PFI Announces Stable Interim Results
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22 August | 2022
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PFI ANNOUNCES STABLE INTERIM RESULTS
The PFI management team will present the results via live webcast from 10am NZT on 22 August 2022.
To view and listen to the webcast, please visit https://edge.media-server.com/mmc/p/3bdexvc5. Anyone
wishing to participate in the webcast (for example, to ask a question) must pre-register for the conference
call at https://register.vevent.com/register/BI33cbd8a72ecb4e8b8bd64c99aec3bd90. Upon registering,
participants will be provided with participant dial-in numbers, a passcode and a unique registrant ID. In
the 10 minutes prior to the call start time, you will need to use the conference access information
provided in the email received at the point of registering, in addition to opening the webcast (using the
details above).
Highlights
▪ Stable operating result: Interim profit after tax of $23.8 million, Funds From Operations (FFO)
1
earnings down 4.3% from the prior interim period to 5.13 cents per share, Adjusted Funds From
Operations (AFFO) earnings in line with the prior interim period at 4.64 cents per share, interim cash
dividends of 3.60 cents per share.
▪ Portfolio delivering strong rental growth: $28.7 million of contract rent reviewed during H1 2022
delivering an average annualised uplift of 4.8%, 9.6% of contract rent leased during H1 2022 at an
average of 15.6% above previous contract rents, 3.9% of contract rent due to expire in H2 2022.
▪ Resilient industrial portfolio of scale: Portfolio value of $2.19 billion, 11 properties revalued at the
half-year, fair value gains on properties of $19.5 million, net tangible assets confirmed at 309.6 cents
per share.
▪ Proactive capital management: 725,000 shares acquired through share buyback programme,
$100 million BNZ facility refinanced, USPP facility established post balance date, $122 million of
available bank liquidity, gearing comfortable at 27.6%.
▪ Brownfield opportunities progressed: 47A Dalgety Drive complete, significant leasing progress
made at 30-32 Bowden Road, $219 million or 10% of the portfolio held in brownfield opportunities.
Property for Industry Limited (PFI, the Company) today announced a stable interim operating result for
the six months ended 30 June 2022.
“We are pleased to announce a stable operating result for the first half of 2022. Our portfolio has been
delivering strong rental growth and we are making excellent progress developing out our key brownfield
opportunities” says PFI Chief Executive Officer, Simon Woodhams.
Stable operating result
PFI generated a profit after tax for the interim period of $23.8 million (4.70 cents per share), down from
$273.5 million (54.46 cents per share) in the prior interim period. A $19.5 million fair value gain on the
independent valuation of 11 investment properties and the revaluation of two properties when
transferring them to assets held for sale, as compared to a $248.2 million fair value gain on the
independent valuation of the entire portfolio in the prior interim period, was the main contributor to this
reduction.
In addition, it was determined that goodwill of $29.1 million, which arose on the merger with Direct
Property Fund in July 2013, was impaired, and the full amount was written off during the interim period.
Notwithstanding this, the merger has been a very successful transaction for PFI, with a growth in rents
--------
1
Funds From Operations (FFO) and Adjusted Funds From Operations (AFFO) are non-GAAP financial information and are
common property investor metrics, which have been calculated in accordance with the guidelines issued by the Property Council
of Australia. Please refer to Appendix 1 for more detail as to how these measures were calculated.
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of 35% and values of 124% for those properties still owned by PFI, and gains on sale for those properties
divested of 18%
2
.
At an operating level, net rental income of $47.6 million was up $1.6 million or 3.6% on the prior interim
period, with positive leasing activity contributing $1.9 million to this increase. Offsetting this, interest
expense and bank fees rose by $2.0 million on the prior interim period, this increase being the result of
an increase in the Company’s weighted average cost of debt to 4.07% as at the end of the interim period
from 3.40% as at the end of prior interim period, combined with a $54 million or 10% increase in average
borrowings from net acquisition and divestment activity.
As a result, FFO earnings were down 4.3% from the prior interim period to 5.13 cents per share, whilst
AFFO earnings of 4.64 cents per share were in line with the prior interim period (4.71 cents per share).
That being the case, the PFI Board today resolved to pay a second quarter interim cash dividend of 1.80
cents per share. The dividend will have imputation credits of 0.58 cents per share attached and a
supplementary dividend of 0.26 cents per share will be paid to non-resident shareholders. The record
date for the dividend is 29 August 2022, and the payment date is 7 September 2022. The dividend
reinvestment scheme will not operate for this dividend.
The second quarter dividend will take cash dividends for the interim period to 3.60 cents per share, in
line with 2021 dividends, resulting in an FFO dividend pay-out ratio of 79% (2021: 74%) and an AFFO
dividend pay-out ratio of 87% (2021: 84%, refer Appendix 2).
Positive results for the year to date and market conditions that are delivering strong rental growth now
mean that the PFI Board expects to declare cash dividends of 8.10 cents per share for the 2022 financial
year, at the upper end of the initial guidance range of 8.05 to 8.10 cents per share. Dividends of 8.10
cents per share would represent an increase of 2.5% on 2021 dividends.
PFI’s dividend policy to distribute between 90% to 100% of AFFO on a rolling three-year historic average
basis, and cash dividends of 8.10 cents per share are anticipated to result in a dividend pay-out at the
bottom of this dividend policy range. This guidance is subject to there being no material adverse changes
in conditions or unforeseen events, including no material tenant failures.
Portfolio delivering strong rental growth
Portfolio snapshot as at 30 June 2022 31 December 2021
Book value $2,192.7m $2,168.9m
Number of properties 97 97
Number of tenants 135 136
Contract rent $97.2m $95.6m
Occupancy 100.0% 100.0%
Weighted average lease term 5.32 years 5.40 years
Auckland property 82.3% 81.8%
Industrial property 98.2% 98.2%
PFI’s portfolio delivered strong levels of rental growth over the first half of the year.
Rent reviews were completed on 61 leases during the first half of the year, resulting in an average annual
uplift of 4.8% on ~$28.7 million of contract rent. CBRE predict
3
industrial rental growth over the next five
--------
2
All figures are gross and are unadjusted for capitalised expenditure, interest, lease incentives, fees and fixed rental
adjustments.
3
CBRE “Auckland Property Market Outlook”, July 2022.
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years to average 5.0% per annum for prime properties and 5.1% per annum for secondary properties,
up from 3.9% and 5.1% in their December 2021 forecasts.
Around 67,000 square metres or 9.6% of PFI’s portfolio by rent was leased during the interim period to
19 new and existing tenants for an average increase in term of 5.4 years. Four new leases and 15
renewals were secured, and across these leasing transactions average leasing costs of 0.2 months per
year of term were negotiated. A positive re-leasing spread of around 16% on annual passing rents was
achieved, representing an 8.2% increase on December 2021 market rents.
Combined, over 39% of contract rent was reviewed, varied, or leased during the first half 2022.
At the end of the interim period the Company’s portfolio was fully occupied, and just 3.9% of contract
rent is due to expire in the second half of 2022, with all remaining 2022 expiries either secured, or in
advanced stages of negotiation, since the end of the interim period. The leasing market for industrial
property remains very strong, with vacancy still at historically low levels. CBRE reports
4
that Auckland
industrial vacancy is just 0.5% for prime properties and 0.6% for secondary properties.
