NPT FY 2018 Financial Results
Level 2, Bayleys House, 30 Gaunt Street, Wynyard Quarter, Auckland 1010, New Zealand
PO Box 37953, Parnell 1151 | P+64 (9) 300 6161 | F+64 (9) 300 6162 | www.npt.co.nz
NPT FY 2018 Financial Results
(NZX: NPT)
29 May 2018
NPT Limited is pleased to announce its financial results for the year ended 31 March 2018.
The year ended 31 March 2018 represents consistency in operating earnings against the prior
corresponding period (pcp) however revaluation adjustments and loss on disposal have resulted in a 2.3%
reduction in net tangible assets.
NPT Chairman, Bruce Cotterill says that the last 12 months have been steady whilst we have embedded a
new board, negotiated a new management arrangement for NPT, and set the new strategic direction. We
are confident that the position of the existing portfolio is now sustainable and positioned for value add
related growth moving forward.
“With Augusta, the Board have now identified a defined value add strategy in which the company will seek
to acquire properties with the potential to reposition, redevelop and lease; all with the aim of creating
future value. The future strategy differentiates NPT from the sector and provides a framework for relative
outperformance,” said Cotterill.
Highlights include:
• Net profit after tax of $3.095 million ($3.073 million in the prior corresponding period (pcp)).
• Adjusted funds from operations
1
of $6.15 million
• Portfolio occupancy is 97.4% which is increased from 96% due to higher occupancy at Stoddard Rd,
Auckland and the sale of Print Place, Christchurch.
• The WALE is 4.4 years which is reduced from 4.6 years (pcp)
• Loan to value ratio is 26.6% (33.1% at 31 March 2017).
• Net tangible assets of 70.6 cents per share reduced from 72.3 cps.
• The sale of both Print Place and the AA Centre creates balance sheet capability to execute future
strategy.
• Externalisation of management to Augusta for $4.5 million.
•
1
Adjusted funds from operations (AFFO) is non-GAAP financial information and is a common investor metric, calculated
based on guidance issued by the Property Council of Australia. NPT considers that AFFO is a useful measure for
shareholders and management because it assists in assessing the Company’s underlying operating performance. This
non-GAAP financial information does not have a standardised meaning prescribed by GAAP and therefore may not be
comparable to similar financial information prescribed by other entities. A reconciliation of the net profit after tax to
AFFO is included in results presentation. The independent auditors have confirmed that the AFFO calculations have been
fairly extracted from the audited Group financial statements for the year ended 31 March 2018.
Level 2, Bayleys House, 30 Gaunt Street, Wynyard Quarter, Auckland 1010, New Zealand
PO Box 37953, Parnell 1151 | P+64 (9) 300 6161 | F+64 (9) 300 6162 | www.npt.co.nz
Augusta’s Managing Director Mark Francis states that Augusta has a strong alignment of interest with
respect to its 18.85% shareholding and has the necessary acumen to drive the Company forward. The
primary focus is to close the gap between the share price and the NTA by executing the desired strategy
with the use of the current balance sheet capacity.
Financial result
The adjusted funds from operations support the current dividend level and represents a pay-out ratio of
95%. Net revenues from the property portfolio have been flat with no material growth rental growth.
There were no material lease expiries (aside from the now divested Print Place) during the period,
however no new material leases were signed with respect to vacancies at Eastgate.
Administration costs were marginally lower than last year due to a saving on professional fees but before
restructuring costs which were incurred as part of the externalisation.
Funding costs reflected a slightly higher debt profile during the year. Material debt repayments were made
late in March 2018 and there is now $25.5 million of undrawn debt.
Transaction costs of $0.68 million were incurred with the bulk of these relating to the Kiwi proposal. $0.24
million related to the externalisation of management to Augusta.
A loss on revaluation of investment property of $2.945 million was recorded driven primarily by Eastgate
and AA Centre. The stairwell project at AA Centre is now forecast to be materially more than was originally
estimated and a full allowance for the expected costs to complete have been recorded this financial year.
Print Place was divested on 29 March 2018 and a $2.97 million loss realised.
The receipt of $4.5 million from Augusta for the management contract rights has been recorded as
income.
Balance Sheet
$44.5 million of debt is currently drawn which represents a LVR of 26.6% (33.1% in the prior year).
The NTA is now 70.6 cents per share (down from 72.3 cps in the pcp) driven by the unrealised revaluation
loss as well as the realised loss on disposal of Print Place offset against the sale of the management rights.
Level 2, Bayleys House, 30 Gaunt Street, Wynyard Quarter, Auckland 1010, New Zealand
PO Box 37953, Parnell 1151 | P+64 (9) 300 6161 | F+64 (9) 300 6162 | www.npt.co.nz
Dividend
A final quarter dividend of 0.9 cents per share has been declared, with the record date set for 13 June
2018 and payment on 20 June 2018.
Total dividends paid for the year are 3.60 cents per share which is consistent with guidance.
Outlook
Post the exit of the AA Centre, which is expected to settle in July 2018, there is further balance sheet
capacity to acquire investment property which is in line with the future strategy.
The Board is confident that Augusta has the necessary capability and track record in the sector to source
such opportunities. The primary focus is to close the share price gap to NTA through active management
and prudent investment selection.
The Board will commit to a rebrand of the company and this will be announced in the near term.
ENDS
For further information please contact:
Mark Francis
Managing Director
Augusta Funds Management Limited
(09) 300 6161
Guy French-Wright
Chief Operating Officer
Augusta Funds Management Limited
(09) 300 6161
Simon Woollams
Chief Financial Officer
Augusta Funds Management Limited
(09) 300 6161
---
Annual Report
For the twelve months ended
31 March 2018
Page | 2
Contents
Page
1. Consolidated Statement of Comprehensive Income 3
2. Consolidated Statement of Changes in Shareholders’ Funds 4
3. Consolidated Statement of Financial Position 5
4. Consolidated Statement of Cash Flows 6
5. Notes to the Consolidated Financial Statements 8
6. Independent Auditor’s Report 31
7. Directory 34
Page | 3
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2018
The notes set out on pages 8 to 30 form part of, and should be read in conjunction with, the consolidated financial statements
GROUPGROUP
20182017
Note$000$000
Gross Rental Income16,694 17,152
Other Income5 30
Unrealised Change in Fair Value of Interest Rate Swaps1079 732
Sale of Management Rights254,500 -
Total Income21,278 17,914
Direct Property Operating Expenses6(4,995) (5,276)
Net Finance Costs7(2,821) (2,726)
Administration Expenses8(2,951) (2,612)
Net Loss on Sale of Plant and Equipment14(29) (87)
Unrealised Change in Fair Value of Property12(2,945) (1,651)
Net (Loss) on Sale of Investment Property12(2,970) -
Transaction Costs23(686) (1,339)
Total Expenses(17,397) (13,691)
Profit Before Income Tax3,881 4,223
Income Tax Expense9(786) (1,150)
Ne t Profit Afte r Ta x a tion3,095 3,073
Other Comprehensive Income - -
Total Comprehensive Income3,095
3,073
Earnings Per Share
Cents per Share
Basic and Diluted Earnings Per Share191.91 1.90
Page | 4
Consolidated Statement of Changes in Shareholders’ Funds
For the year ended 31 March 2018
The notes set out on pages 8 to 30 form part of, and should be read in conjunction with, the consolidated financial statements
Attributa ble to
ContributedRetainedOwners of
CapitalEarningsthe Group
Note$000$000$000
Shareholders' Funds at 1 April 2016134,089 (14,297) 119,792
Net Profit after Taxation - 3,073 3,073
Distributions Paid and Payable to Shareholders20 - (5,792) (5,792)
Other Comprehensive Income - - -
Shareholders' Funds at 31 March 2017134,089 (17,016) 117,073
Shareholders' Funds at 1 April 2017134,089 (17,016) 117,073
Net Profit after Taxation - 3,095 3,095
Distributions Paid and Payable to Shareholders20 - (5,829) (5,829)
Other Comprehensive Income - - -
Shareholders' Funds at 31 March 2018134,089 (19,750) 114,339
Page | 5
Consolidated Statement of Financial Position
As at 31 March 2018
T
he Board of NPT Limited approved the consolidated financial statements for issued on 29 May 2018.
