asx announcement financial report of phl and pt · pdf filefinancial report of phl and pt...

1 Propertylink (Holdings) Limited (ACN 092 684 798), Propertylink Investment Management Limited (ACN 136 865 417) (AFSL 338189). As

responsible entity of Propertylink Trust (ARSN 613 032 750) and Propertylink Australian Industrial Partnership (ARSN 613 032 812) Level 29, 20 Bond Street, Sydney NSW 2000 T: +612 9186 4700 www.propertylink.com.au

ASX Announcement 29 September 2016

Financial Report of PHL and PT

Propertylink Group (ASX:PLG) today lodges the consolidated Financial Report for Propertylink (Holdings) Limited (PHL) and Propertylink Trust (PT) for the year ended 30 June 2016. PHL and PT were unlisted stapled securities for the year ended 30 June 2016. PLG satisfied listing conditions of the ASX on 15 August 2016, immediately after Propertylink Australian Industrial Partnership (PAIP) was stapled to PHL and PT to form the listed Propertylink Group on that day. The Financial Report of PHL and PT for the financial year ending 30 June 2016 does not include the financial results of PAIP as it was not a member of the unlisted PHL and PT group during the year ended 30 June 2016. Investors should not rely upon the Financial Report of PHL and PT as being representative of the listed PLG. Further Enquiries Stuart Dawes Ben Leeson Propertylink Group CEO Cannings Corporate Communications +61 2 9186 4700 +61 2 8284 9915 [email protected] [email protected]

About Propertylink

Propertylink is an AREIT, listed on the Australian Stock Exchange under the code “PLG”. Propertylink is an internally managed real estate group that owns and manages a diversified portfolio of logistics, business park and office properties and is a leading investment and asset management business with over A$1.7 billion of assets under management. Propertylink’s integrated, in-house approach to active asset management is aimed at maximising the performance and value of assets under management for our global investors from North America, Europe, the Middle East, Asia and Australia.

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mailto:[email protected]

mailto:[email protected]

Financial Report For The Year Ended 30 June 2016F

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Contents

Page

Directors’ Report 2

Auditor’s Independence Declaration 8

Consolidated Statement of Profit or Loss and Other Comprehensive Income 9

Consolidated Statement of Financial Position 10

Consolidated Statement of Changes in Equity 11

Consolidated Statement of Cash Flows 12

Notes to the Financial Statements 13

Directors’ Declaration 37

Independent Auditor’s Report 38

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Directors’ Report

The Directors of Propertylink (Holdings) Limited (ABN 59 092 684 798) and the Directors of Propertylink Investment Management Limited (PIML), the Responsible Entity (RE) of Propertylink Trust (ARSN 613 032 750), present their report, together with the consolidated financial statements of the Propertylink Group, for the year ended 30 June 2016. Propertylink (Holdings) Limited and its controlled entities (referred to in the report as “Propertylink” or “Company”), and Propertylink Trust and its controlled entities (referred to as “Propertylink Trust”), together comprise the Propertylink Group (referred to as “Propertylink Group” or “Group”).

The units in the Propertylink Trust are stapled to the shares in the Company. A stapled security comprises one Company share and one Propertylink Trust unit, and the stapled securities cannot be traded or dealt with separately.

DirectorsThe names of the Directors of Propertylink in office at any time during, or since the end of, the year are:

Peter Lancken (Chairman and Non-executive Director)

Stuart Dawes (Chief Executive Officer and Executive Director) (appointed on 5 July 2016)

Stephen Day (Vice Chairman and Executive Director)

Peter McDonald (Executive Director)

Chris Ryan (Non-executive Director)

Derek Nix (Non-executive Director)

David Epper (Non-executive Director)

Ian Hutchinson (Non-executive Director)

Anthony Ryan (Non-executive Director) (appointed on 5 July 2016)

Directors have been in office since the start of the financial year to the date of this report unless otherwise stated.

Operating results for the yearThe consolidated profit of the consolidated group for the financial year after providing for income tax amounted to $8,330,307 (2015: $2,416,398)

Principal activities and review of operationsThe principal business conducted by the Group during the year ending 30 June 2016 was the management of external investment funds and their assets. The external funds mainly comprise unlisted and unregistered property trusts, investment mandates and joint ventures managed by the investment management business. As at 30 June 2016, Propertylink managed approximately $1.558 billion of assets under management (AUM) across ten separate industrial, logistics and commercial office external funds. The Group has continued to invest in the majority of these assets as an investment partner of the institutional investors.

No significant change in the nature of the activities of the Group occurred during the year. However on 15 August 2016 the Group became listed on the Australian Stock Exchange (ASX) following the successful completion of an Initial Public Offering (IPO). As a result of the listing process, units of Propertylink Australian Industrial Partnership (ARSN 613 032 812) (PAIP) were stapled to the shares of Propertylink and units of the Propertylink Trust. From 15 August 2016 a stapled security comprises one Propertylink share, one Propertylink Trust unit, and one PAIP unit.

Further details of the IPO can be found in the Prospectus and Product Disclosure Statement (PDS), and the Supplementary Prospectus and Product Disclosure Statement (Supplementary PDS), which may be found on the Propertylink web site www.propertylink.com.au.

Operational strategyDuring the year Propertylink continued to execute upon its strategy to grow the Group’s platform of investment funds for which it acts as investment manager, and also co-invests alongside top-tier global investors. At 30 June, with the exception of the investment in 73 Miller Street, Propertylink held all property investment exposure through managed funds. This style of investment has allowed the Group to generate a strong diversified property income yield, plus stable management fees from the management of the underlying assets. As detailed in the Prospectus and Product Disclosure Statement (PDS), and in “Events after the reporting date”, following the IPO the stapled Group now includes the assets of the PAIP portfolio.

Propertylink | Financial Report 20162

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Directors’ Report (continued)

A summary of the Group’s funds and operations for the year ended 30 June 2016 is detailed below.

External Fund AUM ($m)

Propertylink co-investment stake (30 June 2016) ($m)

Industrial and Logistics PAIP 685.0 21.7

PAIP II 166.81 3.3

SEDCO Mandate 29.0 0.9

Confidential Mandate 42.8 2.0

PALT 69.0 2.8

M&G Mandate 85.4 Nil

Gantry Investment Trust 14.3 Nil

Commercial Office POP 130.0 6.5

POP II 245.0 6.2

POP III 91.1 2.5

Total 1,558.4 45.9

1 Includes assets under contact at 30 June 2016, acquisition of which settled on 12 July 2016

Significant operational eventsSignificant events during the year included the establishment of PAIP II in September 2015 as the Group’s successor vehicle to PAIP, and the Group’s first acquisition with Sedco Capital (PCII) also in September 2015. At reporting date, PAIP II had acquired or was under contract to acquire $167m of industrial and logistics assets. Further the Group successfully established its third commercial office fund with POP III in March 2016 with the acquisition of a 4 asset portfolio in North Ryde Sydney for $91m.

During the year to 30 June, Propertylink completed a restructure of management. Under agreements in place as a result of the merging of Propertylink Australasia Pty Limited and the Echo Capital Holdings Pty Limited group into the Propertylink Group in 2011, entities associated with senior management had rights related to profit share and the investment management business. Under a restructure negotiated during the latter half of calendar 2015, entities associated with management agreed to exchange those rights for equity in the Group and earn out payments related to future performance fees. This has been accounted as an equity transaction with owners.

Capital management strategyDuring the year the Group did not raise any equity capital in order to fund its operations. However, in December 2015 the company’s existing senior debt facility was augmented with an additional unsecured loan facility of $5m in order that the Group could continue to invest along with its institutional investment partners to grow AUM. In the latter part of the year the Group worked intensively on the IPO strategy, as the Group would benefit from the capital base that a successful IPO would provide.

Review of financial accountsThe Group profit after income tax for the year ended 30 June 2016 (F2016) was $8,330,307, compared with a profit of $2,416,398 for the year ended 30 June 2015 (F2015). Key financial highlights for the year include:

• Investment management fees of $5.377m were 227% higher than the fees of $2.372m for F2015;

• Property management fees of $2.568m were 242% higher than the fees of $1.062m for F2015;

• The Group derived $2.065m in acquisition fees in F2016 against $3.415m in F2015, with the reduction partly due to a major PAIP II portfolio acquisition scheduled to settle in June 2016 being delayed until July 2016;

• The share of net profit of associates and joint venture entities for the F2016 was $9.352m (inclusive of increases in fair value of the investments), compared with $2.014m in F2015;

• Employment and management costs incurred were $7.239m, 156% higher than the costs of $4.642m incurred in F2015;

• Equity in co-investments at the end of F2016 was valued at $39.4m, compared with $24.3m at the end of F2015, an increase of $15.1m; and

• Borrowings at the end of F2016 were $22.8m, compared with $11.0m at the end of F2015, an increase of $11.8m.


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Likely developments and expected results of operationsLikely developments in the operations of the Propertylink Group and the expected results of those operations in future financial years have not been included in this report, other than commentary around the successful IPO. A pro forma forecast for the listed entity for the year ended 30 June 2017 was included in the PDS and securityholders can refer to that document for guidance. In the opinion of the Directors, disclosure of any further information regarding business strategies, future developments or results would be unreasonably prejudicial to the Group.

Environmental regulationThe Directors are satisfied that Propertylink has adequate systems in place in relation to the Group’s environmental responsibility and compliance with all relevant requirements and regulations. Further the Directors are not aware of any material breaches to these requirements and, to the best of their knowledge, all activities have been undertaken in compliance with these environmental requirements.

DistributionsDistributions paid or declared since the start of the financial year are as follows:

• In November 2015, Propertylink paid a fully franked divided of 2.0 cents per share totalling $557,256, such dividend having been provided in the 2015 financial accounts;

• On 15 August 2016 Propertylink paid a fully franked cash special dividend of 22 cents per share totalling $9,662,454, to shareholders on the register at the record date of 12 August 2016 as part of the IPO restructure — no provision was made for this dividend in the 2016 financial accounts;

• On 15 August 2016 Propertylink credited a fully franked dividend of 0.0001 cents per share totalling $4,392 to shareholders on the register at the record date of 12 August 2016 as part of the IPO restructure, the proceeds of which were used to fund acquisition of units in PAIP — no provision was made for this dividend in the 2016 financial accounts; and

• On 15 August 2016 Propertylink Trust paid a cash special distribution of 48 cents per unit totalling $21,018,719 to unitholders on the register at the record date of 12 August 2016 as part of the IPO restructure — no provision was made for this distribution in the 2016 financial accounts.

OptionsNo options over issued shares or interests in the company or a controlled entity were granted during or since the end of the financial year and there were no options outstanding at the date of this report.

Indemnification of Directors and officersThe insurance premium for a policy of insurance indemnifying Directors, officers and, in specific circumstances, some other persons, has been paid by Propertylink (Holdings) Limited. The policy covers all entities in the Propertylink (Holdings) Limited Group.