Resilient industrial portfolio of scale
11 properties were revalued at the end of the interim period, resulting in fair value gains on those
properties of $18.9 million or an average increase of 9.8%. When combined with the revaluation changes
for 39 Edmundson Street and 330 Devon Street East as a result of transferring these properties to non-
current assets classified as held for sale, the unrealised net increase in the value of investment
properties for the six months ended 30 June 2022 was $19.5 million.
As a result of portfolio and valuation activity, PFI’s passing yield was largely unchanged at 4.44% and
the portfolio’s value is now $2.19 billion.
Net tangible assets (NTA) per share increased by 6.2 cents per share from 303.4 cents per share as at
the end of 2021 to 309.6 cents per share as at the end of the interim period.
Proactive capital management:
“The first half of the year has been a busy period.” says Chief Finance and Operating Officer, Craig
Peirce. “We’ve proactively managed our capital by launching a share buyback programme, extending
our Bank of New Zealand loan facility, and entering into a new USPP facility.”
With the Company’s shares trading at a 21% discount to NTA at the time, PFI announced that it would
undertake an on-market share buyback programme (the Buyback Programme) on 25 May 2022. To the
end of June 2022, 724,527 shares or approximately 2.9% of the shares able to be purchased under the
programme have been purchased, at an average price of $2.4114 per share.
The Buyback Programme has been paused from 1 July 2022, as PFI has entered a blackout period
under its Financial Products Trading Policy in relation to its 2022 interim results, and will recommence
tomorrow on 23 August 2022, being the day following this interim results announcement. PFI will
however continue to assess market conditions, its prevailing share price, available investment
opportunities and all other relevant considerations, and reserves the right to further suspend or terminate
the Buyback Programme at any time.
PFI also refinanced its $100 million loan facility from the Bank of New Zealand during the interim period,
extending the facility expiry date by one year from 2 July 2023 to 2 July 2024. The weighted average
term to expiry of PFI’s bonds and bank facilities is 3.5 years and the Company has over $120 million of
available bank liquidity as at the end of the interim period. Gearing as at 30 June 2022 was 27.6%
(covenant: 50%) and the interest cover ratio was 3.9 times (covenant: 2 times) for the year then ended.
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Interest rate hedging provides for an average of ~65% of the Company’s debt to be hedged at an
average fixed rate of ~2.49% for the remainder of 2022, offering protection from rising interest rates.
Post balance date, a USPP facility was established with Pricoa Capital Group (Pricoa), part of Prudential
Financial, Inc. (Prudential). Prudential is one of the largest U.S. insurance companies with a 140-year
history and ~US$1.1 trillion of assets under management. Establishing this facility with Pricoa provides
PFI with access to long-term funding, which the Company may use to finance investment opportunities,
including upcoming brownfield opportunities.
Brownfield opportunities progressed
PFI’s strategy has four key areas of focus: core generic assets, brownfield opportunities, specialised
assets and assets held for sale.
An increasing focus for the PFI team has been the redevelopment of existing holdings, referred to as
brownfield opportunities. The Company has around $219 million or 10% of the portfolio held in such
opportunities, providing a growing pipeline of medium-term redevelopment projects. In March 2022, the
$6.825 million purchase of 318 Neilson Street in Penrose was completed, adding to this stable of assets
and providing the opportunity to enable ‘drive-round’ access to the neighbouring PFI properties at 304
and 306 Neilson Street, improving leasing appeal on redevelopment.
Following the completion of a 3,400 square metre industrial property on surplus land at 47A Dalgety
Drive, in Wiri, the PFI team’s attention has shifted to the Company’s Bowden Road site in Mount
Wellington, where significant leasing progress has been made. At this 3.9-hectare property in one of
Auckland’s prime industrial locations, ~40% of the development has been pre-leased to Tokyo Food for
a lease term of 12-years from an estimated practical completion date of June 2024. The Company
currently plans to develop the remainder of the site without tenant commitment, and the project has an
estimated total cost of up to $75 million, with a targeted yield on cost including land in excess of 5%.
The project will target a Five Green Star rating, creating PFI’s first fully Green Star rated industrial estate.
78 Springs Road in East Tamaki provides the opportunity for the next significant brownfield project.
Multiple warehouse redevelopment and refurbishment options are available on this versatile, heavy
industrial zoned, 10.4-hectare site in East Tamaki site that can accommodate large-scale facilities. An
October 2024 lease expiry provides PFI the opportunity to invest ~$150 million, split across multiple
stages, and PFI will target Five Green Star ratings on all new buildings.
The first half of the year has also seen the divestment of several smaller PFI properties: the divestment
of 39 Edmundson Street in Napier settled on 8 July 2022, the divestment of 330 Devon Street East in
New Plymouth settles on 25 August 2022 and Shed 22 in Wellington is being marketed for sale. After
these planned divestments, PFI will have completed the transition to a pure-play industrial portfolio.
Closing
“Our proactive capital management is providing us with the balance sheet to execute on a growing
portfolio of brownfield opportunities.” observes PFI Chairman, Anthony Beverley. “At the same time, PFI
has delivered a stable operating result, with the Company’s resilient industrial $2.2 billion portfolio
delivering strong rental growth and growing dividends. Looking forward, we believe that PFI is well
placed to respond to challenges, but just as importantly, the Company is ready to take advantage of
opportunities that will no doubt present themselves.”
ENDS
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ABOUT PFI & CONTACT
PFI is an NZX listed property vehicle specialising in industrial property. PFI’s nationwide portfolio of 97 properties is leased to
135 tenants.
For further information please contact:
SIMON WOODHAMS
Chief Executive Officer
----
Phone: +64 21 749 770
Email: woodhams@pfi.co.nz
CRAIG PEIRCE
Chief Finance and Operating Officer
----
Phone: +64 21 248 6301
Email: peirce@pfi.co.nz
----
Property for Industry Limited
Shed 24, Prince’s Wharf, 147 Quay Street, Auckland 1010
PO Box 1147, Shortland Street, Auckland 1140
www.propertyforindustry.co.nz
Attachments
NZX Form – Results Announcement
NZX Form – Distribution Notice
Interim Results Presentation
Interim Financial Statements
Appendices
Appendix 1 – FFO and AFFO Calculations
Funds / Adjusted Funds From Operations For the six
months ended
For the six
months ended
(unaudited, $000, unless noted) 30 June 2022 30 June 2021
Profit and total comprehensive income after income
tax attributable to the shareholders of the Company
23,778 273,542
Adjusted for:
Fair value loss / (gain) on investment properties and AHFS (19,451) (248,196)
Material damage insurance income - (540)
Loss on disposal of investment properties and AHFS 131 4
Fair value (gain) / loss on derivative financial instruments (14,293) (4,912)
Amortisation of tenant incentives 1,441 1,626
Straight lining of fixed rental increases (681) (826)
Deferred taxation 5,934 6,210
Goodwill impairment 29,086
Other (1) (1)
Funds From Operations (FFO) 25,944 26,907
FFO per share (cents) 5.13 5.36
Maintenance capex (1,051) (1,432)
Incentives and leasing fees given for the period (1,556) (2,082)
Other (incl. reversal of accounting entries for COVID-19 abatement
and deferral deals)
129 261
Adjusted Funds From Operations (AFFO) 23,466 23,654
AFFO per share (cents) 4.64 4.71
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Appendix 2 – FFO and AFFO Dividend Pay-out Ratios
2022 2021
Full year dividends per share
(cents, 2022 = guidance, 2021 = actuals)
8.10 7.90
Pro-rata share of full year dividends per share
(cents, 2022 = 50% of guidance, 2021 = 50% of actuals)
4.05
3.95
FFO dividend pay-out ratio (%) 79% 74%
AFFO dividend pay-out ratio (%) 87% 84%
---
Results announcement
(for Equity Security issuer/Equity and Debt Security
issuer)
Updated as at 17 October 2019
Results for announcement to the market
Name of issuer Property for Industry Limited (PFI)
Reporting Period 6 months to 30 June 2022
Previous Reporting Period 6 months to 30 June 2021
Currency NZD
Amount (000s) Percentage change
Revenue from continuing
operations
$88,428 -71%
Total Revenue $88,428 -71%
Net profit/(loss) from
continuing operations
$23,780 -91%
Total net profit/(loss) $23,780 -91%
Final Dividend
Amount per Quoted Equity
Security
$0.01800000
Imputed amount per Quoted
Equity Security
$0.00579321
Record Date 29 August 2022
Dividend Payment Date 7 September 2022
Current period Prior comparable period
Net tangible assets per
Quoted Equity Security
$3.096 $2.714
A brief explanation of any of
the figures above necessary
to enable the figures to be
understood
This dividend is fully credited with imputation credits to the
extent permitted by the imputation credit rules and to the extent
that the directors of PFI determine were available.