B
ruce Cotterill Carol Campbell
Chairman Chair Audit and Risk Committee
T
he notes set out on pages 8 to 30 form part of, and should be read in conjunction with, the consolidated financial statements
GROUPGROUP
20182017
Note$000$000
Cu r r e n t Asse ts
Cash and Cash Equivalents472 2,030
Trade and Other Receivables11339 462
Prepayments340 616
Investment Property Held for Sale1243,814 -
Total Current Assets44,965 3,108
Non-Current Assets
Investment Properties12124,556 178,173
Plant & Equipment1480 1,068
Total Non-Current Assets124,636 179,241
T o ta l Asse ts 169,601 182,349
Current Liabilities
Trade and Other Payables152,227 2,589
Deposit Received on Property Held for Sale124,700 -
Tax Payable9462 296
Total Current Liabilities7,389 2,885
Non-Current Liabilities
Bank and Other Loans1644,500 58,500
Deferred Tax Liability92,533 2,972
Interest Rate Swaps10840 919
Total Non-Current Liabilities47,873 62,391
Shareholders' Funds
Contributed Capital17134,089 134,089
Retained Earnings18(19,750) (17,016)
Total Shareholders' Funds114,339 117,073
Total Shareholders' Funds and Liabilities169,601 182,349
Page | 6
Consolidated Statement of Cash Flows
For the year ended 31 March 2018
The notes set out on pages 8 to 30 form part of, and should be read in conjunction with, the consolidated financial statements
GROUPGROUP
20182017
$000$000
Cash Flows from Operating Activities
Cash was provided from/(applied to):
Gross Rental Income17,286 16,762
Interest Income41 69
Taxation Paid(1,057) (1,055)
Other Income5 285
Operating Expenses(6,908) (9,123)
Interest Expense(2,902) (2,794)
Net Cash Inflow from Operating Activities6,465 4,144
Cash Flows from Investing Activities
Cash was provided from/(applied to):
Sale of Investment Property8,250 -
Cost of Disposal of Investment Property(220) -
Deposit Received from Investment Property Held for Sale124,700 -
Plant and Equipment - (584)
Capital Expenditure on Investment Properties(4,738) (8,201)
Transaction Costs(686) (1,138)
Sale of Management Rights254,500 -
Ne t Ca sh (Outflow ) from Inve sting Activitie s11,806 (9,923)
Cash Flows from Financing Activities
Cash was provided from/(applied to):
(Repayment)/Drawdown of Bank and Other Loans (Secured)(14,000) 10,500
Distributions made to Shareholders20(5,829) (5,792)
Net Cash (Outflow) / Inflow from Financing Activities(19,829) 4,708
Net Increase/(Decrease) in Cash and Cash Equivalents(1,558) (1,071)
Cash and Cash Equivalents at the Beginning of the Year2,030 3,101
Cash and Cash Equivalents at the End of the Year472 2,030
Page | 7
Reconciliation of Net Profit to Net Cash Inflow from Operating Activities
Reconciliation of Liabilities arising from Financing Activities
The changes in the Group’s liabilities arising from financing activities can be classifed as follows:
The notes set out on pages 8 to 30 form part of, and should be read in conjunction with, the consolidated financial statements
GROUPGROUP
20182017
$000$000
Ne t Profit a fte r Ta x a tion3,095 3,073
Items Classified as Investing or Financing Activities:
Unrealised (Gain)/Loss in Fair Value of Investment Properties2,945 1,651
Transaction Costs686 1,339
Loss on Disposal of Investment Property2,750 -
Loss on Sale of Plant and Equipment29 87
Cost of Sale of Print Place220 -
Unrealised Loss in Fair Value of Interest Rate Swaps(79) (732)
Movement in Deferred Taxation(439) 78
Sale of Management Rights(4,500) -
Movements in Working Capital Items:
Accounts Receivable and Prepayments868 (328)
Trade and Other Payables367 (1,170)
Taxation Payable166 17
Non-Cash Item
Depreciation357 129
Net Cash Inflow from Operating Activities6,465 4,144
Bank and Other Loans
1 April 201758,500
Repayments(14,000)
31 March 201844,500
1 April 201648,000
Loan Increases10,500
31 March 201758,500
Page | 8
Notes to the Consolidated Financial Statements
For the year ended 31 March 2018
1. REPORTING ENTITY
The reporting entity is the consolidated group comprising NPT Limited (“the Company”) and its New Zealand subsidiaries
together referred to as “the Group”. NPT Limited is a limited liability company incorporated and domiciled in New Zealand. NPT
Limited is registered under the Companies Act 1993, is listed on the New Zealand Stock Exchange (NZX) and is an FMC
reporting entity under the Financial Markets Conduct Act 2013.
The principal activity of the Group is investing in industrial, retail and commercial property in New Zealand.
2. STATEMENT OF COMPLIANCE AND BASIS OF PREPARATION
These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Practice in
New Zealand (‘NZ GAAP’). They comply with New Zealand equivalents to International Financial Reporting Standards (‘NZ
IFRS’) and other applicable Financial Reporting Standards, as appropriate for a profit-orientated entity that falls into the Tier 1
for profit category as determined by the New Zealand Accounting Standards Board.
The consolidated financial statements have been prepared under the assumption that the Group operates on a going concern
basis and also comply with International Financial Reporting Standards (‘IFRS’) issued by the International Accounting
Standards Board.
These consolidated financial statements have been prepared in accordance with Generally Accepted Accounting Practice in
New Zealand (‘NZ GAAP’) and the requirements set out in section 7 of the Financial Markets Conduct Act 2013 and the Main
Board Listing Rules of the NZX.
Basis of Measurement
The consolidated financial statements have been prepared on the basis of historical cost, except for the revaluation of
investment properties and certain financial instruments. They are the same accounting policies as were applied for the year
ended 31 March 2017 consolidated financial statements.
Cost is based on the fair value of the consideration given in exchange for assets.
Accounting policies are selected and applied in a manner which ensures that the resulting financial information satisfies the
concepts of relevance and reliability, therefore ensuring that the substance of the underlying transactions or other events are
reported.
Functional and Presentation Currency
The consolidated financial statements are presented in New Zealand Dollars (NZD), which is the Group’s functional currency,
rounded to the nearest thousand dollars (000’s) except in certain notes where disclosure may be to the dollar.
Critical Judgments in Applying Accounting Policies and Key Sources of Estimation Uncertainty
In the application of NZ IFRS, management are required to make judgements, estimates and assumptions about carrying
values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to be reasonable under the circumstances, the
results of which form the basis of making the judgements. Actual results may differ from these estimates. The estimates and
underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in
which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the
revision affects both current and future periods.
Page | 9
In particular, information about significant areas of estimation, uncertainty and critical judgements in applying accounting
policies that have the most significant effect on the amount recognised in these Consolidated Financial Statements are
described in the following notes:
Valuation of Investment Properties (Note 12)
Recognition of Deferred Tax (Note 9)
3. SIGNIFICANT ACCOUNTING POLICIES
Changes in Accounting Policy
In prior years certain lease fitouts, plant and equipment and furniture and fittings have been recorded separately from
the investment properties as plant and equipment. These have been reclassified as investment property at reporting
date as management has determined they would likely include these items in any sale of property. Note 14 discloses
the impact of this reclassification.
In addition the Group’s policy to provide details on its financing activities was changed as a result of the following
standard. The amendments to NZ IAS 7 ‘Statements of Cash Flows’, effective 1 January 201, require the Group to
provide disclosures about the changes in liabilities from financing activities. The Group categorises those changes into
changes arising from cash flows and non-cash changes with further sub-categories as required by NZ IAS 7.
The accounting policies set out below have been applied consistently to all periods presented in these consolidated financial
statements.
Basis of Consolidation
(a) Subsidiaries
The consolidated financial statements incorporate the assets, lia bilities, equity, income, expenses and cash flows of
entities co ntrolled by NPT Limited at the end of the reporting period or from time to time during the reporting period. A
co ntrolled entity is any entity over which NPT Limited has the power to direct relevant act ivi ties, exposure, or rights, to
variable returns from its involvement with the investee, and the ability to use its power over the investee to affe ct the
amount of investor return.
Consist ent accounting policies are employed in the preparation and presentation of the consolidated financial
statements.
Accounting polic ies of su bsidiaries are co nsist ent with the poli cies adopted by the Company.
All material intra-group transactions, balances, income and expenses are eliminated on co nso lid ation.
(b) Investment Properties
Investment properties, which are properties held to earn rentals and/or for ca pital appreciation, are initially brought to
account at cost plus related costs of acq uisition. After initial recognition, investment properties are st ated at fair value
as determined by an independent registered valuer. Investment properties are valued annually. The fair value is based
on market values, being the estimated amount for which a property could be exchanged on the date of the valuation
between a willing buyer and a willing seller in an arm's length transaction after proper marketing wherein the parties
had each acted knowledgeably, prudently and without compulsion.
In the abse nce of an active market, alternative valuation tech niques are utili sed which may include discounted cash
flow projections, ca pitali sa tion of income or sa les co mparison approach as appropriate to the property being valued.
The valuations are prepared by co nsidering the aggregate of the estimated cash flows expect ed from rental income,
the occupancy rates, average lease terms and ca pitali sa tion rates which reflect the current market co nditions. The
est imate of fair value is a judgement which has been made based on the mar
ke t conditions which apply at each
reportin g date.
Any gains or losses arising from ch anges in the fair value of investment properties are included in the Consolidated
Statement of Comprehensive Income in profit or loss in the period in which the change occurred.
Page | 10
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(c) Plant and Equipment
Each class of plant and equipment is st ated at cost less accumulated depreciation and any impairment. Any gains or
losses arising from disposal of plant and equipment are included in Profit and Loss.
Depreciation
Depreciation is ch arged on a straight-line basis to write down the cost of plant and equipment to its est imated residual
value over its est imated use ful life. Plant and equipment residual values are reviewed annually.
Summary of rates use d:-
Computer Equipment & Software 30% - 40%
Plant & Equipment 7% - 67%
Furniture & Fittings 8.5% - 30%
Lease Fitouts 8.40%
(d) Operating Leases
(i) Group as Lessor
Property leases under which all the risks and rewards of ownership are effect ively retained by the lessor (the
Group) are classified as operating leases. Annual rental income and expenditure are included in the
Consolidated Statement of Comprehensive Income on a syst ematic basis over the term of the lease.
(ii) Group as Lessee
Property leases are recognised as an expense on a straight line basis over the lease term.
(e) Lease Incentives
In the event lease incentives are provided to lessees, such incentives are recognised as an asset. The
aggregate benefits provided are amortised to the Consolidated Statement of Comprehensive Income on the
straight line basis over the period of the lease as a reduction in rental income, except where another syst ematic
basis is more representative of the time pattern in which benefits provided are co nsu med.
(f) Impairment of Assets
Assets other than investment properties and deferred tax assets are test ed for impairment whenever events or
ch anges in circumst ance indica te that the carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset's fair value less costs to se ll and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels for which there are se parately identifiable cash flows that are
largely independent of the cash flows from other assets or groups of assets (cash generating
units).
(g) Borrowing Costs
Borrowing costs, interest payable on borrowings within the consolidated Statement of Comprehensive Income and
gain/loss on interest rate swaps are recognised as an expense in the profit or loss when incurred. Borrowing costs
incurred that do not relate to qualifying assets are treated as an expense and are not capitalised.
(h) Revenue Recognition
Revenue is measured at the fair value of the co nsideration received or receivable and represents rental
received and property expenses recovered in the normal co urse of business. The foll owing sp ecific recognition
cr iteria must be met before revenue is recognise d:
(i) Rental Income
Rental Income from Operating Leases is recognised on a straight line basis over the term of the relevant
lease including any lease incentives.
Page | 11
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(ii) Interest Income
Interest Income is recognised on an effect ive interest method.
(iii) Sale of Investment Properties/Non-Current Assets Held for Sale
Revenue on the sa le of Investment Properties/Non-Current Assets Held for Sale is recognised when the risks
and rewards have transf erred to the buyer.
(iv) Property Management Income
Property management income is recognised on completion of service.
(i) Taxation
The tax expense recognised in the Profit or Loss comprises the sum of deferred tax and current tax not recognised in
other comprehensive income or directly in equity.
(i) Current Tax
Current tax is ca lcu lated by reference to the amount of income taxes payable or recoverable in respect of
the taxable profit or tax loss for the period. It is ca lcu lated using tax rates and tax laws that have been
enact ed or su bst antively enact ed by reporting date. Current tax for current and prior periods is recognised
as a liability (or asset) to the extent it is unpaid (or refundable).