Under the terms of the policy, the level of cover or the amount of premium are not permitted to be disclosed.

Proceedings on behalf of the Propertylink GroupNo person has applied for leave of the Court to bring proceedings on behalf of the Propertylink Group or intervene in any proceedings to which the Company is a party for the purpose of taking responsibility on behalf of the Propertylink Group for all or any part of those proceedings in accordance with section 237 of the Corporations Act 2001.

No person has made such an application and no proceedings have been brought or intervened in on behalf of the Propertylink Group under this section.

Events after the reporting dateSecurityholders are advised of the following matters which occurred after balance date:

• In May 2016 Propertylink and its investment partners in PAIP agreed to work towards an IPO involving the stapling of PAIP units to Propertylink securities. Propertylink and its PAIP partners continued to pursue this outcome post balance date, and on 15 August 2016 the IPO was completed. For further details please refer to the Prospectus and Product Disclosure Statement (PDS), and to the Supplementary Prospectus and Product Disclosure Statement (Supplementary PDS), which may be found on the Propertylink web site.

• As a result of the completion of the IPO, all Propertylink external debt (refer to note 18 in the accounts) was fully repaid. The debt repaid included secured bank loans and unsecured other loans. Also at IPO completion the listed entity drew down on a new senior debt facility with Westpac Banking Corporation (for further details please refer to the PDS).

• As disclosed in the accounts, certain parties had a right to have partly paid securities issued to them from options exercised in 2014. It was agreed with these parties during the IPO process that the partly paid securities would not be issued, monies already advanced as a part payment for the securities would be repaid, and a capital payment to compensate the holders for the cancellation of the rights would be made on IPO completion.


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• As a result of the stapling of PAIP to Propertylink on 15 August 2016, Propertylink became entitled to an investment management performance fee of $25.2m payable by the PAIP owners. This fee funded a special dividend of 22c per share to Propertylink security holders at the record date of 12 August 2016, and also funded staff bonus payments and other costs incurred as a result of the IPO.

• In order to avoid a cross shareholding on completion of the stapling of Propertylink Group with PAIP, Propertylink Trust sold its investment interest in PAIP for approximately $21.2m immediately prior to the stapling on 15 August 2016. Proceeds from the sale of this investment funded a special distribution of 48c per unit to Propertylink Trust securityholders at the record date of 12 August 2016.

• As disclosed in the Supplementary Prospectus and PDS, in July 2016 Propertylink formed a new fund, Propertylink Enhanced Partnership (PEP). Propertylink committed approximately $17.7m in equity to PEP, with the balance of equity committed by a Goldman Sachs Investor entity. During August and September 2016 PEP completed the acquisition of approximately $142m of property. Whilst created to acquire this portfolio, PEP remains open to future acquisitions and expansion of the vehicle.

Information on Directors and company secretaryPeter Lancken, BE (Civil), FIEA

Independent Chairman, member of Remuneration and Nomination Committee

Peter has a career spanning over 25 years in a range of executive and director roles in equipment hire, industrial, and real estate companies. Peter was formerly the Managing Director and Non-Executive Chairman of Kennards Hire Pty Limited. Peter managed an era of growth spanning two decades with Kennards, with annual sales now exceeding $300 million from a network of over 170 locations, and remains on the board as a Non-Executive Director. Peter is also a Non-Executive Director of Acrow Formwork and Scaffolding Pty Ltd. Peter was the Deputy Chairman and a Non-Executive Director of CMA Corporation Limited, a public company listed on ASX. Peter holds a Bachelor of Engineering (Civil) from the University of New South Wales, is a Fellow of the Institute of Engineers Australia and is a member of the Australian Institute of Company Directors.

Stuart Dawes, BComm, MAppFin

Chief Executive Officer and Executive Director

Stuart has over 17 years’ experience in the property industry in a variety of executive roles. Prior to being appointed Chief Executive Officer of Propertylink, Stuart was Propertylink’s Chief Operating Officer since 2014, in addition to his role as Head of Investment Management which he held since 2009. As Chief Operating Officer and Head of Investment Management, Stuart was responsible for the oversight of the operations of the Group in addition to leading PHL’s investment management business. Under Stuart’s leadership, the investment management business has grown from $36 million to over $1.55 billion AUM. Prior to joining Propertylink, Stuart worked in the United Kingdom for Lend Lease Investment Management, where he primarily focused on the development of new fund and investment opportunities. Before moving to the United Kingdom in 2003, Stuart worked with Lend Lease’s. Australian wholesale fund, Australian Prime Property Fund. Stuart also has experience with Barclays Capital in its European structured finance business, where he concentrated on debt and equity transactions within Europe. Stuart holds a Bachelor of Commerce from Western Sydney University and a Master of Applied Finance from Macquarie University.

Stephen Day, BComm, FRICS

Vice Chairman and Executive Director

Stephen has a career spanning over 31 years in the property industry in a variety of executive roles in Australia and overseas. Stephen is currently Vice Chairman and Executive Director of Propertylink, a role in which he is responsible for managing mergers and acquisitions, assisting the property team on deal flow and chairing the review of property strategy and operations, in addition to assisting the CEO with corporate strategy and wholesale investor relationships. Stephen is formerly the Managing Director of PHL where he was responsible for the strategic direction and day-to-day leadership of PHL. Stephen was co-founder and Executive Chairman of Valad. Stephen guided the strategic growth of Valad to achieve in excess of $10 billion in AUM. In 2009, he founded Echo Capital which merged with Propertylink in 2011. Stephen’s previous experience includes various roles in Lend Lease from 1985 to 1995. Stephen holds a Bachelor of Economics from Macquarie University, a Fellow of the Royal Institute of Chartered Surveyors (FRICS), sits on the Australian Chapter Board of the Asia Pacific Real Estate Association (APREA) and is a Fellow of the Australian Property Institute (API).

Chris Ryan, BFA, FCA

Independent Non-executive Director, Chairman of Remuneration and Nomination Committee, member of Audit and Risk Committee

Chris is an Executive Director of Investorlink Group Limited, a Sydney-based corporate finance and advisory firm. Chris has diverse experience and expertise in mergers and acquisitions together with initial public offerings. Chris has advised on ASX listings since 1986. Chris has served as Chairman of ASX listed Bravura Solutions Limited and China Waste Corporation Limited and is currently Co-Chairman of ASX listed TTG Fintech Limited (ASX:TTG) and a Non- executive Director of eCargo Holdings Limited (ASX:ECG). Chris holds a Bachelor of Financial Administration from the University of New England and is a Fellow of the Institute of Chartered Accountants Australia and New Zealand.


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Ian Hutchinson LLB, FAICD

Independent Non-executive Director, Chairman of Audit and Risk Committee

Ian has been a professional non-executive company director for over 20 years. Before that, he was Chairman and Senior Partner of one of Australia’s largest law firms, Freehills (now Herbert Smith Freehills). Ian was the Representative of Lloyds of London Underwriters, appointed under the Australian Insurance Act, and Counsel for Lloyds Australia. He has been the Chairman or a director of companies, both listed on ASX and non-listed companies, across a broad range of industries and services, including investment banking, financial services, life and general insurance, mining and energy, property, transport, hotels, infrastructure and health. Ian is Chairman and President of the Global Sustainability Foundation in New York. He is also Vice Chairman of Wealth Resources Pty Limited, a Chinese-owned energy company in Australia. Ian holds a Bachelor of Laws from Sydney University and is a Fellow of the Australian Institute of Company Directors. Ian is actively involved in the Australian Institute of Company Directors, and gives presentations to company directors and assists in training and mentoring directors.

David Epper, OAM

Independent Non-executive Director, member of Audit and Risk Committee

David has over 40 years’ experience in the insurance underwriting business and is the former Managing Director and Owner of Accident & Health International Underwriting Pty Ltd. David owned and operated this business from 1998 to 2015 before selling the business to CGU Insurance Australia. David is a Life Governor of Autism Spectrum Australia and was also awarded the Order of Australia Medal in 2014. David is a member of the Australian and New Zealand Institute of Insurance and Finance.

Derek Nix, B App Sc (Build) Hons

Independent Non-executive Director, member of Remuneration and Nomination Committee

Derek is the Managing Director and Principal of Nix Anderson Pty Ltd, a construction project management and property advisory firm working principally in the commercial, industrial, health and retail sectors. Nix Anderson’s clients include LGS, Aventus, Health Infrastructure, Colonial First State, Stockland, Charter Hall and other industry leaders. Derek has over 35 years’ experience in the construction and property industry. Initially with Concrete Constructions Group Limited, where he was a Project Manager, he later moved to Reed Group Pty Ltd where for over 17 years, he covered roles from Commercial Manager, and Chief Estimator to Project Manager, becoming a director in 1988 before leaving and forming Nix Management in 1999. In 2014, Nix Management merged with industry leading infrastructure delivery expert Scott Anderson to become Nix Anderson Pty Ltd. Derek holds a Bachelor of Applied Science (Building) (Hons) from the University of Technology Sydney and is a member of the Property Council of Australia.

Peter McDonald

Executive Director and Head of Property

Peter has 27 years of property market experience across the industrial and office sectors within Australia. As Head of Property, Peter is ultimately responsible for the overall operations of the Portfolio and the management of the property team. Peter has a particular focus on capital transactions and has sourced or been heavily involved in all of the Group’s acquisitions to date. His previous experience includes senior roles with Jones Lang LaSalle, Lend Lease, Dexus and Valad and he has a long track record in concluding major acquisitions and leasing transactions. Peter holds an Associate Diploma in Business (Valuation).

Anthony Ryan, BComm

Non-Executive Director

Anthony is a real estate finance professional with over 20 years’ experience in Australia and Asia, spanning real estate corporate, project and structured finance. Anthony is a former Managing Director of J.P. Morgan and was Head of Real Estate Investment Banking for Asia. Anthony is also a Non-Executive Director of Grocon Group Holdings, an Australian top tier construction contractor and developer, real estate consultant to OCP Asia, an alternative asset manager based in Hong Kong and an independent member of the Propertylink Australian Industrial Partnership II (PAIP II) Investment Committee. Anthony holds a Bachelor of Commerce from the University of New South Wales.

Rebekah Hourigan

Company Secretary

Rebekah is the company Secretary. With over 10 years’ experience in company secretarial and compliance roles Rebekah leads the operational compliance and governance functions. Rebekah is a qualified lawyer admitted to practice in New South Wales. She commenced her legal career with leading national litigation firms prior to moving in-house with Swiss Reinsurance Company and most recently the Charter Hall Group in company secretary, compliance and legal counsel roles.


