Financial result for the year ended 31 March 2020
NZX Release
16 June 2020
Financial result for the year ended 31 March 2020
Asset Plus Limited (NZX: APL) announces its financial results for the year ended 31 March 2020,
reporting a net loss after tax of $14.69 million, down from a $3.80 million profit in the previous year.
The material loss was driven by an unrealised loss as a result of revaluations of investment property
caused by COVID-19 impacts.
Adjusted funds from operations (AFFO)
1
of $4.74 million is in line with the previous financial year.
Higher net rental income received during the financial year was offset by increased due diligence costs.
APL Chairman, Bruce Cotterill said “Over the past 12 months we have set out to progress our
transformation to a value-add strategy, continuing to reposition the existing portfolio to facilitate that
change, and successfully completing two new acquisitions in line with that mandate.”
Other key points from the year are:
• No dividend is to be paid for the fourth quarter due to the impact of COVID-19
• Unrealised loss on the fair value of investment property of $19.1m or 11.9%
• Portfolio occupancy is 98.3% which is increased from 96.7%
• The WALT is 3.16 years which has decreased from 5.5 years at 31 March 2019 due to the sale
of the Heinz Watties property and purchase of 35 Graham Street
• Loan to value ratio is 34.3% (8.5% as at 31 March 2019)
• Net tangible assets (NTA) of 56.7 cents per share (cps) are reduced from 69.4 cps due to an
unrealised loss on revaluation of investment property
• Purchase of 35 Graham Street for $58.0 million in late June 2019
• Purchase of land in Albany (in December 2019) and signing of a conditional agreement to
develop and lease with Auckland Council for a 15-year lease term
• Sale of Heinz Watties property in Hastings for $29.1 million in December 2019
COVID-19 impact
The investment property portfolio has materially reduced in value by $19.1m. Rental abatements and
relief applied to the April – June 2020 quarter are expected to impact operating earnings by $0.59
million ($0.42 million on an after tax basis), equivalent to approximately 6% of the current annualised
gross rental income. This lost revenue will be partially offset by the reintroduction of building
depreciation. The full impact of COVID-19 will not be known for some time. While upfront rental
abatement and relief has been granted, preservation of longer term value is also a key strategy, and this
includes ensuring the continuing operations of all retail tenants.
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. Asset Plus 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 the accompanying 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 2020.
Portfolio activity
Mark Francis, Managing Director of Augusta said “The successful acquisition of 35 Graham Street in
June 2019 was the first step towards implementation of our approach to yield plus growth assets, with
the purchase immediately enhancing the company’s earnings, providing growth opportunities through
redevelopment in the medium term, and increasing the portfolio weighting to the Auckland market.”
“Following on from the acquisition of Graham Street, APL acquired bare land in the Albany basin in
December 2019, for the purposes of constructing a 15,100m
2
office building, with Auckland Council as
an anchor tenant. We are pleased to be working with Auckland Council, who have committed to a 15
year lease term for more than 63% of the space subject to satisfaction of a funding and shareholder
approval condition in favour of APL
2
.”
During the year APL actively pursued two material potential acquisitions which were operating
businesses, with property backed assets. Given the scale and associated complexity of these assets,
significant due diligence was undertaken which came at both material cost, and considerable time
invested by the Manager and Board. Unfortunately, these transactions have not eventuated leading to
$1.0 million of due diligence costs being incurred.
Munroe Lane update
On the back of the conditional agreement with Council, APL launched a fully underwritten $100 million
equity raise in March 2020. Unfortunately, as a result of the market volatility associated with COVID-
19 the Board elected to withdraw the offer and defer the capital raise until market conditions stabilise.
As a result of this deferral, APL has secured an extension to the funding condition until the end of July
2020, with a further right (at both parties’ discretion) to extend until the end of October 2020. Asset
Plus is currently in discussions with Auckland Council to extend the funding condition through to
October, however agreement has yet to be reached. In the meantime, the design for the development
continues and the resource consent has now been granted. Current debt capability means that APL can
continue to facilitate the progression of design and consenting for the development in accordance with
the agreed milestone schedule during the conditional period. The Asset Plus Board continues to review
funding options for the Munroe Lane development.
Portfolio update
Six lease renewals were completed at Stoddard Road, covering 17% of the rental income. As a result,
the WALE for the property increased to 4.12 years (from 4.02 a year ago), however, the valuation
decreased to $37.5 million (from $39.5 million a year ago). While passing income has marginally
increased, the valuer has assessed a reduction in the market rental level and softened the capitalisation
rate.
Several lease renewals were completed at Eastgate. However, many of these are on a monthly rollover
to provide flexibility for a future redevelopment. The new Bargain Chemist tenancy is a complimentary
addition to the Centre. As a result, the WALT was 4.53 years (down from 5.07 years) and the valuation
decreased from $54.5 million to $46.9 million.
The Auckland Council lease at 35 Graham Street runs for a further 12 months to the end of June 2021.
35 Graham Street was acquired for $58.0 million in June 2019 and has been revalued to $50.1 million
2
The funding and shareholder approval condition is due for satisfaction by 31 July 2020. However, the agreement with
Auckland Council provides an ability for the parties to agree to further extend it to 30 October 2020 (with such agreement at
each party’s absolute discretion).
as at 31 March 2020.
Financial result
The net loss after tax for the year ended 31 March 2020 is $14.69 million ($3.80 million profit in the
prior year). The material net loss was driven by the unrealised revaluation loss on investment property
caused by COVID-19. AFFO for the year was $4.74 million ($4.74 million in the prior year).
Net revenues from the property portfolio increased by $1.32 million due to the purchase of 35 Graham
Street partly offset against the sale of the Heinz Watties property. There was, however, no material
rental growth in respect to the like for like portfolio. The income increase was offset against an increase
in funding costs of $0.6 million as debt was drawn to fund the 35 Graham Street acquisition. Debt was
repaid when the Heinz Watties property was sold in December 2019.
The result also reflects $1.0 million of due diligence costs as well as $0.8 million of costs associated with
the withdrawn capital raise.
A loss on revaluation of investment property of $19.1 million was recorded, driven primarily due to the
impacts of COVID-19.
Balance Sheet
Debt is currently drawn to $49.25 million which represents a LVR of 34.3% (8.5% in the prior year).
The NTA is now 56.7 cents per share (down from 69.4 cps in the prior year) driven by the unrealised
revaluation loss on investment property.
Independent valuers have identified a level of material valuation uncertainty. Each valuer has
highlighted that less certainty and a higher degree of caution should be attached to the valuations, and
that values could change quickly and significantly due to subsequent events.
Dividend
A final quarter dividend will not be paid as a result of the impact of COVID-19 and the uncertainty in
the current environment. Total cash dividends paid for the year are therefore 2.70 cents per share. The
dividend remains subject to quarterly review but is expected to be reinstated once there is more
certainty on future trading conditions.
Outlook
The impact of COVID-19 further reinforces the adopted approach towards a diversified, value-add
strategy that ultimately will increase the portfolio size.
The manager continues to focus on working with retail tenants to navigate these uncertain times and
preserve value in the longer term.
While the capital raise was withdrawn, the management team is focused on securing the Munroe Lane
development with the Auckland Council and works remain on timetable. A decision on the
development of Graham Street has yet to be made by the Asset Plus Board. Consideration is being
given to the scale of the proposed development given vacancy rates, market sentiment, tenant pre-
commitment, and the significant capital requirements for the preferred development option. The
property provides options for reduced scale redevelopment which may become the preferred option
given current market conditions, and ability to secure leasing pre-commitments.
-ENDS-
For further information please contact:
Bruce Cotterill
Chairman, Asset Plus Limited
021 668 881
Mark Francis
Managing Director
Augusta Funds Management Limited, manager of Asset Plus Limited
(09) 300 6161
Simon Woollams
Chief Financial Officer
Augusta Funds Management Limited, manager of Asset Plus Limited
(09) 300 6161
---
ANNUAL REPORT 2020
35 Graham Street, Auckland
Contents
01
05
16
26
02
06
17
52
04
12
18
55
57
Chairman’s Letter
Performance of
the Portfolio
Director Profiles
Financial Statements
Key Points from the
Financial Year
Property Report
The Manager
Independent Auditor’s
Report
Strategy Update
Finance Report
Corporate
Govenance
Shareholder
Statistics
Directory
Chairman’s Letter
Chairman’s
Letter
Over the past 12 months we have set out to progress
our transformation to a diversified value-add strategy,
continuing to reposition the existing portfolio to facilitate
that change, and successfully completing two new
acquisitions in line with that mandate.
The successful acquisition of 35 Graham Street in June
2019 was the first step towards implementation of our
approach to yield plus growth assets, with the purchase
immediately enhancing the company’s earnings,
providing growth opportunities through potential
redevelopment in the medium term, and increasing the
portfolio weighting to the Auckland market, should the
development proceed.
Furthermore, the successful divestment of the Heinz
Watties property in Hastings in December 2019
reflected the strategy to divest non-core assets which
lack potential value-add opportunity. The sale re-set the
balance sheet at an LVR of 34.3% to facilitate further
growth ambitions. In addition an underwriting fee was
received for the equity raise conducted by the purchaser
totalling $0.49 million.
The existing portfolio continues to be actively
managed, with a number of renewals completed and
new leases secured during the period. Further work
continues to reposition Eastgate, with an additional
internal anchor tenant being sought, which would
further solidify, and enhance the centre.
Following on from the acquisition of Graham Street, we
acquired bare land in the Albany basin in December
2019, for the purposes of constructing a 15,100m
2
office
building, with Auckland Council as an anchor tenant.
We are pleased to be working with Auckland Council,
who have committed to a 15 year lease term for more
than 2/3rds of the space. The deal remains subject
to satisfaction of the landlord funding condition and
shareholder approval.
On the back of the conditional agreement with Council,
we launched a fully underwritten $100 million equity
raise in March 2020. Unfortunately, the market volatility
associated with COVID-19 made the timing untenable
and the Board elected to withdraw, and defer the capital
raise until market conditions stabilise. As a result of this
deferral, management have secured an extension to
the funding condition until the end of July 2020, with
a further right (at both parties discretion) to extend
until the end of October 2020. In the meantime the
design and consenting for the development continues.
Current debt capability means that we can facilitate the
progression of the development in the conditional period.
The impact of COVID-19 and the Government’s response
to effectively shut-down the country for 7 weeks has
had a substantial impact on the economy. Asset Plus
has not been immune to the downstream effects of
this – particularly given the portfolio weighting to retail
assets. A number of tenants within the portfolio are
considered an essential service, and their ability to
continue trading has resulted in a reasonable proportion
of income still being received throughout this tumultuous
period. However the lasting impact, particularly for retail
tenants, and their ability to meet rental commitments
moving forward remains to be seen. At the time of
writing, management are working closely with all tenants
regarding their commitments, and to ensure their viability
moving forward, which will extend to relief packages
where required, and amendment of lease arrangements
where mutually suitable.
While earnings for the financial year were largely
on budget, we incurred material costs associated
with due diligence being undertaken on potentially
material acquisitions (which were partially offset by the
underwriting fee received in relation to the Hastings
divestment). In addition there were the costs associated
with the capital raising which was ultimately withdrawn.
This, overlaid with the significant uncertainty associated
with COVID-19 and its resultant impact moving forward
has led to the Board to suspend the final quarter
dividend. The dividend will continue to be reviewed on a
quarterly basis, having regard to the operating cash flow
and capital requirements of the business.
The impact of COVID-19 further reinforces the adopted
approach towards a diversified, value-add strategy
that ultimately will increase the portfolio size and dilute
the impact that any single tenant, or property has on
the overall portfolio. The Board is very pleased with the
initiatives and efforts of the Augusta management team
over the course of the year in securing two material
and transformative transactions for Asset Plus. While
the capital raise was unsuccessful at this time the
management team is focused on securing the Albany
development which will likely see the need for a future
capital raise as this is a compelling opportunity for
Asset Plus.
Finally, we thank you, our shareholders, for your
continued support, which we do not take for granted.
We trust that you and your families are safe and well
during these highly unusual times and we look forward to
continuing to re-position the Company on your behalf.
Regards,
Bruce Cotterill
Chairman
01
Key Points
from the Financial Year
34.3
LOAN TO VALUE RATIO
S
4.74
ADJUSTED FUNDS
FROM OPERATIONS
1
OF
million
(8.50% at 31 March 2019).
NET LOSS AFTER TAX
S
14.69
million
($3.80 million profit
in the prior year).
($4.74 million in
the prior year).
1
AFFO is a non-GAAP financial information, calculated based on guidance issued by the Property Council of Australia. Asset Plus
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. The calculation of AFFO has been reviewed by the
auditors. A reconciliation between Net Profit After Tax and AFFO can be found on page 14.
98.3
PORTFOLIO
OCCUPANCY
increased from 96.7%
Key Points f rom the Last Financial Year
02
Exit of Heinz Watties
Distribution Centre
in December 2019
- sold for $29.1 million
Purchase of land
at 6-8 Munroe
Lane for $7.25m
in December 2019
WALT
3.16
years
56.7
NET TANGIBLE
ASSETS
reduced from 69.4 cps
down from
5.51 years (prior year)
cents per share
S
58
million
driven by loss on revaluation
on investment property.
in June 2019.
PURCHASE OF 35 GRAHAM
STREET, AUCKLAND FOR
Key Points f rom the Last Financial Year (Continued)
03
Strategy
Update
General
Acquisition of 6-8 Munroe Lane,
Albany, Auckland
The acquisition of Munroe Lane and concurrent entering
of the conditional Agreement to Develop and Lease with
Auckland Council further cements the implementation
of the transformational value-add strategy for Asset
Plus. Capitalising on the Managers expertise, agility and
strong relationships, the Company secured a contract
on the Munroe Lane land and were identified as the
preferred development partner by Auckland Council after
a competitive process. The Munroe Lane development
remains subject to satisfaction of the funding condition
and shareholder approval. On completion this $137m
property would:
• significantly increase the weighting of the portfolio
to Auckland,
• create sustainable growth of shareholder returns
through regular fixed rental growth,
• delivers on the yield plus growth strategy through
the forecast development margin, and
• has a 63% pre-lease commitment to a very
attractive tenant covenant with a long term lease.
Heinz Watties Distribution Centre,
Hastings Divestment
The successful divestment of the Heinz Watties property
provided balance sheet capability to acquire the Munroe
Lane land, and facilitate development costs in the
near term. Divesting this asset at valuation supported
the strategy to reduce the share price to NTA gap (by
providing surety around NTA and valuations), and
underwriting the equity raise for the purchaser resulted
in a one off additional fee, which supported the yield plus
growth strategy.
35 Graham Street, Auckland Central
The successful purchase of 35 Graham Street heralded
the newly adopted value-add strategy for Asset Plus.
The transaction supported enhanced yield for investors
through the income derived during the 2 year lease-back
by Auckland Council, with the growth strategy coming in
the form of a myriad of development options. Asset Plus
continues to assess the business case for the proposed
redevelopment, and has appointed consultants led by
world renowned Woods Bagot Architects.
Strategy Update
Increase the scale of the portfolio
The Munroe Lane development, should it
proceed, is expected to increase the scale of
the portfolio by ~$137m, and once developed
35 Graham Street could further increase
the portfolio value by up to ~$120m. Once
complete these developments will materially
increase the size of the Asset Plus portfolio,
reduce the Management Expense Ratio, and
concurrently increase liquidity through the
injection of further equity into
the company.
Reduce the share price to NTA gap
The Munroe Lane development, should it
proceed, is expected to reduce the gap by
both enhancing the quality of the Asset Plus
portfolio, executing on the yield plus growth
strategy and increasing market capitalisation
and liquidity.
Set a strong platform for sustainable
growth moving forward
Delivery of the Munroe Lane development,
should it proceed, is expected to significantly
enhance the quality of the Asset Plus portfolio,
and re-weight the portfolio to a higher
Auckland weighting and increase the office
sector weighting as well. Given the current
impact of COVID-19 on the retail environment,
reducing Asset Plus’s weighting to this sector
is considered desirable.
Provide an appropriate yield reflective
of the value-add, and total return
approach adopted
The Munroe Lane development is expected
to provide attractive risk-adjusted returns
having regard to the high quality tenant
covenant, and extended lease term over
almost 2/3rds of the building.
Strategic Objective Update
04
Performance
of the portfolio
Fair
Value
($m)
Occupancy
(%)
WALT
(Years)
Passing
Rent
Yield
(%)
Eastgate
Shopping
Centre
46.9595.34.537.80
Stoddard
Road
37.50100
4.00
7.03
35 Graham
Street
50.101001.247.93
6-8 Munroe
Lane
7.50n/an/an/a
Total142.0598.33.16
Performance of the portfolio
Other Activity
During the year the company has
actively pursued two material
potential acquisitions which were
operating businesses, with property
backed assets. Given the scale of
these assets, and operating company
complexities significant due diligence
was undertaken which came at both
material cost, and considerable time
invested by the Manager and Board.
Unfortunately, these transactions
haven’t eventuated leading to extensive
due diligence costs being incurred.
Given the value-add focus of Asset Plus
it is likely that most transactions that
are considered will require extensive
due diligence, to verify business cases
and mitigate risk. With the pending
development of Munroe Lane, and
future redevelopment of Graham Street
it is unlikely that Asset Plus will consider
any material transactions in the near
term until both projects are sufficiently
advanced, with the majority of lease
commitments secured.