(ii) Deferred Tax
Deferred tax is calculated by using the lia bility method in respect of temporary differences arising from
differences between the carrying amount of assets and liabilities in the financial st atements and the
corresponding tax base of those items.
Deferred tax liabilities are recognised for all taxable temporary differences. Deferred tax assets are
recognised to the extent that it is probable that su fficient taxable income will be available against which
deduct ible temporary differences or unused tax losses and tax credits can be utili se d. However, deferred tax
assets and liabilities are not recognised if the temporary differences giving rise to them arise from the initial
recognition of assets and liabilities (other than as a result of a business co mbination) which affects neither
taxabl
e income nor accounting profit.
If a deferred tax liability or asset arises from investment property that is measured at fair value, there is a
rebuttable assumption that the carrying amount of the investment property will be recovered through sa le. The
presumption has not been rebutted.
The Group holds investment properties for the purpose of capital appreciation and rental income and therefore the
measurement of any related deferred tax reflects the tax consequences of recovering the carrying amount of the
investment property entirely through sale.
In New Zealand there is no capital gains tax, therefore the tax consequences on sale will be limited to
depreciation previously claimed for tax purposes (i.e. depreciation recovered).
Deferred tax liabilities are recognised for taxable temporary differences arising on investments in
su bsidiaries except where the co nso lidated entity is able to co ntrol the reversal of the temporary
differences and it is probable that the temporary differences will not reverse in the foreseeable future.
Deferred tax assets arising from deductible temporary differences associated with these investments and
interests are only recognised to the extent that it is probable that there will be su fficient taxable profits
against which to utilise the benefits of the temporary differences and they are expect ed to reverse in the
foreseeable future.
Deferred tax assets and liabilities are measured at the tax rates that are expect ed to apply in the period when
the lia bility is se ttled or the asset is realised based on tax rates that have been enacted or substantively
enacted at reporting date. Deferred tax is charged or cr edited in the Consolidated Statement of
Comprehensive Income, except when it relates to items ch arged or credited directly to equity, in which case
the deferred tax is also dealt with in equity.
Page | 12
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
(j) Goods and Services Tax (GST)
All items in the Consolidated Statement of Financial Position are st ated exclusive of GST, with the exception of
receivables and payables, which are st ated inclusive of GST. All items in the Consolidated Statement of
Comprehensive Income are st ated exclusive of GST.
Cash flows are included in the Consolidated Statement of Cash Flows on a net basis. The GST co mponent of
cash flows arising from investing and financing act ivities which is recoverable from, or payable to the taxation
authority, are classified as an operating cash flow.
(k) Cash and Cash Equivalents
Cash and cash equivalents co mprise cash on hand, demand deposits, and other sh ort-term highly liquid
investments that are readily co nvertible to a known amount of cash and are su bject to an insignificant risk of
changes in value.
(l) Financial Instruments
Financial Assets and Financial Liabilities are recognised on the Consolidated Statement of Financial
Position when the Group becomes a party to the contractual provisions of the instrument
.
(i) Accounts Receivable
Accounts Receivable are measured at initial recognition at fair value and are su bse quently measured at
amortised cost using the effect ive interest rate method. Appropriate allowances for est imated irrecoverable
amounts are recognised in the Consolidated Statement of Comprehensive Income when there is objective
evidence that the asset is impaired. The all owance recognised is measured as the difference between the
asset’s carrying amount and the present value of estimated future cash flows discounted at the effect ive
interest rate co mpu
ted at initial recognition.
(ii) Accounts Payable
Accounts Payable are initially measured at fair value and su bse quently measured at amortised cost using the
effect ive interest rate method.
(iii) Equity Instruments
Equity Instruments issued by the Group are recorded as the proceeds are received, net of direct issue costs.
(iv) Fair Value Estimation
The fair value of financial instruments traded in active markets is based on quoted market prices as at each
reporting date.
The fair value of derivative financial instruments is based on quoted market prices. Where such prices are not
available, use is made of discounted cash flow analysis using the applic able yield curve for the duration of the
instruments.
The nominal value less est imated credit risk adjustments of accounts receivable and payable are assumed to
approximate their fair values. The fair value of financial liabilities for disc losure purposes is est imated by
discounting the future co ntractual cash flows at the current market vs. interest rate that is available to the
Group for similar financial instruments.
(v) Loans and Borrowings
All loans and borrowings are initially recognised at fair value plus transaction costs. After initial recognition,
these loans and borrowings are su bse quently measured at amortised cost using the effect ive interest rate
method which allocates the cost through the expect ed life of the loan or borrowing. Amortised cost is
ca lcu lated taking into account any issue costs and any discount or premium on drawdown. Interest accrued on
Loans and Borrowings is se parately disclosed under Trade and Other Payables (refer Note 16).
Page | 13
3. SIGNIFICANT ACCOUNTING POLICIES (continued)
The effect ive interest method is a method of ca lcu lating the amortised cost of a financial liability and of
all ocating interest expense over the relevant period. The effe ct ive interest rate is the rate that exactly
discounts est imated future cash payments through the expect ed life of the financial liability, or where
appropriate, a sh orter period, to the net carrying amount of the financial instrument.
(vi) Derivative Financial Instruments
The Group’s activities expose it primarily to the financial risk of changing interest rates. The Group therefore uses
interest rate swap contracts to manage these exposures.
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are
subsequently re-measured to their fair value at the reporting date. The gain/loss on re-measurement to fair value is
recognised in Profit or Loss within the Consolidated Statement of Comprehensive Income.
In determining the fair value of derivatives, an adjustment would be made to reflect the creditworthiness of the
counterparty only if material.
4. STANDARDS AND INTERPRETATIONS ON ISSUE NOT YET ADOPTED
The Group has elected not to early adopt the following standards, which have been issued by the International Accounting
Standards Board and the New Zealand Accounting Standards Board.
NZ IFRS 9 Financial instruments (Effective from 1 January 2018)
The New Zealand Accounting Standards Board (NZASB) issued the completed version of NZ IFRS 9 Financial Instruments,
bringing together the classification and measurement, impairment and hedge accounting to replace NZ IAS 39 Financial
Instruments: Recognition and Measurement and all previous versions of NZ IFRS 9.
NZ IFRS 15 Revenue from Contracts with Customers (Effective from 1 January 2018)
NZ IFRS 15 establishes principles for reporting useful information to users of financial statements about the nature,
amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. The core
principle of NZ IFRS 15 is that an entity recognises 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 those
goods or services.
NZ IFRS 16 Leases (Effective from 1 January 2019)
NZ IFRS 16 changes the relevant information to be reported by lessors and lessees with a view to faithful representation of
information to the users of financial statements so they can assess the effect leases have on cash flow, financial
performance and the financial position of the entity. The standard requires the lessee to recognise assets and liabilities for
the rights and obligations created by those leases. Lessors reporting requirements are similar to the previous standard NZ
IAS 17 Leases.
The Directors have evaluated the impact of these new standards on the consolidated financial position and performance of the
Group. Their current preliminary evaluation has indicated that there is no material effect on the Group’s result in adopting the
new standards but additional disclosures will be required.
Page | 14
5. OPERATING PROFIT BEFORE FAIR VALUE MOVEMENTS, DISPOSALS AND TAXATION
6. DIRECT PROPERTY OPERATING EXPENSES
7. NET FINANCE COSTS
GROUPGROUP
20182017
$000$000
Gross Rental Income16,694 17,152
Other Income5 30
Total Income16,699 17,182
Direct Property Operating Expenses
(4,995) (5,276)
Net Income11,704 11,906
Administration Expenses(2,951) (2,612)
Gross Operating Profit8,753 9,294
Interest Income41 69
Interest and Finance Charges(2,862) (2,795)
Net Finance Costs(2,821) (2,726)
Operating Profit Before Fair Value Movements, Disposals And Taxation5,932 6,568
GROUPGROUP
2018
2017
$000$000
Tenant Operating Expenses(4,120) (4,009)
Owner Operating Expenses(802) (994)
Bad Debts(29) (14)
Movement in allowance for Doubtful Debts(44) (259)
Total Direct Property Operating Expenses(4,995) (5,276)
GROUP
GROUP
20182017
$000
$000
Interest Income41
69
Interest and Finance Charges(2,862) (2,795)
Net Finance Costs(2,821) (2,726)
Page | 15
8. ADMINISTRATION EXPENSES
GROUPGROUP
20182017
$000$000
Audit Fees(108) (87)
Directors Fees(279) (234)
Employee Costs(931) (1,160)
Redundancy Costs(726) -
Offic e Cos ts(392) (316)
Professional Fees(313) (625)
Registry and Stock Exchange Fees(113) (105)
Shareholder Communications(66) (85)
Total Administration Expenses(2,951) (2,612)
Fees for Grant Thornton comprise the following:
GROUPGROUP
20182017
$000$000
Other Assurance Services(29) (29)
Statutory Audit(79) (58)
Total Fees Paid to Grant Thornton(108) (87)
Page | 16
9. INCOME TAX
GROUPGROUP
20182017
$000
$000
Net Profit Before Taxation
3,881 4,223
Taxation at 28% 1,087 1,182
Less Taxation Effect of Permanent Differences
Loss/(Gain) on Realisation of Investment Properties832 (389)
Investment Properties Depreciation(657)
-
Adjustment for non-recovered Depreciation(272) -
Investment Properties Gain (Loss)824 -
Loss on Disposal(7) -
Sale of Management Rights
(1,260) -
Transaction Costs192 -
Other47 357
Taxation Expense/(Benefit) per the Statement of Comprehensive Income786 1,150
The Income Tax Expense is represented by:
Current Tax
Current Year Tax Provision(1,223)
(1,095)
Total Current Tax Movement(1,223)
(1,095)
Current Tax Asset/(Liability)
Opening Balance
(296) (279)
Current Year Tax Provision(1,223) (1,095)
Tax Paid/(refunded)1,057 1,078
Total Current Tax Asset/(Liability)(462) (296)
Deferred Tax
Lease Incentives
98 49
Unrealised Interest Rate Swap Gain/(Loss)(22) (205)
Depreciation on Investment Properties272
-
209 -
Provisions
(119) 86
Other
- (8)
Total Deferred Tax Movement438 (78)
GROUPGROUP
20182017
Deferred Tax Asset/(Liability)
$000$000
Investment Properties Depreciation Recovery
(2,868) (3,350)
Interest Rate Swaps
235 257
Other100
121
Balance at the End of the Period(2,533) (2,972)
Investment Property Sale
Page | 17
10. INTEREST RATE SWAPS
The Group manages its interest rate risk by using floating-to-fixed Interest Rate Swaps which have the economic effect of
converting interest on borrowings from floating rates to fixed rates.