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Meetings of Directors

NameNumber of

eligible to attendNumber

attended

Peter Lancken 12 11

Stuart Dawes 0 0

Stephen Day 12 11

Ian Hutchinson 12 9

Chris Ryan 12 12

Derek Nix 12 10

David Epper 12 7

Peter McDonald 12 11

Anthony Ryan 0 0

Directors feesFees paid to directors for services provided in relation to their directorship during the year ended 30 June 2016 were:

Peter Lancken $101,200

Stuart Dawes Nil

Stephen Day Nil

Ian Hutchinson $82,200

Chris Ryan $111,000

Derek Nix $50,000

David Epper $50,000

Anthony Ryan Nil

Auditor’s Independence DeclarationA copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 8.

This directors’ report is signed in accordance with a resolution of the Board of Directors:

Peter Lancken Stuart Dawes

Chairman Chief Executive Officer

29 September 2016 29 September 2016


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Auditor’s Independence Declaration


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Consolidated Statement of Profit or Loss and Other Comprehensive IncomeFor the year ended 30 June 2016

2016 2015

Note $ $

Income

Share of net profits of associates and joint ventures 12 9,352,256 2,014,147

Fee income 3 10,757,353 8,324,412

Other income 3 523,517 324,597

Rental income 505,169 137,114

Net gain on investment property at fair value 602,383 -

Total income 21,740,678 10,800,270

Expenses

Employment and management costs (7,238,782) (4,641,958)

Finance costs (1,435,507) (449,482)

Occupancy costs (795,189) (153,364)

Travel expenses (585,555) (406,343)

Legal and consultancy fees (1,524,078) (499,258)

Directors fees 5 (394,400) (292,500)

Auditors remuneration 6 (152,444) (52,083)

Property expenses (27,307) (31,760)

Depreciation and amortisation expense (200,123) (131,774)

Administration and other expenses (776,039) (1,016,408)

Total expenses (13,129,424) (7,674,930)

Profit before income tax 8,611,254 3,125,340

Tax (expense)/income 4(a) (280,947) (708,942)

Profit after income tax attributable to owners of the staples securities 8,330,307 2,416,398

Other comprehensive income - -

Total comprehensive income attributable to owners of the staples securities 8,330,307 2,416,398

Basic earnings/(loss) per stapled security (cents) 7(a) 29.84 9.24

Diluted earnings/(loss) per stapled security (cents) 7(b) 25.32 7.76

Dividends proposed per share (cents) 8 - 2.00

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


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Consolidated Statement of Financial PositionAs at 30 June 2016

2016 2015

Note $ $

ASSETS

CURRENT ASSETS

Cash and cash equivalents 9 3,958,675 2,347,705

Trade and other receivables 10 4,007,660 1,835,941

Other assets 11 162,401 109,334

TOTAL CURRENT ASSETS 8,128,736 4,292,980

NON-CURRENT ASSETS

Financial assets 13 39,413,597 24,311,215

Investment properties 16 6,470,871 5,856,547

Property, plant and equipment 15 561,920 199,426

Deferred tax assets 20 786,804 183,883

Intangible assets 17 4,565,574 4,586,553

Total non-current assets 51,798,766 35,137,624

TOTAL ASSETS 59,927,502 39,430,604

LIABILITIES

CURRENT LIABILITIES

Trade and other payables 18 10,165,514 2,168,771

Borrowings 19 22,802,226 2,578,466

Current tax liabilities 20 410,510 629,885

Provisions 21 355,781 700,103

TOTAL CURRENT LIABILITIES 33,734,031 6,077,225

NON-CURRENT LIABILITIES

Provisions 21 198,099 23,960

Borrowings 19 - 8,450,871

TOTAL NON-CURRENT LIABILITIES 198,099 8,474,831

TOTAL LIABILITIES 33,932,130 14,552,054

NET ASSETS 25,995,372 24,878,550

EQUITY

Issued capital 22 40,598,477 27,255,515

Capital reserve (20,556,446) -

Retained earnings/(Accumulated losses) 5,953,341 (2,376,965)

TOTAL EQUITY 25,995,372 24,878,550

NAV per stapled security (cents) 59.34 89.29

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


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Consolidated Statement of Changes in EquityFor the year ended 30 June 2016

Share capital Capital reserve

Retained earnings

(accumulated losses) Total

Note $ $ $ $

Balance at 1 July 2014 21,650,643 - (4,236,110) 17,414,533

Comprehensive income for the year - - 2,416,398 2,416,398

21,650,643 - (1,819,712) 19,830,931

Shares issued during the year 22 5,865,449 - - 5,865,449

Share issue costs (260,577) - - (260,577)

Dividends paid or provided for 8 - - (557,253) (557,253)

Balance at 30 June 2015 27,255,515 - (2,376,965) 24,878,550

Balance at 1 July 2015 27,255,515 - (2,376,965) 24,878,550

Comprehensive income for the year - - 8,330,307 8,330,307

27,255,515 - 5,953,341 33,208,856

Shares issued during the year 22 13,883,000 - - 13,883,000

Share issue costs (540,038) - - (540,038)

Equity restructure - (20,556,446) - (20,556,446)

Dividends paid or provided for 8 - - - -

Balance at 30 June 2016 40,598,477 (20,556,446) 5,953,341 25,995,372

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

Equity restructureUnder agreements in place as a result of the merging of Propertylink Australasia Pty Limited and the Echo Capital Holdings Pty Limited group into the Propertylink Group in 2011, entities associated with senior management had rights related to profit share and the investment management business. Under a restructure negotiated during the latter half of calendar 2015, entities associated with management agreed to exchange those rights for equity in the Group and earn out payments related to future performance fees. This has been accounted as an equity transaction with owners.


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Consolidated Statement of Cash FlowsFor the year ended 30 June 2016

2016 2015

Note $’000 $’000

CASH FLOWS FROM OPERATING ACTIVITIES

Receipts from customers 14,052,216 9,690,800

Interest received 30,033 90,372

Payments to suppliers and employees (4,237,585) (5,620,816)

Finance costs paid (1,276,019) (603,181)

Income tax (paid)/refunded (871,799) -

Net cash provided by operating activities 25(a) 7,696,846 3,557,175

CASH FLOWS FROM INVESTING ACTIVITIES

Proceeds from sale of investments 1,063,524 -

Acquisition and improvement of investment properties - (5,856,547)

Loan proceeds received from related parties 3,600,000 57,683

Payment for investment in associates and joint ventures (10,218,977) (14,171,953)

Purchase of property, plant and equipment (541,638) -

Net cash used in investing activities (6,097,091) (19,970,817)

CASH FLOWS FROM FINANCING ACTIVITIES

Proceeds from issue of shares - 5,493,196

Payments to acquire non-controlling interest (7,444,928) -

Proceeds from borrowings 10,870,012 11,163,460

Repayment of borrowings (2,856,611) (2,810,000)

Dividends paid (557,257) (335,745)

Net cash provided by financing activities 11,216 13,510,911

Net increase in cash and cash equivalents 1,610,971 (2,902,731)

Cash and cash equivalents at the beginning of financial year 2,347,704 5,250,435

Cash and cash equivalents at the end of the period 3,958,675 2,347,704

The above consolidated statement of cach flow should be read in conjuction with the accompanying notes.


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Notes to the Financial StatementsFor the year ended 30 June 2016

Note 1 Summary of Significant Accounting PoliciesThe financial report is for the entity Propertylink (Holdings) Limited as the parent entity of Propertylink (Holdings) Limited and controlled entities and Propertylink Trust and controlled entities, together the Propertylink Group. At 30 June 2016 Propertylink (Holdings) Limited was an unlisted public company limited by shares, incorporated and domiciled in Australia. The separate financial statements of the parent entity, Propertylink (Holdings) Limited, have not been presented within this financial year as permitted by the Corporations Act 2001.

The financial report was authorised for issue by directors on 29 September 2016.

The following is a summary of the material accounting policies adopted by the economic entity in the preparation of the financial report. The accounting policies applied are the same as those applied in the previous financial year unless otherwise stated.

Basis of preparationThese general purpose financial statements have been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and Interpretations of the Australian Accounting Standards Board and International Financial Reporting Standards as issued by the International Accounting Standards Board. The Group is a for-profit entity for financial reporting purposes under Australian Accounting Standards. Material accounting policies adopted in the preparation of these financial statements are presented below and have been consistently applied unless stated otherwise.

The financial statements except for cash flow information, have been prepared on an accruals basis and are based on historical costs, modified, where applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. The amounts presented in the financial statements have been rounded to the nearest dollar.

Going concernThe directors have determined that the Group’s financial report should be prepared on a going concern basis.

The following is a summary of the material accounting policies adopted by the Group in the preparation of the financial report. The accounting policies have been consistently applied unless otherwise stated.

(a) Principles of consolidationThe consolidated financial statements incorporate all of the assets, liabilities and results of the Propertylink Group and all of the subsidiaries (including any structured entities). Subsidiaries are entities the Parent controls. The Parent controls an entity when it is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. A list of the subsidiaries is provided in Note 14.

The assets, liabilities and results of all subsidiaries are fully consolidated into the financial statements of the Group from the date on which control is obtained by the Group. The consolidation of a subsidiary is discontinued from the date that control ceases. Inter-company transactions, balances and unrealised gains or losses on transactions between Group entities are fully eliminated on consolidation. Accounting policies of subsidiaries have been changed and adjustments made where necessary to ensure uniformity of the accounting policies adopted by the Group.

(b) Business combinationBusiness combinations occur where an acquirer obtains control over one or more businesses.

A business combination is accounted for by applying the acquisition method, unless it is a combination involving entities or businesses under common control. The business combination will be accounted for from the date that control is attained, whereby the fair value of the identifiable assets acquired and liabilities (including contingent liabilities) assumed is recognised (subject to certain limited exceptions).

When measuring the consideration transferred in the business combination, any asset or liability resulting from a contingent consideration arrangement is also included. Subsequent to initial recognition, contingent consideration classified as equity is not remeasured and its subsequent settlement is accounted for within equity. Contingent consideration classified as an asset or liability is remeasured in each reporting period to fair value, recognising any change to fair value in profit or loss, unless the change in value can be identified as existing at acquisition date.

All transaction costs incurred in relation to business combinations other than those associated with the issue of a financial instrument are recognised as expenses in profit or loss when incurred.

The acquisition of a business may result in the recognition of goodwill or a gain from a bargain purchase.

(c) GoodwillGoodwill is carried at cost less any accumulated impairment losses.

The amount of goodwill recognised on acquisition of each subsidiary in which the Group holds a less than 100% interest will depend on the method adopted in measuring the non-controlling interest. The Group can elect in most circumstances to measure the non-controlling interest in the acquiree either at fair value (“full goodwill method”) or at the non-controlling interest’s proportionate share of the subsidiary’s identifiable net assets (“proportionate interest method”). In such circumstances, the Group determines which method to adopt for each acquisition and this is stated in the respective notes to these financial statements disclosing the business combination.