This announcement is extracted from PFI’s unaudited interim
financial statements as at and for the six months ended 30 June
2022. A copy of these unaudited interim financial statements is
attached to this announcement.
Authority for this announcement
Name of person
authorised
to make this announcement
Craig Peirce
Contact person for this
announcement
Craig Peirce
Contact phone number +64 21 248 6301
Contact email address peirce@pfi.co.nz
Date of release through MAP
22 August 2022
Unaudited interim financial statements accompany this announcement.
---
Distribution Notice
Updated as at 18 December 2019
Section 1: Issuer information
Name of issuer Property for Industry Limited
Financial product name/description Property for Industry Limited Shares
NZX ticker code PFI
ISIN (If unknown, check on NZX
website)
NZPFIE0001S5
Type of distribution
(Please mark with an X in the
relevant box/es)
Full Year Quarterly
Half Year X Special
DRP applies
Record date 29 August 2022
Ex-Date (one business day before the
Record Date)
26 August 2022
Payment date (and allotment date for
DRP)
7 September 2022
Total monies associated with the
distribution
$9,087,853
Source of distribution (for example,
retained earnings)
Retained earnings
Currency NZD
Section 2: Distribution amounts per financial product
Gross distribution $0.02379321
Gross taxable amount $0.02069003
Total cash distribution $0.01800000
Excluded amount (applicable to listed
PIEs)
$0.00310318
Supplementary distribution amount $0.00262885
Section 3: Imputation credits and Resident Withholding Tax
Is the distribution imputed Fully imputed X
Partial imputation
No imputation
If fully or partially imputed, please
state imputation rate as % applied
28%
Imputation tax credits per financial
product
$0.00579321
Resident Withholding Tax per
financial product
N/A
Section 4: Distribution re-investment plan (if applicable)
DRP % discount (if any)
N/A
Start date and end date for
determining market price for DRP
Date strike price to be announced (if
not available at this time)
Specify source of financial products to
be issued under DRP programme
(new issue or to be bought on market)
DRP strike price per financial product
Last date to submit a participation
notice for this distribution in
accordance with DRP participation
terms
Section 5: Authority for this announcement
Name of person
authorised to make
this announcement
Craig Peirce
Contact person for this
announcement
Craig Peirce
Contact phone number +64 21 248 6301
Contact email address peirce@pfi.co.nz
Date of release through MAP
22 August 2022
---
BROWNFIELD OPPORTUNITIES PROGRESSED:
47ADalgetyDrivecomplete,significantleasingprogressmadeat
30-32BowdenRoad,$219millionor10%oftheportfolioheldin
brownfieldopportunities
PROACTIVE CAPITAL MANAGEMENT:
725,000sharesacquiredthroughsharebuybackprogramme,$100
millionBNZfacilityrefinanced,USPPfacilityestablishedpost
balancedate,$122millionofavailablebankliquidity,gearing
comfortableat27.6%
PORTFOLIO DELIVERING STRONG RENTAL GROWTH:
$28.7millionofcontractrentreviewedduringH12022deliveringan
averageannualisedupliftof4.8%,9.6%ofcontractrentleased
duringH12022atanaverageof15.6%abovepreviouscontract
rents,3.9%ofcontractrentduetoexpireinH22022
Highlights
Interim
Results
Briefing
2022
STABLE OPERATING RESULT:
RESILIENT INDUSTRIAL PORTFOLIO OF SCALE:
Portfoliovalueof$2.19billion,11propertiesrevaluedatthehalf-
year,fairvaluegainsonpropertiesof$19.5million,nettangible
assetsconfirmedat309.6centspershare
Interimprofitaftertaxof$23.8million,FundsFromOperations(FFO)
earningsdown4.3%fromthepriorinterimperiodto5.13centspershare,
AdjustedFundsFromOperations(AFFO)earningsinlinewiththeprior
interimperiodat4.64centspershare,interimcashdividendsof3.60cents
pershare
4
47A DALGETY DRIVE, WIRI
1
2
4
4
78
1
1
3
3
JUNE 2022DECEMBER 2021
BOOK VALUE
$2,192.7m$2,168.9m
NUMBER OF PROPERTIES
9797
NUMBER OF TENANTS
135136
CONTRACT RENT
$97.2m$95.6m
OCCUPANCY
100.0%100.0%
WEIGHTED AVERAGE LEASE TERM
5.32 years5.40 years
AUCKLAND PROPERTY
82.3%81.8%
INDUSTRIAL PROPERTY
98.2%98.2%
Portfolio
Snapshot
▪PFI's portfolio is diversified across 97 properties
and 135 tenants, with 100.0% occupancy and a
weighted average lease term of 5.32 years,
weighted towards Auckland industrial property
6
Interim
Results
Briefing
2022
Interim
Results
Briefing
2022
Valuations
▲
▲
▲c
1
For those 11 properties.