Changes in the fair value of Swaps are recognised in the Consolidated Statement of Comprehensive Income. Any unrealised
change is expected to unwind over the longer term. Swaps have been recognised as non-current as the current portion as
disclosed in Note 22 is not considered material for separate disclosure in the Statement of Financial Position.
The Group has four interest rate swaps currently in place, with the following values: The first for $20m will expire on 7 May
2019, the second for $5m expires on 22 April 2021, the third, also for $5m, expires on 30 September 2021, and the fourth for
$10m will expire on 8 May 2022.
11. TRADE AND OTHER RECEIVABLES
12. INVESTMENT PROPERTIES
All properties that will not be sold in the next 12 months were valued on a fair value basis at each reporting date by
independent registered valuers, listed below, who are members of the Institute of Valuers of New Zealand. These valuers are
experienced in valuing commercial properties.
GROUPGROUP
2018
2017
$000
$000
Balance at the Beginning of the Period919 1,651
Current Year Fair Value Change of Swaps(79) (732)
Balance at the End of the Period840 919
GROUP
GROUP
20182017
$000
$000
Trade Receivables
353
494
Allowance for Doubtful Debts(91) (55)
Total Accounts Receivable262 439
Other Loans and Receivables77 23
Total Trade and Other Receivables339 462
GROUPGROUP
20182017
Reconciliation of Carrying Amount$000$000
Balance at the Beginning of the Period175,956 171,265
Disposal of Investment Property(11,008) -
Work in Progress119 -
Building Improvements15 -
Reclassifications from Work in Progress5,726 4,736
Reclassifications from Plant and Equipment977 -
Capitalised Lease Incentives and Commissions(470) 1,606
Revaluation of Investment Properties(2,945) (1,651)
Investment Property Held for Sale Reclassified as current asset(43,814) -
Balance at the End of the Period124,556 175,956
Page | 18
The fair values of the Investment Properties at each reporting date are as follows:
Print Place was sold on 29 March for $8.25 million. This resulted in a loss on sale of this property of $2.97 million, recognised in
the Consolidated Statement of Comprehensive Income profit or loss.
The AA Centre has an unconditional Sale and Purchase Agreement in place that is expected to settle 12 July 2018. The sales
price is $47 million and a deposit of $4.7 million has been received, the deposit is shown in current liabilities. The property is
classified as held for sale and is measured at fair value less costs to sell. Fair value is based up on the contracted sale price
less known costs to complete refurbishment that NPT limited is contractually obliged to perform.
Measurement of Fair Value
(i) Fair Value Hierarchy
The Group's investment properties were valued at 31 March 2018 by independent registered valuers who have
recent experience in the locations and segments of the investment properties valued. For all investment properties,
their current use equates to the highest and best use.
GROUP
CAPITALISATION
OCCUPANCY
WALT
2018
DESCRIPTION
VALUER
RATE
RATE %
YEAR$000
Eastgate Shopping Centre
Cnr Buckleys Road & Linwood Jones Lang LaSalle8.00%94.30%4.758,910
Avenue, C hri stchurch
Heinz Wattie's Warehouse
113 Elwood Road, HastingsColliers8.13%100.00%8.927,439
Roskill Centre
22 Stoddard Road, AucklandColliers6.25%100.00%3.838,049
97.40%4.4
124,398
GROUP
12 months
2018
Investment Property Held for Sale$000
Contract Sale Price AA Centre47,000
W IP(68)
Lease Incentives(39)
Contractual Cost to Complete cladding(2,584)
Cost of Sale(495)
Sale Price43,814
GROUP 2017GROUP
CAPITALISATIONOCCUPANCYWALT2017
DESCRIPTIONVALUERRATERATE %YEAR$000
AA Centre
99 Albert Street, AucklandJones Lang LaSalle7.63%91.58%2.141,129
Eastgate Shopping Centre
Cnr Buckleys Road & Linwood Jones Lang LaSalle8.13%96.15%4.560,574
Avenue, C hri stchurch
Print Place
17 Pri nt Place, C hri stchurch Jones Lang LaSalle9.50%77.81%1.311,026
Heinz Wattie's Warehouse
113 Elwood Road, HastingsJones Lang LaSalle8.13%100.00%9.827,162
Roskill Centre
22 Stoddard Road, AucklandJones Lang LaSalle6.38%100.00%4.936,065
175,956
Page | 19
12. INVESTMENT PROPERTIES (continued)
Discussions of valuation processes and results are held between the Management Team and the Audit and Risk
Committee on an annual basis where they verify all major inputs to the independent valuation report, assess property
valuation movements when compared to the prior year valuation report and determine whether there are any
changes in fair values.
The investment properties are stated at fair value as determined by independent registered valuers. The valuation
basis, which conforms to the New Zealand Property Institute’s Valuation for Financial Reporting Purposes Practice
Standard, was determined by reference to market evidence of transaction prices for similar properties. Accordingly,
fair value is the amount at which the properties could be sold in an arm's length transaction between willing parties, in
an active market for similar properties in the same location and condition and subject to similar leases. However,
where an active market is absent, in line with usual commercial valuation practice, the valuations are prepared by
considering the historical transactions, the aggregate of the estimated cash flows expected from rental income, the
occupancy rates, average lease terms and capitalisation rates which reflect the current market conditions.
In deriving fair value under each approach all assumptions are compared, where possible, to the Direct Comparison
Approach using the market based evidence and transactions for properties with similar locations, condition and
quality of accommodation and analysis of the rate per square metre of net lettable area. The adopted Fair Value is a
weighted combination of both the Capitalisation and Discounted Cash Flow approaches.
Where recent comparable market based evidence and transactions are not available, alternative valuation
techniques are utilised which may include discounted cash flow projections, capitalisation of income and sales
comparison approaches as appropriate to the property being valued. As each of the investment properties are under
$100 million, most of the properties have recent transactional evidence to support their valuation.
Based on the inputs used, the Direct Comparison valuation has been categorised as Level 2 Fair Value and
Capitalisation of Net Income and Discounted Cash Flow have been categorised as Level 3. The Group has adopted
Jones Lang LaSalle's valuation for Eastgate Shopping Centre and Colliers’ valuations for the rest of the investment
properties.
(ii) Level 3 Fair Value
Valuation Techniques and Significant Unobservable Inputs
The following table shows the Capitalisation of Net Income and Discounted Cash Flow Level 3 valuation techniques
used in measuring the fair value of investment property. All investment properties at 31 March 2018 have been
categorised within Level 3 of the fair value hierarchy.
GROUP
2018
Loss on Sale of Print Place$000
Opening Carrying Value11,026
Plus Cost of Sale Transaction194
Less Sale Price(8,250)
Loss on Sale2,970
Page | 20
12. INVESTMENT PROPERTIES (continued)
13. INVESTMENT IN SUBSIDIARIES
All of the subsidiaries are wholly owned companies incorporated in New Zealand with a 31 March annual reporting date.
DESCRIPTION
VALUATION
$000
VALUATION
TECHNIQUE
Investment Properties
124,398
Capitalisation
of Net Income
Discounted
Cash Flow
UNOBSERVABLE INPUTS
The estimated fair value
would increase/(decrease)
SENSITIVITY OF FAIR
VALUE TO CHANGES IN
The capitalisation rate range
applied is 6.25% - 8.125%.
Retail and office rental growth
was higher (lower).
The rental reversion as a rate
of investment property value
rate range is -7.43% - 8.0%.
This is an adjustment for those
tenancies whose rental is
above or below the market rate.
Rental reversions was higher
(lower).
The capital expenditure as a
rate of investment property
value rate range is 0.33% -
1.37% over the next 24 months.
Capital expenditure was lower
(higher).
The discount rate range
applied is 8.50% - 9.25%.
The discount rate was lower
(higher).
Occupancy rate range applied
is 94.3% - 100.00%.
The occupancy rate was
higher (lower).
Rental growth rate range is
1.0% - 3.0% over 10 years.
Office rental growth was
higher (lower).
A letting up period range of 3 -
8 months has been allowed at
the end of each existing lease
of the properties.
Capital expenditure was lower
(higher).
GROUP
GROUP
31 MAR 201831 MAR 2017
Eastgate Shopping Centre Limited100%100%
The National Property Trust No 2 Limited100%100%
22 Stoddard Road Limited100%100%
99 Albert Street Limited100%100%
NPT Management Team Limited100%100%
NPT 10 Limited100%100%
NPT 11 Limited100%100%
PERCENTAGE HELD
Page | 21
14. PLANT AND EQUIPMENT
Totals across the plant and equipment classes are showing the effect of the change in accounting policy in which plant and
equipment that are an integral part of the buildings have been included in the investment property valuations.
The Net Loss on Sale of Plant and Equipment shown in the Consolidated Statement of Comprehensive Income is included
disposals.
15. TRADE AND OTHER PAYABLES
LEASE
PLANT &FURNITURECOMPUTER
FITOUTSEQUIPMENT& FITTINGSEQUIPMENTTOTAL
GROUP 2018$000$000$000$000$000
Co st
Balance at the Beginning of the Period524 535 378 138 1,575
Additions36 262 76 16 390
Disposals(16) (19) (18) - (53)
Reclassified as Investment Property(544) (758) (115) (89) (1,506)
Balance at the End of the Period - 20 321 65 406
Accumulated Depreciation
Balance at the Beginning of the Period(190) (103) (118) (96) (507)
Depreciation(48) (76) (203) (30) (357)
Disposals - 3 6 - 9
Reclassified as Investment Property238 156 50 85 529
Balance at the End of the Period - (20) (265) (41) (326)
Net Book Value at the End of the Period - - 56 24 80
LEASEPLANT &FURNITURECOMPUTER
FITOUTSEQUIPMENT& FITTINGSEQUIPMENTTOTAL
GROUP 2017$000$000$000$000$000
Co st
Balance at the Beginning of the Period422 173 368 114 1,077
Additions102 378 80 25 585
Disposals - (16)(69)(2)(87)
Balance at the End of the Period524 535 378 138 1,575
Accumulated Depreciation
Balance at the Beginning of the Period(148) (69) (89) (71) (377)
Depreciation(42) (36) (26) (26) (130)
Disposals - 2 (3) 1 -
Balance at the End of the Period(190) (103) (118) (96) (507)
Net Book Value at the End of the Period334 432 260 42 1,068
GROUPGROUP
20182017
$000$000
Accrued Interest and Fees Payable to Bank284 324
GST Payable742
-
Rent in Advance33 146
Other Creditors and Accruals1,168 2,119
Total Trade and Other Payables - Current2,227 2,589
Page | 22
16. BANK AND OTHER LOANS
The Group has a $70 million banking facility arranged with the Bank of New Zealand that is secured by way of General Security
Agreements granted by NPT Limited and each subsidiary of the Company. In addition, the facility is secured by registered first
mortgages over all of the real property assets and the cross guarantee of each of the Group's subsidiary companies. The
facility is due to expire on 22 July 2020.