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Notes to the Financial Statements (continued)

For the year ended 30 June 2016

Under the full goodwill method, the fair value of the non-controlling interests is determined using valuation techniques which make the maximum use of market information where available. Under this method, goodwill attributable to the non-controlling interest is recognised in the consolidated financial statements.

Goodwill on acquisitions of subsidiaries is included in intangible assets. Goodwill on acquisition of associates is included in investments in associates.

Goodwill is tested for impairment annually and is allocated to the group’s cash-generating units or groups of cash-generating units, which represents the lowest level at which goodwill is monitored but where such level is not larger than an operating segment. Gains and losses on the disposal of an entity include the carrying amount of goodwill related to the entity sold.

Changes in the ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions and do not affect the carrying amounts of goodwill.

(d) Income taxThe income tax expense (income) for the year comprises current income tax expense (income) and deferred tax expense (income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income. Current tax liabilities (assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Current and deferred income tax expense (income) is charged or credited outside the profit and loss when the tax relates to items that are recognised outside the profit and loss.

Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled and their measurement also reflects the manner in which management expects to recover or settle the carrying amount of the related asset or liability. With respect to non-depreciable items of property, plant and equipment measured at fair value and items of investment property measured at fair value, the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of the asset will be recovered entirely through sale. When an investment property that is depreciable is held by the company in a business model whose objective is to consume substantially all of the economic benefits embodied in the property through use over time (rather than through sale), the related deferred tax liability or deferred tax asset is measured on the basis that the carrying amount of such property will be recovered entirely through use.

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures, deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities, where it is intended that net settlement or simultaneous realisation and settlement of the respective asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected to be recovered or settled.

(e) Fair value of assets and liabilitiesThe Group measures some of its assets and liabilities at fair value on either a recurring or non-recurring basis, depending on the requirements of the applicable accounting standard.

Fair value is the price the Group would receive to sell an asset or would have to pay to transfer a liability in an orderly (i.e. unforced) transaction between independent, knowledgeable and willing market participants at the measurement date.

As fair value is a market-based measure, the closest equivalent observable market pricing information is used to determine fair value. Adjustments to market values may be made having regard to the characteristics of the specific asset or liability. The fair values of assets and liabilities that are not traded in an active market are determined using one or more valuation techniques. These valuation techniques maximise, to the extent possible, the use of observable market data.

To the extent possible, market information is extracted from either the principal market for the asset or liability (ie the market with the greatest volume and level of activity for the asset or liability) or, in the absence of such a market, the most advantageous market available to the entity at the end of the reporting period (ie the market that maximises the receipts from the sale of the asset or minimises the payments made to transfer the liability, after taking into account transaction costs and transport costs).

For non-financial assets, the fair value measurement also takes into account a market participant’s ability to use the asset in its highest and best use or to sell it to another market participant that would use the asset in its highest and best use.

The fair value of liabilities and the entity’s own equity instruments (excluding those related to share based payment arrangements) may be valued, where there is no observable market price in relation to the transfer of such financial instrument, by reference to observable market information where such instruments are held as assets. Where this information is not available, other valuation techniques are adopted and where significant, are detailed in the respective note to the financial statements.


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(f) Investment propertiesInvestment properties are properties held to earn rentals and/or for capital appreciation (including property under construction for such purposes). Investment properties are measured initially at its costs, including transaction costs. Subsequent to initial recognition, investment properties are measured at fair value. All of the Group’s property interests held under operating leases to earn rentals or for capital appreciation purposes are accounted for as investment properties and are re-measured using a fair value model. Gains and losses arising from changes in the fair value of investment properties are included in profit or loss in the period in which they arise.

An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal.

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

(g) Property, plant and equipmentEach class of property, plant and equipment is carried at cost or fair value as indicated less, where applicable, any accumulated depreciation and impairment losses.

Property

Freehold land and buildings are carried at their fair value (being the amount for which an asset could be exchanged between knowledgeable willing parties in an arm’s length transaction), based on periodic, but at least triennial, valuations by external independent valuers, less accumulated depreciation for buildings.

Increases in the carrying amount arising on revaluation of land and buildings are credited to a revaluation surplus in equity. Decreases that offset previous increases of the same asset are recognised against revaluation surplus directly in equity; all other decreases are recognised in profit or loss.

Any accumulated depreciation at the date of revaluation is eliminated against the gross carrying amount of the asset and the net amount is restated to the revalued amount of the asset.

Plant and equipment

Plant and equipment are measured on the cost basis and are therefore carried at cost less accumulated depreciation and any accumulated impairment losses. In the event the carrying amount of plant and equipment is greater than its estimated recoverable amount, the carrying amount is written down immediately to its estimated recoverable amount and impairment losses recognised either in profit or loss or as a revaluation decrease if the impairment losses relate to a revalued asset. A formal assessment of recoverable amount is made when impairment indicators are present (refer to Note 1(j) for details of impairment).

The cost of fixed assets constructed within the consolidated group includes the cost of materials, direct labour, borrowing costs and an appropriate proportion of fixed and variable overheads.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can be measured reliably. All other repairs and maintenance are recognised as expenses in profit or loss in the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets including buildings and capitalised lease assets, but excluding freehold land, is depreciated on a straight line basis over the asset's useful life to the consolidated group commencing from the time the asset is held ready for use. Leasehold improvements are depreciated over the shorter of either the unexpired period of the lease or the estimated useful lives of the improvements.

The depreciation rates used for each class of depreciable assets are:

Class of fixed asset Depreciation rate

Plant and equipment 10% - 20% pa

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains or losses are recognised in profit or loss when the item is derecognised. When revalued assets are sold, amounts included in the revaluation surplus relating to that asset are transferred to retained earnings.

(h) LeaseLeases of fixed assets, where substantially all the risks and benefits incidental to the ownership of the asset – but not the legal ownership – are transferred to entities in the consolidated group, are classified as finance leases.


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Finance leases are capitalised by recording an asset and a liability at the lower of the amounts equal to the fair value of the leased property or the present value of the minimum lease payments, including any guaranteed residual values. Lease payments are allocated between the reduction of the lease liability and the lease interest expense for the period.

Leased assets are depreciated on a straight-line basis over the shorter of their estimated useful lives or the lease term.

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are recognised as expenses on a straight-line basis over the lease term.

Lease incentives under operating leases are recognised as a liability and amortised on a straight-line basis over the life of the lease term.

(i) Financial instruments

Initial recognition and measurement

Financial assets and financial liabilities are recognised when the entity becomes a party to the contractual provisions of the instrument. For financial assets, this is equivalent to the date that the company commits itself to either purchase or sell the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified ‘at fair value through profit or losses in which case transaction costs are recognised as expenses in profit or loss immediately.

Classification and subsequent measurement

Financial instruments are subsequently measured at fair value, amortised cost using the effective interest method, or cost. Where available, quoted prices in an active market are used to determine fair value. In other circumstances, valuation techniques are adopted.

Amortised cost is calculated as the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments and any reduction for impairment, and adjusted for any cumulative amortisation of the difference between that initial amount and the maturity amount calculated using the effective interest method.

The effective interest method is used to allocate interest income or interest expense over the relevant period and is equivalent to the rate that exactly discounts estimated future cash payments or receipts (including fees, transaction costs and other premiums or discounts) through the expected life (or when this cannot be reliably predicted, the contractual term) of the financial instrument to the net carrying amount of the financial asset or financial liability. Revisions to expected future net cash flows will necessitate an adjustment to the carrying amount with a consequential recognition of an income or expense item in profit or loss.

The Group does not designate any interests in subsidiaries, associates or joint ventures as being subject to the requirements of Accounting Standards specifically applicable to financial instruments. Accordingly, such interests are accounted for on a cost basis in the parent's separate financial statements.

(i) Financial assets at fair value through profit or loss

Financial assets are classified at “fair value through profit or loss” when they are held for trading for the purpose of short-term profit taking, derivatives not held for hedging purposes, or when they are designated as such to avoid an accounting mismatch or to enable performance evaluation where a group of financial assets is managed by key management personnel on a fair value basis in accordance with a documented risk management or investment strategy. Such assets are subsequently measured at fair value with changes in carrying amount included in profit or loss.

(ii) Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.

(iii) Held-to-maturity investments

Held-to-maturity investments are non-derivative financial assets that have fixed maturities and fixed or determinable payments, and it is the Group’s intention to hold these investments to maturity. They are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial asset is derecognised.

(iv) Available-for-sale financial investments

Available-for-sale investments are non-derivative financial assets that are either not capable of being classified into other categories of financial assets due to their nature or they are designated as such by management. They comprise investments in the equity of other entities where there is neither a fixed maturity nor fixed or determinable payments.

They are subsequently measured at fair value with any re-measurements other than impairment losses and foreign exchange gains and losses recognised in other comprehensive income. When the financial asset is derecognised, the cumulative gain or loss pertaining to that asset previously recognised in other comprehensive income is reclassified into profit or loss.

Available-for-sale financial assets are classified as non-current assets when they are not expected to be sold within 12 months after the end of the reporting period. All other available-for-sale financial assets are classified as current assets.


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(v) Financial liabilities

Non-derivative financial liabilities other than financial guarantees are subsequently measured at amortised cost. Gains or losses are recognised in profit or loss through the amortisation process and when the financial liability is derecognised.

Impairment

At the end of each reporting period, the Group assesses whether there is objective evidence that a financial asset has been impaired. A financial asset (or a group of financial assets) is deemed to be impaired if, and only if, there is objective evidence of impairment as a result of one or more events (a "loss event") having occurred, which has an impact on the estimated future cash flows of the financial asset(s).

In the case of available-for-sale financial assets, a significant or prolonged decline in the market value of the instrument is considered to constitute a loss event. Impairment losses are recognised in profit or loss immediately. Also, any cumulative decline in fair value previously recognised in other comprehensive income is reclassified to profit or loss at this point

In the case of financial assets carried at amortised cost, loss events may include: indications that the debtors or a group of debtors are experiencing significant financial difficulty, default or delinquency in interest or principal payments; indications that they will enter bankruptcy or other financial reorganisation; and changes in arrears or economic conditions that correlate with defaults.

For financial assets carried at amortised cost (including loans and receivables), a separate allowance account is used to reduce the carrying amount of financial assets impaired by credit losses. After having taken all possible measures of recovery, if management establishes that the carrying amount cannot be recovered by any means, at that point the written-off amounts are charged to the allowance account or the carrying amount of impaired financial assets is reduced directly if no impairment amount was previously recognised in the allowance account.

When the terms of financial assets that would otherwise have been past due or impaired have been renegotiated, the Group recognises the impairment for such financial assets by taking into account the original terms as if the terms have not been renegotiated so that the loss events that have occurred are duly considered.

Financial guarantees

Where material, financial guarantees issued that require the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due are recognised as financial liabilities at fair value on initial recognition.