2
CBRE “Auckland Rent & Yield Update”, June 2022
7
GAINS
on assets
held for sale
39 Edmundson Street and 330 Devon Street East
▲
▲
LeasingInterim
Results
Briefing
2022
8
0.0%
3.9%
10.5%
18.2%
9.9%
3.9%
11.5%
12.3%
3.8%
3.5%
22.5%
0%
5%
10%
15%
20%
25%
Vacant202220232024202520262027202820292030Onwards
Total ExpiriesBrownfield Opportunities
H2 2022
Lease
Expiries
Interim
Results
Briefing
2022
▪Portfolio is 100.0% occupied (0.0% vacancy) and 3.9% of contract rent
is due to expire in H2 2022 (graph below), largest single expiry 46.8% of
that (1.8% of contract rent, chart on right)
▪Leasing demand remains robust, all remaining H2 2022 expiries either
secured, or in advanced stages of negotiation, since the end of the
interim period
▪Excluding brownfield opportunities, FY23 and FY24 expiries are 7.1%
and 10.3%, respectively (bottom graph), in line with prior periods
▪Vacancy still at historically low levels: CBRE reports
1
Auckland Prime
industrial vacancy at 0.5%, Secondary industrial vacancy at 0.6%
9
1
CBRE “Auckland Property Market Outlook” June 2022, 39 Edmundson street has been sold (settled 8 Jul 2022) and is excluded from any expiries analysis
Fixed28.2%
CPI4.2%
Expiries3.9%
Market4.6%
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
H2 2022
CBRE five year average rental growth
estimates
1
for Auckland:
▲
▲
▲
▲
H2 2022
Lease
Expiries
Interim
Results
Briefing
2022
1
CBRE “Auckland Property Market Outlook” June 2022
10
47.6
+1.3
+0.6
+0.2
+0.1
-0.3
-0.3
45.9
$45m
$45m
$46m
$46m
$47m
$47m
$48m
$48m
$49m
H1 2021 net rental
income
Rent reviews &
adjustments
New leases &
renewals
Acquisitions &
disposals
DevelopmentsOtherCOVID-19 supportH1 2022 net rental
income
Net Rental
Income
▪Net rental income of $47.6
million up $1.6 million or 3.6%
on the prior interim period of
$45.9 million
▪Positive leasing activity
contributed to an increase
totalling +$1.9 million
▪Net impact of acquisition and
disposal activity resulted in an
increase of +$0.2 million
▪Decreases due to other
-$0.3 million and COVID-19
support -$0.3 million
12
Interim
Results
Briefing
2022
+0.42
+0.08
+0.04
-0.03
-0.39
-0.17
-0.02
4.71
4.64
4.3
4.4
4.5
4.6
4.7
4.8
4.9
5.0
5.1
5.2
5.3
H1 2021 AFFORebase for
shares issued
Net rental
income
Maintenance
capex
Current taxationInterest expense
and bank fees
Administrative
expenses /
Other
Non-recoverable
property costs
H1 2022 AFFO
Adjusted
Funds From
Operations
(cents per share)
▪Profit after tax of $23.8 million
▪AFFO earnings of 4.64 cents
per share, 0.07 cents per share
(cps) or 1.5% less than the
prior interim period
▪Net rental income (including
AFFO adjustments) up $2.2
million or 0.42 cps on the prior
interim period
▪Interest expense and bank
fees up $2.0 million on the
prior interim period
▪Admin expenses increased
due to impact of new hires but
remained constant as a % of
average property values
▪Maintenance capex down $0.4
million on the prior year to 10
basis points
13
Interim
Results
Briefing
2022
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
6.50
6.70
6.90
7.10
7.30
7.50
7.70
7.90
8.10
8.30
FY17FY18FY19FY20FY21FY22
DPS (cps) - ActualDPS (cps) - GuidanceDividend Growth (p.a - rhs)
Earnings,
Dividends,
Guidance
▪H1 2022 cash dividends total 3.60 cents per
share (cps), in line with H1 2021
▪2022 dividend guidance now 8.10 cps, at top
of initial guidance range of guidance of 8.05 to
8.10 cps, growth of 2.5% on 2021 dividends
▪Dividend policy to distribute between 90% to
100% of AFFO on a rolling three-year historic
average basis
▪Cash dividends of 8.10 cents per share are
anticipated to result in a dividend pay-out at
the bottom of this dividend policy range
▪Guidance subject to no material adverse
changes in conditions or unforeseen events,
including no material tenant failures
EARNINGSH1 2022 CPSH1 2021 CPSCHANGE
FUNDS FROM OPERATIONS
5.135.36-0.23 CPS or -4.3%
ADJUSTED FUNDS FROM OPERATIONS
4.644.71-0.07 CPS or -1.4%
14
Interim
Results
Briefing
2022
1
PFI first began disclosing AFFO in 2016, therefore part of the rolling 3-year pay-out ratio for FY17 uses Distributable Profit
2,192.7
+19.5
+6.8
+5.8
+1.3
-9.7
2,168.9
$2,150m
$2,160m
$2,170m
$2,180m
$2,190m
$2,200m
$2,210m
December 2021
investment
properties & AHFS
Fair value gainAdditionsCapitalised
expenditure &
interest
Movement in lease
incentives, fees and
fixed rental income
DisposalsJune 2022
investment
properties & AHFS
Investment
Properties
▪Portfolio value of $2.193 billion,
including properties classified as
held for sale (AHFS)
▪Full valuations of 11 properties
resulted in uplift of $18.9 million
or 9.8%, AHFS reclassifications
contributed a further $0.6 million
▪318 Neilson Street, Penrose,
acquired in March 2022 for $6.8
million
▪Capex at Shed 22 (seismic
strengthening works), 59 and
47A Dalgety Drive
(redevelopment and
development) and 3-5 Niall
Burgess Road (sustainable
refurbishment)
▪48 Seaview Road, Wellington,
disposal settled February 2022
15
Interim
Results
Briefing
2022
303.4
309.6
+0.4
+3.9
+2.8
-0.4
-0.5
300
302
304
306
308
310
312
December 2021 NTARebase for shares
purchased
Movement in share
capital
Fair value gain on
investment properties
Fair value gain on
derivative financial
instruments
Retained earningsJune 2022 NTA
▪Net tangible assets (NTA) per
share increased by 6.2 cents
per share (cps) or 2.0%
▪Change in NTA per share driven
by the increase in the fair value
of investment properties (+3.9
cps), an increase in the net fair
value asset for derivative
financial instruments (+2.8 cps)
and retained earnings (-0.5 cps)
▪Share buyback programme
accretive to NTA, shares
purchased at an average cost of
$2.41 per share, compared to
NTA as at 30 June 2022 of
$3.10
16
Interim
Results
Briefing
2022
Net Tangible
Assets
(cents per share)
▪Goodwill of $29.086 million arose on the merger
with Direct Property Fund (DPF) in July 2013 and
represented the excess of the consideration over
the fair value of the assets acquired
▪Goodwill is tested for impairment by comparing the
Company’s net assets to its market capitalisation
(using a 1-day volume-weighted average share
price as at 30 June 2022 ($2.44)), adjusted for a
control premium (15.2%) and costs of disposal
▪Based on this test, and after cross checking with a
“value in use” test, it was determined that goodwill
was impaired, and the full amount has been written
off during the period
▪Notwithstanding this, the merger has been very
successful transaction for PFI, with a growth in
rents of 35% and values of 124% for those
properties still owned by PFI, and gains on sale for
those properties divested of 18%
1
17
1
All figures are gross and are unadjusted for capitalised expenditure, interest, lease incentives, fees and fixed rental adjustments
Goodwill Interim
Results
Briefing
2022
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
Share Price ($), NTA ($)
P/NTA (%)
Buyback PeriodP/NTA (%)Share Price ($)NTA per share ($)
Share
Buyback
Programme
▪On-market share buyback programme of up