The weighted average cost of funds for bank debt under the facility, including margin and line fee, at the reporting date was
5.42% (2017: 5.08%).
The Group recognises the risk of the fluctuating economic value of financial instruments because of changes in interest rates in
its attempt to manage its cash flow interest rate risk. The Group manages this risk by using floating-to-fixed Interest Rate
Swaps.
Generally, the Group raises borrowings at floating rates and swaps them into fixed rates that are lower than those available if
the Group borrowed at fixed rates directly. Under the Interest Rate Swaps, the Group agrees with other parties to exchange the
difference between fixed contract rates and floating rate interest amounts calculated by reference to the agreed notional
principal amounts. Changes in the fair value of Interest Rate Swaps are recognised in Profit or Loss within the Statement of
Comprehensive Income.
Refer to Note 22, Financial Instruments for additional information.
17. CONTRIBUTED CAPITAL
All shares have equal voting rights and share equally in distributions and any surplus on winding up.
18. RETAINED EARNINGS
GROUPGROUP
20182017
$000$000
Bank of New Zealand (Secured)44,500 58,500
Total Bank Loans - Non-Current44,500 58,500
Agreed Bank Facility70,000 70,000
GROUP
2018201820172017
No of shares$000No of shares
$000
Fully Paid Shares on Issue
161,920,433134,089161,920,433 134,089
Movement in Shares on Issue
Balance at the Beginning of the Period161,920,433134,089161,920,433 134,089
Balance at the End of the Period161,920,433134,089
161,920,433 134,089
GROUP
GROUPGROUP
20182017
$000$000
Balance at the Beginning of the Period(17,016) (14,297)
Net Profit After Taxation3,095 3,073
Distributions Paid and Payable to Shareholders(5,829) (5,792)
Balance at the End of the Period(19,750) (17,016)
Page | 23
19. EARNINGS PER SHARE
Earnings per Share is calculated by dividing the Profit or Loss attributable to Shareholders (excluding distributions) of the
Group by the weighted average number of ordinary shares on issue during the period.
20. DISTRIBUTIONS PAID AND PAYABLE
GROUPGROUP
20182017
$000
$000
Profit/(Loss) attributable to Shareholders of the Group
3,095
3,073
Number of Shares on Issue161,920 161,920
Basic and Diluted Earnings per Share (cents)1.91 1.90
Number of Ordinary Shares
Issued Shares at the Beginning of the Period161,920,433
161,920,433
Issued Shares at the End of the Period161,920,433 161,920,433
161,920,433 161,920,433
Number of Ordinary Shares for Basic and Diluted Earnings per Share
GROUPGROUP
20182017
$000$000
The following distribution was declared0.900cents(2017: 0.875 cents)1,458 1,416
and paid in respect of the previous year:
The following distributions were declared0.900cents(2017: 0.900 cents)1,457 1,462
and paid during the year:
0.900cents(2017: 0.900 cents)1,457 1,457
0.900cents(2017: 0.900 cents)1,457 1,457
Total Distributions Paid5,829 5,792
Page | 24
21. SEGMENT INFORMATION
The principal business activity of the Group is to invest in New Zealand properties. Investment properties have similar economic
characteristics, methods of management and are under leases of various terms. Segment reporting is presented in a consistent
manner with internal reporting provided to the chief operating decision maker. During the year ended 31 March 2017 the Chief
Executive was the chief operating decision maker who receives internal financial information on a property by property basis,
assessing property performance and deciding on the resource allocation. During the period to 31 March 2018 new directors
were appointed who reassessed and changed the previous reporting structure to the board. The Group operates only in New
Zealand. On this basis all of the Group’s property have been aggregated into a single reporting segment to most appropriately
reflect the nature and financial effects of the business activities. Comparitive information has been restated in order to be
comparable with the new way information is being reported.
22. FINANCIAL INSTRUMENTS
Exposure to interest rate, credit, liquidity and other market risks arise in the normal course of the Group’s business.
The main risks, arising from the Group's Financial Instruments, are interest rate risk and credit risk.
Interest Rate Risk
The Group's exposure to interest rate risk primarily arises from its long term variable rate borrowings. Interest Rate Swaps are
used to reduce exposure to fluctuating interest rates arising on floating rate borrowings.
Management monitors the level of interest rates on an ongoing basis, and from time to time, will recommend to the Board that
fixed rates are locked in. The notional principal or contract amounts of interest rate contracts outstanding at each reporting date
were $40m (2017: $40m).
The Group's exposure to interest rate risk and the effective weighted interest rates for each class of financial asset and liability
were:
Segment values for the year ended 31 March 2018 were as follows:
Investment PropertyUnallocatedTotal
$000$000$000
Segment Revenue 16,706 (12) 16,694
Net Segment Revenue 11,444 (12) 11,432
Net Profit/(Loss) before Taxation5,514 (1,633) 3,881
Change in Fair Value of Investment Properties(2,945) - (2,945)
Segment values for the year ended 31 March 2017 were as follows:
Investment PropertyUnallocatedTotal
$000$000$000
Segment Revenue 17,152 - 17,152
Net Segment Revenue 11,593 - 11,593
Net Profit/(Loss) before Taxation9,932 (5,709) 4,223
Change in Fair Value of Investment Properties(1,651) - (1,651)
Page | 25
22. FINANCIAL INSTRUMENTS (continued)
Interest Rate Swaps
Accounting Classifications and Fair Value
Interest Rate Swaps have been entered into by the Group to hedge against movements in the variable interest rates on its loan
facility. This results in the Group holding fixed rate debt and hence there is a risk that the economic value of the Swaps will
fluctuate because of changes in market interest rates. Any unrealised gain or loss is expected to unwind over the longer term.
The average interest rate is based on the outstanding balance at the end of each reporting period.
As at 31 March 2018, approximately 89.89% (2017: 68.37%) of the Group's bank loan is at a fixed rate of interest.
The fair value of Swaps shown represents the amount of unrealised gains and losses, whereas the notional amount is an
aggregate exposure value of all contracts.
The Group holds interest rate swaps at Fair Value through Profit or Loss. The Fair Value of Interest Rate Swaps fall into Level 2
of the Fair Value Hierarchy. Level 2 inputs are inputs other than quoted prices included within Level 1 (quoted prices in active
market for identical assets or liabilities) that are observable for the asset or liability, either directly (by price) or indirectly
(derived from prices). The fair value is determined using a valuation technique being swap models, discounting the future cash
flows and using the yield curves at each reporting date and the credit risk inherent in the contract.
EFFECTIVELESS THAN
INTEREST1 YEAR1-2 YEARS2 YEARS +
GROUP 2018RATE RANGE$000$000$000
Financial Assets
Cash and Cash Equivalents1.75%472 - -
Accounts Receivable and Prepayments679 - -
Total Financial Assets1,151 - -
Financial Liabilities
Trade and Other Payables2,227 - -
Bank Loans2.605% - 4.55% - - 44,500
Tax Payable462 - -
Total Financial Liabilities2,689 - 44,500
EFFECTIVELESS THAN
INTEREST1 YEAR1-2 YEARS2 YEARS +
GROUP 2017RATE RANGE$000$000$000
Financial Assets
Cash and Cash Equivalents1.75%2,030 - -
Accounts Receivable and Prepayments1,078 - -
Total Financial Assets3,108 - -
Financial Liabilities
Trade and Other Payables2,589 - -
Bank Loans2.605% - 4.55% - - 58,500
Tax Payable296 - -
Total Financial Liabilities2,885 - 58,500
201820172018201720182017
$000$000$000$000
Less than 1 year -
4.26% -10,000
-55
Greater than 1 year but less than 5 years3.64%3.91%40,00030,000840 864
5 years + - - - - - -
40,00040,000840
919
AVERAGE FIXED INTEREST RATENOTIONAL PRINCIPAL AMOUNTFAIR VALUE - LEVEL 2
Page | 26
22. FINANCIAL INSTRUMENTS (continued)
Interest Rate Sensitivity
Cash Flow Sensitivity
The Group's assets and liabilities which are subject to interest rate changes, consist of cash and cash equivalents and secured
bank loans. A change of 1% in interest rates would have increased/(decreased) profit after income tax and equity in respect of
these items by the amounts shown below. This analysis assumes all other variables remain constant.
Fair Value Risk
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between
market participants at each reporting date. The net fair value of Financial Assets and Liabilities is not materially different from
the net carrying amounts disclosed in the consolidated financial statements. The methods used for determining the fair values
of financial instruments are discussed in Note 3.
GROUPGROUP
20182017
1% Increase$000$000
Cash and Cash Equivalents
14 25
Bank Loans(99) (95)
GROUPGROUP
20182017
1% (Decrease)$000$000
Cash and Cash Equivalents
(14) (25)
Bank Loans99 95
FINANCIAL
LIABILITIES ATTOTAL
DESIGNATED ASL O AN S AN DAMORTISEDCARRYING
FAIR
FAIR VALUERECEIVABLESCOSTAMOUNTVAL U E
GROUP 2018$000$000$000$000$000
Financial Assets
Cash and Cash Equivalents -472 -472472
Accounts Receivable -339 -339339
Total Financial Assets -
811 -811811
Financial Liabilities
Bank Loans - -44,50044,50044,500
Trade and Other Payables - -2,2272,2272,227
Interest Rate Swaps840 - -840840
Total Financial Liabilities
840 -46,72747,56747,567
Page | 27
22. FINANCIAL INSTRUMENTS (continued)
Fair Value Estimation
The fair value of financial instruments that are not traded in an act ive market such as derivative financial instruments, are
determined using a valuation tech nique such as discounted cash flows. The carrying value less an impairment allowance
for other financial assets and liabilities is not expect ed to be materially different to their fair values.