05
Stoddard Road
COVID-19 has impacted commercial property valuations across the board. The
uncertainty has impacted retail market rents and softened capitalisation rates.
As a result, the Stoddard Rd Centre valuation has decreased from $39.5 million
to $37.5 million, or a 5.1% reduction.
22 Stoddard Road,
Mt Roskill, Auckland
Property Report
22 Stoddard Road31-Mar-1931-Mar-20Change
Valuation
$39.5m$37.5m
Net Contract Income
$2.567m$2.689m
Passing Initial Yield6.50%7.03%
Cap. Rate
6.13%
6.25%
Net Market RentaI
$2.456m$2.366m
WALT (years)4.02
4.00
During the year a total of 6 lease renewals were completed,
making up 17% of the centres income stream.
The centre is currently 100% occupied. As a result of rent
reviews and renewals during the year, the net contract
income has increased by $70,369 p.a.
Additional income was secured via a licence to provide six
interactive advertising signs throughout the centre, which
provides additional income and further enhances to centre’s
offering to the public.
The future leasing focus are the four renewals due in 2021,
making 16.3% of the total rental income for the Centre.
During the year, some capital was invested to enhance
the landscaping in addition to ongoing pro-active
maintenance and the centre maintains a modern and
attractive appearance.
06
Property Report (continued)
Eastgate -
Shopping Centre
Cnr Buckleys Road &
Linwood Avenue,
Christchurch
The year has seen a number of positives including the additional 4 year
renewal being secured with Countdown after payment of the incentive
(taking the term to 8 years), the addition of a new internal mini-major
tenant, Bargain Chemist, and completion of seismic upgrade works within
The Warehouse.
Offsetting this is the impact of COVID-19 and the decline in market rental
and value for the property in light of global retail uncertainty.
Eastgate31-Mar-1931-Mar-20Change
Valuation
$54.5m$46.9m
Net Contract Income
$3.635m$3.661m
Passing Initial Yield6.66%7.80%
Cap. Rate8.13%8.38%
Net Market RentaI
$4.463m$4.087m
WALT (years)5.074.53
Seismic upgrade works for “The Warehouse” building were
carried out and completed towards the end of 2019. These
works have raised the seismic strength of the building
above 67% New Building Standard (NBS). All buildings at
Eastgate are now a minimum of 67% NBS.
There have been several lease expiries throughout
the year with many of these tenants being allowed
to holdover on a monthly basis to give management
flexibility with potential redevelopment options.
Towards the end of 2019 Bargain Chemist committed to
a 6 year lease at the Centre. Several tenancies have been
combined to provide just over 800m
2
for the tenant. We
anticipate this addition to the Centre will drive increased
foot traffic and in turn lead to increased turnover across
the board. Bargain Chemist’s Commencement Date has
been delayed due to the impact of COVID-19 and they
began trading after the lock down in mid-May 2020.
Master planning for both internal and external areas of
the Centre continues. Externally, negotiations are well
advanced for a standalone fast-food restaurant adjacent
to KFC site. Internally, management continues to focus
on sourcing another internal anchor in addition to
Bargain Chemist.
COVID-19 has had a significant impact on the March 2020
valuation for Eastgate with a decrease of $7.55 million or
13.9% on the prior year. COVID-19 has brought a level of
uncertainty to the retail market which has softened the
capitalisation rate. Although customer numbers are up at
the Centre the Moving Annual Turnover (MAT) has remained
flat for the year. Passing income was largely flat through the
year while the WALT has decreased slightly.
07
Property Report (continued)
35 Graham Street
The valuation for 35 Graham St has reduced on the back of COVID-19 given
the relatively short income stream, and uncertainty attached to COVID-19
and potential impacts for office occupiers. The property is well positioned
in a central location with a number of redevelopment options available
dependent on market demand and sentiment, providing Asset Plus with an
ability to pivot to take advantage of any scenario.
35 Graham Street
On
Acquistion31-Mar-20Change
Valuation$58.0m$50.1m
Net Contract Income$3.975m$3.975m
Passing Initial Yield6.85%7.93%
Cap. Rate6.00%6.50%
Net Market RentaI$3.960m$4.008m
WALT (years)2.01.2
On 17 June 2019, Asset Plus shareholders approved the
purchase of 35 Graham Street, Auckland for $58 million
from Auckland Council.
At the time of the transaction, a two-year lease was
entered into with Auckland Council to provide Asset
Plus with income and time to work through potential
redevelopment options. A full redevelopment continues
to be Asset Plus' preferred development option
with the intention of holding this property as a long
term investment upon completion.
Alternative redevelopment options presented to
shareholders in June 2019 also still remain available
dependent on market conditions and achieving pre-
leasing thresholds.
Work has progressed on the preferred development
option, including the appointment of an international
architect and consultant team, along with appointment of
a leasing agent, Colliers.
A final decision on the development of 35 Graham Street
has yet to be made by the Asset Plus Board. Consideration
is being given to the scale of the proposed redevelopment
given vacancy rates, market sentiment, tenant pre-
commitment, and the significant capital requirements for
the preferred development option. The property provides
options for reduced scale redevelopment which may be more
acceptable in the current market conditions.
35 Graham Street,
Auckland
08
09
Property Report (continued)
If the deal proceeds then the property will be developed with the following
characteristics:
Resource Consent obtained in mid-May 2020, and remains subject to a Landlord funding
and shareholder approval condition. This condition must be satisfied by 30 July 2020.
4,200m
2
corner site with three road frontages in Albany acquired off-market in
December 2019.
On 20 December 2019, Asset Plus announced the development of a 26,500m
2
(GFA) / 15,100m
2
(NLA) building in Albany, 63% pre-leased, with a 15-year lease to
Auckland Council.
Asset Plus intends to hold Munroe Lane as a long term investment upon completion.
Construction is expected to commence in late 2020, with a targeted completion date of
December 2022.
Asset Plus believes the Munroe Lane Development offers attractive risk-adjusted returns
having regard to the high-quality tenant and extended lease term secured to date.
Munroe Lane
– Future potential development
Artist’s impression of the Munroe Lane development
10
Property Report (continued)
Development overview
• 6 levels plus 2 basement carparking development in the
heart of Albany with extensive on site car parking.
• Large floor plates of ~3,000 m2 each.
• ~350m
2
of expected Café / Food & Beverage / Retail
outlets on ground level.
• 63% pre-leased on a 15 year lease to Auckland Council.
Target August 20 to commence marketing the balance
of unleased space.
Sustainability Commitments
The development has committed to sustainability and
environmental performance improvement in their design
focussing on the following areas:
• Targeting 5-star Greenstar and 5-star NABERSNZ rating.
• Re-use of existing structure will reduce development
carbon footprint.
• Excellent daylighting and external views.
• Intend to develop inter-connecting atrium stairs
promoting wellness.
• Extensive end-of-trip facilities.
• Intending to use durable materials with a low
maintenance requirement.
Munroe Lane,
Auckland
Artist’s impression of the Munroe Lane development
The Munroe Lane development remains subject to satisfaction of the funding condition and shareholder approval.
11
Finance Report
Finance
Report
2020
$’000
2019
$’000
2018
$’000
2017
$’000
2016
$’000
Total Net Revenue10,9599,151
11,704
11,906
11,575
Administration Expenses
(1,644)
(1,766)(2,225) (2,612) (2,318)
Redundancy Costs
-
-(726) - -
Net Finance Costs
(1,664)
(1,079)(2,821) (2,726) (2,448)
Total Operating Income7,6516,306
5,932 6,568 6,809
Gain/(Loss) on Sale of Property, Plant
and Equipment
-
(14)(29) (87) -
Loss on Sale of Investment Property
46
(915)(2,970) - -
Unrealised Interest Rate Swap
Gain/(Loss)
-
13379 732(677)
Fair Value Gain/(Loss) in Value of
Investment Property
(19,115)
(1,767)(2,945) (1,651) 3,160
Transaction Costs
(1,774)
(224)(686) (1,339) -
Sale of Management Rights
-
-4,500 - -
Net Profit/(Loss) Before Taxation(13,192)3,519
3,881 4,223 9,292
Income Tax Expense(1,496)284(786) (1,150) (895)
Profit and Total Comprehensive Income
For the Year, Net of Tax
(14,688)
3,8033,0953,0738,397
Basic and Diluted Earnings Per Share(9.07)2.35 1.91 1.90 5.19
Five Year Financial Summary
12
Financial Result Summary
2020
$’000
2019
$’000
Variance
$’000 Comments
Total Net Revenue10,9599,1511,808
Income higher due to
35 Graham Street partly offset
by the divestment of Heinz
Watties warehouse
Administration Expenses
(1,644)(1,766)122
Administration expenses lower due
to the benefits of externalisation
Net Finance Costs
(1,664)(1,079)(585)
Higher due to debt drawn to
purchase 35 Graham Street partly
offset by the divestment of Heinz
Watties warehouse
Total Operating Income7,6516,306
1,345
Loss on Sale of Property, Plant
and Equipment
-(14)14
Loss on Sale of Investment Property
46(915)961
Loss in 2019 due to further costs in
relation to the AA Centre
Unrealised Interest Rate Swap Gain
-133(133)
All interest rate swaps were exited
in July 2018
Fair Value Loss in Value of
Investment Property
(19,115)(1,767)(17,348)
Lower due to fair value movement
of portfolio as a result of
uncertainty due to COVID-19
Transaction Costs
(1,774)(224)(1,550)
FY20 includes due diligence costs
associated with two separate
business acquisitions that didn't
proceed and capital raising costs
Net Other Losses(20,843)(2,787)(18,056)
Net Profit / (Loss) Before Taxation(13,192)3,519
(16,711)
Income Tax(1,496)
284
(1,780)
Profit and Total Comprehensive Income
for the Year, Net of Tax
(14,688)
3,803
(18,491)
Finance Report (continued)
13
Finance Report (continued)
Adjusted Funds from Operations - Reconciliation to Net Profit After Tax
1
AFFO is a non-GAAP financial information, calculated based on guidance issued by the Property Council of Australia. Asset
Plus 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. The calculation of AFFO
has been reviewed by the auditors.
2020
$’000
2019
$’000 Comments
Statutory Net Profit After Tax(14,688)3,803
Investment Property and Inventory
Loss on Sale of Investment Property
(46)
915
Fair Value Loss in Investment Property
19,115
1,767
Depreciation on Owner Occupied PP&E
63
-
Financial Instruments
Fair Value Gain on the Mark to Market
of Derivatives
-
(133)
Deferred Tax
Deferred Tax Expense
(522)(665)
Tax on Depreciation Recovery (Non-Operating)
527
-
Depreciation recovered from Heinz Watties
Other Unrealised Or One-Off Items
Other income (underwriting)(488)
-
Underwriting fee income (Heinz Watties)
Transaction Costs
785
224
FY20 costs relate to the capital raise which
was withdrawn in March 2020
Non Operating - Current Tax-(948)
Net Loss on Sale of Property, Plant
and Equipment
-
14
Net Operating Income After Tax4,746
4,977
Incentives and Rent Straightening
Amortisation of Lease Incentives and Costs
285188
Funds From Operations (FFO)5,031
5,165
Incentives Given for the Accounting Period
(207)(275)
Maintenance CAPEX
(80)(151)
Adjusted Funds From Operations (AFFO)
1
4,744
4,739
CPS
2.932.93
14
Finance Report (continued)
Balance Sheet
2020
$’000
2019
$’000Comments
Cash at Bank98
781
Investment Properties143,559
94,077
Increased due to 35 Graham St and Munroe Lane less Heinz Wattie
Properties Held for Sale-
28,890
Heinz Wattie's Distribution centre (2019)
Other Assets1,420
2,318
AA Centre recoveries and Colliers trust account (Eastgate)
Total Assets145,077
126,066
Borrowings49,250
10,500
Other Liabilities
4,0323,252
Total Liabilities
53,28213,752
Shareholders Equity
91,795112,314
Net Tangible Assets
Per Share ($)
0.5670.694
Capital Management
$49.3 million of debt is currently drawn which represents
a LVR of 34.3% (8.5% in the prior year). The loan facility
limit was increased to $75 million post the 35 Graham
Street acquisition.
The NTA is now 56.7 cents per share (down from 69.4
cents per share in the prior year) driven by the unrealised
revaluation loss on investment property.
Dividends
A final quarter dividend will not be paid as a result of the
impact of COVID-19 and the uncertainty in the current
environment. Total cash dividends paid for the year are
therefore 2.70 cents per share. This represents a pay
out ratio of 92% (based on AFFO). The dividend remains
subject to quarterly review, but it is expected to be
reinstated once there is more certainty on future
trading conditions.
15
Bruce Cotterill
Chairman,
Non-Executive
Independent Director
Bruce Cotterill
joined the Board
of Asset Plus in
April 2017. Bruce
is an experienced
CEO, Chairman and
Company Director,
who has excelled in a
number of sectors and in a
range of extremely demanding
roles. This includes businesses going
through major transformation brought about by financial
performance, structural change and cultural issues. As
a CEO he has led real estate group Colliers, both in New
Zealand and Australia, Kerry Packer’s ACP Magazines,
and iconic New Zealand sportswear company
Canterbury International. As CEO of Yellow Pages Group
he was appointed to lead that company through a
period of dramatic change, including the restructure of
the Company’s $1.8 billion of debt. Bruce was Chairman
of Noel Leeming Group for 8 years until that Company’s
sale to The Warehouse, and he is currently on the Board
of Swimming New Zealand.
Carol Campbell
Non-Executive
Independent Director
Carol Campbell
joined the Board of
Asset Plus in May
2015 and chairs
the Audit and Risk
Committee. Carol is a
Chartered Accountant
and a member of
Chartered Accountants
Australia and New Zealand.
Carol has extensive financial
experience and a sound understanding of efficient Board
governance. Carol holds a number of directorships
across a broad spectrum of companies, including T&G
Global, New Zealand Post, NZME and the Fisher Listed
Investment companies – Kingfish, Barramundi and
Marlin Global, where she is also Chair of the Audit and
Risk Committee. She is also a Director of Kiwibank. Carol
was a Director of The Business Advisory Group for 11
years, a Chartered Accountancy Practice, and prior to
that a partner at Ernst & Young for over 25 years.
Paul Duffy
Non-Executive Director
Paul Duffy has over 36
years’ experience in the
property investment/
development industry,
including CEO/executive
director of DNZ Property
Fund (now named
Stride Property) for 13
years. During his career,
Paul held the position of
General Manager of Fletcher
Property Limited and was Joint
Managing Director of US Real Estate
Subsidiaries for the Abu Dhabi Investment Authority.
In this role he oversaw the formation of a large real
estate portfolio in the United States and Europe. Paul
is currently a Director of Leighs Construction and a
number of private companies. Paul is also the chairman
of Augusta Capital and Augusta Funds Management
and is therefore not an independent director.
Paul joined the Board in April 2017.
Allen Bollard
Non-Executive
Independent Director
Allen has a long
background
in accounting,
business analysis,
risk management, tax,
and finance, mostly in
property and construction.
Starting as a partner in a
major accounting firm, he
was then CFO for three listed
property companies and for ten
years was CEO/CFO of Tramco Group, which managed
and financed several large privately held leasehold
land owning partnerships including Viaduct Harbour
Holdings, Tram Lease, Quay Lease, Kiwi Forests,
Wairakei Pastoral and Calland Properties Ltd. He is now
an independent business and finance consultant and
Director, still advising Tramco and is an independent
trustee for the Wyborn and Green families. He is the
Government approved independent director of Tamaki
Makaurau Community Housing Joint Venture and Chair
of the Odyssey House Board of Trustees.
Allen joined the Board in April 2017.
Director Profiles
Director Profiles
16
The Manager
Founded in 2001, Augusta is a leading diversified
listed fund manager with value-adding and asset
management expertise across New Zealand and
Australia. Augusta owns and manages 71 properties
across the office, retail and industrial sectors, with
$1.83 billion of assets under management.
Augusta employs 40 staff across offices in Auckland,
Christchurch and New Plymouth, with specialist
expertise in asset management and development
management, as well as other essential professional
functions including accounting, treasury and investor
relations, legal, compliance and company secretariat.
The number of assets it manages gives Augusta a
vantage point from which to understand the market
and unlock real estate opportunities. Augusta has
comprehensive and up-to-date knowledge and
insights pertaining to property buyers/sellers, tenants
and, importantly, the constant and subtle shifts to
lending and bank sentiment. Understanding this
sentiment has a critical bearing on the investment
strategies ultimately determined for each property
it manages.
Augusta’s wide market reach, coupled with its
professional expertise across all the key areas of asset
management, represents the backbone of the value
proposition which will underpin its strategy for the Asset
Plus portfolio future growth and success.
There is a dedicated asset manager for each property
within the portfolio with oversight from the senior
management team in respect to portfolio strategy.
In line with the yield plus growth ambitions of Asset
Plus, each asset manager has been selected for their
ability to actively manage each asset and exhaust all
avenues to extract value from the existing portfolio.