The fair value of financial guarantee contracts has been assessed using the probability weighted discounted cash flow approach. The probability has been based on:

– the likelihood of the guaranteed party defaulting during the next reporting period;

– the proportion of the exposure that is not expected to be recovered due to the guaranteed party defaulting; and

– the maximum loss exposure if the guaranteed party were to default.

Financial guarantees are subsequently measured at the higher of the best estimate of the obligation in accordance with AASB 137: Provisions, Contingent Liabilities and Contingent Assets and the amount initially recognised less, when appropriate, cumulative amortisation in accordance with AASB 118: Revenue. Where the entity gives guarantees in exchange for a fee, revenue is recognised under AASB 118.

Derecognition

Financial assets are derecognised when the contractual rights to receipt of cash flows expire or the asset is transferred to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits associated with the asset. Financial liabilities are derecognised when the related obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability extinguished or transferred to another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed, is recognised in profit or loss.

(j) Impairment of assetsAt the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired. The assessment will include considering external sources of information and internal sources of information, including dividends received from subsidiaries, associates or joint ventures deemed to be out of pre-acquisition profits. If such an indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being the higher of the asset’s fair value less costs of disposal and value in use to the asset’s carrying amount. Any excess of the asset’s carrying amount over its recoverable amount is recognised immediately in profit or loss, unless the asset is carried at a revalued amount in accordance with another Standard (eg in accordance with the revaluation model in AASB 116: Property, Plant and Equipment). Any impairment loss of a revalued asset is treated as a revaluation decrease in accordance with that other Standard.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.


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(k) Investments in associatesAn associate is an entity over which the Group has significant influence. Significant influence is the power to participate in the financial and operating policy decisions of the entity but is not control or joint control of those policies. Investments in associates are accounted for in the consolidated financial statements by applying the equity method of accounting, whereby the investment is initially recognised at cost (including transaction costs) and adjusted thereafter for the post-acquisition change in the Group’s share of net assets of the associate. In addition, the Group’s share of the profit or loss of the associate is included in the Group’s profit or loss.

The carrying amount of the investment includes, when applicable, goodwill relating to the associate. Any discount on acquisition, whereby the Group’s share of the net fair value of the associate exceeds the cost of investment, is recognised in profit or loss in the period in which the investment is acquired.

Profits and losses resulting from transactions between the Group and the associate are eliminated to the extent of the Group’s interest in the associate.

When the Group’s share of losses in an associate equals or exceeds its interest in the associate, the Group discontinues recognising its share of further losses unless it has incurred legal or constructive obligations or made payments on behalf of the associate. Upon the associate subsequently making profits, the Group will resume recognising its share of those profits once its share of the profits equals the share of the losses not recognised.

(l) Interests in joint arrangementsJoint arrangements represent the contractual sharing of control between parties in a business venture where unanimous decisions about relevant activities are required.

Separate joint venture entities providing joint venturers with an interest to net assets are classified as a joint venture and accounted for using the equity method. Refer to Note 1(k) for a description of the equity method of accounting.

Joint operations represent arrangements whereby joint operators maintain direct interests in each asset and exposure to each liability of the arrangement. The Group’s interests in the assets, liabilities, revenue and expenses of joint operations are included in the respective line items of the consolidated financial statements.

Gains and losses resulting from sales to a joint operation are recognised to the extent of the other parties’ interests. When the Group makes purchases from a joint operation, it does not recognise its share of the gains and losses from the joint arrangement until it resells those goods/assets to a third party.

(m) Employee benefits

Short-term employee benefits

Provision is made for the Group’s obligation for short-term employee benefits. Short-term employee benefits are benefits (other than termination benefits) that are expected to be settled wholly before 12 months after the end of the annual reporting period in which the employees render the related service, including wages, salaries and sick leave. Short-term employee benefits are measured at the (undiscounted) amounts expected to be paid when the obligation is settled.

The Group’s obligations for short-term employee benefits such as wages, salaries and sick leave are recognised as a part of current trade and other payables in the statement of financial position.

Other long-term employee benefits

Provision is made for employees’ long service leave and annual leave entitlements not expected to be settled wholly within 12 months after the end of the annual reporting period in which the employees render the related service. Other long-term employee benefits are measured at the present value of the expected future payments to be made to employees. Expected future payments incorporate anticipated future wage and salary levels, durations of service and employee departures and are discounted at rates determined by reference to market yields at the end of the reporting period on government bonds that have maturity dates that approximate the terms of the obligations. Upon the re-measurement of obligations for other long-term employee benefits, the net change in the obligation is recognised in profit or loss as a part of employee benefits expense.

The Group’s obligations for long-term employee benefits are presented as non-current provisions in its statement of financial position, except where the Group does not have an unconditional right to defer settlement for at least 12 months after the end of the reporting period, in which case the obligations are presented as current provisions.

(n) ProvisionsProvisions are recognised when the group has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

Provisions are measured using the best estimate of the amounts required to settle the obligation at the end of the reporting period.

(o) Cash and cash equivalentsCash and cash equivalents include cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within short-term borrowings in current liabilities on the statement of financial position.


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(p) Revenue and other incomeRevenue from asset and property management is recognised on the basis of contractual obligations. Revenue from project management is recognised in accordance with contractual obligations on the basis of regular claims approved at stages of completion. Revenue from administration is recognised on the basis of an agreed fee for services rendered.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

All revenue is stated net of the amount of goods and services tax.

(q) Trade and other receivablesTrade and other receivables include amounts due from customers for goods sold and services performed in the ordinary course of business. Receivables expected to be collected within 12 months of the end of the reporting period are classified as current assets. All other receivables are classified as non-current assets.

Trade and other receivables are initially recognised at fair value and subsequently measured at amortised cost using the effective interest method, less any provision for impairment. Refer to Note 1(i) for further discussion on the determination of impairment losses.

(r) Trade and other payablesTrade and other payables represent the liabilities for goods and services received by the Group that remain unpaid at the end of the reporting period. The balance is recognised as a current liability with the amounts normally paid within 30 days of recognition of the liability.

(s) Borrowing costsBorrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset are capitalised as part of the cost of that asset, which are assets that necessarily take a substantial period of time to get ready for their intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.

Investment income earned on the temporary investment of specific borrowing pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalisation.

All other borrowing costs are recognised in the statement of comprehensive income in the period in which they are incurred.

(t) Goods and Services Tax (GST)Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Taxation Office (ATO).

Receivables and payables are stated inclusive of the amount of GST receivable or payable. The net amount of GST recoverable from, or payable to, the ATO is included with other receivables or payables in the statement of financial position.

Cash flows are presented on a gross basis. The GST components of cash flows arising from investing or financing activities, which are recoverable from or payable to the ATO, are presented as operating cash flows included in receipts from customers or payments to suppliers.

(u) Comparative figuresWhen required by Accounting Standards, comparative figures have been adjusted to conform to changes in presentation for the current financial year.

Where the Group retrospectively applies an accounting policy, makes a retrospective restatement of items in the financial statements or reclassifies items in its financial statements, a third statement of financial position as at the beginning of the preceding period in addition to the minimum comparative financial statement is presented.

(v) Critical accounting estimates and judgementsThe directors evaluate estimates and judgements incorporated into the financial statements based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the Group.

Key estimates

Impairment – general

The group assesses impairment at each reporting date by evaluating conditions specific to the group that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates. Impairment losses are recognised in the statement of comprehensive income.

Key judgements

The Group assesses its interest in its joint arrangements and associates annually to ensure that it is accounting for its joint arrangements and associates in accordance with Accounting Standards. This assessment includes a review of the arrangement between the parties, including whether any changes have occurred during the year that would indicates a change in classification is required.


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The Directors have an obligation to ensure that the carrying amount of investments in associates and joint arrangements do not exceed fair value at each reporting date.

(w) New Accounting Standards for application in future periodsThe AASB has issued a number of new and amended Accounting Standards and Interpretations that have mandatory application dates for future reporting periods, some of which are relevant to the Group. The Group has decided not to early adopt any of the new and amended pronouncements. The Group’s assessment of the new and amended pronouncements that are relevant to the Group but applicable in future reporting periods is set out below:

– AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning on or after 1 January 2018).

The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and includes revised requirements for the classification and measurement of financial instruments, revised recognition and de-recognition requirements for financial instruments and simplified requirements for hedge accounting.

The key changes that may affect the Group on initial application include certain simplifications to the classification of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit loss, and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of such accounting would be largely prospective.

Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group’s financial instruments, including hedging activity, it is impracticable at this stage to provide a reasonable estimate of such impact.

– AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods commencing on or after 1 January 2018).

When effective, this Standard will replace the current accounting requirements applicable to revenue with a single, principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB 15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of business to facilitate sales to customers and potential customers. The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:

o identify the contract(s) with a customer;

o identify the performance obligations in the contract(s);

o determine the transaction price;

o allocate the transaction price to the performance obligations in the contract(s); and

o recognise revenue when (or as) the performance obligations are satisfied.

Although the directors anticipate that the adoption of AASB 15 may have an impact on the Group’s financial statements, it is impracticable at this stage to provide a reasonable estimate of such impact.


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Note 2 Parent InformationThe following information has been extracted from the books and records of the parent and has been prepared in accordance with Australian Accounting Standards.

2016 2015

$ $

STATEMENT OF FINANCIAL POSITION

ASSETS

Current assets 77,198,046 39,423,299

Non-current assets 4,028,530 7,493,351

TOTAL ASSETS 81,226,576 46,916,650

LIABILITIES

Current liabilities 44,806,261 13,032,364

Non-current liabilities 19,233,094 10,984,653

TOTAL LIABILITIES 64,039,355 24,017,017

EQUITY

Issued capital 40,598,377 27,255,515

Capital reserve (20,556,446) -

Retained earnings (2,854,710) (4,355,882)

TOTAL EQUITY 17,187,221 22,899,633

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Profit after income tax 1,501,172 1,801,821

Total comprehensive income 1,501,172 1,801,821

Note 3 Fees and other income2016 2015

$ $

Fee income:

— Acquisitions 2,065,329 3,414,638

— Investment management 5,377,291 2,371,920

— Property management 2,567,993 1,061,811

— Other property services 746,740 1,476,043

Total revenue 10,757,353 8,324,412

Other income:

— Profit from discontinued infrastructure operations 396,351 231,459

— Interest - other corporations 30,033 90,372

— Sundry 97,133 2,766

Total other income 523,517 324,597


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Note 4 Tax expense2016 2015

Note $ $

(a) The components of tax expense/(income) comprise:

Current tax benefit (505,857) 525,059

Deferred tax asset 20 786,804 183,883

280,947 708,942

(b) Reconciliation of income tax expense/(benefit) to prima facie tax payable

Profit before income tax expense 8,611,254 3,125,340

Prima facie tax expense at the Australian tax rate of 30% 2,583,376 937,602

Tax effect of amounts which are not deductible/(taxable) in calculating taxable income

Propertylink Trust income (2,126,091) (145,124)

Non-deductible expenses 12,158 (14,098)

Share equity cost written off (82,699) -

Capital gain sheltered by carrying forward capital loss (118,905) -

Adjustments in respect of prior year 13,108 -

Share of net profit of investment accounted for using the equity method - (69,438)

280,947 708,942

Note 5 Key management personnel compensationThe totals of remuneration paid to key management personnel (KMP) of the Group during the year are as follows

2016 2015

Directors’ fees $ $

Peter Lancken 101,200 72,500

Ian Hutchinson 82,200 60,000

Chris Ryan 111,000 60,000

Derek Nix 50,000 50,000

David Epper 50,000 50,000

394,400 292,500

During the 2016 year certain Directors were required to carry out additional duties, mainly related to a management re-structure which was negotiated during the year and completed near the end of the year. As a result, Peter Lancken, Chris Ryan and Ian Hutchinson were paid fees to compensate them for the additional duties. Those fees are included in this note.