The only financial instruments measured at fair value in the Consolidated Statement of Financial Position are derivatives
(Interest Rate Swaps). The fair value of Interest Rate Swaps is ca lcu lated as the present value of the est imated future
cash flows based on observable yield curves. As this valuation tech nique maximises the use of observable market data as
an input, the instrument is classified as Level 2 under NZ IFRS 7 Financial Instruments Disclosure.
Credit Risk
To the extent the Group has a receivable from another party there is a credit risk in the event of non-performance by
that party. Financial instruments, which potentially su bject the Group to credit risk, principall y co nsist of bank balances,
receivables and advances to tenants.
The Group manages its exposure to credit risk. Act ions include:
• Reviewing each new lease co ntract on an individual basis and imposing appropriate terms as co nsidered
necessary.
• Monitoring the credit quali ty of major financial institutions that are co unterparties to its financial
instruments. The Group does not anticipate non-performance by the co unterparties.
•
The maximum exposure for all financial assets is the balance recorded in the co nso lidated financial st atements.
Collateral is not required in su pport of other financial instruments.
Concentrations of Credit Risk
The Group has placed its cash and sh ort-term investments with the Bank of New Zealand. The Group is not exposed to any
other co nce ntrations of credit risk other than advances to wholl y owned su bsidiaries.
Currency Risk
The Group does not have any exposure to foreign currency risk.
Liquidity Risk
Liquidity risk is the risk that the Group will have insufficient funds on hand to meets its co mmitments. The Group actively
monitors its position to ensure that su fficient funds are available to meet liabilities as they arise. Liquidity is monitored on a
regular basis and reported to the Board monthly.
The foll owing table se ts out the co ntractual cash flows for all financial liabilities and for derivatives that are se ttled on a gross
cash flow basis.
CONTRACTUALMORE
C AS HON1-22-5T H AN
BALANCEFLOWSDEMANDYEARSYEARS5 YEARS
GROUP 2018$000$000
$000$000$000$000
Trade and Other Payables2,2272,227 - - - -
Bank Loans44,50050,078 -2,41245,253 -
Interest Rate Swaps840378 -92194 -
Total Non-Derivative Net Financial
Liabilities
47,56752,683 -2,50445,447 -
CONTRACTUAL
MORE
C AS HON1-22-5T H AN
BALANCEFLOWSDEMANDYEARSYEARS5 YEARS
GROUP 2017$000
$000$000$000$000$000
Trade and Other Payables2,5892,58926 - - -
Bank Loans58,50068,344 -2,97262,400 -
Interest Rate Swaps9191,945 -571579 -
Total Non-Derivative Net Financial
Liabilities
62,00872,878263,54362,979 -
Page | 28
22. FINANCIAL INSTRUMENTS (continued)
Capital Management
The Group's capital includes contributed capital and retained earnings.
The Group's policy is to maintain a strong capital base so as to maintain investor, creditor and market confidence and to
sustain future development of the business.
The impact of the level of capital on Shareholders' return is also recognised and the Group recognises the need to maintain a
balance between the higher returns that might be possible with greater gearing and the advantage and security afforded by a
sound capital position.
The Bank of New Zealand which is the provider of the loan facility to the Group requires the Group to meet the following
covenants:
• Bank debt is less than 50% of gross property value
• EBIT is greater than 175% of total debt interest costs
The Group met these covenants at all times during the reporting period.
The Group's policies in respect of capital management and allocation are reviewed quarterly by the Board of Directors.
There are no changes in capital management subsequent to 31 March 2018.
23. TRANSACTION COSTS
At a special meeting of shareholders held on 21 April 2017 a resolution to purchase two properties from Kiwi Property Holdings
Limited, raise equity for those purchases, and enter into a management contract with Kiwi Property Group Limited, was not
approved by shareholders. Consequently, these proposed transactions were terminated and did not proceed.
The investigation of the above proposal, and three other proposals, incurred substantial due diligence, financial investigation,
and other legal costs for the Group that have collectively been described as transaction costs. These costs totalled $1.339
million in the 2017 financial year. A further $0.430 million of costs was incurred in the year to 31 March 2018.
In July 2017 NPT received a proposal from Augusta Funds Management Limited to sell the management rights of the Group.
This process was carefully reviewed to ensure it was in the best interests of NPT shareholders. The costs incurred in this due
diligence process have also been described as transaction costs and totalled $0.256 million.
The total of $0.686 million of costs are included in the Consolidated Financial Statements as transaction costs in the
Consolidated Statement of Comprehensive Income.
24. LEASE COMMITMENTS
Operating Lease Commitments Receivable - As Lessor
The Group has entered into co mmercial property leases on its investment properties. These non-ca nce llable leases have
remaining terms of between 1 month to 11 years.
The above rental receivables are based on co ntracted amounts as at 31 March 2018 and 31 March 2017.
Act ual rental amounts co llected in future will differ due to rental review provisions within the lease agreements.
GROUPGROUP
20182017
$000
$000
Future minimum rentals receivable under non-cancellable Operating Leases
Within one year10,35113,634
After one year but not more than five years24,32338,929
Later than five years
17,544
17,828
Total minimum lease receivables
52,21870,391
Page | 29
Operating Lease Commitments - As Lessee
The Group has entered into a co mmercial property lease for its Head Office premises at Level 13, the AA Centre, 99
Albert Street, Auckland. This non-ca nce llable lease is $244,303 p.a. and extends out to the 31
st
of December 2019. On 12
July the sale of the AA Centre to SkyCity will complete and lease obligations will commence.
In 2017 the Group entered into a commercial property lease for its Head Office premises at Level 26 PWC Tower, 188 Quay
Street, Auckland. This non-cancellable lease was for $124,922 p.a. and in March 2017 had a remaining term of 9 months.
25. RELATED PARTY TRANSACTIONS
Key Management Personnel
The Group has a related party relationship with its key management personnel. The key management personnel are the
Directors and Executive Management.
The table above includes remuneration of the Chief Executive Officer and other key management personnel of the Group.
Values were significantly higher in 2018 due to costs associated with restructuring.
Augusta Funds Management Limited
On 26 March 2018 the Group sold the management rights to Augusta Funds Management Limited (AFM) for $4.5 million. The
Group will be managed by AFM under the terms of the signed management contract.
AFM's parent Augusta Capital Limited holds an 18.85% stake in the Group at 31 March 208 (2017 9.26%).
The table below sets out the related party transactions.
26. CAPITAL COMMITMENTS
At the reporting date the Group had $2.76 milli on co mmitted to ca pital expenditure for the AA Centre stairwell (2017: $2.20
million).
GROUPGROUP
20182017
$000$000
Future minimum rentals payable under non-cancellable Operating Leases
Within one year175 94
After one year but not more than five years184
-
Total minimum lease payables
359 94
GROUPGROUP
2018
2017
$000$000
Salaries and other key management personnel benefits1,292 951
Directors fees279 234
Total payments to key management personnel1,571 1,185
GROUPGROUP
20182017
$000$000
Sale of management rights4,500 -
Management fees(18) -
Dividend paid to Augusta Capital Limited(1,099) (270)
Page | 30
27. CONTINGENT LIABILITIES
At the reporting date the Group had no material co ntingent liabilities (2017: Nil).
28. SUBSEQUENT EVENTS
There have been no significant NPT related events since 31
March 2018.
Chartered Accountants
Member of Grant Thornton International Ltd
Audit
Grant Thornton New Zealand Audit
Partnership
L4, Grant Thornton House
152 Fanshawe Street
PO Box 1961
Auckland 1140
T +64 9 308 2570
F +64 9 309 4892
www.grantthornton.co.nz
Independent Auditor’s Report
To the Shareholders of NPT Limited
Report on the Audit of the consolidated financial statements
Opinion
We have audited the consolidated financial statements of NPT Limited (“the Company”)
and its subsidiaries (“the Group”), on pages 3 to 30, which comprise the consolidated
statement of financial position as at 31 March 2018, and the consolidated statement of
comprehensive income, consolidated statement of changes in equity and consolidated
statement of cash flows for the year then ended, and notes to the consolidated financial
statements, including a summary of significant accounting policies
In our opinion, the accompanying consolidated financial statements present fairly, in all
material respects, the consolidated financial position of NPT Limited as at 31 March 2018
and its consolidated financial performance and consolidated cash flows for the year then
ended in accordance with New Zealand Equivalents to International Financial Reporting
Standards (NZ IFRS) issued by the New Zealand Accounting Standards Board.
Basis for Opinion
We conducted our audit in accordance with International Standards on Auditing (New
Zealand) (ISAs (NZ)) issued by the New Zealand Audit and Assurance Standards Board.
Our responsibilities under those standards are further described in the Auditor’s
Responsibilities for the Audit of the consolidated financial statements section of our report. We are
independent of the Group in accordance with Professional and Ethical Standard 1 (Revised)
Code of Ethics for Assurance Practitioners issued by the New Zealand Auditing and Assurance
Standards Board, and we have fulfilled our other ethical responsibilities in accordance with
these requirements. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
Our firm carries out other assignments for NPT Limited and the entities it controlled in the
area of related assurance services. The provision of these other services has not impaired
our independence as auditor of the Group. The firm has no other interests in the Company
and the entities it controlled.
Chartered Accountants
Member of Grant Thornton International Ltd
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most
significance in our audit of the consolidated financial statements of the current period. We
summarise below those matters, and our key audit procedures, to address those matters in
order that the Company’s shareholders as a body may better understand the process by
which we arrived at our audit opinion.These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Key audit matters
Our procedures to address the key audit
matters
Investment Property valuation
In the application of NZ IFRS, Management
are required to make judgements, estimates
and assumptions about carrying values of
assets and liabilities that are not readily
apparent from other sources.
The estimates and associated assumptions are
based on historical experience and various
other factors that are believed to be reasonable
under the circumstances, the results of which
form the basis of making the judgements.
The estimates and underlying assumptions are
reviewed on an ongoing basis.