to 5% of ordinary shares, announced on 25
May 2022
▪At the time of announcement, PFI shares
were trading at a 21% discount to NTA
▪PFI acquired and subsequently cancelled
0.7 million shares at an average cost of
$2.41 per share, compared to share price as
at 30 June 2022 of $2.44 and net tangible
assets per share as at 30 June 2022 of
$3.10
▪Buyback programme paused on 30 June
2022 as PFI entered Interim Results
blackout period
▪Share buyback programme to recommence
from 23 August 2022
19
Interim
Results
Briefing
2022
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
50
100
150
200
250
300
350
400
450
500
31-May-228-Jun-2215-Jun-2222-Jun-2230-Jun-22
% of On Market Volume
Acquired (%)
On Market Volume (000s)
On Market Volume (lhs)% of On Market Volume Acquired (rhs)
1.80
2.00
2.20
2.40
2.60
2.80
3.00
3.20
60%
70%
80%
90%
100%
110%
120%
130%
140%
150%
160%
Jun-21Sep-21Dec-21Mar-22Jun-22
Share Price ($), NTA ($)
P/NTA (%)
Funding,
Covenants,
Interest Rates
▪$100 million BNZ facility extended in June
2022
▪Post balance date, USPP facility established
with Pricoa, providing access to long-term
funding
▪High levels of liquidity from a diverse range
of sources, coupled with low gearing,
provide PFI with funding flexibility to execute
on strategy, including upcoming brownfield
development opportunities
JUNE 2022DECEMBER 2021
FUNDING
BANK FACILITIES DRAWN
$402.7m$401.2m
BANK FACILITIES LIMIT
$525.0m$525.0m
BANK FACILITIES HEADROOM
$122.3m$123.8m
FIXED RATE BONDS
$200.0m$200.0m
FUNDING TERM (AVERAGE)
3.5 years3.9 years
BANKS
ANZ, BNZ, CBA,
Westpac
ANZ, BNZ, CBA,
Westpac
COVENANTS
LOAN-TO-VALUE RATIO (COVENANT: <50%)
27.6%27.7%
INTEREST COVER RATIO (COVENANT: >2.0X)
3.9 times4.4 times
INTEREST RATES
WEIGHTEDAVERAGE COST OF DEBT
4.07%3.81%
INTERESTRATE HEDGING (EXCL. FORWARD
STARTING)
$400m/ 2.58% / 3.4 years$400m/ 2.58% / 3.7 years
FORWARD STARTING INTEREST RATE
$100m / 2.59% / 4.1 years$120m / 2.69% / 4.1 years
20
Interim
Results
Briefing
2022
1.5%
1.9%
2.3%
2.7%
$0m
$50m
$100m
$150m
$200m
$250m
$300m
$350m
$400m
$450m
Jun-22Dec-22Jun-23Dec-23Jun-24Dec-24Jun-25Dec-25Jun-26Dec-26Jun-27Dec-27
Cover (lhs)Interest Rate (rhs)
100.0100.0
100.0
150.0
150.0
125.0
$m
$50m
$100m
$150m
$200m
$250m
$300m
FY22FY23FY24FY25FY26FY27FY28
BondsBNZ facilitySyndicated facilitiesCBA facility
Debt Facility
Maturity Profile,
Hedging
▪Average term to expiry of bank
facilities and bonds (top graph)
of ~3.5 years, $122.3 million of
unutilised bank facility capacity
▪Fixed rate payer hedging profile
(bottom graph) provides for an
average of ~65% of debt to be
hedged at an average fixed rate
of ~2.49% for the remainder of
2022, offering protection from
rising interest rates
21
Interim
Results
Briefing
2022
Interim
Results
Briefing
2019
Interim
Results
Briefing
2022
Environmental,
Social and
Governance
(ESG)
23
▪Replaced HVAC systems containing ozone-depleting gases at 16 properties.
▪Committed to a 5 Green Star certification target for our upcoming development at
30-32 Bowden Road.
▪Began applying PFI’s Sustainable Refurbishment Framework.
▪Held staff volunteering days at MotuiheIsland and Auckland City Mission.
▪Delivered ongoing health and safety continuous improvements, including an 82% reduction in
high-risk landlord hazards at PFI properties.
▪Undertaking a refresh of our ESG strategy.
▪Replacing further HVAC systems containing ozone-depleting gases.
▪Commencing PFI’s first solar panel installation.
▪Undertaking ongoing seismic strengthening works.
▪Completing a review of PFI’s Corporate Governance Manual.
▪Moving PFI’s corporate office to a Green Star certified building.
Taking care of
our team
Looking after our
tenants
Responsible
property ownership
Delivering for our
investors
Interim
Results
Briefing
2022
Environmental,
Social and
Governance
(ESG)
Bringing us closer to the operational performance of our buildings
Playing a more active role in energy and water efficiency
Workingwith tenants on sustainability initiatives
Embedding sustainabilityin our facilities management services
24
▪Carolyn Steele has joined the PFI Board as an
Independent Director and a member of the Audit and Risk
Committee
▪Carolyn is currently the Chair of Halberg Foundation and
a director of WEL Networks, Green Cross Health, and
Vulcan Steel, and an investment committee member at
Oriens Capital
▪Carolyn has a background in investment management,
capital markets and mergers and acquisitions
▪Susan Peterson has advised the Company that she will
retire from the PFI Board in December 2022
25
Interim
Results
Briefing
2022
Environmental,
Social and
Governance
(ESG)
0%
2%
4%
6%
8%
10%
12%
14%
16%
20222023202420252026
CBRE - Primary Industrial ForecastCBRE - Secondary Industrial Forecast
Market Update
▪Auckland industrial vacancy remains at all time lows
▪These favourable supply/demand conditions provide
a platform for forecast rental growth, potentially
helping offset any interest rate driven softening in
yields
▪In the context of PFI, we are seeing these dynamics
play out, with capital values holding broadly flat and
supporting NTA per share as at 30 June 2022 of
$3.10
▪Latest market forecasts assume further OCR hikes
in the short term
▪Interest rate outlook indicates the burden of cap rate
pressures from rising interest rates set to ease
during 2023
▪Looking forward, PFI’s defensive portfolio is well
placed to capture further rental growth (market and
CPI) which, combined with the weight of capital
continuing to target quality industrial properties, is
supporting the outlook for values
CBREAUCKLAND MARKET OUTLOOK
1
JUNE 2022
5-YEAR
FORECAST:
JUNE 2022
5-YEAR
FORECAST:
DECEMBER 2021
PRIME INDUSTRIAL –VACANCY0.5%0.6%▼1.0%
–RENTS$171+5.0% (p.a.)▲+3.9%
–YIELDS4.38%4.33%▲4.06%
SECONDARY INDUSTRIAL –VACANCY0.6%0.6%▼1.3%
–RENTS$134+5.1% (p.a.)▲+3.7%
–YIELDS5.40%5.33%▲5.01%
27
Interim
Results
Briefing
2022
1
CBRE “Auckland Property Market Outlook” and “Auckland Rent & Yield Update” June 2022
29
Our Portfolio
(Target & Current)
Interim
Results
Briefing
2022
Brownfield
Opportunities
Interim
Results
Briefing
2022
▪~$219 million or 10% of the portfolio held in
brownfield opportunities, providing a growing
pipeline of medium-term development
opportunities
▪318 Neilson Street (purchased in March 2022
for $6.825 million) provides the opportunity to
enable ‘drive-round’ access to 304 and 306
Neilson Street, improving leasing appeal on
redevelopment
▪Significant progress made at 30-32 Bowden
Road and 78 Springs Road (see next slides)
▪Remaining brownfield opportunities set to
unlock parcels of land in key industrial
precincts, providing PFI with the opportunity to
deploy balance sheet capacity on accretive
projects
PROPERTYJUNE 2022
VALUE
LETTABLE
AREA(SQM)
SITE
COVERAGE
% OF
CONTRACT
RENT
LEASE
EXPIRY
30-32 BOWDEN ROAD$32.5m
17,047
44%1.9%31-Mar-23
92-98 HARRIS ROAD$23.8m
7,194
27%1.5%3-Nov-23
170 SWANSON ROAD$33.5m
5,183
12%1.2%31-Jan-24
78 SPRINGS ROAD$102.5m
41,536
40%6.7%8-Oct-24
304 NEILSON STREET$19.5m
4,538
22%0.8%30-Jun-27