The Manager
17
Corporate Govenance
Corporate
Governance
Principle 1 – Code of Ethical Behaviour
Directors should set
high standards of ethical
behaviour, model this
behaviour and hold
management accountable
for these standards being
followed throughout
the organisation.
A Code of Ethics has been adopted by which the
Company has set out expectations for all Directors,
officers, any employees and representatives to act in
a manner consistent with its guiding principles and
the values set out in its Code of Ethics. This Code sets
out clear expectations of ethical decision-making
and personal behaviour in regard to confidentiality,
securities trading, transparency, company
information, conflict resolution processes, workplace
responsibilities, environmental responsibility and
stakeholder interaction. A copy of the Code of Ethics
is available at www.assetplusnz.co.nz/wp-content/
uploads/code_of_ethics_final.pdf.
Any illegal or unethical behaviour is to be reported
to the Board. The Chairman may determine whether
an exception or waiver is granted. Otherwise a sub-
committee of the Board will be formed to determine
what action should be taken.
Asset Plus’ manager, Augusta, has also adopted a
Code of Ethics which applies to its employees and
directors. The Code sets out the minimum standards
expected of Augusta’s employees and directors and is
intended to facilitate decisions that are consistent with
Augusta values, business goals and legal and policy
obligations. A copy of the Augusta Code of Ethics is
available at www.augusta.co.nz/assets/Uploads/
Augusta-Code-of-Ethics.pdf.
Asset Plus has also adopted a Share Trading Policy
which sets out the rules for dealing in the listed
financial products of Asset Plus. The policy prohibits
trading by directors of Asset Plus without the written
consent of the Company Secretary. The Board may set
‘no trade’ periods around the release of the Annual
and Interim reports, changes in Asset Plus’ capital
structure or where there is significant acquisition or
divestment activity. A copy of the policy is available at
www.assetplusnz.co.nz/wp-content/uploads/share_
trading_policy_final.pdf.
Augusta has also adopted an Insider Trading Policy
which sets out the rules for dealing in the financial
products of any entity that Augusta manages
(including Asset Plus). The policy prohibits trading
by any employee or director of Augusta without the
written consent of the Augusta Chair. Other than in
exceptional circumstances, all trading is prohibited
during blackout periods for 30 days prior to half- and
full-year balance dates until the first trading day
after the relevant results are announced. A copy of
the policy is available at www.augusta.co.nz/assets/
Uploads/Augusta-Insider-trading-policy.pdf.
The Board of Asset Plus is committed to maintaining the highest standards of business
behaviour and accountability.
Accordingly, the Board has adopted corporate governance policies and practices designed to
promote responsible conduct.
The corporate governance framework is set out in Asset Plus’ Corporate Governance
Manual, a copy of which can be found at the Company’s website: www.assetplusnz.co.nz/
corporate-governance.
This section sets out Asset Plus’ corporate governance policies, practices and processes
with reference to the NZX Corporate Governance Code’s eight key principles and
supporting recommendations. The Board considers that it has followed the recommendations
of the NZX Corporate Governance Code except as set out below under each Principle.
18
Corporate Govenance (continued)
Principle 2 – Board Composition
and Performance
To ensure an effective board,
there should be a balance
of independence, skills,
knowledge, experience
and perspectives.
Board Charter
The Asset Plus Board has adopted a Board Charter
and Governing Principles which sets out that
the specific responsibilities of the Board and its
Committees include:
• oversight of the Company including its control and
accountability procedures and systems;
• setting the strategic direction and objectives of
the Company;
• overseeing the audit and monitor risk;
• approval of operating plans including annual
business plans and budgets;
• monitoring actual results against the annual
business plan, budget and strategic objectives;
• delegating the appropriate authority of the
management of the Company, and monitoring
management’s performance on a regular basis;
• setting the remuneration of the Directors;
• approval and monitoring of the progress of capital
expenditure, capital management initiatives and
acquisitions and divestments;
• approval of capital structure and dividend
policies; and
• oversight of disclosure and monitoring of price
sensitive matters affecting the Company.
Director nominations and appointments
The Board has adopted a Nomination Committee
Charter which sets out the procedure for nominating
and appointing potential directors to the Board.
Given its size, the full Board of Asset Plus acts as the
Nominations Committee. The responsibilities set out in
the Nomination Committee Charter are:
• to identify and nominate candidates to fill Board
vacancies as and when they arise;
• before making an appointment, to evaluate
the balance of skills, knowledge and experience
on the Board and, in light of the evaluation, to
determine the role and capabilities required for
the appointment;
• to formulate succession plans for Directors taking
into account the challenges and opportunities
facing the Company and the skills and expertise
accordingly required to govern the Company in
the future;
• to regularly review the structure, size and
composition (including the skills, knowledge
and experience) of the Board and to make
any changes;
• to keep under review the leadership requirements
of the Company, both non-executive and
executive, with a view to ensuring the continued
ability of the Company to compete efficiently in
the marketplace; and
• to consider such other matters relating to Board
nomination or succession issues as may be
identified by the Board.
Formal agreements are entered into with all
new directors.
19
Board composition
Director profiles are on page 16 and director
shareholdings are listed on page 25.
Directors undertake continuing education to keep their
skills current and understand how to best perform
their duties.
The Board Charter sets out that the Board will review
its performance as a whole on an annual basis and
instigate additional comprehensive reviews as may
be deemed necessary from time to time. External
consultants may be commissioned as needed to assist
in the assessment of individual director performance,
the effectiveness of the Board’s processes and/or the
Board’s own effectiveness.
Diversity
Asset Plus has not adopted a diversity policy as it no
longer has any employees following externalisation of
management to Augusta. Instead, the Asset Plus Board
has reviewed the Manager’s diversity policy and relied on
the Manager to implement diversity measures with
its employees.
Breakdown of Gender Composition of Asset Plus’
Directors and Officers.
MaleFemale
Financial
YearDirectorsOfficersDirectorsOfficers
Year ending
31 March
2020
3310
Year ending
31 March
2019
3310
Chair and CEO
In accordance with the NZX Corporate Governance
Code and as a result of management being
externalised, Asset Plus’ Chair is not also its CEO.
Principle 3 – Board Committees
The board should use
committees where this will
enhance its effectiveness in
key areas, while still retaining
board responsibility.
The Asset Plus Board has established a separate Audit
and Risk Committee comprising of three directors. The
Corporate Governance Manual also includes charters
for Nominations Committee and Remuneration
Committee. However, the full Board undertakes the
responsibilities of those Committees. Given the size
and operations of Asset Plus, the Board does not
consider that any further committees are necessary.
Audit and Risk Committee
The Audit and Risk Committee’s primary
objectives are:
• to set the principles and standards with respect
to internal controls, accounting policies and the
nature, scope, objectives and functions of the
external audit. This objective enables the Board
to satisfy itself that management is discharging
its responsibilities in accordance with established
processes and, wherever practical, best practice
methodologies; and
• to ensure the efficient and effective management
of all business risks, and the efficient and
effective compliance with Asset Plus’ Risk
Management Policy.
Corporate Govenance (continued)
20
Key responsibilities for the Audit and Risk
Committee include:
• Establishing guidelines for the selection,
appointment and/ or removal of the external
auditor as well as the rotation of the lead partner
of the audit firm;
• Ensuring the external auditor is discharging
its responsibilities, including monitoring the
effectiveness, objectivity and independence
of the external auditor;
• Reviewing draft financial statements, NZX
preliminary announcements and annual and
interim reports;
• Reviewing accounting policies and practices;
• Reviewing the risk management policy and the
annual risk management plans; and
• Reviewing the Delegated Authority
Policy annually.
The members are all independent directors being
Carol Campbell (Chair), Allen Bollard and Bruce
Cotterill. The Audit and Risk Committee is required to
meet at least twice a year, with three meetings being
held in the 2020 financial year.
Representatives of the Manager only attend meetings
of the Audit and Risk Committee at the invitation of
the committee.
Remuneration Committee
The full Board acts as the Remuneration Committee.
The Remuneration Committee Charter is included in
the Corporate Governance Manual. The responsibilities
include setting and reviewing all components of the
remuneration of non-executive Directors.
Nominations Committee
The full Board acts as the Nominations Committee.
The Nominations Committee Charter is included in the
Corporate Governance Manual. The responsibilities are
as set out on page 19.
Takeover protocols
In June 2018, the Board adopted protocols setting
out the procedures to be followed if a takeover offer
is received.
Principle 4 – Reporting and Disclosure
The board should demand
integrity in financial and non
financial reporting, and in
the timeliness and balance
of corporate disclosures.
Continuous disclosure
Asset Plus has adopted a disclosure policy setting
out its approach to disclosing material information
and communication with shareholders or analysts.
Asset Plus recognises that the cornerstone of New
Zealand and international securities law is full and fair
disclosure of material information and that the timely,
non-exclusionary distribution of information to the
public is crucial to the efficiency and integrity of the
capital markets.
A copy of the policy is available on Asset Plus’ website
at www.assetplusnz.co.nz/corporate-governance,
along with the Corporate Governance Manual.
Non-financial disclosures
As the size of Asset Plus’ portfolio is currently only four
properties, the recommendation regarding non-financial
disclosures has not been complied with due to the cost
of such compliance. This will be further evaluated as the
portfolio grows.
The development of Munroe Lane and Graham Street
will be developed to certain sustainability standards
which is expected to form part of Asset Plus's
sustainability strategy.
Corporate Govenance (continued)
21
Principle 5 – Remuneration
The remuneration of directors and executives should be
transparent, fair and reasonable.
Remuneration of directors is reviewed by the Board.
The director remuneration pool was approved at $300,000 when Asset Plus was formed following the
corporatisation of the National Property Trust in 2011. In June 2017, the Asset Plus Board approved the following
director fees which have continued to be paid during the past year:
Director remuneration
DirectorBase director feesCommittee feesAnnual fee
Amount paid
during the year
Bruce Cotterill $90,000 – chair-$90,000$90,000
Carol Campbell$65,000$10,000 – Chair of Audit and Risk Committee$75,000$75,000
Allen Bollard$65,000$5,000 – Member of Audit and Risk Committee $70,000$70,000
Paul Duffy$65,000-$65,000$65,000
Total $300,000$300,000
Approved pool$300,000
As Asset Plus no longer has any employees, it does not have a remuneration policy.
Chief Executive remuneration
Following the externalisation of management to Augusta, Asset Plus no longer has a CEO.
Corporate Govenance (continued)
22
Principle 6 – Risk Management
Directors should have a
sound understanding of the
material risks faced by the
issuer and how to manage
them. The Board should
regularly verify that the issuer
has appropriate processes
that identify and manage
potential and material risks.
Asset Plus has a risk management policy (set out in
the Corporate Governance Manual). As part of this
a range of risks have been identified from financial/
operational risk to investment market risk with
causes, potential outcomes and risk management
strategies detailed.
Asset Plus also relies on Augusta’s risk management
framework to identify, oversee, manage and control risks
that Asset Plus faces. Key risks have been identified
including interest rate and treasury risk, cyber security,
construction and development risk, compliance with
regulatory obligations, property risks (such as tenant
default), fraud and health and safety risks.
Augusta is responsible under the management
agreement for advising the Asset Plus Board on
risk management matters. The Audit and Risk
Committee will receive such reports and oversee
risk management.
Health and safety
Augusta oversees health and safety compliance on a
day to day basis for Asset Plus in conjunction with the
property managers for each property. Each property
has a hazard register which is managed on a day to
day basis by the property managers and overseen by
Augusta’s asset managers.
Augusta’s Legal and Compliance Manager oversees
compliance with Augusta’s health and safety
framework including regular reporting to the Board.
This includes monthly reporting to the Board on key
health and safety statistics, incidents and hazard
remedies. This is in addition to quarterly reporting
to Augusta’s Health and Safety Committee which
considers all health and safety hazards and incidents.
The Asset Plus Board also considers health and safety
issues at each board meeting and as they arise if
necessary. A key focus for the Asset Plus Board is
ensuring that hazards are identified and remedied
and that reporting identifies the progress with
remedial actions.
A health and safety assessment is conducted on
all new properties to identify all relevant hazards prior
to acquisition.
Principle 7 – Auditors
The board should ensure the
quality and independence of
the external audit process.
The Audit and Risk Committee Charter sets out Asset
Plus’ framework for managing relationships with
its auditor. This includes the ability for directors to
communicate directly with auditors and for auditors
to attend meetings of the Audit and Risk Committee
without management present. Any non-audit services
provided by the audit firm must be approved by the
Audit and Risk Committee.
Grant Thornton is the auditor of Asset Plus with the
audit partner rotated every 5 years. Grant Thornton
attends each annual shareholder meeting and
is available to answer shareholder questions at
the meeting.
Asset Plus has no separate internal audit function as it
has no employees.
Corporate Govenance (continued)
23
Principle 8 – Shareholder Rights
and Relations
The board should respect
the rights of shareholders
and foster constructive
relationships with
shareholders that
encourage them to
engage with the issuer.
Asset Plus’ website at www.assetplusnz.co.nz includes
a range of information including bios for directors,
copies of the Corporate Governance Manual, the
constitution and historical annual and interim reports.
The Company engages with shareholders through
annual and interim reports, results conference
calls, presentations to shareholders and the annual
shareholder meeting.
Shareholders have the right to receive communications
electronically by notifying the share registrar. Major
decisions which require approval under the NZX Main
Board Listing Rules are submitted to shareholders
for approval. All voting at shareholder meetings
(such as the 2019 meeting for the 35 Graham Street
acquisition) is conducted by a poll.
The annual shareholders notice of meeting will be
provided to shareholders at least 28 days prior to the
annual meeting.
Statutory disclosures
Principal Activities
Asset Plus Limited is a listed commercial property
investment company investing solely in New Zealand
real estate.
Board Composition
The table below sets out details of the current directors of
Asset Plus Limited and its subsidiary, including the date
on which they were appointed.
No one ceased to be a director of the Company or its
subsidiary during the year ending 31 March 2020.
DirectorDate Appointed
Bruce Cotterill21 April 2017
Carol Campbell25 May 2015
Allen Bollard21 April 2017
Paul Duffy21 April 2017
Board Attendance
Directors attended the following formal meetings of
the Board in the year to 31 March 2020.
Director
Board Meetings
Held
Board
Meetings
attended
Bruce Cotterill1111
Carol Campbell1111
Allen Bollard11
10
Paul Duffy11
11
Interest Register Record
There were no entries made in the interest register
during the year ended 31 March 2020.
NZX Waivers Received
On 10 March 2020, the Company was granted a
waiver from NZX Listing Rule 5.2.1 in connection with
the previoulsy proposed $100 million capital raising.
The waiver allowed related parties of Asset Plus to
participate in the shortfall bookbuild at the conclusion
of the capital raising without shareholder approval
being required but subject to certain conditions
being met (including that the related parties were not
involved in or did not influence allocation decisions).
The waiver mirrored an existing exclusion in the NZX
Listing Rules for accelerated rights offers. Ultimately
the wavier was not relied on as the capital raising
was withdrawn.
Corporate Govenance (continued)
24
Corporate Govenance (continued)
Share Dealings by Directors
There were no share dealings by the Directors in the
year ending 31 March 2020.
Securities of the Company in which each Director had
a relevant interest as at 31 March 2020:
DirectorHolding
Security
Held
Nature of
Relevant Interest
Carol
Campbell
50,000Shares
Registered holder
and beneficial
owner
Indemnity and Insurance
The Company has effected Directors and Officers liability
insurance at prevailing rates for all Directors.
The Company and its subsidiaries have continued to
indemnify the Directors for any costs referred to in
Section 162(3) of the Companies Act 1993 and any
liability or costs referred to in Section 162(4) of the Act.
Donations
The Company did not make any donations in the year
to 31 March 2020 (2019: Nil).
Audit Fees
Amounts paid to the Auditor of the Company:
2020
$’000
2019
$’000
Grant Thornton Audit Fees
6384
In addition to the audit fee
the following other fees
were paid to Auditors:
Other Assurance Services
4248
Total105132
25
2020
FINANCIALS
Consolidated Financial Statements for the year ended 31 March 2020
26
The notes set out on pages 33 to 51 form part of, and should be read
in conjunction with, the consolidated financial statements.
Consolidated Financial Statements
Contents
28
29
30
31
32
33
52
Consolidated Statement
of Comprehensive Income
Consolidated Statement of
of Changes in Equity
Consolidated Statement of
Financial Position
Consolidated Statement
of Cash Flows
Reconciliation of Net Loss/
Profit to Net Cash from
Operating Activities
Notes to the Consolidated
Financial Statements
Independent
Auditor’s Report
27
Consolidated Financial Statements
The notes set out on pages 33 to 51 form part of, and should be read in conjunction with, the consolidated financial statements.