As at 31 March 2018, Investment Property
carried at fair value of $167 million is held
across multiple New Zealand locations. There
are a number of risks that can have a material
impact on the investment property balance in
the consolidated financial statements,
principally:
valuations of all the investment properties
may not be performed by qualified and
experienced commercial property valuers;
methods and assumptions used by the
property valuers, may not be considered
appropriate;
the calculation of the fair value amount for
each of the investment properties, as well
as the revaluation adjustment for the year
may not be correct;
data provided to the property valuers may
not be appropriate;
We have:
obtained and agreed the schedule of
investment properties to the
respective independent valuation
reports, performed by valuation
experts;
evaluated the qualifications and work
of each valuation expert, for each of
the investment properties;
inquired about and documented the
methods and assumptions used by the
expert, and considered the
appropriateness of those assumptions
and methods used, for each property
valuation;
re-performed the calculation in
determining the fair value amount of
each investment property, as well as
the revaluation adjustment to be
recorded for the year;
tested the appropriateness of data
provided to the expert, for each
property valuation;
ensured properties held for sale are
recorded at appropriate fair value at
the reporting date based upon actual
market evidence of the expected sale
and that any estimates or judgements
made by Management are reasonable
and appropriate for financial
reporting purposes.
Chartered Accountants
Member of Grant Thornton International Ltd
Directors’ Responsibilities for the Consolidated Financial Statements
The Directors are responsible on behalf of the Group for the preparation and fair
presentation of the consolidated financial statements in accordance with New Zealand
equivalents to International Financial Reporting Standards issued by the New Zealand
Accounting Standards Board, and for such internal control as the Directors determines is
necessary to enable the preparation of consolidated financial statements that are free from
material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible on
behalf of the Group for assessing the Group’s ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless the directors either intend to liquidate the Group or to cease
operations, or have no realistic alternative but to do so.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated
financial statements as a whole are free from material misstatement, whether due to
fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable
assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (NZ) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these consolidated financial statements.
A further description of the auditor’s responsibilities for the audit of the consolidated
financial statements is located on the External Reporting Board’s website at:
https://www.xrb.govt.nz/standards-for-assurance-practitioners/auditors-
responsibilities/audit-report-5/
Restriction on use of our report
This report is made solely to the Company’s shareholders, as a body. Our audit work has
been undertaken so that we might state to the Company’s shareholders, as a body those
matters which we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and its shareholders, as a body, for our audit work, for
this report or for the opinion we have formed.
Grant Thornton New Zealand Audit Partnership
K Price
Partner
Auckland
29 May 2018
Page | 34
DIRECTORY
Company
NPT Limited
PO Box 37953, Parnell 1151
Phone: 09 300 6161
www.npt.co.nz
Directors
Bruce Cotterill
Allen Bollard
Carol Campbell
Paul Duffy
Bankers
Bank of New Zealand
Level 6
Deloitte Centre
80 Queen Street
Auckland
Auditor
Grant Thornton New Zealand Audit Partnership
L4, Grant Thornton House
152 Fanshawe Street
PO Box 1961
Auckland 1140
Registrar
Link Market Services Limited
Level 11
Deloitte Centre
80 Queen Street
Auckland 1010
PO Box 91976
Auckland 1142
Phone: 09 375 5998
Fax: 09 375 5990
Legal Advisor
David Stock
Barrister and Solicitor
Level 3
22 Moorhouse Avenue
Christchurch
---
Contents
AnnualResult
For the year ended 31 March2018
1
Contents
1.Highlights
2.FinancialPerformance
3.Balance Sheet and Net Tangible Assets
4.PortfolioSummary
5.Outlook
2
Highlights
Financial PerformanceAgainst Prior Year
•Net profit after tax of $3.095 million up from $3.073 million
•Adjusted funds from operations* of $6.15 million
•Net rental income of $11.7 million, reduced from $11.9 million
•Portfolio occupancy is 97.4%, increased from 96% due to the sale of Print Place
•The WALE is 4.4 years, reduced from 4.6 years in the prior year
•Loan to value ratio is 26.6% (33.1% in 2017)
•Net tangible assets of 70.6 cents per share (cps) reduced from 72.3 cps
•The sale of both Print Place and the AA Centre creates balance sheet capacity to
execute the new value add strategy
•Externalisation of management to Augusta for $4.5 million
*refer to Appendix 1 & 2
3
FinancialPerformance
20182017ChangeChange
$m$m$m%
Net Rental Income11.7 11.9 (0.2) (1.7%)
Administration Expenses(3.0) (2.6) (0.4)
EBIT8.7 9.3 (0.6) (6.5%)
Net Finance Costs(2.8) (2.7) (0.1)
Net Profit before taxation, revaluations and one-offs5.9 6.6 (0.7) (10.6%)
Sale of Management Rights4.5 - 4.5
Transaction Costs(0.7) (1.3) 0.6
Unrealised Change in Fair Value of Interest Rate Swaps0.1 0.7 (0.6)
Net Loss on Sale of Plant and Equipment - (0.1) 0.1
Unrealised Change in Fair Value of Property(2.9) (1.6) (1.3)
Net (Loss) on Sale of Investment Property(3.0) - (3.0)
Net Profit before taxation3.9 4.3 (0.4) (9.3%)
Income Tax Expense(0.8) (1.2) 0.4
Net Profit after taxation3.1 3.1 0.0 0.0 %
4
The pay-out ratio is 95% based on an AFFO of $6.15 million for the year.
Net Rental
20182017Variance
Net rent by property$000$000$000Comments
Eastgate3,705 3,918 (213) Increase in vacancies throughout '18
Stoddard Rd2,527 2,187 340 Increases in lease and opex income
Heinz2,175 2,064 111 Opex cost savings
AA Centre2,503 2,454 49
Print Place789 1,253 (464) Vacancies from January '18
Total11,699 11,876 (177)
5
The primary reduction in net rental is driven by the Print Place vacancy prior to sale
Stoddard Rd net rent was up due to increased rents and lower net opexcosts
Corporate Costs
20182017Variance
$000$000$000Comments
Employee Costs931 1,160 229 Staff left and not replaced
Redundancy Costs726 - (726) Restructuring in '18
Directors Fees279 234 (45)
Audit Fees108 87 (21)
Office Costs424 261 (163) High deprecation in '18
Professional Fees313 625 312 Higher legal and professional fees in '17
Other Expenses170 245 75 Credits from unpresented chqs in '18
Total Administration Expenses2,951 2,612 (339)
6
Excluding restructure costs and legal fees associated with externalisation, corporate
costs reduced by $0.13 million. Lower personnel costs were offset by accelerated
depreciation in respect to NPT office furniture
Corporate Costs –Reflecting Externalisation
2018
2018
Augusta Cost
Structure
Net saving
$000$000$000Comments
Employee Costs931 - 931 Employee Costs replaced with fee 0.5% of Total Assets
Base Management Fees - 835 (835) 50 bps on closing asset values
Directors Fees279 279 -
Audit Fees108 108 -
Office Costs424 101 323 No rent, cleaning, maintenance, travel, telephone, stationery
Professional Fees313 243 70
Other Expenses170 120 50
Total Administration Expenses2,225 1,686 539
7
The above pro-forma representation outlines the FY18 corporate costs on the basis
of externalisation. The Augusta base management fees reflect the balance sheet
as at 31 March 2018. Non recurring transactions have been removed (such as
redundancy costs)
Excludes use of money benefits on the $4.5 million sale proceeds
Property mgmt. fees, which form part of the net rental, would have equated to
$0.25 million for the year
BalanceSheet
20182017Variance
Description
$000$000$000
Comments
Current assets1,151 3,108 (1,957) $1.5m lower cash balance
Investment Property Held for Sale43,814 - 43,814 AA Centre - reflects balance of capex
Investment Property 124,636 179,241 (54,605) 3 remaining assets
Total Assets169,601 182,349 (12,748)
Current liabilities7,389 2,885 4,504 Includes $4.7m deposit on AA Centre
Debt44,500 58,500 (14,000) $14m of debt repaid during the year. $25.5m undrawn
Deferred tax liability2,533 2,972 (439) Reduced by Print Place divestment
Fair value of swaps840 919 (79)
Total Liabilities55,262 65,276 (10,014)
Equity114,339 117,073 (2,734)
8
Gearing reduced to 26.6% as at balance date (2017 33.2%)
NTA is 70.6 cps (2017 72.3 cents per share)
Net Tangible Assets
NPT NTA Movement in Cents Per Share 2017-2018
0.4
0.4
1.8
1.8
70.6
72.3
0.1
2.8
9
Funding
31 March 2018
$m
31 March 2017
$m
Bank facility limit(BNZ)70.070.0
Drawn bankdebt44.558.5
Available undrawn debt25.511.5
Weighted average cost of debt (incl. margins & linefees)5.42%5.08%
Remaining duration of bankfacility(expires 22 July2020)2.3years3.3years
% of drawn debthedged89.9%68.4%
Loan to Value Ratio covenant (< 50% of Gross propertyvalue)26.6%33.1%
Interest Cover Ratio covenant (EBIT >1.75x Total debtinterestcost)3.2x2.5x
Post the AA Centre divestment in July 2018 there is further capacity to
fund future acquisitions
10
Revaluation of Investment Property
Opening
Balance of
Asset
$000
Building
Improvements
$000
Reclassified
from Fixed
Assets
$000
Updated
Asset
Carrying
Value
$000
Valuation
$000
Revaluation
Impact
$000
Comments
Eastgate59,500 1,164 720 61,384 58,000 (3,384)
$1.9m of improvements, $1.5m
drop in DCF calculation
22 Stoddard Road36,000 120 85 36,205 38,000 1,795
Heinz Wattie27,000 38 7 27,045 27,300 255
AA Centre40,850 4,410 165 45,425 43,814 (1,611)
Cost overruns on Stairwell
project
Total163,350 5,732 977 170,059 167,114 (2,945)
The AA Centre valuation reflects the expected costs to complete the stairwell works ($2.6m)
$0.977 million reclassified from fixed assets to investment property
Loss on disposal on Print Place of $2.97 million
11
Revaluation of Investment Property
NPT Revaluation Movement in ($m)
2.9
167.1
163.4
5.73
0.98
Opening Valuation
Bu ilding
Imp rovements
Reclassifed from
Fix ed Assets
Revalu ation
Clo sing Valuations
TotalPortfolio
Excludes Print
Place which was
divested on 29
March 2018
AA Centre
expected to settle
on 12 July 2018
Building
improvements
represent L8 fit
out at AA Centre,
the stairwell
project as well as
Eastgatecapex
12
PortfolioSummary
13
Occupancy
%
WALT (years)
31 March 2018
Valuation
($m)
Passing
Rent
($000s)
Passing
Rent
Yield %
Market Cap
Rate 2018
%
Eastgate Shopping Centre94.30%4.7 yrs58.00 3,908 6.74%8.00%
Heinz Wattie's Warehouse100.00%8.9 yrs27.30 2,134 7.82%8.13%
Roskill Centre100.00%3.8 yrs38.00 2,499 6.58%6.25%
3 Remaining Assets123.30 8,541 6.93%7.49%
AA Centre1.65 yrs43.80 3,397 7.76%7.25%
Total97.40%4.4 yrs167.10 11,938 7.14%7.43%
Portfolio Update –Future Strategy
EastgateShopping Centre, Christchurch
•Improvement in management structure
•Provide asset with a credible narrative for both users and tenants
•Implement leasing strategy off the back of focussed consumer research
•Re-gear key leases to allow for leasing strategy to be implemented
•Opportunities for value enhancement have been identified
133 Elwood Road, Hastings
•Meaningful discussions commenced about enhancing asset for Heinz Wattie
•Seeking long term lease commitment in return that creates accretion to
asset value
22 Stoddard Road, Auckland
•Potential Unit Title of existing centre being explored as opportunity to add
value
•13 lease expiries in calendar year 2019. Leasing interest remains strong in
the centre and we will be looking to add value through this process
•Remain cognisant of need for income stability to underpin dividend
14
Outlook
Post the exit of the AA Centre, which is expected to settle in July 2018,
there is further balance sheet capacity to acquire investment property in
line with the value add strategy.