318 NEILSON STREET$7.2m
59012%0.2%30-Jun-27
TOTAL$219m
76,089
12.2%
30
Brownfield
Opportunities
Interim
Results
Briefing
2022
32
30-32 BOWDEN ROAD, MTWELLINGTON
▪Large 3.9ha site in one of Auckland’s prime
industrial locations
▪~40% of development (inside the red lines) pre-
leased to Tokyo Food, for a lease term of 12-years
from June 2024, remainder of site to be developed
on a speculative basis
▪Estimated total project cost of up to $75 million,
targeting a yield on cost including land in excess of
5%
▪Project will target a Five Green Star rating, creating
PFI’s first fully Green Star rated industrial estate
Brownfield
Opportunities
Interim
Results
Briefing
2022
34
78 SPRINGS ROAD, EAST TAMAKI
▪Significant 10.4-hectare site in East Tamaki
▪Multiplewarehouse redevelopment and
refurbishment options on a versatile heavy
industrial zoned site that can accommodate large-
scale facilities
▪October 2024 lease expiry provides PFI with a
significant brownfields opportunity, which could
involve an investment of ~$150 million split across
multiple stages
▪PFI will target Five Green Star ratings on all new
buildings
▪39 Edmundson Street (Napier) settled 8 July
2022
▪330 Devon Street East (New Plymouth) sold,
settles 25 August 2022
▪Shed 22 (Wellington) seismic strengthening works
complete, is being marketed for sale
▪After planned divestments:
−Pro forma LVR of 26.8%;
−83.2% of portfolio will be located in
Auckland;
−PFI will have completed the transition to a
pure-play industrial portfolio
Assets Held
For Sale
Interim
Results
Briefing
2022
35
JUNE 2022
39
EDMUNDSON
DIVESTMENT
330 DEVON
DIVESTMENT
SHED 22
DIVESTMENT
PRO FORMA
INVESTMENT PROPERTIES &
AHFS
$2,187.6m-$5.3m▼-$2.3m▼-$14.7m▼$2,165.3m
TOTAL DRAWN
BORROWINGS
$602.7m-$5.3m▼-$2.3m▼-$14.7m▼$580.4m
CONTRACT RENT$97.2m-$0.2m▼-$0.1m▼-$0.9m▼$96.0m
LOAN-TO-VALUE RATIO 27.6%-0.2%▼-0.1%▼-0.5%▼26.8%
AUCKLAND PROPERTY82.3%+0.2%▼+0.1%▲+0.6%▲83.2%
INDUSTRIAL PROPERTY98.2%NC◄►+0.1%▲+0.7%▲99.0%
Review &
Questions
Questions?
37
CLOSING:
▪“Our proactive capital management is
providing us with the balance sheet to
execute on a growing portfolio of brownfield
opportunities. At the same time, PFI has
delivered a stable operating result, with the
Company’s resilient industrial $2.2 billion
portfolio delivering strong rental growth.
Looking forward, we believe that PFI is well
placed to respond to challenges, but just as
importantly, the Company is ready to take
advantage of opportunities that will no
doubt present themselves.”
HIGHLIGHTS:
▪Stable operating result
▪Portfolio delivering strong rental growth
▪Resilient industrial portfolio of scale
▪Proactive capital management
▪Brownfield opportunities progressed
Interim
Results
Briefing
2022
Disclaimer
The information included in this presentation is provided as at 22 August 2022 and should be read in conjunction with the NZXresults
announcement, NZX Form –Results Announcement and NZX Form –Distribution Notice issued on that same day.
Property for Industry Limited (PFI) does not guarantee the repayment of capital or the performance referred to in this presentation.
Past performance is not a reliable indicator of future performance.
The presentation includes a number of forward looking statements. Forward looking statements, by their nature, involve inherent risks
and uncertainties. Many of those risks and uncertainties are matters which are beyond PFI’s control and could cause actual results to
differ from those predicted. Variations could either be materially positive or materially negative.
While every care has been taken in the preparation of this presentation, PFI makes no representation or warranty as to the accuracy or
completeness of any statement in it including, without limitation, any forecasts.
This presentation has been prepared for the purpose of providing general information, without taking account of any particular
investor’s objectives, financial situation or needs. An investor should, before making any investment decisions, consider the
appropriateness of the information in this presentation, and seek professional advice, having regard to the investor’s objectives,
financial situation and needs.
This presentation is solely for the use of the party to whom it is provided.
38
Interim
Results
Briefing
2022
---
Property
for
Industry
Limited
Interim
Financial
Statements
30 June
2022
STATEMENTS
FINANCIAL
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTHS ENDED 30 JUNE 2022
The accompanying notes form part of these interim financial statements.
UNAUDITEDUNAUDITED
ALL VALUES IN $000SNOTE
6 months ended
30 June 2022
6 months ended
30 June 2021
INCOME
Rental and management fee income2.354,68152,721
Interest income3–
Fair value gain on investment properties and non-current assets classified as held for sale2.1,2.219,451248,196
Fair value gain on derivative financial instruments3.214,2934,912
Business interruption insurance income2.6–93
Material damage insurance income2.6–540
Total income88,428306,462
EXPENSES
Property costs2.4(8,377)(7,976)
Interest expense and bank fees(11,134)(9,149)
Administrative expenses5.1(3,953)(3,357)
Loss on disposal of investment properties and non-current assets classified as held for sale(131)(4)
Goodwill impairment5.3(29,086)–
Total expenses(52,681)(20,486)
Profit before taxation35,747285,976
Income tax expense5.2(11,967)(12,434)
Profit and total comprehensive income after income tax attributable
to the shareholders of the Company4.123,780273,542
Basic earnings per share (cents)4.14.7054.46
Diluted earnings per share (cents)4.14.7054.45
2
PROPERTY FOR INDUSTRY LIMITED INTERIM FINANCIAL STATEMENTS — 2022
INTERIM FINANCIALS 2022
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2022
The accompanying notes form part of these interim financial statements.
Cents
per Share
(cents)
No. of
Shares
(#)
Ordinary
Shares
($000s)
Share-Based
Payments
Reserve
($000s)
Retained
Earnings
($000s)
Total
Equity
($000s)
Balance as at 1 January 2021 (audited)–501,302,888569,169615566,8291,136,613
Total comprehensive income––––273,542273,542
Dividends and reinvestment
Q4 2020 final dividend - 10/3/20212.25–––(11,281)(11,281)
Q4 2020 dividend reinvestment1,105,0733,087––3,087
Q1 2021 interim dividend - 24/5/20211.80–––(9,044)(9,044)
Q1 2021 dividend reinvestment986,1612,737––2,737
Long-term incentive plan84,685177(124)–53
Balance as at 30 June 2021 (unaudited)–503,478,807575,170491820,0461,395,707
Balance as at 1 January 2022 (audited)–505,493,668580,995751980,9161,562,662
Total comprehensive income––––23,78023,780
Dividends
Q4 2021 final dividend - 9/3/20222.45––– (12,388) (12,388)
Q1 2022 interim dividend - 24/5/20221.80––– (9,100) (9,100)
Share buyback 5.5(724,527)(1,763)––(1,763)
Long-term incentive plan111,564300(317)–(17)
Balance as at 30 June 2022 (unaudited)–504,880,705 579,532 434 983,208 1,563,174
3
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 30 JUNE 2022
The accompanying notes form part of these interim financial statements.