Note
2020
$’000
2019
$’000
Gross Rental Revenue5
14,466
13,350
Direct Property Operating Expenses5(3,995)(4,199)
Net Rental Revenue
10,471
9,151
Other Revenue6488-
Total Net Revenue
10,959
9,151
Administration Expenses7(1,644)(1,766)
Net Finance Costs7(1,664)(1,079)
Total Operating Expenses(3,308)(2,845)
Total Operating Income
7,651
6,306
Gain/(Loss) on Sale of Investment Property1346(915)
Realised Interest Rate Swap Gain-133
Fair Value Loss in Value of Investment Properties12(19,115)(1,767)
Loss on Sale of Property, Plant and Equipment-(14)
Transaction Costs8(1,774)(224)
Net (Loss)/Profit Before Taxation(13,192)
3,519
Income Tax9(1,496)284
Net (Loss)/Profit After Taxation
(14,688)3,803
Other Comprehensive Income--
Total Comprehensive (Loss)/Income For the Year, Net of Tax
(14,688)3,803
Basic/Diluted Earnings Per Share
(9.07)
2.35
Consolidated Statement
of Comprehensive Income
For the year ended 31 March 2020
28
Consolidated Financial Statements
The notes set out on pages 33 to 51 form part of, and should be read in conjunction with, the consolidated financial statements.
Note
Share Capital
$’000
Accumulated
Losses
$’000
Total
$’000
Opening Balance at 01 April 2018134,089(19,750)
114,339
Net Profit After Taxation
-3,8033,803
Total Comprehensive Income For the Year, Net of Tax
-3,8033,803
Dividends20-(5,828)(5,828)
Closing Balance at 31 March 2019134,089(21,775)112,314
Note
Share Capital
$’000
Accumulated
Losses
$’000
Total
$’000
Opening Balance at 01 April 2019134,089(21,775)
112,314
Net Loss After Taxation
-(14,688)(14,688)
Total Comprehensive Loss For the Year, Net of Tax
-(14,688)(14,688)
Dividends20-(5,831)(5,831)
Closing Balance at 31 March 2020134,089(42,294)91,795
Consolidated Statement
of Changes in Equity
For the year ended 31 March 2020
29
Consolidated Financial Statements
The notes set out on pages 33 to 51 form part of, and should be read in conjunction with, the consolidated financial statements.
Note
2020
$’000
2019
$’000
Current Assets
Cash and Cash Equivalents
98781
Trade Receivables, Other Receivables and Prepayments11
1,420
1,839
Taxation Receivable-413
Total Current Assets
1,518
3,033
Properties Held for Sale13-28,890
Non-Current Assets
Investment Properties12
143,559
94,077
Property, Plant and Equipment14-66
Total Non-Current Assets
143,559
94,143
Total Assets
145,077
126,066
Current Liabilities
Trade Payables, Accruals and Provisions161,8041,384
Taxation Payable707-
Other Current Liabilities175-
Total Current Liabilities2,6861,384
Non-Current Liabilities
Borrowings1549,25010,500
Deferred Taxation9
1,346
1,868
Total Non-Current Liabilities
50,596
12,368
Total Liabilities53,28213,752
Net Assets91,795112,314
Contributed Capital
134,089
134,089
Accumulated Losses(42,294)(21,775)
Shareholders' Equity91,795112,314
The Board of Directors of Asset Plus Limited approved the consolidated financial statements for issue on 16 June 2020.
Bruce Cotterill Carol Campbell
Chairman Chair Audit and Risk Committee
Consolidated Statement
of Financial Position
As at 31 March 2020
30
Consolidated Financial Statements
The notes set out on pages 33 to 51 form part of, and should be read in conjunction with, the consolidated financial statements.
2020
$’000
2019
$’000
Cash Flows from Operating Activities
Cash was provided from/(applied to):
Gross Rental Revenue
15,25613,222
Other Income507 -
Operating Expenses
(7,286)
(7,211)
Interest Income7 20
Interest Expense(1,654) (998)
Taxation Paid
(896)
(1,256)
Net Cash Inflow from Operating Activities5,934
3,777
Cash Flows from Investing Activities
Cash was provided from/(applied to):
Sale of Investment Property29,249 37,517
Purchase of Investment Property(65,873) -
Capital Expenditure on Investment Properties
(2,641)
(355)
Transaction Costs - (4)
Net Cash (Outflow)/Inflow from Investing Activities(39,265)
37,158
Cash Flows from Financing Activities
Cash was provided from/(applied to):
Repayment of Borrowings(28,000) (38,000)
Proceeds from Borrowings66,750 4,000
Distributions made to Shareholders(5,836) (5,828)
Capital Raising Costs(266) -
Payment to Cancel Interest Rate Swaps - (798)
Net Cash Inflow/(Outflow) from Financing Activities
32,648 (40,626)
Net (Decrease)/Increase in Cash and Cash Equivalents
(683) 309
Cash and Cash Equivalents at the Beginning of the Year781 472
Cash and Cash Equivalents at the End of the Year98 781
Consolidated Statement
of Cash Flows
For the year ended 31 March 2020
31
Consolidated Financial Statements
The notes set out on pages 33 to 51 form part of, and should be read in conjunction with, the consolidated financial statements.
2020
$’000
2019
$’000
Net (Loss)/Profit after Taxation
(14,688)3,803
Items Classified as Investing or Financing Activities:
Unrealised Loss in Fair Value of Investment Properties
19,115 1,767
Transaction Costs - 224
(Gain)/Loss on Disposal of Investment Property
(46) 915
Capital Raising Costs820 -
Loss on Sale of Plant and Equipment - 14
Realised Interest Rate Swap Gain - (133)
Finance Costs - 105
Movement in Deferred Taxation
(522)
(665)
Movements in Working Capital Items:
Accounts Receivable and Prepayments806(128)
Trade and Other Payables
(734)
(1,250)
Taxation Payable1,120(875)
Non-Cash Item
Depreciation63 -
Net Cash Inflow from Operating Activities
5,934
3,777
Reconciliation of Net Profit to Net
Cash Flow from Operating Activities
For the year ended 31 March 2020
32
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
1. Corporate Information
The consolidated financial statements comprise of
Asset Plus Limited (the “Company”) and its subsidiary
(collectively the “Group”).
The Company is a limited liability company incorporated
and domiciled in New Zealand whose shares are listed on
the New Zealand Stock Exchange. The Company is a FMC
reporting entity under the Financial Markets Conduct Act
2013. The registered office is located in Level 2, Bayley's
House, 30 Gaunt Street, Wynyard Quarter, Auckland.
The nature of the operations and principal activities of the
Group are investing in industrial, retail and commercial
property in New Zealand.
2. Summary of Significant
Accounting Policies
(a) Basis of Preparation
The consolidated financial statements have been prepared
in accordance with Generally Accepted Accounting Practice
in New Zealand (“NZ GAAP”), the Companies Act 1993, the
requirements set out in section 7 of the Financial Markets
Conduct Act 2013 and the Main Board Listing Rules of the
NZX. The consolidated financial statements have been
prepared on a historical cost basis, except for investment
properties which have been measured at fair value.
The consolidated financial statements are presented
in New Zealand dollars and all values are rounded to
the nearest thousand dollars ($’000), except where
otherwise indicated.
The consolidated financial statements have been
prepared on the basis that the Group is a going concern.
(b) Statement of Compliance
The consolidated financial statements comply with New
Zealand equivalents to International Financial Reporting
Standards ('NZ IFRS') and International Financial Reporting
Standards (IFRS), as appropriate for a profit-oriented entity
that falls into the Tier 1 for profit category as determined by
the New Zealand Accounting Standards Board.
Changes in accounting policies
The accounting policies adopted are consistent with
those of the previous financial year, except where new
accounting standards which have been issued and are
effective for the current reporting period, or which are
issued but not yet effective and may be early adopted,
have been adopted for the first time. Certain comparative
information has been reclassified to conform with the
current year’s presentation.
The Group has adopted the accounting standards which
are issued and effective for reporting periods beginning
on or after 1 January 2019. These amendments and
interpretations apply for the reporting period beginning
1 April 2019 as follows:
NZ IFRS 16 Leases
NZ IFRS 16 introduces new or amended requirements
for lease accounting. Significant changes to lessee
accounting have been introduced by removing the
distinction between operating and finance leases and now
requires a lessee to recognise a lease liability reflecting
future lease payments and a ’right-of-use’ asset for all
lease contracts. Lessors reporting requirements are
similar to the previous standard NZ IAS 17 Leases.
The Directors have assessed all lease contracts and note
that there are no leases entered into by the Group in
the role of a lessee. Substantially all property owned by
the Group is leased to third party tenants. These leases
continue to be classified as operating leases as the Group
retains all significant risks and rewards of ownership.
Impact on lessor accounting
NZ IFRS 16 does not change substantially how a lessor
accounts for leases. Under NZ IFRS 16, a lessor continues
to classify leases as either finance leases or operating
leases and the Group accounts for those two types of leases
differently. NZ IFRS 16 has changed and expanded the
disclosures required, in particular regarding how a lessor
manages the risks arising from its residual interest in the
leased assets.
The adoption of this standard has no material effect on
what has been recognised and measured in the Group’s
consolidated financial statements however, additional
disclosure is required. Refer to Note 5. Net Rental Revenue
for additional disclosure information and revised
accounting policies.
Accounting standards that are issued but not
yet effective
Several other amendments and interpretations apply for the
first time from 1 April 2019, but do not have an impact on the
consolidated financial statements of the Group.
(c) Basis of Consolidation
The consolidated financial statements incorporate the
assets, liabilities, equity, revenue, expenses and cash flows
of the entities controlled by the Company at the end of the
annual reporting period. A controlled entity is any entity
over which Asset Plus Limited has the power to direct
relevant activities, exposure or rights, to variable returns
from its involvement with the investee, and the ability to
use its power over the investee to affect the amount of
investor return.
In preparing these consolidated financial statements,
subsidiaries are consolidated from the date the Group gains
control until the date on which control ceases.
33
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
The financial statements of the subsidiary are prepared
for the same reporting period as the parent company,
using consistent accounting policies. In preparing the
consolidated financial statements, all intercompany
balances, transactions, unrealised gains and losses
resulting from intra-group transactions and dividends have
been eliminated in full.
The table below represents the Company's investment in its
subsidiary as at each reporting date:
Percentage Held
31 March 2020 31 March 2019
Asset Plus
Investments Limited
100%100%
(d) Goods and Services Tax (GST)
Revenue and expenses are recognised net of the amount
of GST except where the GST incurred on a purchase of
goods and services is not recoverable from the taxation
authority, in which case the GST is recognised as part of
the cost of acquisition of the item as applicable.
All items in the consolidated statement of financial
position are stated net of GST, with the exception of
receivables and payables, which include GST invoiced.
Cash flows are included in the consolidated statement
of cash flows on a net basis and the GST component of
cash flows arising from investing and financing activities is
classified as part of operating activities.
3. Significant Accounting Estimates
and Judgements
The preparation of these consolidated financial statements
requires the use of certain critical accounting estimates.
It also requires management to exercise its judgement in
the process of applying the Group’s accounting policies.
Although the Group has internal control systems in place
to ensure that estimates can be reliably measured, actual
amounts may differ from those estimates. The areas
involving a higher degree of judgement or areas where
assumptions are significant to the Group include
the following:
• Determination of Fair Value of Investment Property
(Note 12)
• Determination of Deferred Taxes (Note 9)
Impact of COVID-19
The outbreak of the Coronavirus (COVID-19) was declared
by the World Health Organisation as a 'Global Pandemic' on
11 March 2020. Since that time there has been increased
adverse impact on global financial markets. There have
been travel restrictions implemented by many countries
and economic stimulus packages announced by most
governments. Market activity is being impacted in almost
every sector and there is a major reduction in liquidity across
all investments markets. In terms of the property markets it
is difficult at the current time to determine if this is a short
term liquidity issue or a longer term concern. The illiquidity
in property markets means there will be a time delay in
establishing transactional evidence to demonstrate actual
pricing and what the adjustment from pre-pandemic values
is with any certainty.
As at 31 March 2020, registered property valuers in
New Zealand consider it appropriate to attach less weight
to previous market evidence for comparison purposes, to
inform opinions of value. The current response to COVID-19
means that valuers are faced with an unprecedented
set of circumstances on which to base a judgement.
Valuations are therefore reported on the basis of 'material
valuation uncertainty' at the time they issued their report.
Consequently, less certainty (and a higher degree of caution)
should be attached to the valuations than would normally be
the case. Given the unknown future impact that COVID-19
might have on the real estate market, the Group will keep the
valuation of all properties under frequent review as valuation
advice will be outdated significantly quicker than is normally
the case.
In the consolidated statement of financial position, the
Group's property assets have been impacted by COVID-19.
Refer to Note 12 – Investment Properties which shows the
year on year adverse movement in property valuations
primarily due to COVID-19.
Specifically the increased risks and uncertainty can be seen
in the deterioration of the unobservable inputs this year
compared to the previous reporting year which adversely
impacts property valuations. This impact and others arising
from the expected impact upon the New Zealand economy
creates uncertainty about future events. Given this it is not
practical to estimate the future financial impact on the Group
at this time.
34
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
As at 31 March 2020
Effective interest
rate range
Less than 1 year
$’000
1 - 2 years
$’000
2 years +
$’000
Financial Assets
Cash and Cash Equivalents
0.10%98--
Trade Receivables and Other Receivables
1,190
--
Total Financial Assets
1,288
--
Financial Liabilities
Trade Payables and Other Payables
225--
Borrowings2.90% - 4.40%--49,250
Total Financial Liabilities225-49,250
As at 31 March 2019
Financial Assets
Cash and Cash Equivalents
1.50%781--
Trade Receivables and Other Receivables1,826--
Total Financial Assets2,607--
Financial Liabilities
Trade Payables and Other Payables
365--
Borrowings4.04% - 7.14%-10,500-
Total Financial Liabilities36510,500-
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) net profit after taxation and
equity in respect of these items by the amounts shown below. This analysis assumes all other variables remain constant.
2020
$’000
2019
$’000
1% increase
Cash and Cash Equivalents
46
Borrowings(493)(105)
1% decrease
Cash and Cash Equivalents
(4)(6)
Borrowings493105
4. Financial Risk Management Objectives and Policies
The Group's principal financial instruments comprise bank loans, cash, trade receivables and payables. Financial assets and
liabilities are recognised on the consolidated statement of financial position when the Group becomes a party to the contractual
provisions of the instrument.
The main risks arising from the Group’s financial instruments are interest rate risk, credit risk and liquidity risk. The Board reviews
and agrees policies for managing each of these risks and they are summarised below.
Interest rate risk
The Group has exposure to interest rate risk to the extent that it borrows for fixed terms at floating interest rates. The
Directors will assess this risk on an ongoing basis and if deemed significant, will instruct the Group to enter into interest rate
swaps to manage material exposure. The Group’s exposure to interest rate risk and the effective weighted interest rates for
each class of financial asset and financial liability were:
35
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
As at 31 March 2020
Designated
as fair value
$’000
Amortised cost
$’000
Total
carrying
amount
$’000
Fair value
$’000
Financial Assets
Cash and Cash Equivalents
-989898
Trade Receivable and Other Receivables-
1,1901,1901,190
Total Financial Assets-
1,2881,2881,288
Financial Liabilities
Trade Payables and Other Payables
-(225)(225)(225)
Borrowings-(49,250)(49,250)(49,250)
Total Financial Liabilities-(49,475)(49,475)(49,475)
As at 31 March 2019
Financial Assets
Cash and Cash Equivalents
-781781781
Trade Receivable and Other Receivables-1,8261,8261,826
Total Financial Assets-2,6072,6072,607
Financial Liabilities
Trade Payables and Other Payables
-(365)(365)(365)
Borrowings-(10,500)(10,500)(10,500)
Total Financial Liabilities-(10,865)(10,865)(10,865)
Credit risk
In management’s opinion, the Group trades only with
recognised, creditworthy third parties, whose obligations
to the Group are contractually enforceable under
tenancy agreements and car park licences. Financial
instruments, which potentially subject the Group to credit
risk, principally consist of bank balances, receivables and
advances to tenants.
With respect to credit risk arising from the other financial
assets of the Group, which comprise interest received
on cash and cash equivalents, the Group’s exposure to
credit risk arises from default of the counter party, with
a maximum exposure equal to the carrying amount
of these instruments. Bank of New Zealand, who is the
counter party in respect to these financial assets of the
Group, currently holds an AA- credit rating (issued by
Standard & Poors).
Liquidity risk
Liquidity risk arises from the Group’s financial liabilities
and the ability to meet all its obligations to repay financial
liabilities as and when they fall due. The Group actively
monitors its position to ensure that sufficient funds are
available to meet liabilities as they arise. Liquidity is
monitored on a regular basis and reported to the
Board regularly.
The table below reflects all contractually fixed pay-offs
for settlement and repayments resulting from recognised
financial liabilities. This table is based on all interest rate
variables being held constant over the relevant period
of time. It does not allow for potential future margin
changes as these can not be easily identified as at
balance date. All payments are undiscounted and the
timing of the cash flows is based on the contractual terms
of the underlying contract.
Fair value risk
A comparison between financial assets and financial liabilities fair value and carrying amounts is set out below. The
net fair value is not materially different from the carrying value. The methods used for determining fair value have been
disclosed in Note 17.
36
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
As at 31 March 2020
Balance
$’000
Contractual
cash flows
$’000
< 1 year
$’000
1 - 2 years
$’000
2 - 5 years
$’000
> 5 years
$’000
Financial Liabilities
Non-derivative financial liabilities
Trade payables and
Other payables
225225225---
Borrowings49,25049,250--49,250-
Interest and fees payable
to the bank
273,2291,4541,427348-
Total49,50252,7041,6791,42749,598-
As at 31 March 2019
Financial Liabilities
Non-derivative financial liabilities
Trade payables and
Other payables
365365365---
Borrowings10,50010,500-10,500--
Interest and fees payable
to the bank
10564433131--
Total10,87511,42979810,631--
Capital management
The Group’s capital includes contributed capital and
accumulated loss.
