating activities

	30 Jun 13	30 Jun 12
	\$M	\$M
Net profit for the half year	257.0	275.5
Fair value adjustments to investment properties	(10.0)	(107.2)
Share of after tax profit of equity accounted investments (net of distributions)	(22.8)	(8.6)
Fair value adjustments to derivatives	(25.7)	55.2
Net foreign exchange loss	44.5	(0.1)
Fair value adjustments to borrowings	(27.1)	-
Fair value adjustments of unlisted equity investments	(0.5)	-
Net loss on disposal of assets	2.1	2.5
Depreciation and amortisation	3.6	3.3
Non-cash employee benefits - share based payments	1.5	3.7
Non-cash revenue adjustments	7.1	6.8
Non-cash expense adjustments	0.5	0.1
Interest capitalised	(0.6)	(7.3)
Impairment of trade receivables	0.3	0.3
Change in operating assets and liabilities:
Increase in operating assets	(5.2)	(17.1)
Decrease in operating liabilities	(34.5)	(13.6)
Net cash inflows from operating activities	190.2	193.5
(b) Reconciliation of cash
Cash at bank and on hand	300.8	132.1
Total cash and cash equivalents at the end of the half year	300.8	132.1

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

12. Earnings per stapled security

		Consolidated entity
		30 Jun 13	30 Jun 12
	Note	Cents	Cents
(a) Attributable to ordinary securityholders of the Trust
Basic and diluted earnings per security - profit from continuing operations		12.7	14.8
Basic and diluted earnings per security - profit from discontinued operations		0.4	0.5
Total basic and diluted earnings per security attributable to ordinary securityholders of the Trust		13.1	15.3
(b) Attributable to ordinary stapled securityholders of The GPT Group
Basic earnings per security - profit from continuing operations		13.5	14.2
Basic earnings per security - profit from discontinued operations		0.3	0.5
Total basic earnings per security attributable to ordinary stapled securityholders of The GPT Group		13.8	14.7
(c) Attributable to ordinary stapled securityholders of The GPT Group
Diluted earnings per security - profit from continuing operations		13.5	14.1
Diluted earnings per security - profit from discontinued operations		0.3	0.5
Total diluted earnings per security attributable to ordinary stapled securityholders of The GPT Group		13.8	14.6
The earnings and securities used in the calculations of basic and diluted earnings per ordinary stapled security are as follows:
(d) Reconciliation of earnings used in calculating earnings per ordinary stapled security		30 Jun 13	30 Jun 12
		\$M	\$M
Net profit from continuing operations attributable to the securityholders of the Trust		236.5	278.4
Net profit from discontinued operations attributable to the securityholders of the Trust		6.9 243.4	9.0 287.4
Less: distribution to the holders of Exchangeable Securities *		(12.4)	(12.4)
Basic and diluted earnings of the Trust		231.0	275.0
Add: Net profit / (loss) from continuing operations attributable to the securityholders of other stapled entities		15.2	(11.9)
Add: Net (loss) from discontinued operations attributable to the securityholders of other stapled entities		(1.6)	-
Basic and diluted earnings of the Company		13.6	(11.9)
Basic and diluted earnings of The GPT Group		244.6	263.1
		No. of securities	No. of securities
		millions	millions
(e) Weighted average number of ordinary stapled securities		30 Jun 13	30 Jun 12
Weighted average number of ordinary stapled securities used as the denominator in calculating:
Basic earnings per ordinary stapled security - Trust and The Group		1,766.4	1,794.6
Adjustments for calculation of diluted earnings per security:
Performance rights (weighted average basis)	(f)	1.4	1.4
Weighted average number of ordinary stapled securities and potential ordinary stapled securities used as the
denominator in calcuating diluted earnings per ordinary stapled security		1,767.8	1,796.0

* These securities are not considered dilutive as the distribution per exchangeable security is higher than the basic EPS per stapled security. Refer to note 8(c) for further details on the Exchangeable Securities.

(f) Performance Rights

4,021,529 Performance Rights (Jun 12: 4,101,033) were granted to certain Senior Executives under the Stapled Security Rights Plan during 2013. Cumulatively, 11,696,162 Performance Rights have been issued up until 30 June 2013. However, only 1,392,134 Performance Rights are considered dilutive. As such, only 1,392,134 Performance Rights have been included in the determination of diluted earnings per security. No Performance Rights have been included in the determination of basic earnings per security.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

13. Fair value measurement of financial instruments

The Group measures and recognises the following financial assets and liabilities at fair value on a recurring basis:

• Financial assets and liabilities at fair value through profit or loss (P&L)
• Derivative financial instruments

(a) Fair value hierarchy

(i) Recognised fair value measurements

GPT has adopted the classification of fair value measurements into the following hierarchy as required by AASB 13 Fair Value Measurement and AASB 7 Financial Instruments: Disclosures:

• (1) quoted prices (unadjusted) in active markets for identical assets or liabilities (Level 1);
• (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 2); and
• (3) inputs for the asset or liability that are not based on observable market data (unobservable inputs) (Level 3).