Note 6 Auditors’ remuneration2016 2015

$ $

Remuneration of the auditor of the parent entity for:

— auditing or reviewing the financial statements 117,284 44,083

Remuneration of the auditor of the subsidiary entity for:

— auditing or reviewing the financial statements 35,160 8,000

152,444 52,083


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Note 7 Earnings per stapled security2016 2015

$ $

Profit attributable to the ordinary stapled securityholders of the Group 8,330,307 2,416,398

Weighted average number of ordinary stapled securities 27,915,673 26,158,492

(a) Basic earnings per stapled security (cents) 29.84 9.24

Adjustments for calculation of diluted earnings per stapled security

Options exercised but not yet issued as shares 4,982,206 4,982,206

Weighted average number of ordinary stapled securities and potential ordinary stapled securities 32,897,879 31,140,698

(b) Diluted earnings per stapled security (cents) 25.32 7.76

Note 8 Dividends2016 2015

$ $

Distributions provided for:

Fully franked ordinary dividend of $Nil (2015: $557,253) franked at the tax rate of 30% (2015: 30%). - 557,253

Balance of franking account at year end adjusted for franking credits/(debits) arising from: 418,898 657,722

— franking credit on income tax paid 871,799 -

— franking debit on dividend provided - (238,824)

1,290,697 418,898

Total dividends (cents) per share provided - 2.00

Note 9 Cash and cash equivalents2016 2015

$ $

Cash at bank and on hand 3,958,675 2,347,705

Note 10 Trade and other receivables2016 2015

$ $

Current

Trade receivables 2,471,897 1,393,946

Sundry debtors 1,046,595 57,762

Trust distribution 375,774 126,321

3,894,266 1,578,028

Deposit 86,394 228,741

Loans 27,000 29,172

Total current trade and other receivables 4,007,660 1,835,941


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Note 11 Other assets2016 2015

$ $

Current

Prepayments 162,401 109,334

Note 12 Associates and joint arrangements

a. Information about principal joint ventures and associatesSet out below are the material associates and joint ventures of the Group. The entities listed below have equity of ordinary shares or units in unit trusts. The proportion of equity held by the Group generally equals the voting rights held by the Group.

Proportion of equity Carrying amount

Name Classification

Place of incorporation/ business 2016 2015

Measurement method 2016 2015

% % $ $

Instruct Corporation Pty Ltd

Joint venture Australia 0% 50% Equity accounted - 126,856

PAIP Investment Partnership

Joint venture Australia 25% 25% Equity accounted 21,692,652 15,053,210

Auslog Holdings Trust Joint venture Australia 10% 10% Equity accounted 2,763,177 2,650,343

PHL Moelis Braeside Trust


POP II Investment Partnership


PCII Joint venture Australia 7.50% 0% Equity accounted 882,364 -

Propertylink Australian Industrial Partnership II

Joint venture Australia 3.95% 0% Equity accounted 3,297,157 -

POP III Investment Partnership

Joint venture Australia 6.00% 0% Equity accounted 2,527,160 -

39,413,597 24,311,215

b. Contingent liabilities in respect of associatesThe Group is not liable for any contingent liabilities arising from its interests in associates.

c. Commitments and contingent liabilities in respect of joint venturesRefer to note 24 for details of limited guarantee issued to financiers of PAIP, which was released on 15 August 2016.


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d. Summarised financial information for joint ventures Set out below is the summarised financial information for joint ventures. Unless otherwise stated, the disclosed information reflects the amounts presented in the financial statements of each joint venture. The following summarised financial information, however, reflects the adjustments made by the Group when applying the equity method, including adjustments for any differences in accounting policies between the Group and the joint ventures.

Instruct Corporation

Pty Ltd

PAIP Investment

Partnership

Auslog Holdings

Trust

PHL Moelis Braeside

Trust

POP II Investment

Partnership PCII

Propertylink Australian Industrial

Partnership II

POP III Investment

Partnership Total

30 June 2016 $ $ $ $ $ $ $ $ $

Summarised financial position

Cash and cash equivalents - 10,677 1,388,725 515,614 821 919,152 54,957,326 1,973,586 59,765,901

Total current assets - 1,671,303 1,636,025 764,564 921,512 1,046,747 70,694,828 2,241,924 78,976,902

Total non-current assets - 86,424,008 69,000,000 42,848,650 31,072,925 29,000,000 32,521,736 99,017,059 389,884,377

Total current liabilities - (1,324,703) (1,337,449) (1,113,288) (920,497) (1,032,874) (947,811) (2,069,181) (8,745,804)

Total non-current liabilities - - (41,666,875) (22,136,937) - (17,248,942) (18,701,965) (56,821,485) (156,576,204)

Net assets - 86,770,608 27,631,701 20,362,988 31,073,940 11,764,932 83,566,787 42,368,316 303,539,272

Group’s share (%) 0.00% 25.00% 10.00% 10.00% 20.00% 7.50% 3.95% 6.00%

Group’s share of associate’s net assets - 21,692,652 2,763,177 2,036,299 6,214,788 882,364 3,297,157 2,527,160 39,413,597

Summarised financial performance

Revenue - 21,417,807 6,351,862 6,959,842 8,805,826 1,603,607 2,192,988 1,692,504 49,024,435

Depreciation and amortisation - - - - - - - - -

Interest income - 4,838,146 - 2,738 1,760,035 6,743 13,802 6,118 6,699,281

Interest expense - - (1,787,842) (897,741) (195) (479,186) (542,723) (545,529) (3,437,401)

Other expenses - (2,371) (454,110) (2,398,946) - (2,858,984) (2,678,559) (484,163) (8,750,153)

Profit or loss from continuing operations - 26,253,582 4,109,911 3,665,893 10,565,666 (1,727,820) (1,014,492) 668,929 43,536,161

Income tax expense - - - - - - - - -

Profit after tax from continuing operations - 26,253,582 4,109,911 3,665,893 10,565,666 (1,727,820) (1,014,492) 668,929 43,536,161

Total comprehensive income - 26,253,582 4,109,911 3,665,893 10,565,666 (1,727,820) (1,014,492) 668,929 43,536,161

Group’s share of joint venture’s total comprehensive income - 6,563,396 410,992 366,589 2,119,387 (129,587) (18,657) 40,136 9,352,256


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Instruct Corporation

Pty Ltd

PAIP Investment

Partnership

Auslog Holdings

Trust

PHL Moelis Braeside

Trust

POP II Investment

Partnership PC II

Propertylink Australian

Investment Partnership

II

POP III Investment

Partnership Total

30 June 2015 $ $ $ $ $ $ $ $ $

Summarised financial position

Cash and cash equivalents 414,503 13,533 1,280,493 423,751 - - - - 2,132,280

Total current assets 1,023,476 599,042 2,034,866 664,809 32,287 - - - 4,354,480

Total non-current assets 133,979 59,866,240 67,830,962 40,816,759 23,403,015 - - - 192,050,955

Total current liabilities (903,743) (252,442) (1,695,590) (54,649) (31,272) - - - (2,937,695)

Total non-current liabilities - - (41,666,875) (22,793,299) - - - - (64,460,174)

Net assets 253,712 60,212,840 26,503,363 18,633,620 23,404,030 - - - 129,007,565

Group’s share (%) 50.00% 25.00% 10.00% 10.00% 20.00% 0.00% 0.00% 0.00%

Group’s share of associate’s net assets 126,856 15,053,210 2,650,336 1,863,362 4,680,806 - - - 24,374,570

Summarised financial performance

Revenue 4,642,797 3,843,952 5,014,182 1,361,062 - - - - 14,861,993

Depreciation and amortisation (13,378) - - - - - - - (13,378)

Interest income - 2,936,835 - 2,219 31,272 - - - 2,970,326

Interest expense (5,055) - (1,979,626) (295,829) - - - - (2,280,510)

Other expenses (4,212,103) (11,600) (254,632) (433,835) - - - - (4,912,170)

Profit or loss from continuing operations 412,262 6,769,187 2,779,924 633,617 31,272 - - - 10,626,260

Income tax expense (129,305) - - - - - - - -

Profit after tax from continuing operations 282,957 6,769,187 2,779,924 633,617 31,272 - - - 10,626,260

Total comprehensive income 282,957 6,769,187 2,779,924 633,617 31,272 - - - 10,626,260

Group’s share of joint venture’s tota comprehensive income 141,478 1,692,297 277,992 63,362 6,254 - - - 2,181,383

Note 13 Financial assets2016 2015

$ $

Non-current

Shares in joint venture entities - 126,856

Units in unit trusts 39,413,597 24,184,359

39,413,597 24,311,215


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Note 14 Interests in subsidiariesThe subsidiaries listed below have either share capital consisting solely of ordinary shares or units in unit trusts, which are held directly by the Group. The proportion of ownership interests held equals the voting rights held by the Group. Each subsidiary’s principal place of business is also its country of incorporation or registration.

Country of Corporation

2016 (%)

2015 (%)

Parent Entity:

Propertylink (Holdings) Ltd (stapled entity - Propertylink Trust)

Subsidiaries of Propertylink (Holdings) Ltd

BRV Nominees Pty Ltd Australia 100% 100%

Propertylink Funds Management Pty Ltd Australia 100% 100%

Propertylink Admin Management Pty Ltd Australia 100% 100%

Propertylink Capital Pty Ltd Australia 100% 100%

Propertylink Services Management Pty Ltd Australia 100% 100%

Propertylink Investment Management Pty Ltd Australia 100% 100%

Infralink (Australasia) Pty Ltd Australia 100% 100%

MITSA Pty Ltd Australia 100% 100%

Propertylink (Australasia) Pty Ltd Australia 100% 100%

Propertylink WIM Pty Ltd Australia 100% -

Propertylink PAIP Pty Ltd Australia 100% -

Propertylink Nominees Pty Ltd Australia 100% -

BBR 15 Pty Ltd Australia 100% -

PAIP II MA Nominees Pty Ltd Australia 100% -

PAIP II BA Nominees Pty Ltd Australia 100% -

Controlled entities of Propertylink Trust

PAIP PT Australia 100% 100%

PT Moelis Trust Australia 100% 100%

Propertylink Office Partnership Trust Australia 100% 100%

POP 73 Miller Trust Australia 100% 100%

POP II PT Australia 100% 100%

PAIP II PT Australia 100% -

POP III PT Australia 100% -

Subsidiary financial statements used in the preparation of these consolidated financial statements have also been prepared as at the same reporting date as the Group’s financial statements.