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 Group’s policies in respect of capital management and
allocation are reviewed regularly by the Board of Directors.
Cash and Cash Equivalents
Cash and cash equivalents comprise of cash on hand,
demand deposits and other short term highly liquid
investments that are readily convertible to a known
amount of cash and are subject to an insignificant risk of
changes in value.
NZ IFRS 9 Financial instruments
NZ IFRS 9 establishes principles for the financial reporting
of financial assets and financial liabilities that will
present relevant and useful information to users of these
consolidated financial statements for their assessment of
the amounts, timing and uncertainty of an entity’s future
cash flows. NZ IFRS 9 also introduces an expected credit loss
model for the impairment of financial assets. This standard
also includes guidance which aligns hedge accounting
more closely with risk management. It does not fully change
the types of hedging relationships or the requirement to
measure and recognise ineffectiveness; however, it allows
more hedging strategies that are used for risk management
purposes to qualify for hedge accounting. At the end of
each reporting period there were no derivative hedging
arrangements in place.
Classification of financial instruments
The Group classifies its financial assets as fair value
through profit and loss (“FVTPL”), fair value through other
comprehensive income (“FVTOCI”) and amortised cost
according to the Group’s business objectives for managing
the financial assets and based on the contractual cash
characteristics of the financial assets. At each reporting date,
the Group classifies all its financial liabilities as amortised
cost or FVTPL.
37
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
2020
$’000
2019
$’000
Rental charged to tenants in the ordinary course of business12,72011,350
Operating cost recoveries from tenants and customers
1,727
2,000
Total gross operating revenue
14,447
13,350
Other revenue
19
-
Gross rental revenue
14,466
13,350
Property operating costs
1
(3,995)(4,199)
Net rental revenue
10,471
9,151
1
Property operating costs represent property maintenance and operating expenses
Future minimum rentals receivable under non-cancellable operating leases as at 31 March are as follows:
2020
$’000
2019
$’000
Within one year11,0419,113
After one year but not more than five years21,28330,568
More than five years6,30216,053
The above rental receivables are based on contracted amounts as at 31 March 2020 and 31 March 2019. Actual rental
amounts collected in future will differ due to a number of factors including, but not limited to, rental review provisions within
lease agreements, market rent reviews, tenancy vacancy and potential default, rental abatements as well as property
acquisitions/divestments.
6. Other Revenue
The sale of the Heinz Wattie’s Distribution Centre in Hastings settled on 17 December 2019. The Group had agreed to
underwrite the purchaser’s capital raising. No call was made on the underwrite and a fee of $487,500 was received.
Accounting policy
Rental Revenue
Rental revenue is the Group's primary revenue stream. Net rental revenue is recognised in accordance with NZ IFRS 16
Leases. Substantially all property owned by the Group is leased to third party tenants. As the Group retains substantially all
the risks and benefits of ownership of its investment properties, it accounts for leases with its tenants as operating leases and
begins recognising income when the tenant has a right to use the leased asset. The total amount of contractual rent to be
received from operating leases is recognised on a straight-line basis over the term of the lease; including any lease incentives
which are amortised to profit and loss over the same period and reduce rental income recognised.
Net rental revenue is measured based on the consideration specified in the relevant rental agreement. The lease term varies
between properties and individual tenants within those properties.
5. Net Rental Revenue
38
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
7. Administration Expenses and Net Finance Costs
Accounting policy
Interest Revenue
Interest revenue consists of interest accrued on cash deposits and is recognised using the effective interest method.
Interest and Finance Costs
Finance costs, including borrowing costs and interest payable on borrowings, are recognised in the consolidated
statement of comprehensive income when incurred. Borrowing costs incurred that do not relate to qualifying assets are
treated as an expense and are not capitalised.
2020
$’000
2019
$’000
Administration expenses
Management fees(824)(715)
Directors' fees(300)(300)
Auditor's remuneration
(105)
(132)
Professional fees(277)(368)
Personnel costs-(29)
Other administration costs
1
(138)
(222)
Total administration expenses(1,644)(1,766)
Net finance costs
Interest and finance costs(1,671)(1,100)
Interest revenue721
Total net finance costs(1,664)(1,079)
Auditor’s remuneration as follows:
Audit of the annual financial statements
(63)
(84)
Other assurance services
(42)
(48)
Total auditors remuneration
(105)
(132)
1
Other administration costs include office costs, registry, New Zealand Stock Exchange fees and shareholder communications costs.
8. Transaction Costs
During the reporting period ended 31 March 2020, investigative work was undertaken to acquire two separate property-based
businesses. This cost includes substantive due diligence, financial investigative and legal costs for the Company, collectively
known as transaction costs. During the period, $0.989 million of transaction costs were incurred. In addition $0.785 million of
costs were incurred in relation to the Company's rights offer that was cancelled in March 2020.
During the reporting period ended 31 March 2019, estimated disposal costs of $0.224 million relating to the future sale of the
Heinz Wattie’s asset (including agency, legal and reimbursement fees) were recognised when this asset was reclassified to
property held for sale.
39
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
9. Income Tax
Accounting policy
Income tax in the consolidated statement of comprehensive income comprises current and deferred tax. Income
tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity.
Current tax is the expected tax on the taxable income for the year, using rates enacted or substantially enacted at
balance date, and any adjustment to income tax payable in respect of previous periods. Current tax for current and
prior periods is recognised as a liability (or asset) to the extent it is unpaid (or refundable).
Deferred tax is provided for using the liability method on all temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the amounts used for taxation purposes.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
• When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a
transaction that is not a business combination and, at the time of the transaction, affects neither the
accounting profit nor the taxable profit or loss.
• In respect of the taxable temporary differences associated with investments in subsidiaries, associates and
interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it
is probable that the temporary differences will not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax
assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which
the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be
utilised, except:
• When the deferred income tax asset relating to the deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor taxable profit or loss.
• When the deductible temporary difference is associated with investments in subsidiaries, associates or interests
in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the
temporary difference will reverse in the foreseeable future and taxable profit will be available against which the
temporary difference can be utilised.
The carrying amount of any deferred income tax asset is reviewed at each reporting date and reduced to the extent
that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income
tax asset to be utilised. Deferred income tax assets and liabilities are measured at the tax rates that are expected
to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have
been enacted or substantively enacted at balance date.
The Group has applied the rebuttable presumption under NZ IAS 12 that deferred tax on investment property
measured using the fair value model in NZ IAS 40 is determined on the basis that its carrying amount will be
recovered through sale.
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).
40
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
Major components of income tax for the year ended 31 March are:
2020
$’000
2019
$’000
Current tax
Continuing operations - current income tax charge(2,132)(381)
Prior year tax adjustment114-
Current Tax
(2,018)(381)
Net deferred income tax
Realised interest rate swap gain/(loss)
-(235)
Investment property building depreciation4391,082
Other
83
(182)
Net deferred income tax
522
665
Income tax reported in the consolidated statement of comprehensive income(1,496)284
A reconciliation of the income tax expense applicable to net profit before income tax at 28%, to the income tax expense in the
consolidated statement of comprehensive income for the year ended 31 March is as follows:
2020
$’000
2019
$’000
Net (loss)/profit before tax(13,192)
3,519
Income taxation expense (28%)
3,694
(985)
Adjust for revaluations of investment property(5,352)(494)
Adjust for non-deductible expenses(501)-
Adjust for swap cancellation-223
Adjust for loss on disposal of property (fitout)-744
Adjust for capital loss on disposal of investment property-(256)
Adjustment for deferred tax (depreciation on buildings)-1,082
Adjustment for deferred tax (interest rate swaps)-(235)
Adjustment for depreciation (claimed in financial year)386406
Other277(201)
Income tax reported in the consolidated statement of comprehensive income(1,496)284
Deferred income tax
2020
$’000
2019
$’000
Net deferred income tax liability relates to the following:
Deferred income tax liabilities
Investment properties recoverable depreciation(1,347)(1,786)
Other
1
(82)
Net deferred income tax liabilities(1,346)
(1,868)
Deferred taxation(1,346)
(1,868)
10. Segment Reporting
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, the Board.
The Board receives internal financial information on a property by property basis, assesses property performance and
decides on the resource allocation. The Group operates only in New Zealand. On this basis all of the Group’s properties
have been aggregated into a single reporting segment to most appropriately reflect the nature and financial effects of
the business activities.
The Group has no unallocated revenue, expenses, assets or liabilities and this approach has been applied to
comparative periods.
41
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
11. Trade Receivables, Other Receivables and Prepayments
12. Investment Properties
Accounting policy
Trade receivables, other receivables and prepayments are initially recognised at fair value plus transaction costs
and subsequently carried at amortised costs using the effective interest rate method less an allowance for any
impairment losses. Due to their short term nature, trade receivable, other receivables and prepayments are
not discounted.
The Group makes use of a simplified approach in accounting for trade receivables and records the loss allowance
as lifetime expected credit losses. These are the expected shortfalls in contractual cash flows, considering the
potential for default at any point during the life of the financial instrument. In calculating, the Group uses its
historical experience, external indicators and forward looking information to calculate the expected credit losses.
The impairment of trade receivables is assessed on a collective basis (grouped based on the days past due), as
they possess shared credit risk characteristics.
Further disclosure details on the expected credit loss model have not been included in the financial statements as
the amounts involved are considered by the Directors of the Group to be immaterial.
Accounting policy
Properties which are held exclusively to earn rentals and/or for capital appreciation are classified as investment
properties at their acquisition date. These are initially recognised at cost plus related costs of acquisition. After
initial recognition, investment properties are stated 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 absence of an active market, alternative valuation techniques are utilised which may include discounted cash
flow projections, capitalisation of income or sales comparison approach as appropriate to the property being valued.
The valuations are prepared by considering 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. The
estimate of fair value is a judgement which has been made based on the market conditions which apply at each
reporting date.
Any gains or losses arising from changes in the fair value of investment properties are recognised in profit or loss in the
consolidated statement of comprehensive income.
2020
$’000
2019
$’000
Trade receivables
235
157
Expected credit losses(26)(56)
Total trade receivables
209
101
Colliers Property Trust Account (Eastgate)484455
Other receivables
497
1,270
Total other receivables
981
1,725
Prepayments23013
Total trade receivables, other receivables and prepayments
1,420
1,839
Trade receivables are non-interest bearing and are on < 30 day terms. Rent is due on the first day of every month.
42
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
The tables below outline the movements in the carrying values for all directly owned investment properties:
As at 31 March 2020
Opening
balance
$’000
Acquisitions
$’000
Capex
$’000
Transfer
to assets
held for
sale
$’000
Lease
amortisation
& other
$’000
Gain/
(loss) on
revaluation
$’000
Fair
value at
balance
date
$’000
WIP
1
$’000
Closing
balance
$’000
Eastgate Shopping
Centre
54,577-1,234-(39)(8,822)46,950-
46,950
Stoddard Road
39,500---(10)(1,990)37,500-
37,500
Graham Street *
-58,580---(8,480)50,100396
50,496
Munroe Lane **
-7,323---1777,500
1,1138,613
Total investment
properties
94,07765,9031,234-(49)(19,115)142,050
1,509143,559
* The acquisition of 35 Graham Street, Auckland was approved by shareholders at a special meeting held on 17 June 2019. The purchase of this property settled on 28 June 2019.
** The acquisition of 6 - 8 Munroe Lane, Albany, Auckland settled on 2 December 2019.
As at 31 March 2019
Opening
balance
$’000
Acquisitions
$’000
Capex
$’000
Transfer
to assets
held for
sale
$’000
Lease
amortisation
& other
$’000
Gain/
(loss) on
revaluation
$’000
Fair
value at
balance
date
$’000
WIP
1
$’000
Closing
balance
$’000
Eastgate Shopping
Centre
59,063-95-137(4,795)54,5007754,577
Heinz Wattie's
Warehouse *
27,439-37(29,110)(22)1,646(10)10-
Stoddard Road38,054-49-151,38239,500-39,500
Total investment
properties
124,556-181(29,110)130(1,767)93,9908794,077
* Heinz Wattie’s had been reclassified as property held for sale during the previous reporting period ended 31 March 2019. A valuation was performed on this property as
at 31 March 2019. The gain on revaluation had been recognised in profit and loss in the consolidated statement of comprehensive income for the reporting period ended
31 March 2019.
1
WIP (work in progress) as at 31 March 2020 relates to costs incurred in relation to future development work at 35 Graham St and Munroe Lane which were not included in the
inputs to the valuation calculation by the independent valuers. These costs include design, consents and other direct costs capitalised as development costs.
All properties that are not expected to 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. The fair values of the investment properties at each reporting date are as follows:
As at 31 March 2020
Valuer
Capitalisation rate
%
Occupancy rate
%
WA LT
Years
Valuation
$’000
Eastgate Shopping Centre
Cnr Buckleys Road & Linwood Avenue,
Christchurch
Jones Lang
LaSalle
8.3895.334.5346,950
Stoddard Road
22 Stoddard Road, Auckland
Colliers6.25100.004.0037,500
Graham Street
35 Graham Street, Auckland Central
Colliers6.50100.001.2450,100
Munroe Lane
6 - 8 Munroe Lane, Albany, Auckland
Jones Lang
LaSalle
N/AN/AN/A7,500
98.373.16142,050
43
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
As at 31 March 2019
Valuer
Capitalisation rate
%
Occupancy rate
%
WA LT
Years
Valuation
$’000
Eastgate Shopping Centre
Cnr Buckleys Road & Linwood Avenue,
Christchurch
Jones Lang
LaSalle
8.1393.205.07
54,500
Stoddard Road
22 Stoddard Road, Auckland
Colliers6.13100.004.02
39,500
94,000
Heinz Wattie's Warehouse*
113 Elwood Road, Hastings
Colliers8.00100.007.90
29,100
96.735.51
123,100
* Heinz Wattie’s was valued by an independent registered valuer as at 31 March 2019 and had been subsequently reclassified to property held for sale during the previous reporting
period ended 31 March 2019.
The valuation techniques and significant unobservable inputs are as follows:
DescriptionValuation
Valuation
techniqueUnobservable inputs
Sensitivity Of Fair Value To Changes
In the estimated fair value would
increase/(decrease):
Investment
properties
142,050
Capitalisation
of net income
The capitalisation rate range applied is
6.25% - 8.38% (2019: 6.13% - 8.13%).
Retail and office rental growth was
higher (lower).
The rental reversion as a rate of investment
property value rate range is 0.09% - 1.79%
(2019: 0.01% - 1.70%). This is an adjustment
for those tenancies whose rental is above or
below the market rate.
Retail and office rental growth was
higher (lower).
The present value of capital expenditure as a
rate of investment property value rate range
is 1.24% - 11.33% (2019: 2.45% - 3.84%).
Capital expenditure was lower (higher).
Discounted
Cash Flow
The discount rate range applied is
8.00% - 8.50% (2019: 8.25% - 9.25%).
The discount rate was lower (higher).
Occupancy rate range applied is
95.33% - 100.00% (2019: 93.20% - 100.00%).
The occupancy rate was higher (lower).
Rental growth rate range is
0.00% - 3.00% (2019: 1.98% - 3.00%)
over 10 years.
Office rental growth was higher (lower).
A letting up period range of 12 - 24 months
(2019: 3 - 8 months) has been allowed at the
end of each existing lease of the properties.
Letting up period was lower (higher).
All investment properties were valued as at 31 March 2020 (and as at 31 March 2019). All valuations are prepared by
independent valuers who are members of the New Zealand Institute of Valuers.
Investment property values are assessed within a range indicated by at least two valuation approaches; most commonly
capitalisation of net income approach and discounted cash flow approach.
Estimates are used in these valuation approaches to determine fair value. For the two most common approaches, these include
the capitalisation rate in the income capitalisation approach and the discount rate in the discounted cash flow approach. Both
approaches are also influenced by other estimates relating to market rental levels, vacancy rates, letting-up allowances and the
cost of ongoing operating expenses, capital expenditure and other capital payments.
As at 31 March 2020, valuers consider it appropriate to attach less weight to previous market evidence for comparison purposes,
to inform opinions of value. The current response to COVID-19 means that valuers are faced with an unprecedented set of
circumstances on which to base a judgement. Valuations are therefore reported on the basis of 'material valuation uncertainty'.
Consequently, less certainty (and a higher degree of caution) should be attached to the valuations than would normally be the
case. Given the unknown future impact that COVID-19 might have on the real estate market, the Company will keep the valuation
of all properties under frequent review as valuation advice will be outdated significantly quicker than is normally the case.