UNAUDITEDAUDITED
ALL VALUES IN $000SNOTE30 June 202231 December 2021
CURRENT ASSETS
Cash at bank1,0961,103
Accounts receivable, prepayments and other assets3,7145,842
Total current assets4,8106,945
NON-CURRENT ASSETS
Investment properties2.1 2,170,475 2,158,940
Property, plant and equipment 351 412
Derivative financial instruments3.2 27,586 11,623
Goodwill5.3–29,086
Total non-current assets 2,198,412 2,200,061
Non-current assets classified as held for sale2.2 22,225 10,000
Total assets 2,225,447 2,217,006
CURRENT LIABILITIES
Derivative financial instruments3.268710
Accounts payable, accruals and other liabilities2.712,33912,344
Taxation payable2,2343,557
Total current liabilities14,64116,611
NON-CURRENT LIABILITIES
Borrowings3.1 600,376 598,653
Derivative financial instruments3.2 6,921 4,608
Deferred tax liabilities5.2 40,335 34,419
Lease liabilities5.6–53
Total non-current liabilities 647,632 637,733
Total liabilities 662,273 654,344
Net assets4.2 1,563,174 1,562,662
EQUITY
Share capital 579,532 580,995
Share-based payments reserve 434 751
Retained earnings 983,208 980,916
Total equity 1,563,174 1,562,662
These interim financial statements are signed on behalf of Property for Industry Limited and were authorised for issue on 22 August 2022.
Anthony Beverley Susan Peterson
Chair, Board of Directors Chair, Audit and Risk Committee
4
PROPERTY FOR INDUSTRY LIMITED INTERIM FINANCIAL STATEMENTS — 2022
INTERIM FINANCIALS 2022
The accompanying notes form part of these interim financial statements.
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS ENDED 30 JUNE 2022
UNAUDITEDUNAUDITED
ALL VALUES IN $000SNOTE
6 months ended
30 June 2022
6 months ended
30 June 2021
CASH FLOWS FROM OPERATING ACTIVITIES
Property and management fee income received 57,708 61,806
Business interruption insurance income2.6– 103
Net goods and services tax paid (144) (489)
Interest received 3 –
Interest and other finance costs paid (10,566) (9,135)
Payments to suppliers and employees (13,399) (8,867)
Income tax paid (7,356) (3,398)
Net cash flows from operating activities 26,246 40,020
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of investment properties and non-current assets classified as held for sale 9,869 9,293
Acquisition of investment properties2.1 (6,843) (138,315)
Acquisition of property, plant and equipment (10) (20)
Expenditure on investment properties (7,137) (12,277)
Capitalisation of interest on development properties2.1 (248) (341)
Material damage insurance income2.6– 540
Net cash flows from investing activities (4,369) (141,120)
CASH FLOWS FROM FINANCING ACTIVITIES
Net proceeds from syndicated bank facility 1,423 90,523
Net proceeds from bilateral CBA bank facility– 25,000
Principal elements of finance lease payments (57) (56)
Dividends paid to shareholders net of reinvestments (21,488) (14,501)
Share buyback costs (1,763)–
Net cash flows from financing activities (21,885) 100,966
Net decrease in cash and cash equivalents (7) (134)
Cash and cash equivalents at beginning of period 1,103 1,414
Cash and cash equivalents at end of period 1,096 1,280
5
NOTES 2022
1. GENERAL INFORMATION7
1.1. Reporting entity7
1.2. Basis of preparation7
1.3. Critical judgements, estimates and assumptions7
1.4. Accounting policies7
1.5. Significant events and transactions7
2. PROPERTY9
2.1. Investment properties9
2.2. Non-current assets classified as held for sale10
2.3. Rental and management fee income10
2.4. Property costs10
2.5. Net rental income11
2.6. Insurance income11
2.7. Accounts payable, accruals and other liabilities11
3. FUNDING12
3.1. Borrowings12
3.2. Derivative financial instruments13
4. INVESTOR RETURNS AND INVESTMENT METRICS15
4.1. Earnings per share15
4.2. Net tangible assets per share15
5. OTHER16
5.1. Administrative expenses16
5.2. Taxation17
5.3. Goodwill18
5.4. Related party transactions19
5.5. Share Capital19
5.6. Leases20
5.7. Operating segments21
5.8. Capital commitments21
5.9. Subsequent events21
6
PROPERTY FOR INDUSTRY LIMITED INTERIM FINANCIAL STATEMENTS — 2022
NOTES TO THE INTERIM FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED 30 JUNE 2021
1. GENERAL INFORMATION
IN THIS SECTION
This section sets out the basis upon which the Group’s Interim Financial Statements are prepared.
1.1. Reporting entity
These unaudited consolidated interim financial statements (the interim financial statements) are for Property for Industry Limited (the Company) and its
subsidiary P.F.I. Property No. 1 Limited (PFI No. 1) (together, the Group). The Company is a limited liability company incorporated in New Zealand and is
registered under the New Zealand Companies Act 1993. The Company is a FMC reporting entity under Part 7 of the Financial Markets Conduct Act 2013
and the Financial Reporting Act 2013 and these interim financial statements have been prepared in accordance with the requirements of the NZX Listing
Rules. The Company is listed on the NZX Main Board (NZX: PFI).
The Group’s principal activity is property investment and management in New Zealand.
1.2. Basis of preparation
These interim financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP). They
comply with New Zealand Equivalent to International Accounting Standard 34 ‘Interim Financial Reporting’ (NZ IAS 34) and International Accounting
Standard 34 ‘Interim Financial Reporting’ (IAS 34).
These interim financial statements have been prepared on the historical cost basis except where otherwise identified. All financial information is
presented in New Zealand dollars and has been rounded to the nearest thousand.
These interim financial statements should be read in conjunction with the Annual Report for the year ended 31 December 2021 which may be
downloaded from the Company’s website (www.propertyforindustry.co.nz/investor-centre/reports-and-presentations).
1.3. Critical judgements, estimates and assumptions
In applying the Group’s accounting policies, the Board and Management regularly evaluate judgements, estimates and assumptions that may have an
impact on the Group. Aside from goodwill (refer note 5.3), the significant judgements, estimates and assumptions made in the preparation of these
interim financial statements were the same as those applied to the consolidated financial statements as at and for the year ended 31 December 2021.
1.4. Accounting policies
The accounting policies adopted are the same as those applied by the Group in its consolidated financial statements as at and for the year ended
31 December 2021.
1.5. Significant events and transactions
The financial position and performance of the Group was affected by the following events and transactions that occurred during the reporting period:
Investment property acquisitions and disposals
On 22 February 2022, the Group settled the disposal of a non-current asset classified as held for sale located at 48 Seaview Road, Wellington for
a gross sales price of $10.00 million.
On 7 March 2022, the Group settled the acquisition of the property located at 318 Neilson Street, Penrose, for a net purchase price of $6.83 million.
On 10 June 2022, the Group announced the divestment of 39 Edmundson Street, Napier for a gross sales price of $5.25 million. Settlement occurred
on 8 July 2022, and this property has been classified as non-current asset classified as held for sale in these interim financial statements.
Share buyback
On 25 May 2022, the Group announced that it would begin an on-market share buyback programme to purchase up to 5% of its ordinary shares (being
25,280,262 ordinary shares). Under the programme, the Group will only acquire shares on the NZX Main Board for a period of up to one year. The
acquired shares are cancelled upon acquisition. As at 30 June 2022, the Group had acquired and cancelled 724,527 shares for a cost of $1,762,552
(including transaction costs).
7
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
NOTES 2022
BNZ Facility
On 17 June 2022, the Group announced that it had refinanced its $100 million loan facility from the Bank of New Zealand (also known as Syndicated
Bank Facility C), extending the expiry date by one year from 2 July 2023 to 2 July 2024.