The following table presents the consolidated entity's assets and liabilities measured and recognised at fair value as at 30 June 2013 and 31 December 2012.

Consolidated entity

		30 June 2013				31 December 2012
	Level 1	Level 2	Level 3	Total	Level 1	Level 2	Level 3	Total
	\$M	\$M	\$M	\$M	\$M	\$M	\$M	\$M
Recurring fair value adjustments
Financial assets
Unlisted equity securities	-	-	4.4	4.4	-	-	3.9	3.9
Derivative assets
Interest Rate Swaps	-	119.7	-	119.7	-	137.9	-	137.9
Cross-currency interest rate swaps	-	14.4	-	14.4	-	-	-	-
Interest Rate Options	-	1.6	-	1.6	-	2.9	-	2.9
Total financial assets	-	135.7	4.4	140.1	-	140.8	3.9	144.7
Financial liabilities
Derivative liabilities
Interest Rate Swaps	-	(41.6)	-	(41.6)	-	(50.1)	-	(50.1)
Interest Rate Options	-	(8.7)	(27.3)	(36.0)	-	(2.9)	(87.2)	(90.1)
Borrowings at fair value(1)	-	(359.4)	-	(359.4)	-	-	-	-
Total financial liabilities	-	(409.7)	(27.3)	(437.0)	-	(53.0)	(87.2)	(140.2)

(1) Excluding unamortised establishment costs

There were no transfers between levels 1 and 2 for recurring fair value adjustments during the year. For transfers in and out of level 3 measurements see (c) below.

(ii) Disclosed fair values

The held for trading unlisted equity securities are not quoted on an active market (level 3) and disclosed in the statement of financial position as other assets.

The fair value of non-current borrowings disclosed in note 7 is estimated by discounting the future contractual cash flows at the current market interest rates that are available to the group for similar financial instruments. The fair value of current borrowings approximates the carrying amount, as the impact of discounting is not significant (level 2).

The fair value of the derivatives (level 2 and level 3) is disclosed in the statement of financial position.

The carrying amounts of trade receivables and payables are assumed to approximate their fair values due to their short-term nature.

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

13. Fair value measurement of financial instruments (continued)

(b) Valuation techniques used to derive level 2 and level 3 fair values

Recurring fair value measurements

GPT holds no Level 1 derivatives. Level 2 derivatives held by GPT at 30 June 2013 include Float to Float, Fixed to Float, Vanilla derivatives, Crosscurrency interest rate swaps and Vanilla Callables. Level 3 derivatives held by GPT at 30 June 2013 include CPI derivatives only.

The fair value of derivatives is determined internally using a generally accepted pricing model based on a discounted cash flow analysis using quoted market inputs (interest rates, basis, CPI, volatility) adjusted for specific features of the instruments and applied debit or credit value adjustments based on GPT or the derivative counterparties current credit worthiness.

Credit value adjustments: these are applied to mark-to-market assets based on that counterparty's credit risk using the observable credit default swaps curve as a benchmark for credit risk.

Debit value adjustments: these are applied to mark-to-market liabilities based on GPT's credit risk using GPT's credit default swaps curve as a benchmark for credit risk.

The fair value of held for trading unlisted securities is determined based on the recent arm's length transaction in a non-active market.

(c) Fair value measurements using significant unobservable inputs (level 3)

The following table presents the changes in Level 3 instruments for the periods 30 June 2013 and 31 December 2012 for recurring fair value measurements:

Consolidated entity

	Unlisted
	equity securities	Derivative	Derivative liabilities	Total
		assets
	\$M	\$M	\$M	\$M
Opening balance 1 January 2012	-	0.3	(82.5)	(82.2)
Fair value movements in other comprehensive income
- Still held	-	-	(14.0)	(14.0)
- No longer held	-	-	(5.5)	(5.5)
Transfers out of Level 3	-	(0.3)	-	(0.3)
Transfers into Level 3	3.9	-	-	3.9
Terminations	-	-	14.8	14.8
Closing balance 31 December 2012	3.9	-	(87.2)	(83.3)
Opening balance 1 January 2013	3.9	-	(87.2)	(83.3)
Fair value movements in other comprehensive income
- Still held	0.5	-	7.1	7.6
- No longer held	-	-	(2.0)	(2.0)
Terminations	-	-	45.2	45.2
Transfers out of Level 3	-	-	9.6	9.6
Closing Balance 30 June 2013	4.4	-	(27.3)	(22.9)