44
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
Impact of Covid-19
As at 31 March 2020, the uncertainty caused by the COVID-19 outbreak materially impacted the real estate markets to which
the Group’s investment properties belong. This has created material valuation uncertainty primarily as a result of:
1. Estimating the future net income a property will generate
2. Converting the net income to value by applying investment rate returns which are derived from recent transactions
Asset Plus has a range of tenants from local government agencies, a supermarket, healthcare providers classified as essential
businesses by the New Zealand Government during Levels 3 and 4 of the lockdown as well as a large number of other tenants
considered non-essential. The Government restrictions on non-essential businesses from operating meant a large number of
these tenants were unable to operate during April – May 2020 under Levels 4 and 3 of the lockdown, and now at Level 1 there
are still a number of trading restrictions in place. A number of tenants have not paid rent during this period and to date
$0.59 million of rental abatements have been agreed with tenants. There will continue to be further discussions with retail
tenants over the coming months.
Future earnings of the tenants are also likely to be impacted by:
• Changes in people’s behaviour and restrictions around social distancing will prevent people accessing goods and services
increasing the use of other channels / contact points by individuals and businesses. E.g. online shopping, video conferencing.
• Restrictions on travel meaning less tourists / travellers will reduce spend in retail shops.
• Overall pressure put on the economy due to the pandemic through low growth / recession / increased unemployment will
affect consumer spending impacting retail tenants (Stoddard Road and Eastgate).
• Changing attitudes to working from home / increasing use of technology may reduce to future demand for future office
space (Graham Street and Munroe Lane)
As a result, some tenants have a higher risk of failure and others will face a reduced ability to meet business expenses, including
rent and other occupancy charges. Tenant failure will see vacancy rates increase and it may take longer to lease vacant
tenancies. When new leases are secured, the achieved rentals may be less than expected pre COVID-19 and incoming tenants
may require a higher level of incentive.
Impacts on 31 March 2020 Valuations
Valuation uncertainty has also arisen from an inactive property investment market. Potential buyers have been unable to
complete due diligence. A lack of transactional evidence means the only inputs and metrics available to reliably estimate fair
value relate to the market before the pandemic event occurred and the impact on prices cannot be fully determined until the
market stabilises.
The investment property valuations now reflect the impact of the pandemic. Valuers have generally increased capitalisation
rates and discount rates, reduced growth rates and increasing letting up periods. The valuers' estimates and assumptions have
materially impacted the value of the Group’s investment property. For the year ended 31 March 2020 the Group recognised a
fair value loss of $19,115,000 (2019: loss of $1,767,000). The impact of COVID-19 on valuations is also illustrated by comparing
the valuations reported on the 8 March 2020 as part of the $100 million capital raise (which was subsequently withdrawn as a
result of COVID-19).
Mar-19 / On Acquisition
$’000
Mar-20 (preliminary as
part of capital raise)
$’000
Mar-20 (Final Valuation)
$’000
Eastgate Shopping Centre54,500 (Mar-19)52,20046,950
Stoddard Road39,500 (Mar-19)42,50037,500
Graham Street58,000 (on acquisition)58,50050,100
Munroe Lane7,250 (on acquisition)7,5007,500
160,700142,050
Valuation Sensitivity
This sensitivity analysis outlines how movements in the discount rate and capitalisation rate affect the fair value of the
investment properties. The discount rate is used in the discounted cash flow approach and the capitalisation rate is used in the
capitalisation approach.
45
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
13. Properties Held for Sale
Accounting policy
Properties which are acquired exclusively with a view for subsequent resale are classified as properties held for sale
at their acquisition date. These properties are held for immediate sale in their present condition or the Group has
committed to selling the asset through entering into a contractual sale and purchase agreement. Properties held for
sale are measured at the lower of their carrying amount and fair value less costs to sell. The value of these properties is
reassessed at each reporting date with gains and losses arising from changes in fair values being recognised in profit
and loss.
Investment properties which meet the requirements of assets held for sale will be reclassified on the date these
requirements are met. These properties will continue to be measured under the fair value model with any gains
or losses being recognised in profit or loss in accordance with NZ IAS 40 Investment Properties. Revenue on the
sale of properties held for sale is recognised when the risks and rewards have transferred to the buyer.
Fair value of properties held for sale is determined by either an independent valuation or Directors’ valuation.
Where there is an absence of current prices in an active market for properties similar in location, condition
and lease terms, a valuation will be performed using the discounted cash flow method and the capitalisation
approach. The valuations consider market assumptions of internal rates of return, rental growth, average lease
terms, occupancy rates, and the costs associated with the initial purchase of the property and yield and are
compared, where possible, to market based evidence and transactions for properties similar in location, condition
and lease terms.
The discounted cash flow method is based on the expected net rental cash flows applicable to each property,
which are then discounted to their present value using a market determined, discount risk-adjusted rate
applicable to the respective property. The capitalisation approach is based on the current contract rental and
market rental and an appropriate yield for that particular property. The market value is a weighted combination
of both the discounted cash flow and the capitalisation approach.
Estimated sensitivity to movements in the discount rate
As at 31 March 2020
Base
Discount
Rate
Value
$’000
Impact of -25bps movement
in discount rate
$’000 / %
Impact of +25bps movement
in discount rate
$’000 / %
Eastgate Shopping Centre8.50%46,950685 / 2%(647) / (2%)
Stoddard Road8.00%37,500648 / 2%(632) / (2%)
Graham Street8.50%50,1001,013 / 2%(989) / (2%)
Munroe Lanen/a7,500N/AN/A
Estimated sensitivity to movements in the capitalisation (cap) rate
As at 31 March 2020
Base Cap
Rate
Value
$’000
Impact of -25bps movement
in cap rate
$’000 / %
Impact of +25bps movement
in cap rate
$’000 / %
Eastgate Shopping Centre8.50%46,950722 / 2%(706) / (2%)
Stoddard Road6.38%37,500848 / 2%(784) / (2%)
Graham Street6.63%50,1001,339 / 3%(1,242) / (3%)
Munroe Lanen/a7,500N/AN/A
In June 2020, the Group sought valuation advice to determine if there was any market transaction or other evidence (i.e.
information gathered subsequent to valuations being issued) that indicated the valuations as at 31 March 2020 should be
reconsidered. This advice indicated that the valuations provided as at 31 March 2020 were materially correct as at that date.
The sensitivity analysis are estimates only and assume all other variables used to calculate the property valuations
remain constant.
The base discount rates and cap rates adopted in the above sensitivity analysis are from the respective valuers 10 year DCF
sensitivity analysis and in some instance vary slightly from the market cap rate used in the capitalisation approach.
46
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
14. Property, Plant and Equipment
The property, plant and equipment opening balance of $66k was written off in full during the financial year ended
31 March 2020.
15. Borrowings
Accounting policy
Borrowings are classified as financial liabilities at amortised costs. They are initially recognised at fair value of the
consideration less directly attributable transaction costs. Subsequent to initial recognition, borrowings are stated at
amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has
an unconditional right to defer the settlement of the liability for at least 12 months after the reporting date.
Borrowing costs are recognised as an expense when incurred, unless they relate to a qualifying asset and are
capitalised when incurred.
FacilityBank
Loan
maturity
2020
$’000
2019
$’000
Investment property facilityBNZ28 June 202249,25010,500
Total49,25010,500
The table below outlines the movements in the carrying values for all properties held for sale during the year:
As at 31 March 2020
Property
Opening
balance
$’000
Capex
$’000
Lease
amortisation &
other
$’000
Gain On Sale
$’000
Disposal
$’000
Closing
balance
$’000
AA Centre (99 Albert Street) ---23(23)-
Heinz Wattie’s Warehouse
28,890204(17)23(29,100)
-
Total
28,890204(17)
46(29,123)-
An additional $23k gain on sale of investment property related to AA Centre (99 Albert Street) disposal in 2019 has been
recognised in the financial year ended 31 March 2020.
As at 31 March 2019
Property
Opening
balance
$’000
Transfer from
investment
properties
$’000
Cost of sale of
transaction
$’000
Loss on Sale
$’000
Disposal
$’000
Closing
balance
$’000
AA Centre
(99 Albert Street)
43,814--(915)(42,899)-
Heinz Wattie’s
Warehouse
-29,110(220)--28,890
Total43,81429,110(220)(915)(42,899)28,890
These properties were initially classified as investment properties and were subsequently reclassified to properties held
for sale. There were no reclassifications to properties held for sale during the current reporting period ended 31 March
2020 (31 March 2019: Heinz Wattie's Warehouse).
47
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
16. Trade Payables, Accruals and Provisions
Accounting policy
Trade and other payables
Trade payables are classified as financial liabilities and are initially measured at fair value less any transaction costs
and subsequently carried at amortised cost and due to their short term nature, are not discounted. They represent
liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise
when the Group becomes obliged to make future payments in respect to the purchase of these goods and services.
Provisions
Provisions 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 the outflow can be reliably measured.
Financing facilities available
At reporting date, the following financial facilities had been negotiated and were available:
2020
$’000
2019
$’000
Facilities used at reporting date - secured bank loan (BNZ)49,25010,500
Facilities unused at reporting date - secured bank loan (BNZ)25,7509,500
Total75,00020,000
Loan security
The loan is secured by a registered first mortgage over the investment properties of the Group, an assignment of leases
over all present and directly acquired properties mortgaged to the BNZ Bank and a first general security interest over the
assets of the Group. The facility limit was increased from $20 million to $75 million on 27 June 2019. The current facility
matures on 28 June 2022.
Loan covenants – BNZ bank
During the year ended 31 March 2020 all loan covenants were met. (2019: all met)
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.
There are currently no interest rate swaps in place as potential future developments remain conditional. Once the future debt
structure is confirmed interest rate swaps will be considered.
2020
$’000
2019
$’000
Opening balance - liability-840
Unrealised interest rate swap (gain)-(133)
Interest on swap settlement-91
Settlement of swap contract-(798)
Closing balance--
48
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
The table below sets out the comparison by category of carrying amounts, fair values, and fair value movement hierarchy of all
the Group's assets and (liabilities):
Year ended 31 March 2020Year ended 31 March 2019
Quoted
market
Price
(Level 1)
Market
observable
Outputs
(Level 2)
Non market
Outputs
(Level 3)
Quoted
market
Price
(Level 1)
Market
observable
Outputs
(Level 2)
Non market
Outputs
(Level 3)
Investment propertiesNote 12--143,559--94,077
Properties held for saleNote 13-----28,890
BorrowingsNote 15-(49,250)--(10,500)-
The quoted market price (Level 1) represents the fair value determined based on quoted prices in active markets as at the
reporting date. For financial instruments not quoted in active markets (Level 2) the Group uses present value techniques,
with a comparison to similar instruments for which market observable prices exist and other relevant models used by market
participants, which includes current swap rates on offer and also the current floating interest rate (interest rate swaps). For
properties held for sale and investment properties (Level 3), the Group uses present value techniques based on forecasted
future earnings.
There are no transfers between Level 1, 2 or 3 during the financial year ended 31 March 2020 (2019: None).
2020
$’000
2019
$’000
Trade payables158127
GST payable1181
Other payables67238
Total trade and other payables236446
Interest accrual2710
Opex accruals473670
Capex accruals 514108
Capital raising cost accruals 554-
Total accruals1,568788
Provisions-150
Total provisions-150
Total trade payables, accruals and provisions1,8041,384
Trade payables are non-interest bearing and are normally settled on 30 day terms. Interest payable is settled quarterly
throughout the financial year. Other payables are non-interest bearing and have an average term of 6 months.
17. Fair Value Measurement
Accounting policy
Financial assets/liabilities classified as fair value through profit and loss (“FVTPL”) are initially recognised at their
fair value and are subsequently measured at fair value at each reporting date. Gains and losses recorded on each
revaluation date are recognised within net earnings. Transaction costs of financial assets classified as FVTPL are
expensed in the consolidated statement of comprehensive income.
Interest rate swaps and other derivative financial instruments
The company selectively utilises derivative financial instruments primarily to manage financial risks, including interest
rate risk. Derivative financial instruments are recorded at fair value. The assets or liabilities relating to unrealised mark-
to-market gains and losses on derivative financial instruments are recorded in the consolidated statement of financial
position. The gain/loss on re-measurement to fair value is recognised in 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.
49
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
20. Dividends Paid to Shareholders
Dividends paid during each reporting period comprised:
CPS
2020
$’000Date PaidCPS
2019
$’000Date Paid
Q4 prior year net dividend 0.900 1,457 20/06/190.900 1,457 20/06/18
Q1 net dividend0.900 1,458 4/09/190.900 1,457 7/09/18
Q2 net dividend0.900 1,458 18/12/190.900 1,457 19/12/18
Q3 net dividend0.900 1,458 13/03/200.900 1,457 12/03/19
Total paid during the year3.600 5,831 3.600 5,828
2020
$’000
2019
$’000
Imputation credit account
At 31 March the imputation credits available for use in subsequent reporting periods are17579
19. Earnings Per Share
Accounting policy
Earnings per share is calculated by dividing the profit/(loss) attributable to shareholders (excluding distributions) of the
Group by the weighted average number of ordinary shares on issue during the period.
2020
$’000
2019
$’000
Total Comprehensive (Loss)/Income For the Year, Net of Tax
(14,688)3,803
Weighted average number of ordinary shares ('000)161,920161,920
Earnings per share (cents) - basic and fully diluted
(9.07)
2.35
Issued capital and reserves
2020
’000
2019
’000
Ordinary shares
Number of issued and fully paid shares161,920161,920
Ordinary shares have no par value. Fully paid ordinary shares carry one vote per share, and share equally in dividends and any
surplus on winding up.
18. Equity
Accounting policy
Equity instruments issued by the Group are recorded as the proceeds are received, net of direct issue costs.
50
Notes to the Consolidated
Financial Statements
For the year ended 31 March 2020
21. Remuneration
Key management
personnel costs
2020
$’000
2019
$’000
Directors’ remuneration300300
Total300300
22. Related Parties
Augusta Funds Management Limited owns the management contract rights of the Group. The parent of Augusta Funds
Management Limited, Augusta Capital Limited, owns 18.85% of Asset Plus Limited (2019: 18.85%). Transactions with Augusta
Funds Management Limited are deemed to be related party transactions because the Company is managed by Augusta Funds
Management under the terms of the signed management contract.
20202019
Fees paid and owing to the manager ($'000)Fees chargedFees owedFees chargedFees owed
Management fees824199715158
Lease renewal fees227-7979
Property management fees1924613339
Acquisition fees658---
Development management fees250250--
Total2,151495927276
Consolidated Statement of Changes in Equity
2019
$’000
2018
$’000
Dividend paid to Augusta Capital Limited1,0991,099
23. Commitments and Contingencies
Capital commitments
At 31 March 2020 the Group has no capital commitments (2019: nil).
Guarantees
BNZ has provided a bond to the New Zealand Stock Exchange for the sum of $75,000, being the amount required to be paid by
all Issuers listed on the New Zealand Stock Exchange, and the Company has provided a General Security Agreement over its
assets in favour of BNZ as security for this bond (31 March 2019: $75,000).
Contingent liabilities
At the reporting date the Group had no material contingent liabilities (2019: nil).
24. Subsequent Events
Since 31 March 2020, the Group has been working with tenants that need some financial assistance to counter the impact of
Alert Level 4 lockdowns associated with COVID-19. Tenants are receiving assistance primarily via deferrals or rent abatements.
To date the Group has provided for approximately $0.59 million in rent abatements and there is a potential for further
abatements depending on the outcome of discussions with some tenants.
On 15 June 2020, Augusta Capital Limited (Augusta), the parent company of the Group’s manager and largest shareholder of
the Group received a takeover notice for a full takeover of Augusta Capital Limited from Centuria Capital Group (Centuria). The
takeover notice is not a takeover offer but it contemplates Centuria making a full takeover offer to acquire shares that will take
its holding to 100% of Augusta. The takeover notice is not in relation to Asset Plus Limited shares.
51
Independent Auditor’s Report
Independent
Auditor’s Report
To the Shareholders of Asset Plus Limited
Report on the Audit of the Consolidated Financial Statements
Opinion
We have audited the consolidated financial statements of Asset Plus Limited (“the Company”) and its subsidiaries
(“the Group”) on pages 28 to 51 which comprise the consolidated statement of financial position as at 31 March
2020, 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 financial statements, including a
summary of significant accounting policies.
In our opinion, the accompanying financial statements present fairly, in all material respects, the financial position
of Asset Plus Limited as at 31 March 2020 and its consolidated financial performance and 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 Auditing 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 the Group 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.
52
Independent Auditor’s Report (continued)
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. 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.
Why the audit matter is significantHow our audit addressed the Key Audit Matter
Investment Property valuation
In the application of NZ IFRS, management is 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 2020, Investment Property is carried
at fair value of $142.1 million. The valuations were
performed by independent registered valuers. There
are a number of risks that can have a material impact
on the investment property balance in the consolidated
financial statements, principally:
• The independent registered valuers have included a
material valuation uncertainty clause in their report
arising from the COVID-19 pandemic. This clause
highlights the uncertainties surrounding property
valuations due to the absence of relevant transactional
evidence of current market pricing. This results in
less certainty and greater estimation in the valuation
of investment property. Assumptions made include
capitalisation rates, discount rates, market rent and
expected growth based on market data and market
transactions. These assumptions along with others
were adjusted to recognise the estimated impacted of
COVID-19 pandemic.
• The 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; and
• The 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. Documented and
considered how those assumptions had taken into
account uncertainties arising from COVID-19 pandemic.
• Confirmed each property valuation was performed in
accordance with appropriate accounting standards
for use in determining the carrying value of investment
property as at 31 March 2020.