Note 15 Property, plant and equipment2016 2015

$ $

Leasehold improvements at cost 685,122 216,894

Accumulated depreciation (236,188) (91,538)

448,933 125,356

Office furniture and equipment at cost 200,738 127,327

Accumulated depreciation (87,751) (53,258)

112,987 74,070

Total 561,920 199,426


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Note 16 Investment properties2016 2015

73 Miller Street, North Sydney $ $

At 1 July 5,856,547 -

Property acquisitions - 5,856,547

Capitalised straight-lining of fixed increases in operating leases inclusive of lease incentives 11,941 -

Revaluation adjustment 602,383 -

Investment properties at 30 June 6,470,871 5,856,547

Note 17 Intangible assets2016 2015

$ $

Web development cost - 38,905

Accumulated amortisation - (17,927)

- 20,978

Goodwill

Cost 4,565,574 4,565,574

Intangible assets net carrying amount 4,565,574 4,586,553

Note 18 Trade and other payables2016 2015

$ $

Current

Trade payables 1,213,078 398,868

Other payables and accrued expenses 8,616,008 1,433,851

GST payable 287,959 284,883

Bonds payable 48,469 51,169

10,165,514 2,168,771


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Note 19 Borrowings2016 2015

$ $

Current

Bank loan secured 13,876,000 2,160,000

Borrowing costs (135,625) (130,239)

Loan - others 9,061,851 548,706

Total current borrowings 22,802,226 2,578,466

Non - current

Bank loan secured - 8,541,610

Borrowing costs - (90,739)

Total non-current borrowings - 8,450,870

Total borrowings 22,802,226 11,029,337

(a) Total current and non-current secured liabilities:

Bank loan 13,876,000 10,701,610

(a) The bank debt is secured by general security agreements and covenants imposed by the bank have been met.

(b) The bank facility was due to expire on 27 February 2017, however, the bank facility was fully repaid on 15 August 2016 as part of the IPO re-structure.

Note 20 Tax2016 2015

$ $

Current liabilities

Income tax payable 410,510 629,885

Non-current assets

Deferred tax assets 786,804 183,883

Balance as at 30 June

2016

(Charged)/ Credited to

Income


Equity

Balance as at 30 June

2015


Income


Equity

$ $ $ $ $ $

Deferred tax assets / (liabilities)

Carried forward tax losses - - - - (54,241) -

Capitalised issue costs 257,622 - 140,733 116,889 - 89,589

Annual leave, other accruals and provisions for doubtful debts 529,182 462,188 - 66,994 61,923 -

786,804 462,188 140,733 183,883 7,682 89,589


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Note 21 Provisions2016 2015

$ $

Current

Employee benefits 236,275 36,954

Provision for dividends - 559,469

Provision for fringe benefits tax 7,460 19,316

Payroll liabilities 112,046 84,364

Total current provisions 355,781 700,103

Non-current

Employee benefits - long service leave 198,099 23,960

Provision for employee benefitsThe current portion for this provision includes the total amount accrued for annual leave entitlements and the amounts accrued for long service leave entitlements that have vested due to employees having completed the required period of service. Based on past experience the Group does not expect the full amount of annual leave or long service leave balances classified as current liabilities to be settled within the next 12 months. However, these amounts must be classified as current liabilities since the Group does not have an unconditional right to defer the settlement of these amounts in the event employees wish to use their leave entitlement.

The non-current portion for this provision includes amounts accrued for long service leave entitlements that have not yet vested in relation to those employees who have not yet completed the required period of service.

Provision for dividendsA provision has been recognised for dividends that have been declared, but are yet to be paid.

Note 22 Issued capital2016 2015

$ $

Fully paid ordinary shares 40,598,477 27,255,515

(a) Securities on issue No. No.

Shares at the beginning of the reporting period 27,862,792 22,530,566

Shares issued during the year 15,945,455 5,332,226

Shares at the end of the reporting period 43,808,247 27,862,792

Options on issue at the beginning of the reporting period - 4,982,206

Options exercised during the year but not yet issued as shares (see below) 4,982,206

Options on issue at the end of the reporting period - -

The company issued the following shares during the year:

• 45,455 shares at $1.10 per share in satisfaction of a staff bonus;

• 8,700,000 shares at a nominal value of $1.59 per share as part consideration for the acquisition of BBR 15 Pty Limited from Echo Capital Holdings Trust on 29 June 2016; and

• 7,200,000 shares at nil value in satisfaction of a management right to have Zero Exercise Price Options issued to them under management services agreements first entered in 2011.

The shares are eligible for dividends. Ordinary shares participate in dividends and the proceeds on winding up of the parent entity in proportion to the number of shares held.

At the shareholders’ meetings each ordinary share is entitled to one vote when a poll is called, otherwise each shareholder has one vote on a show of hands.

In September 2014 the holders of all options exercised the options and become entitled to have partly paid securities issued. However under the terms of the option agreement no partly paid securities were to be issued until certain conditions precedent were satisfied. Securities once issued were to be partly paid, which would not have created the desired capital structure at IPO. Propertylink and the holders of these rights agreed that the holders would be paid to relinquish their rights in exchange for a


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repayment of amounts already paid, plus a capital sum calculated with regard to the implied value of securities at IPO. Those payments were made on 15 August 2016, and the rights to have securities issued were extinguished.

(b) Capital managementManagement controls the capital of the Group in order to maintain an acceptable debt to equity ratio, provide the shareholders with adequate returns and ensure that the Group can fund its operations and continue as a going concern.

The group’s debt and capital include ordinary share capital and financial liabilities, supported by financial assets. There are no externally imposed capital requirements.

Management effectively manages the group’s capital by assessing the group’s financial risks and adjusting its capital structure in response to changes in these risks and in the market. These responses include the management of debt levels, distributions to shareholders and share issues.

2016 2015

$ $

Total borrowings 22,802,226 11,029,337

Trade and other payables 10,165,514 2,168,771

Less cash and cash equivalents (3,958,675) (2,347,705)

Net debt 29,009,065 10,850,403

Total equity 25,995,372 24,878,550

Total capital 55,004,437 35,728,953

Gearing ratio 53% 30%

Note 23 Capital and leasing commitments2016

$2015

$

Operating lease commitments

Non-cancellable operating leases contracted for but not recognised in the financial statements

Payable — minimum lease payments

— not later than 12 months 592,191 762,565

— between 12 months and five years 5,043,048 3,460,127

— later than five years - 2,175,113

5,635,240 6,397,805

The property lease is a non-cancellable lease with a seven-year term, with rent payable monthly in advance.

Note 24 Contingent liabilities and contingent assetsAt 30 June 2016 Propertylink had a contingent liability in the form of a limited guarantee issued to the financiers of PAIP. PAIP acquired Melbourne Markets assets in September 2015, which consist of industrial properties constructed on land leased from the Melbourne Markets Authority. Propertylink’s guarantee was several, could only be called in the event that some or all Melbourne Markets ground leases were terminated or become valueless, and was limited to a maximum of $3.16m if called. As part of the IPO restructure process Propertylink was released from the limited guarantee on 15 August 2016.

Other than that contingent liability, at balance date the group had no significant contingent assets or liabilities.


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Note 25 Cash flow information

(a) Reconciliation of profit for the period to net cash flows from operating activities2016 2015

$’000 $’000

Profit after income tax 8,330,307 2,416,398

Adjustments to reconcile profit before tax to net cash flows

Valuation (gains) on investment property (602,383) -

Depreciation and amortisation expense 200,123 131,774

Amortisation of borrowing costs 159,489 -

Straight-lining rental income adjustments (11,941) -

Share of joint venture tax expenses - 64,653

Deferred tax credited to capitalised share issue costs 231,445 -

Valuation (gains) on investment in joint ventures (5,946,927) -

(5,970,194) 196,427

Changes in assets and liabilities

(Increase)/decrease in trade and other receivable (2,171,720) (176,060)

(Increase)/decrease in other assets (53,067) (42,628)

(Increase)/decrease in deferred tax assets (602,921) (97,272)

Increase in trade and other payables 7,994,530 1,610,108

Increase/(decrease) in income tax payable (219,376) (629,885)

Increase/(decrease) in provisions (excluding provision for dividend) 389,287 280,087

5,336,733 944,350

Net cash flows from operating activities 7,696,846 3,557,175

(b) Credit standby arrangement and loan facilitiesAt 30 June 2016 the company had a market rate loan facility amounting to $14,370,000 (2015: $14,370,000). This may be terminated under certain determined circumstance. At 30 June 2016, $13,876,000 of this facility was used (2015: $10,701,610). Interest rates are variable. The facility was fully repaid on 15 August 2016.

Note 26 Events after the reporting periodSecurity holders are advised of the following matters which occurred after balance date:

• In May 2016 Propertylink and its investment partners in PAIP agreed to work towards an IPO involving the stapling of PAIP units to Propertylink securities. Propertylink and its PAIP partners continued to pursue this outcome post year end, and on 15 August 2016 the IPO was completed. For further details please refer to the Prospectus and Product Disclosure Statement (PDS), and to the Supplementary Prospectus and Product Disclosure Statement (Supplementary PDS), which may be found on the Propertylink web site.

• As a result of the completion of the IPO, all Propertylink external debt as disclosed in note 18 was fully repaid. The debt repaid included secured bank loans and unsecured other loans. Also at IPO completion the listed entity drew down on a new senior debt facility with Westpac Banking Corporation (for further details please refer to the PDS).

• As disclosed in note 22, certain parties had a right to have partly paid securities issued to them from options exercised in 2014. It was agreed with these parties during the IPO process that the partly paid securities would not be issued, monies already advanced as a part payment for the securities would be repaid, and a capital payment to compensate the holders for the cancellation of the rights would be made on IPO completion.

• Again as a result of the stapling of PAIP to Propertylink on 15 August 2016, Propertylink became entitled to an investment management performance fee of $25.2m payable by the PAIP owners. This fee funded a special dividend of 22c per share to Propertylink security holders at the record date of 12 August 2016, and also funded staff bonus payments and other costs incurred as a result of the IPO.

• In order to avoid a cross shareholding on completion of the stapling of Propertylink and PAIP, Propertylink Trust sold its investment interest in PAIP for approximately $21.2m immediately prior to the stapling on 15 August 2016. Proceeds from the sale of this investment funded a special distribution of 48c per unit to Propertylink Trust securityholders on record at 12 August 2016.