Sensitivity on changes in fair value of Level 3 financial instruments

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

Consolidated Entity

Description	Change in unobservable input	Jun-13	Dec-12
Fair value of Level 3 Unlisted equity instruments		4.4	3.9
	10% increase in price per security gain(loss)	0.4	0.4
	10% decrease in price per security gain/(loss)	(0.4)	(0.4)
Fair value of Level 3 Derivatives		(27.3)	(87.2)
	1% increase in interest rates gain/(loss)	10.1	48.2
	1% decrease in interest rates gain/(loss)	(10.5)	(46.1)

NOTES TO THE FINANCIAL STATEMENTS

for the half year ended 30 June 2013

14. Net tangible asset backing

		Consolidated entity
	30 Jun 13	31 Dec 12
	\$	\$
Net tangible asset backing per stapled security	3.76	3.73

Net tangible asset backing per security is calculated by dividing the sum of net assets less intangible assets by the total number of potential stapled securities, assuming the conversion of the exchangeable securities at an exchange price of \$3.883.

15. Events subsequent to reporting date

The following events have occurred subsequent to 30 June 2013:

• On 9 August 2013, a distribution of 5.0 cents per stapled security was declared for the quarter ended 30 June 2013 which is expected to be paid on 13 September 2013 (refer to note 3(a)(ii)).
• Post 30 June 2013 and prior to 9 August 2013, the Group has bought back 0.7 million ordinary stapled securities for a total consideration of \$2.5 million.
• On 31 July 2013, the GPT Group sold its Brisbane Homemaker Centre at Fortitude Valley for \$103.2 million. The sale supports GPT's strategy of owning and managing high quality shopping centres, office assets and logistics & business parks.

Other than the above, the Directors are not aware of any matter or circumstance occurring since 30 June 2013 that has significantly or may significantly affect the operations of the Group, the results of those operations or the state of affairs of the Group in subsequent financial years.

Independent auditor's review report to the members of General Property Trust

Report on the Half-Year Financial Report

We have reviewed the accompanying half-year financial report of General Property Trust (the Trust), which comprises the consolidated statement of financial position as at 30 June 2013, the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the half-year ended on that date, selected explanatory notes and the directors' declaration for the Trust and its controlled entities (the consolidated entity). The consolidated entity comprises both the Trust and the entities it controlled during that half-year, including GPT Management Holdings Limited and its controlled entities.

Directors' responsibility for the half-year financial report

The directors of the GPT RE Limited (the responsible entity) are responsible for the preparation of the half-year financial report that gives a true and fair view in accordance with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the halfyear financial report that is free from material misstatement whether due to fraud or error.

Auditor's responsibility

Our responsibility is to express a conclusion on the half-year financial report based on our review. We conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410 Review of a Financial Report Performed by the Independent Auditor of the Entity, in order to state whether, on the basis of the procedures described, we have become aware of any matter that makes us believe that the financial report is not in accordance with the Corporations Act 2001 including: giving a true and fair view of the consolidated entity's financial position as at 30 June 2013 and its performance for the half-year ended on that date; and complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As the auditor of General Property Trust, ASRE 2410 requires that we comply with the ethical requirements relevant to the audit of the annual financial report.

A review of a half-year financial report consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with Australian Auditing Standards and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

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

PricewaterhouseCoopers, ABN 52 780 433 757 Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: +61 2 8266 0000, F: +61 2 8266 9999, www.pwc.com.au

Liability limited by a scheme approved under Professional Standards Legislation.

Independence

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

Conclusion

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

• (a) giving a true and fair view of the consolidated entity's financial position as at 30 June 2013 and of its performance for the half-year ended on that date; and
• (b) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001.

Matters relating to the electronic presentation of the reviewed financial report

This review report relates to the financial report of the Trust for the half-year ended 30 June 2013 included on the GPT Group's web site. The responsible entity's directors are responsible for the integrity of the GPT Group's web site. We have not been engaged to report on the integrity of this web site. The review report refers only to the statements named above. It does not provide an opinion on any other information which may have been hyperlinked to/from these statements. If users of this report are concerned with the inherent risks arising from electronic data communications they are advised to refer to the hard copy of the reviewed financial report to confirm the information included in the reviewed financial report presented on this web site.

PricewaterhouseCoopers

Matthew Lunn Sydney Partner 9 August 2013