• Recalculated the revaluation adjustment to be
recorded for the year of each investment property as
at 31 March 2020.
• Tested the appropriateness of data provided to the
expert, for each property valuation.
• Considered the adequacy of the disclosures made
in note 3 Significant Accounting Estimates and
Judgements and note 12 Investment Properties, to
the consolidated financial statements, which sets out
the key judgements and estimates including valuation
techniques and significant unobservable inputs applied
to determine fair value of the investment property.
These notes explain that there is material estimation
uncertainty and there has been a material impact on the
valuation of investment properties; and
• Discussed with management changes in the investment
property portfolio, including any property development,
controls in place surrounding the valuation process
and the impact COVID-19 pandemic has had on the
investment property portfolio including rent abatements,
occupancy risk, growth rates.
53
Independent Auditor’s Report (continued)
Other Information
The directors are responsible for all other information included in the Group’s Annual Report. The other information comprises
the information included in the Annual Report but does not include the consolidated financial statements and our auditor’s
report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express any form of
audit opinion or assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the consolidated financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed,
we conclude that there is a material misstatement of this other information, we are required to report that fact. We have
nothing to report in this regard.
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 NZ IFRS issued by the New Zealand Accounting Standards Board, and for such internal control
as the Directors determine 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 financial statements is located on the External
Reporting Board’s website at: https://www.xrb.govt.nz/assurance-standards/auditors-responsibilities/audit-report-1/
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
16 June 2020
54
Shareholder Statistics
RankInvestor Name Total Units % Issued Capital
1Augusta Capital Limited
30,528,933 18.85%
2HSBC Nominees (New Zealand) Limited
19,705,67012.17%
3Accident Compensation Corporation
14,269,8138.81%
4Forsyth Barr Custodians Limited
5,714,2943.53%
5
National Nominees New Zealand Limited4,799,7242.96%
6
FNZ Custodians Limited4,499,1872.78%
7
Investment Custodial Services Limited2,773,1301.71%
8
Premier Nominees Limited 2,721,756 1.68%
9
Cogent Nominees Limited 2,426,273 1.50%
10
Tea Custodians Limited1,472,5540.91%
11
Forhomes Investments Limited1,466,3940.91%
12
FNZ Custodians Limited1,409,9750.87%
13
Francis lvor Charles Jasper & Victoria Jane Carpenter
& Anthony Francis Segedin
1,375,0000.85%
14
Bhc Trustee 68 Limited1,330,0000.82%
15
Anthony Simmonds & Maureen Simmonds1,155,0190.71%
16
Premier Nominees Ltd Armstrong Jones Property Securities Fund1,121,0690.69%
17
New Zealand Permanent Trustees Limited778,0220.48%
18
Bnp Paribas Nominees NZ Limited Bpss40760,7690.47%
19
Bryan Thomas Seddon & Dorothy Edith Allison Seddon700,0000.43%
20
Hawkes Bay Sailplanes Limited650,0000.40%
Twenty Largest Shareholders
Top 20 Shareholders (with expanded NZCSD Sub-Register) as at 20 May 2020.
Shareholder
Statistics
55
RangeHolders (start)Shares% Issued Capital
1-1000
77
43,794
0.03%
1001-5000
350
1,042,869
0.64%
5001-10000
322
2,519,684
1.56%
10001-50000
710
17,547,309
10.84%
50001-100000
147
10,563,191
6.52%
Greater than 100000
145
130,203,586
80.41%
ShareholderNumber of shares relevant interest disclosed for
Augusta Capital Limited30,528,933
Salt Funds Management Limited
25,644,632
Westpac Banking Corporation18,832,528
Accident Compensation Corporation
15,537,355
Spread of shareholders
The following is a spread of quoted security holders as at 20 May 2020.
Substantial Security Holders
As at 31 March 2020 the following Shareholders had filed substantial security notices in accordance
with the Financial Markets Conduct Act 2013.
Shareholder Statistics (continued)
This annual report is dated 16 June 2020 and is signed on behalf of the board by:
Bruce Cotterill Carol Campbell
Chairman Chair Audit and Risk Committee
56
Directory
Company
Asset Plus Limited
PO Box 37953, Parnell 1151
Phone: 09 300 6161
www.assetplusnz.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
Level 4
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
Manager
Augusta Funds Management Limited
Level 2
Bayleys House
30 Gaunt Street
Wynyard Quarter
Auckland 1010
PO Box 37953
Parnell 1151
Directory
57
---
Asset
Plus
2020
Result
Assetplusnz.co.nz
062020
Asset
Plus
Limited
Results
Presentation
for
the
year
ended
31
March
2020
Asset
Plus
2020
Result
Assetplusnz.co.nz
2
No
dividend
is
to
be
paid
for
the
fourth
quarter
due
to
the
impact
of
COVID
‐
19
Net
tangible
assets
(NTA)
of
56.7
cents
per
share
(cps)
are
reduced
from
69.4
cps
due
to
an
unrealised
loss
on
revaluation
of
investment
property
Loan
to
value
ratio
is
34.3%
(8.5%
as
at
31
March
2019)
Unrealised
loss
on
the
fair
value
of
investment
property
of
$19.1m
or
11.9%
of
carrying
value
The
WALT
is
3.16
years
which
has
decreased
from
5.5
years
at
31
March
2019
due
to
sale
of
the
Heinz
Watties
property
and
purchase
of
35
Graham
Street
Portfolio
occupancy
is
98.3%
which
has
increased
from
96.7%
in
March
2019
Purchase
of
35
Graham
Street
for
$58.0m
in
June
2019
Sale
of
Heinz
Watties
property
in
Hastings
for
$29.1m
in
December
2019
Purchase
of
land
in
Albany
in
December
2019
and
signing
of
a
conditional
development
agreement
with
Auckland
Council
for
a
15
year
lease
term
2020
Update
•
Net
rental
income
of
$10.47m
up
$1.32m
or
14%
from
FY19
•
Total
loss
for
the
year
net
of
tax
of
$14.69m
(FY19
profit
of
$3.80m)
•
AFFO
1
of
$4.74m
($4.74m
in
FY19)
1.
AFFO
stands
for
‘Adjusted
Funds
From
Operations’,
and
is
non
‐
GAAP
financial
information,
calculated
based
on
guidance
issued
by
the
Property
Council
of
Australia.
Asset
Plus
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.
The
calculation
of
AFFO
has
not
been
reviewed
by
Asset
Plus’
auditor,
Grant Thornton.
Asset
Plus
2020
Result
Assetplusnz.co.nz
Impact
of
COVID
‐
19
•
The
COVID
‐
19
pandemic
has
provided
material
future
uncertainty
in
the
real
estate
market.
•
As
a
result
the
investment
property
portfolio
has
materially
reduced
in
value
by
$19.1m
as
at
31
March
2020.
•
Rental
abatements
and
relief
applied
to
the
April
–June
2020
quarter
are
expected
to
impact
operating
earnings
by
$0.59m
($0.42m
after
‐
tax
),
equivalent
to
approximately
4%
of
the
current
annualised
gross
rental
income.
•
This
lost
revenue
will
be
partially
offset
by
the
reintroduction
of
building
depreciation
next
financial
year.
•
The
full
impact
of
COVID
‐
19
will
not
be
known
for
some
time.
•
Whilst
upfront
rental
abatement
and
relief
has
been
granted,
preservation
of
long
‐
term
value
is
also
a
key
strategy,
which
includes
ensuring
the
continuing
operations
of
all
retail
tenants.
3
Asset
Plus
2020
Result
Assetplusnz.co.nz
Key
Metrics
as
at
31
March
2020
$142.1m
1
(Mar
‐
19
2
:
$122.8m)
98.3%
(Mar
‐
19
2
:
96.7%)
3.16
years
(Mar
‐
19
2
:
5.5)
71
(Mar
‐
19
2
:
76)
4
(Mar
‐
19
2
:
3)
34.3%
(Mar
‐
19
2
:
8.5%)
$0.567
(Mar
‐
19
2
:
$0.694)
4
1. Excludes
$1.51m
of
WIP
costs
in
relation
to
the
development
projects
at
35
Graham
St
and
Munroe
Lane
2. In
the
year
since
31
March
2019,
35
Graham
Street
was
acquired
in
late
June
2019
for
$58m,
the
Munroe
Lane
property
was
acquired
on
2
December
2019
for
$7.25m
and
the
Heinz
Watties
property
was
sold
on
17
December
2019
for
$29.1m.
Portfolio
Value
WALE
Properties
LVR
Occupancy
Number
of
Tenants
NTA
Asset
Plus
2020
Result
Assetplusnz.co.nz
Increase
the
scale
of
the
portfolio
The
Graham
Street
and
Munroe
Lane
developments
(should
they
proceed)
are
expected
to
increase
the
value
of
the
portfolio,
reducing
the
Management
Expense
Ratio
due
to
increased
scale.
Reduce
the
share
price
to
NTA
gap
The
Munroe
Lane
development
(should
it
proceed),
and
Graham
Street
development
(if
pursued)
are
expected
to
reduce
the
gap
by
(i)
enhancing
the
quality
of
the
Asset
Plus
portfolio,
(ii)
executing
on
the
‘yield
plus
growth’
strategy,
and
(iii)
increasing
market
capitalisation
and
liquidity.
Set
a
strong
platform
for
sustainable
growth
moving
forward
Delivery
of
the
Munroe
Lane
development
(should
it
proceed)
is
expected
to
significantly
enhance
the
quality
of
the
portfolio,
and
re
‐
weight
to
a
higher
Auckland
exposure
as
well
as
office
sector
weighting
of
the
portfolio
by
income.
Provide
an
appropriate
yield
reflective
of
the
value
‐
add,
and
total
return
approach
adopted
The
Munroe
Lane
development
(should
it
proceed)
is
expected
to
provide
attractive
risk
‐
adjusted
returns
having
regard
to
the
high
quality
tenant
covenant,
and
extended
lease
term
over
63%
of
the
building.
Strategic
objectives
01020304
5
Objective
Delivering
on
the
Objectives
Asset
Plus
2020
Result
Assetplusnz.co.nz
Financial
Performance
Year
ended
Year
ended
Mar
‐
20
Mar
‐
19
Var
Var
$m
$m
$
%
Gross
Income
14.47
13.35
1.12
8%
Direct
Property
Operating
Expenses
(4.00)
(4.20)
0.20
5%
Net
Rental
Revenue
10.47
9.15
1.32
14%
Other
Income
0.49
‐
0.49
‐
Total
Net
Revenue
10.96
9.15
1.81
20%
Administration
Expenses
(1.64)
(1.77)
0.13
7%
Net
Finance
Costs
(1.67)
(1.08)
(0.59)
(55%)
NP
Before
Tax,
Reval
&
One
‐
Offs
7.65
6.30
1.35
21%
Other
Adjustments
(20.84)
(2.78)
(18.06)
(650%)
Profit
Before
Tax
(13.19)
3.52
(16.71)
(475%)
Tax
(1.50)
0.28
(1.78)
636%
Profit
and
Other
Comprehensive
Income
for
the
Period
(14.69)
3.80
(18.49)
(487%)
AFFO*
4.74
4.74
‐‐
AFFO
CPS
2.93
2.93
‐‐
•
Net
rental
revenue
up
$1.32m
or
14%
primarily
due
to
the
acquisition
of
35
Graham
St
(June
2019)
partly
offset
by
the
divestment
of
Heinz
Watties
property
(Dec
2019).
•
Other
income
is
an
underwrite
fee
associated
with
the
sale
of
the
Heinz
Watties
property.
•
Administration
expenses
down
$0.13m
or
7%
due
to
lower
professional
fees.
•
Net
Finance
Costs
increased
due
to
higher
average
debt
levels
across
the
year
(primarily
35
Graham
St
acquisition
impact).
•
Other
adjustments
primarily
consist
of
unrealised
fair
value
loss
on
investment
property
($19.12m)
and
transaction
costs
associated
with
business
acquisitions
and
the
withdrawn
capital
raise
($1.77m
in
total).
•
Tax
includes
current
tax
expense
associated
with
the
building
deprecation
recovery
(Heinz
Watties)
–this
was
however
reflected
in
the
deferred
tax
liability
so
does
not
impact
on
the
NTA.
AFFO
stands
for
‘Adjusted
Funds
From
Operations’,
and
is
non
‐
GAAP
financial
information,
calculated
based
on
guidance
issued
by
the
Property
Council
of
Australia.
Asset
Plus
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.
The
calculation
of
AFFO
has
not
been
reviewed
by
Asset
Plus’
auditor,
Grant Thornton.
6
Asset
Plus
2020
Result
Assetplusnz.co.nz
Net
Rental
Performance
•
Eastgate
is
$0.22m
/
6%
lower
due
to
higher
non
recoverable
operating
expenses
and
lease
commissions
recognised.
•
Stoddard
Road
net
rental
is
up
$0.13m
/
5%
due
to
lower
bad
debt
provisions
and
lower
lease
incentives
recognised
compared
to
FY19.
•
35
Graham
Street
was
acquired
in
June
2019.
•
Heinz
Watties
and
AA
Centre
were
divested
(Dec
2019
and
Jul
2018
respectively).
•
No
rental
income
recognised
to
date
for
Munroe
Lane
as
it
is
currently
not
income
producing.
Year
ended
Year
ended
Mar
‐
20
Mar
‐
19
Var
Var
$m
$m
$m
%
Eastgate
Shopping
Centre
3.48
3.70
(0.22)
(6%)
Stoddard
Rd
2.51
2.38
0.13
5%
35
Graham
Street
2.95
‐
2.95
100%
Current
Portfolio
8.94
6.08
2.87
47%
Heinz
Watties
Distribution
Centre
1.53
2.17
(0.65)
(30%)
AA
Centre
‐
0.90
(0.90)
(100%)
Total
Net
Rental
Income
10.47
9.15
1.32
14%
7
Asset
Plus
2020
Result
Assetplusnz.co.nz
Administration
Expenses
and
Transaction
Costs
•
Administration
costs
were
down
$0.13m
or
7%
primarily
due
to
lower
professional
fees
and
personnel
costs.
•
Management
Fees
increased
$0.1m
or
14%
as
a
result
of
the
increase
in
assets
under
management.
•
Transaction
Costs
of
$1.77m
in
total
were
incurred
in
FY20
(FY19
$0.22m)
.
During
the
year
investigative
work
was
undertaken
to
acquire
two
separate
property
‐
based
businesses.
This
cost
included
substantive
due
diligence,
financial
investigative
and
legal
costs
($0.99m
in
total).
In addition
$0.78m
of
costs
were
incurred
in
relation
to
the
rights
offer
that
was
withdrawn
in
March
2020.
Year
ended
Year
ended
Mar
‐
20
Mar
‐
19
Var
Var
$m
$m
$m
%
Management
Fees
0.82
0.72
(0.10)
(14%)
Directors
Fees
0.30
0.30
‐
0%
Audit
Fees
0.11
0.13
0.02
15%
Personnel
costs
‐
0.03
0.03
100%
Professional
Fees
0.28
0.37
0.09
24%
Other
Administration
Costs
0.13
0.22
0.09
41%
Total
Administration
Expenses
1.64
1.77
0.13
7%
Transaction
Costs
1.77
0.22
(1.55)
(692%)
8
Asset
Plus
2020
Result
Assetplusnz.co.nz
Balance
Sheet
and
Funding
•
NTA
of
56.7
cents
per
share
down
18
cents
from
2019
primarily
due
to
the
net
fair
value
loss
of
investment
property
and
transaction
costs.
•
Drawn
bank
debt
increased
to
fund
acquisition
of
35
Graham
Street
offset
by
a
debt
repayment
on
the
sale
of
the
Heinz
Watties
property.
•
Total
bank
facility
limit
is
$75m
($25.75m
was
undrawn
at
31
March
2020).
•
Gearing
is
34.3%
(8.5%
in
2019).