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• As disclosed in the Supplementary Prospectus and PDS, in July 2016 Propertylink formed a new fund, Propertylink Enhanced Partnership (PEP). Propertylink committed approximately $17.7m in equity to PEP, with the balance of equity committed by a Goldman Sachs Investor entity. During August and September 2016 PEP completed the acquisition of approximately $142m of property.

Note 27 Related party transactionsThe Group's main related parties are as follows

(a) Entities exercising control over the group:No entity exercises control over the Group.

(b) Key management personnel:Any person(s) having authority and responsibility for planning, directing and controlling the activities of the entity, directly or indirectly, including any director (whether executive or otherwise) of that entity is considered key management personnel.

For details of disclosures relating to key management personnel, refer to Note 5: Key management personnel compensation.

(c) Entities subject to significant influence by the group:An entity which has the power to participate in the financial and operating policy decisions of an entity, but does not have control over those policies, is an entity which holds significant influence. Significant influence may be gained by share ownership, statute or agreement.

For details of interests held in associates, refer to Note 12.

(d) Joint ventures accounted for under the equity method:The Group has a various interest in the joint venture. The interest in joint venture is accounted for in these consolidated financial statements of the Group, using the equity method of accounting.

For details of interests held in joint ventures, refer to Note 12.

(e) Other related partiesOther related parties include close family members of key management personnel and entities that are controlled or jointly controlled by those key management personnel, individually or collectively with their close family members.

(f) Transactions with related partiesTransactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated.

The following transactions occurred with related parties

2016 2015

$ $

i. Purchase of goods and services

Management services contract

Echo Capital Holdings Trust 2,167,478 2,336,226

Project management fees

Nix Anderson Pty Ltd 108,000 140,700

ii. Shareholdings No No

Christopher Ryan 872,573 872,573

Peter Lancken 1,115,041 1,115,041

Stephen Day 7,235,996 1,193,996

Derek Nix 150,000 150,000

David Epper 77,273 77,273

Ian Hutchinson 25,000 25,000

Peter McDonald 4,763,776 629,776

Stuart Dawes 2,015,204 -

16,254,863 4,063,659


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Note 28 Financial risk managementThe group’s financial instruments consist mainly of deposits with banks, local money market instruments, short-term investments, accounts receivable and payable, loans to and from subsidiaries, bills, leases, preference shares, and derivatives.

The carrying amounts for each category of financial instruments, measured in accordance with AASB 139: Financial Instruments: Recognition and Measurement as detailed in the accounting policies to these financial statements, are as follows:

2016 2015

$ $

Financial assets

Cash and cash equivalents 3,958,675 2,347,705

Loans and receivables 3,921,266 1,607,200

Total financial assets 7,879,941 3,954,905

Financial liabilities

Financial liabilities at amortised cost

— Trade and other payables 10,165,514 2,168,771

— Borrowings 22,802,226 11,029,337

Total financial liabilities 32,967,740 13,198,108

Financial risk management policiesThe directors’ overall financial risk management strategy seeks to assist the company in meeting its financial targets, whilst minimising potential adverse effects on financial performance. The main purpose of non-derivative financial instruments is to raise finance for company operations. The company does not have any derivative instruments at 30 June 2016.

The finance committee, consisting of senior executives of the Group, meets on a regular basis to analyse financial risk exposure and to evaluate treasury management strategies in the context of the most recent economic conditions and forecasts. The finance committee’s overall risk management strategy seeks to assist the Group in meeting its financial targets, whilst minimising potential adverse effects on financial performance.

The finance committee operates under policies approved by the Board of Directors. Financial risk management policies are approved and reviewed by the Board on a regular basis. These include credit risk policies and future cash flow requirements.

Specific financial risk exposures and managementThe main risks the Group is exposed to through its financial instruments are credit risk, liquidity risk and market risk relating to interest rate risk and other price risk. There have been no substantive changes in the types of risks the company is exposed to, how these risks arise, or the Board’s objectives, policies and processes for managing or measuring the risks from the previous period.

(a) Credit riskExposure to credit risk relating to financial assets arises from the potential non-performance by counterparties of contract obligations that could lead to a financial loss to the Group.

Credit risk is managed through maintaining procedures ensuring, to the extent possible, that customers and counterparties to transactions are of sound credit worthiness and includes the utilisation of systems for the approval, granting and renewal of credit limits, the regular monitoring of exposures against such limits and the monitoring of the financial stability of significant customers and counterparties. Such monitoring is used in assessing receivables for impairment. Credit terms are generally 30 to 45 days from the date of invoice

Risk is also minimised through investing surplus funds in financial institutions that maintain a high credit rating or in entities that the finance committee has otherwise assessed as being financially sound.

(b) Liquidity riskLiquidity risk arises from the possibility that the Group might encounter difficulty in settling its debts or otherwise meeting its obligations related to financial liabilities. The Group manages this risk through the following mechanisms:

– preparing forward-looking cash flow analyses in relation to its operational, investing and financing activities;

– monitoring undrawn credit facilities;

– obtaining funding from a variety of sources;

– maintaining a reputable credit profile;

– managing credit risk related to financial assets;

– only investing surplus cash with major financial institutions; and


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– comparing the maturity profile of financial liabilities with the realisation profile of financial assets

The table below reflects an undiscounted contractual maturity analysis for non-derivative financial liabilities. Financial guarantee liabilities are treated as payable on demand since the Group has no control over the timing of any potential settlement of the liability. The Group does not hold any derivative financial liabilities directly

Cash flows realised from financial assets reflect management’s expectation as to the timing of realisation. Actual timing may therefore differ from that disclosed. The timing of cash flows presented in the table to settle financial liabilities reflect the earliest contractual settlement dates and do not reflect management’s expectations that banking facilities will be rolled forward.

Financial liability and financial asset maturity analysis

Within 1 Year 1 to 5 years Total

2016 2015 2016 2015 2016 2015

$ $ $ $ $ $

Financial liabilities due for payment

Secured loans 13,876,000 2,160,000 - 8,541,610 13,876,000 10,701,610

Trade and other payables 10,165,514 1,142,545 - - 10,165,514 1,142,545

Amounts payable to related parties 3,600,000 1,026,226 - - 3,600,000 1,026,226

Total expected outflows 27,641,514 4,328,771 - 8,541,610 27,641,514 12,870,381

Within 1 Year 1 to 5 years Total

2016 2015 2016 2015 2016 2015

$ $ $ $ $ $

Financial assets - cash flows realisable

Cash and cash equivalents 3,958,675 2,347,705 - - 3,958,675 2,347,705

Trade, term and loan receivables 3,894,266 1,578,028 - - 3,894,266 1,578,028

Total expected inflows 7,852,941 3,925,733 - - 7,852,941 3,925,733

Net (outflow)/inflow on financial instruments (19,788,573) (403,038) - (8,541,610) (19,788,573) (8,944,648)

The Group manages the liquidity required to meet its current liabilities from operating cash flows. Non-current liabilities in respect of bank loans are managed by way of re-negotiation or from the sale of medium to long term assets.

The maximum exposure to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets, is the carrying amount, net of any provisions for impairment of those assets, as disclosed in the statement of financial position and notes to the financial statements. The Group manages credit risk by ensuring that appropriate due diligence is carried out before entering into lease agreements with commercial tenants. Receivables balances are regularly monitored so as to ensure minimum exposure to bad debts.

(c) Market risk

Interest rate risk

Exposure to interest rate risk arises on financial assets and financial liabilities recognised at the end of the reporting period whereby a future change in interest rates will affect future cash flows or the fair value of fixed rate financial instruments. The Group is also exposed to earnings volatility on floating rate instruments. The financial instruments that expose the Group to interest rate risk are limited to borrowings, listed shares, cash and cash equivalents.

Interest rate risk is managed using floating rate debt. At 30 June 2016 100% of group debt is floating. The Group also manages interest rate risk by ensuring that, whenever possible, payables are paid within any pre-agreed credit terms.

The net effective variable interest rate borrowings (i.e. unhedged debt) expose the Group to interest rate risk which will impact future cash flows and interest charges and is indicated by the following floating interest rate financial liabilities:

2016 2015

Floating rate instruments Note $ $

Bank facilities 18 13,876,000 10,701,610


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Sensitivity analysis

The following table illustrates sensitivities to the Group’s exposures to changes in interest rates and equity prices. The table indicates the impact on how profit and equity values reported at the end of the reporting period would have been affected by changes in the relevant risk variable that management considers to be reasonably possible.

These sensitivities also assume that the movement in a particular variable is independent of other variables.

2016 2015

Profit Equity Profit Equity

$ $ $ $

Increase in interest rate by 0.5% 69,380 - 53,508 -

Decrease in interest rate by 0.5% (69,380) - (53,508) -

There have been no changes in any of the assumptions used to prepare the above sensitivity analysis from the prior year.

(d) Net fair values

Fair value estimation

The fair values of financial assets and financial liabilities are presented in the following table and can be compared to their carrying amounts as presented in the statement of financial position.

Differences between fair values and carrying amounts of financial instruments with fixed interest rates are due to the change in discount rates being applied by the market since their initial recognition by the Group. Most of these instruments, which are carried at amortised cost (ie trade receivables, loan liabilities), are to be held until maturity and therefore the fair value figures calculated bear little relevance to the Group.

2016 2015

Carrying Amount Fair Value

Carrying Amount Fair Value

$ $ $ $

Financial assets

Cash and cash equivalents 3,958,675 3,958,675 2,347,705 2,347,705

Trade and other receivables 3,894,266 3,894,266 1,578,028 1,578,028

Total financial assets 7,852,941 7,852,941 3,925,733 3,925,733

Financial liabilities

Trade and other payables 13,765,514 13,765,514 2,168,771 2,168,771

Bank debt 13,876,000 13,876,000 10,701,610 10,701,610

Total financial liabilities 27,641,514 27,641,514 12,870,381 12,870,381

Note 29 Company detailsThe registered office of the company is

Level 29, 20 Bond Street

SYDNEY NSW 2000


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Directors’ Declaration

In accordance with a resolution of the directors of Propertylink Group, the directors of the company declare that:

1. The financial statements and notes, as set out on pages 9 to 36, are in accordance with the Corporations Act 2001 and:

(a) comply with Australian Accounting Standards, which, as stated in accounting policy Note 1 to the financial statements, constitutes compliance with international financial reporting standards (IFRS); and

(b) give a true and fair view of the financial position as at 30 June 2016 and of the performance for the year ended on that date of the consolidated group.

2. In the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due and payable.

Peter Lancken Stuart Dawes

Chairman Chief Executive Officer

29 September 2016 29 September 2016


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Independent Auditor’s Report


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Independent Auditor’s Report (continued)


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