The Board is confident that Augusta has the necessary capability and track
record in the sector to source such opportunities with the current balance
sheet capability. The primary focus is to close the share price gap to NTA
through active management and prudent investment selection.
The Board is committed to a rebrand of the company and this will be
announced in the near term.
15
Appendix 1 -Adjusted Funds from Operations (AFFO)
20182017
$000$000Comments
Statutory Net Profit After Tax3,095 3,073
Investment Property and Inventory
Losses from sales of investment property2,970 - Sale of Print Place
Fair value loss on investment property2,945 1,651 Revaluation losses higher in '18 than '17
Depreciation on owner occupied PP&E357 129 High depreciation on head office assets
Financial Instruments
FV gain on the mark to market of derivatives(79) (732)
Deferred Tax
Deferred Tax Expense(438) 78 Sale of Print Place
Tax on depreciation recovery (non-operating)209 - Depreciation recovered from Print Place
Other unrealised or one-off items
Sale of Management Rights(4,500) - Sale of management rights to Augusta
Transaction Costs686 1,339 $430k from Kiwi proposal, $256k for Augusta externalisation
Restructuring Costs523 - Tax effect of redundancy payments
Legal Proceedings Costs - 255
Net Loss on Sale of Plant and Equipment29 87 Loss on sale of fixed assets
Net operating income after tax5,797 5,880 1.4% drop from '17 to '18
Incentives and Rent Straightening
Amortisation of lease incentives and costs482 280 Higher in '18 due to accelerated amortisation from the AA Centre
Funds From Operations (FFO)6,279 6,160 1.9 % increase from '17 to '18
Maintenance CAPEX(131) (255)
Adjusted Funds From Operations (AFFO)6,148 5,905 4.1 % increase from '17 to '18
CPS3.80 3.65
16
Appendix 2 -AFFO
•The AFFO has not previously been reported by NPT. Management has
presented the FY17 reporting period for comparative reasons.
•Adjusted funds from operations (AFFO) is non-GAAP financial information
and is a common investor metric, calculated based on guidance issued by
the Property Council of Australia. NPT considers that AFFO is a useful
measure for shareholders and management because it assists in assessing
the Company’s underlying operating performance. This non-GAAP financial
information does not have a standardised meaning prescribed by GAAP and
therefore may not be comparable to similar financial information prescribed
by other entities. A reconciliation of the net profit after tax to AFFO is included
in results presentation. The independent auditors have confirmed that the
AFFO calculations have been fairly extracted from the audited Group
financial statements for the year ended 31 March 2018.
17
Disclaimer
Important Notice
Thispresentationcontainsnotonlyareviewofoperations,butmayalsocontainsomeforwardlookingstatements
(includingforecastsandprojections)aboutNPTandtheenvironmentinwhichNPToperates.Becausethese
statementsareforwardlooking,NPT’sactualresultscoulddiffermaterially.Pleasereadthispresentationinthe
widercontextofmaterialpreviouslypublishedbyNPTandannouncedthroughNZXLimited.
Norepresentation,warrantyorundertaking,expressorimplied,ismadeastothefairness,accuracy,
completenessorcorrectnessoftheinformationcontained,referredtoorreflectedinthispresentationorsupplied
orcommunicatedorallyorinwritingtoyou(oryouradvisersorassociatedpersons)inconnectionwithit,asto
whetheranyforecastsorprojectionswillbemet,orastowhetheranyforwardlookingstatementswillprove
correct.Youwillberesponsibleforformingyourownopinionsandconclusionsonsuchmatters.
Nopersonisunderanyobligationtoupdatethispresentationatanytimeafteritsreleasetoyou.
Tothemaximumextentpermittedbylaw,noneofNPT,noranyofitsdirectors,officers,manageroragentsorany
otherpersonshallhaveanyliabilitywhatsoevertoanypersonforanyloss(including,withoutlimitation,any
liabilityarisingfromanyfaultornegligenceonthepartofNPT,theirdirectors,officers,manageroragentsorany
otherperson)arisingfromthispresentationoranyinformationcontained,referredtoorreflectedinitorsupplied
orcommunicatedorallyorinwritingtoyou(oryouradvisersorassociatedpersons)inconnectionwithit.
AcceptanceofthispresentationconstitutesacceptanceofthetermssetoutaboveinthisImportantNotice.
18
---
Amount ($000s)Percentage change
16,694(2.67%)
3,0950.72%
3,0950.72%
Amount per securityImputed amount per security
NZ$0.009NZ$0.00247
Other Financial Information31 March 201831 March 2017
Net tangible assets per share
70.672.3
Basic earnings after tax per share
1.911.90
Diluted earning after tax per share
1.911.90
Adjusted funds from operations per share
1
3.8n/a
NPT Limited
Results for announcement to the market
Reporting Period
Previous Reporting Period
12 months to 31 March 2018
12 months to 31 March 2017
Revenue from ordinary activities
Profit from ordinary activities after tax
attributable to security holder.
Net profit attributable to security holders.
Interim/Final Dividend
Adjusted funds from operations (AFFO) is non-GAAP financial information and is a common investor metric, calculated based on guidance
issued by the Property Council of Australia. NPT considers that AFFO is a useful measure for shareholders and management because it
assists in assessing the Company’s underlying operating performance. This non-GAAP financial information does not have a standardised
meaning prescribed by GAAP and therefore may not be comparable to similar financial information prescribed by other entities. A
reconciliation of the net profit after tax to AFFO is included in results presentation. The independent auditors have confirmed that the AFFO
calculations have been fairly extracted from the audited Group financial statements for the year ended 31 March 2018.
CommentsThe financial information for this announcement has been
extracted from the audited annual financial statements of the
Group and further commentary is set out in the accompanying
announcement.
Final Dividend
Record Date13 June 2018
Dividend Payment Date20 June 2018
---
APPENDIX 7 – NZSX Listing Rules
Number of pages including this one
(Please provide any other relevant
NZSX Listing Rule 7.12.2. For rights, NZSX Listing Rules 7.10.9 and 7.10.10. details on additional pages)
For change to allotment, NZSX Listing Rule 7.12.1, a separate advice is required.
Full name
of Issuer
Name of officer authorised to
Authority for event,
make this notice
e.g. Directors' resolution
Contact phone
Contact fax
numbernumber
Date
Nature of event
BonusIf ticked,
Rights Issue
Tick as appropriate
Issue
state whether:Taxable
/ Non TaxableConversionInterestRenouncable
Rights IssueCapitalCallDividend
If ticked, stateFull
non-renouncable
change
x
whether:
InterimYear
x
SpecialDRP Applies
EXISTING securities affected by this
If more than one security is affected by the event, use a separate form.
Description of theISIN
class of securities
If unknown, contact NZX
Details of securities issued pursuant to this eventIf more than one class of security is to be issued, use a separate form for each class.
Description of theISIN
class of securities
If unknown, contact NZX
Number of Securities toMinimum
Ratio, e.g
be issued following eventEntitlement
1 for 2 for
Conversion, Maturity, Call
Treatment of Fractions
Payable or Exercise Date
Tick if
provide an
pari passu
ORexplanation
Strike price per security for any issue in lieu or date
of the
Strike Price available.
ranking
Monies Associated with Event
Dividend payable, Call payable, Exercise price, Conversion price, Redemption price, Application money.
Source of
Amount per security
Payment
(does not include any excluded income)
Excluded income per security
(only applicable to listed PIEs)
Supplementary
Amount per security
Currencydividendin dollars and cents
details -
NZSX Listing Rule 7.12.7
Total monies
TaxationAmount per Security in Dollars and cents to six decimal places
In the case of a taxable bonusResident
Imputation Credits
issue state strike priceWithholding Tax(Give details)
Foreign
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Timing
(Refer Appendix 8 in the NZSX Listing Rules)
Record Date 5pmApplication Date
For calculation of entitlements -Also, Call Payable, Dividend /
Interest Payable, Exercise Date,
Conversion Date. In the case
of applications this must be the
last business day of the week.
Notice DateAllotment Date
Entitlement letters, call notices,For the issue of new securities.
conversion notices mailedMust be within 5 business days
of application closing date.
OFFICE USE ONLY
Ex Date:
Commence Quoting Rights:Security Code:
Cease Quoting Rights 5pm:
Commence Quoting New Securities:Security Code:
Cease Quoting Old Security 5pm:
EMAIL: announce@nzx.com
Notice of event affecting securities
NPT Limited
Simon WoollamsDirectors Resolution
09 300 616109 300 616129052018
Ordinary SharesNZ NAPE 0007S3
In dollars and cents
$0.006350
$0.002650
Enter N/A if not
applicable
$$$0.002470
$
New Zealand Dollars
$1,457,280
Date Payable
13 June, 201820 June, 2018
Data sourced from publicly available filings. Our datasets may not be complete. Automated analysis can produce errors. If you believe any data on this page is incorrect, please contact us at hello@nzxplorer.co.nz. For informational purposes only. Not investment advice.
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