Year
ended
Year
ended
Mar
‐
20
Mar
‐
19
$m
$m
Cash
0.1
0.8
Investment
Properties*
143.6
94.1
Properties
Held
for
Sale
‐
28.9
Other
Assets
1.4
2.3
Total
Assets
145.08
126.10
Bank
Debt
49.3
10.5
Other
Liabilities
4.0
3.3
Total
Liabilities
53.28
13.80
Equity
91.80
112.30
Net
Tangible
Assets
Per
Share
($)
0.57
0.69
9
*includes work in progress costs associated with the potentia
l future development at 35 Graham St and 6-8 Munroe Lane of $1.51m
in total
Asset
Plus
2020
Result
Assetplusnz.co.nz
Portfolio
Summary
as
at
31
March
2020
10
Eastgate,
Christchurch
Stoddard
Rd,
Auckland
Graham
Street,
Auckland
Munroe
Lane,
Auckland
Valuation
($m)
1
$46.95
(Mar
‐
19:
$54.5)
$37.5
(Mar
‐
19:
$39.5)
$50.1
(On
acquisition:
$58.0)
$7.5
(On
acquisition:
$7.25)
WALE
(years)
4.53
(Mar
‐
19:
5.07)
4.00
(Mar
‐
19:
4.02)
1.24
(On
acquisition:
2.0)
‐
Occupancy
(%)
95.3%
(Mar
‐
19:
93%)
100%
(Mar
‐
19:
100%)
100%
(On
acquisition:
100%)
‐
Net
Rental
Income
($m)*
$3.66
(Mar
‐
19:
$3.63)
$2.63
(Mar
‐
19:
$2.57)
$3.95
(On
acquisition:
$3.95)
‐
Passing
yield
(%)
7.80%
(Mar
‐
19:
7.30%)
7.03%
(Mar
‐
19:
6.5%)
7.93%
(On
acquisition:
6.9%)
‐
Comments
•
Bargain
Chemist
recently
secured
as
a
new
tenant
on
a
6
‐
year
lease
•
Ongoing
discussions
to
expand
F&B
offering
•
Seismic
work
for
The
Warehouse
completed
•
The
property
continues
to
perform
well
and
provide
a
steady
income
stream
•
100%
of
expiring
leases
were
renewed
by
existing
tenants
during
the
year
•
Acquired
June
2019
•
Auckland
Council
lease
has
approximately
1
year
to
run
(expiring
June
2021)
•
Attractive
holding
income
•
Acquired
off
‐
market
December
2019
•
Large
~4,200m
2
corner
site
with
three
road
frontages
Largest
tenant
exposures
•
Countdown,
The
Warehouse
•
The
Warehouse
•
Auckland
Council
‐
*Based
on
the
valuers
net
rental
income
assessment
Asset
Plus
2020
Result
Assetplusnz.co.nz
Valuation
Movements
•
In
early
March
2020
external
valuations
were
completed
as
part
of
the
capital
raise
(which
was
subsequently
withdrawn
as
a
result
of
COVID
‐
19).
Draft
valuations
were
broadly
in
line
with
carrying
values
(as
noted
above).
•
In
late
March
2020,
these
external
valuations
were
revised
to
incorporate
the
uncertainty
caused
by
COVID
‐
19.
•
The
fair
value
unrealised
loss
of
the
4
investment
properties
was
$19.11m
–a
reduction
of
12%.
•
To
reflect
the
impact
of
the
pandemic
on
investment
property
value,
the
valuers
have
generally
adopted
softer
valuation
inputs
including
increased
capitalisation
and
discount
rates,
lower
growth
rates
across
the
near
term,
lower
market
rental
levels,
increased
vacancy
rates,
near
term
rental
abatement
and
increased
letting
‐
up
allowances.
•
Independent
valuers
have
identified
a
level
of
material
valuation
uncertainty
and
highlight
that
less
certainty
and
a
higher
degree
of
caution
should
be
attached
to
the
valuations,
and
that
values
could
change
quickly
and
significantly
due
to
subsequent
events.
Final
Valuations
Acquisitions
Capex
&
Other
Mvmts
Fair
Value
Movement
Draft
Valuations
(Pre
‐
capital
raise)
Fair
Value
Movement
Final
Valuations
Mar
‐
19
Mar
‐
20
Mar
‐
20
$m
$m
$m
$m
$m
$m
$m
Eastgate
54.6
‐
1.2
(3.6)
52.2
(5.3)
47.0
22
Stoddard
Road
39.5
‐
(0.0)
3.0
42.5
(5.0)
37.5
35
Graham
Street
‐
58.6
‐
(0.1)
58.5
(8.4)
50.1
6
‐
8
Munroe
lane
‐
7.3
‐
0.2
7.5
‐
7.5
TOTAL
94.1
65.9
1.2
(0.5)
160.7
(18.7)
142.1
11
Asset
Plus
2020
Result
Assetplusnz.co.nz
Eastgate
•
Bargain
Chemist
committed
to
a
6
year
lease
at
the
Centre
from
13
May
2020.
Several
tenancies
have
been
combined
to
meet
the
circa
800m²
space
requirements
for
the
tenant.
•
Seismic upgrade
works
for
“The
Warehouse”
building
were
carried
out
and
completed.
All
buildings
at
Eastgate
are
now
a
minimum
of
67%
NBS.
•
A
number
of
lease
expiries
in
2020
have
been
allowed
to
holdover
on
a
monthly
basis
to
provide
flexibility
with
potential
redevelopment
options.
Some
of
these
tenants
include
EB
Games,
Bed
Bath
&
Beyond,
Acquisitions
and
Unichem.
•
Marketing
for
both
internal
and
external
areas
of
the
Centre
continues.
Negotiations
are
well
advanced
for
a
standalone
fast
‐
food
restaurant
adjacent
to
the
KFC
site.
Internally,
management
continues
to
focus
on
sourcing
another
internal
anchor
in
addition
to
Bargain
Chemist.
•
COVID
‐
19
has
had
a
significant
impact
on
the
March
2020
valuation
for
Eastgate
which
decreased
materially from
the
prior
year.
COVID
‐
19
has
brought
an
amount
of
uncertainty
to
the
retail
market
which
has
softened
the
capitalisation
rate,
and
other
valuation
inputs.
•
Although
customer
numbers
are
up
at
the
Centre,
the
Moving
Annual
Turnover
(MAT)
has
remained
flat
for
the
year.
Passing
income
was
unchanged
through
the
year
whilst
the
WALT
has
decreased
slightly.
2020 2019
Valuation
($m)
46.95 54.50
Net
Rental
Income
($m)
3.66
3.63
Passing
Initial
Yield
(%)
7.80% 7.30%
Cap
Rate
(%)
8.38% 8.13%
Net
Market
Rental
($m)
4.09
4.46
WALT
(years)
4.53
5.07
12
Asset
Plus
2020
Result
Assetplusnz.co.nz
Stoddard
Road
•
A
total
of
6
lease
renewals
were
completed
in
2020
(17%
of
the
total
rental
income
for
the
Centre).
•
WALT
increased
from
4.02
years
in
2019
to
4.12
years
as
a
result
of
renewals
during
the
year,
and
net
contract
income
has
increased
by
$70,369
p.a.
as
a
result
of
rent
reviews.
•
COVID
‐
19
uncertainty
has
impacted
retail
market
rents
and
softened
capitalisation
rates.
As
a
result,
the
valuation
has
decreased
from
$39.5m
to
$37.5m,
or
5.06%.
•
The
Centre
is
currently
100%
occupied
and
there
are
no
renewals
or
expiries
due
for
the
remainder
of
2020.
•
The
future
leasing
focus
are
the
four
renewals
due
in
2021,
representing
16%
of
the
total
rental
income
for
the
Centre.
•
Recent
tenant
retention
has
remained
strong
which
demonstrates
tenant
demand
for
the
Centre.
2020 2019
Valuation
($m)
37.5 39.5
Net
Rental
Income
($m)
2.63 2.57
Passing
Initial
Yield
(%)
7.00% 6.50%
Cap
Rate
(%)
6.25% 6.13%
Net
Market
Rental
($m)
2.37 2.46
WALT
(years)
4.12 4.02
13
Asset
Plus
2020
Result
Assetplusnz.co.nz
•
On
28
June
2019,
Asset
Plus
purchased
35
Graham
Street,
Auckland
for
$58m
from
Auckland
Council.
•
The
purchase
was
in
line
with
Asset
Plus’
‘Yield
plus
Growth’
investment
strategy,
providing
the
benefit
of
an
existing
large
structure,
with
potential
to
upgrade
and
add
additional
floors
(subject
to
resource
consent).
•
Three
development
options
were
presented
to
shareholders
in
June
2019.
A
full
redevelopment
continues
to
be
Asset
Plus'
preferred
development
option
(subject
to
market
conditions)
with
the
intention
of
holding
this
property
as
a
long
‐
term
investment.
•
Work
has
progressed
on
the
preferred
development
option,
including
the
appointment
of
an
architect
and
leasing
agent.
•
A
final
decision
on
the
development
of
Graham
Street
has
yet
to
be
made
by
the
Asset
Plus
Board.
Consideration
is
being
given
to
the
scale
of
the
proposed
redevelopment
given
vacancy
rates,
market
sentiment,
tenant
pre
‐
commitment,
and
the
significant
capital
requirements
for
the
preferred
development
option.
The
property
provides
options
for
reduced
scale
redevelopment
which
may
be
more
acceptable
in
the
current
market
conditions.
•
COVID
‐
19
has
materially
impacted
the
March
2020
valuation
–the
cap
rate
has
softened
and
the
let
‐
up
period
lengthened
resulting
in
a
reduction
of
$8.4m
or
14.4%.
35
Graham
Street,
Auckland
CBD
Development
update
14
Asset
Plus
2020
Result
Assetplusnz.co.nz
15
•
On
20
December
2019,
Asset
Plus
announced
the
development
of
a
26,500m
2
(GFA)
/
15,100m
2
(NLA)
building
in
Albany,
63%
pre
‐
leased,
with
a
15
‐
year
lease
to
Auckland
Council.
•
Resource
consent
has
been
granted
but
the
agreement
remains
conditional
upon
satisfaction
of
the
landlord
funding
condition
and
shareholder
approval.
•
Currently
in
discussions
with
Auckland
Council
to
further
extend
the
funding
condition
from
30
July
2020
until
31
October
2020.
•
Asset
Plus
intends
to
hold
Munroe
Lane
as
a
long
‐
term
investment
on
completion.
•
Construction
is
expected
to
commence
in
late
2020,
with
a
targeted
completion
date
of
December
2022.
•
Asset
Plus
believes
the
Munroe
Lane
Development
offers
attractive
risk
‐
adjusted
returns
having
regard
to
the
high
‐
quality
tenant
and
extended
lease
term
secured
to
date.
Potential
Munroe
Lane
Development
Artist
impression
of
the
Munroe
Lane
Development
Asset
Plus
2020
Result
Assetplusnz.co.nz
•
6
levels
plus
basement
carparking
in
the
heart
of
Albany
with
extensive
car
parking.
•
Large
floor
plates
of
~3,000
m
2
each.
•
~750m
2
of
expected
Café
/
Food
&
Beverage
/
Retail
outlets
on
ground
level.
•
Excellent
daylighting
due
to
three
street
frontages.
•
63%
pre
‐
leased
on
a
15
year
lease
to
Auckland
Council.
Targeting
August
‐
20
to
commence
marketing
the
balance
of
unleased
space
(subject
to
tenant
options
being
exercised
by
Auckland
Council).
Munroe
Lane,
Albany
Proposed
Development
Overview
Gross
Floor
Area
26,500
m
2
Net
Lettable
Area
15,100
m
2
Expected
yield
on
cost
5.8%
Indicative
development
cost
$115m
Value
on
Completion
(JLL)
$137m
Return
on
cost
(including
land)
12%
Munroe
Lane
– Indicative
Metrics
16
Asset
Plus
2020
Result
Assetplusnz.co.nz
Outlook
•
The
impact
of
COVID
‐
19
further
reinforces
the
adopted
approach
towards
a
diversified,
value
‐
add
strategy
that
ultimately
will
increase
the
portfolio
size.
•
The
Manager
continues
to
focus
on
working
with
retail
tenants
to
navigate
these
uncertain
times
and
preserve
value
in
the
longer
term
for
shareholders.
•
Whilst
the
capital
raise
was
withdrawn
the
management
team
is
focused
on
securing
the
Munroe
Lane
development
with
the
Auckland
Council
and
works
remain
on
timetable.
•
The
Graham
Street
redevelopment
is
currently
being
reassessed
given
the
current
economic
climate.
Consideration
is
being
given
to
the
scale
of
proposed
redevelopment
given
vacancy
rates,
market
sentiment,
tenant
pre
‐
commitment,
and
the
significant
capital
requirements
for
the
preferred
development
option.
The
property
provides
options
for
reduced
scale
redevelopment
which
may
be
more
acceptable
given
current
market
conditions
and
ability
to
secure
leasing
pre
‐
commitments.
•
We
remain
committed
to
securing
growth
opportunities
for
Asset
Plus
to
continue
to
execute
the
full
transformation
of
the
company.
•
The
dividend
remains
subject
to
quarterly
review,
but
it
is
expected
to
be
reinstated
once
there
is
more
certainty
on
future
trading
conditions.
17
Asset
Plus
2020
Result
Assetplusnz.co.nz
Appendix
1:
Reconciliation
of
forecast
net
profit
after
tax
to
AFFO
18
AFFO
stands
for
‘Adjusted
Funds
From
Operations’,
and
is
non
‐
GAAP
financial
information,
calculated
based
on
guidance
issued
by
the
Property
Council
of
Australia.
Asset
Plus
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.
The
calculation
of
AFFO
has
not
been
reviewed
by
Asset
Plus’
auditor,
Grant
Thornton.
Year
ended
Year
ended
Mar
‐
20
Mar
‐
19
Var
Var
$m
$m
$m
%
Total
Comprehensive
Income
Net
of
Tax
(14.69)
3.80
(18.49)
(487%)
Add
Back
Loss/
(Gain)
From
Sales
of
Investment
Property
(0.05)
0.92
(0.97)
(105%)
Fair
value
(gain)
/
loss
on
investment
property
19.12
1.77
17.35
980%
One
‐
off
income
(undewriting)
(0.49)
‐
(0.49)
(100%)
Depreciation
on
Owner
Occupied
PP&E
0.06
‐
0.06
0%
Fair
value
gain
on
the
mark
to
market
of
derivatives
‐
(0.13)
0.13
100%
Non
‐
FFO
Deferred
Tax
Expenses
(0.52)
(0.66)
0.14
21%
Non
‐
operating
current
tax
expense
0.53
‐
0.53
0%
Net
Operating
Income
After
Tax
3.96
5.70
(1.74)
(31%)
Net
Loss
on
Sale
of
Plant
and
Equipment
‐
0.01
(0.01)
(100%)
Transaction
Costs
0.78
0.22
0.56
255%
Amortisation
of
Lease
Incentives
0.29
0.19
0.10
53%
Funds
From
Operations
(FFO)
5.03
6.12
(1.09)
(18%)
Maintenance
CAPEX
(0.08)
(0.15)
0.07
47%
Incentives
Granted/Commissions
Paid
(0.21)
(0.28)
0.07
25%
Other
Adjustments
‐
(0.95)
0.95
100%
Adjusted
Funds
From
Operations
4.74
4.74
0.00
0%
AFFO
(CPS)
2.93
2.93
‐
Asset
Plus
2020
Result
Assetplusnz.co.nz
Appendix
2
:
Lease
Expiries
2%
13%
38%
6%
2%
14%
3%
9%
11%
2%
0%
1,518
4,642
669
237
1,663
419
1,044
1,382
243
Vacant
Mar
‐
21
Mar
‐
22
Mar
‐
23
Mar
‐
24
Mar
‐
25
Mar
‐
26
Mar
‐
27
Mar
‐
28
Mar
‐
29
Mar
‐
30
Lease
expiry
in
year
ended
31
March
Lease
expiry
by
rental
income
($000)
19
Asset
Plus
2020
Result
Assetplusnz.co.nz
20
Important Notice
This presentation contains not only a review of operations, but may also contain some forward lookingstatements (including forecasts and projections)
about Asset Plus Limited (APL) and the environment in
which APL operates. Because these statements are fo
rward looking, APL’s actual results could differ
materially. Please read this presentation in the wider context of material previously published by APL andannounced through NZX Limited.No representation, warranty or undertaking, express or implied, is made as to the fairness, accuracy,completeness or correctness of the information contained, referred to or reflected in this presentation orsupplied or communicated orally or in writing to you (o
r your advisers or associated persons) in connection
with it, as to whether any forecasts or projections will be met, or as to whether any forward lookingstatements will prove correct. You will be responsible for forming your own opinions and conclusions onsuch matters.No person is under any obligation to update this presentation at any time after its release to you.To the maximum extent permitted by law, none of APL, Augusta Funds Management Limited (AFM) nor anyof their directors, officers, employees or agents or any other person shall have any liability whatsoever toany person for any loss (including, without limitation, any liability arising from any fault or negligence onthe part of APL, AFM, their directors, officers, employees or agents or any other person) arising from thispresentation or any information contained, referred to or reflected in it or supplied or communicated orallyor in writing to you (or your advisers or associated persons) in connection with it.Acceptance of this presentation constitutes acceptance of the terms set out above in this Important Notice.
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Results announcement
(for Equity Security issuer/Equity and Debt Security
issuer)
Results for announcement to the market
Name of issuer Asset Plus Limited (APL)
Reporting Period 12 months to 31 March 2020
Previous Reporting Period 12 months to 31 March 2019
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$ 14,954 12.0%
Total Revenue $ 14,954 12.0%
Net profit/(loss) from continuing
operations
($ 14,688) (486.2%)
Total net profit/(loss) ($ 14,688) (486.2%)
Interim/Final Dividend
Amount per Quoted Equity Security N/A
Imputed amount per Quoted Equity
Security
N/A
Record Date N/A
Dividend Payment Date N/A
Current period Prior comparable period
Net tangible assets per Quoted
Equity Security
$0.567 $0.694
A brief explanation of any of the
figures above necessary to enable
the figures to be understood
This announcement is extracted from APL’s audited financial statements as at
and for the year ended 31 March 2020. A copy of the results presentation is
attached to this announcement.
Authority for this announcement
Name of person authorised to make
this announcement
Simon Woollams
Contact person for this
announcement
Simon Woollams
Contact phone number 09 300 6161
Contact email address simon@augusta.co.nz
Date of release through MAP 16/06/2020
Audited financial statements accompany this announcement.
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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