Impairment of goodwill
On 30 June 2022, the market value of PFI, based on the quoted market price, was below the value net assets of PFI. PFI assessed whether objective
evidence of impairment of goodwill exists, the outcome of which was that an impairment test has been performed. PFI has estimated the recoverable
amount by performing fair value less costs of disposal (FVLCOD) and value in use valuation approaches. PFI has estimated the recoverable amount of
the Property for Industry Limited CGU using FVLCOD (as the higher of the two valuation approaches), resulting in an impairment loss of $29.086 million
(2021: $NIL) against the carrying amount of goodwill (refer note 5.3).
The COVID-19 global pandemic
During the six months ended 30 June 2022, New Zealand has been subject to various restriction periods associated with the COVID-19 pandemic.
1. GENERAL INFORMATION (continued)
8
PROPERTY FOR INDUSTRY LIMITED INTERIM FINANCIAL STATEMENTS 2022
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
2. PROPERTY
IN THIS SECTION
This section shows the real estate assets used to generate the Group’s trading performance which are considered to be the most relevant to the
operations of the Group.
2.1. Investment properties
ALL VALUES IN $000S
UNAUDITEDAUDITED
6 months ended
30 June 2022
12 months ended
31 December 2021
Opening balance 2,158,940 1,524,785
Capital movements:
Additions 6,843 226,279
Disposals – –
Transfer to non-current assets classified as held for sale (22,225) (8,715)
Capital expenditure 5,844 20,114
Capitalised interest248 204
Movement in lease incentives, fees and fixed rental income 1,374 4,731
(7,916) 242,613
Unrealised fair value gain (i) 19,451 391,542
Closing balance 2,170,475 2,158,940
(i) Valuation
All investment properties were valued as at 31 December 2021 with the exception of 32 Honan Place, Avondale which was independently valued as at
22 October 2021 by Jones Lang LaSalle (JLL), 520 Rosebank Road, Avondale which was independently valued as at 26 October 2021 by Savills and
22 Whakatu Road, Hastings which was independently valued as at 28 October 2021 by Bayleys Valuation Limited (Bayleys), as part of the acquisitions.
The Board determined that a desktop review of the property portfolio should be undertaken by Bayleys, CB Richard Ellis (CBRE), Colliers International
(Colliers), JLL or Savills as at 30 June 2022 to ensure that investment properties continue to be held at fair value. In addition to this desktop review,
the following eleven investment properties were subject to independent valuations due to a change of plus or minus 5% of the market value assessed
in the asset valuation as at the prior year end, or the Board determining that a full valuation was appropriate due to other considerations, such as
significant capital expenditure or leasing activity undertaken during the period:
ALL VALUES IN $000SValuerValuation
314 Neilson Street, Onehunga JLL 24,500
Shed 22, 23 Cable Street, Wellington Central JLL 14,650
686 Rosebank Road, Avondale CBRE 66,700
12 Hugo Johnston Drive, Penrose CBRE 9,350
7 Vestey Drive, Mt Wellington JLL 19,000
50 Carbine Road, Mt Wellington Savills 6,000
7 Carmont Place, Mt Wellington CBRE 17,700
17 Allens Road, East Tamaki JLL 29,750
10 Niall Burgess Road, Mt Wellington JLL 7,150
20 Constance Street, New Plymouth Savills 4,350
47A Dalgety Drive, Manukau Colliers 14,900
Total 214,050
9
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
NOTES 2022
2. PROPERTY (continued)
As a result of the independent valuations, the revaluation gain recorded for 39 Edmundson Street (based on contracted sales price) and revaluation loss
for 330 Devon Street East when transferring the properties to non-current assets classified as held for sale, the unrealised net increase in the value
of investment properties for the six months ended 30 June 2022 was $19,451,000 (six months ended 30 June 2021: gain of $248,196,000 on valuation
for the full portfolio). The portfolio will next be revalued by independent valuers as at 31 December 2022.
2.2. Non-current assets classified as held for sale
ALL VALUES IN $000S
UNAUDITEDAUDITED
30 June 202231 December 2021
48 Seaview Road, Wellington – 10,000
39 Edmundson Street, Napier1 5,250 –
Shed 22, 23 Cable Street, Wellington
1
14,650 –
330 Devon Street East, New Plymouth1 2,325 –
Total non-current assets classified as held for sale 22,225 10,000
1 A revaluation gain of $595,000 was recorded when revaluing 39 Edmundson Street to the actual contracted sales price of $5,250,000, a revaluation loss of $220,000 recorded for
Shed 22, 23 Cable Street, and a revaluation loss of $4,000 recorded for 330 Devon Street East when transferring those properties to non-current assets classified as held for sale.
2.3. Rental and management fee income
ALL VALUES IN $000S
UNAUDITEDUNAUDITED
6 months ended
30 June 2022
6 months ended
30 June 2021
Gross rental receipts 47,520 45,362
Service charge income recovered from tenants 6,556 6,449
Fixed rental income adjustments 681 826
Capitalised lease incentive adjustments (457) (200)
Impact of rental income deferred and abated due to the COVID-19 pandemic 20 (57)
Management fee income 361 341
Total rental and management fee income 54,681 52,721
2.4. Property costs
UNAUDITEDUNAUDITED
ALL VALUES IN $000S
6 months ended
30 June 2022
6 months ended
30 June 2021
Service charge expenses (6,753) (6,449)
Bad and doubtful debts (expense) / recovery (225) 149
Other non-recoverable property costs (1,399) (1,676)
Total property costs (8,377) (7,976)
Other non-recoverable costs represents property maintenance not recoverable from tenants, property valuation fees and property leasing costs.
10
PROPERTY FOR INDUSTRY LIMITED INTERIM FINANCIAL STATEMENTS — 2022
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
2.5. Net rental income
UNAUDITEDUNAUDITED
ALL VALUES IN $000S
6 months ended
30 June 2022
6 months ended
30 June 2021
Gross rental receipts 47,520 45,362
Service charge income recovered from tenants2 6,556 6,449
Fixed rental income adjustments 681 826
Capitalised lease incentive adjustments (457) (200)
Impact of rental income deferred and abated due to the COVID-19 pandemic 20 (57)
less: Service charge expenses2 (6,753) (6,449)
Net rental income 47,567 45,931
2 In 2021, following the migration onto a new property management and accounting software during the period, the Group adopted a revised process for accounting for service charge
income recovered from tenants and service charge expenses, and as a result these balances no longer net off to zero.
2.6. Insurance income
On 21 April 2019, 314 Neilson Street, Penrose sustained fire damage. The fire has resulted in a business interruption (loss of rents claim) and a material
damage claim. The insurance income relating to business interruption and to material damage is presented in the Consolidated Statement of
Comprehensive Income. All insurance proceeds had been received as at 31 December 2021.
2.7. Accounts payable, accruals and other liabilities
ALL VALUES IN $000S
UNAUDITEDAUDITED
30 June 202231 December 2021
Trade creditors and retentions 2,674 2,051
Accruals 6,307 6,039
Deposits and bonds from tenants 2,193 2,909
Operating expense accounts 142 180
Other 1,023 1,165
Total accounts payable, accruals and other liabilities 12,339 12,344
2. PROPERTY (continued)
11
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
NOTES 2022
3. FUNDING
IN THIS SECTION
This section outlines how the Group manages its capital structure, financing costs and exposure to interest rate risk.
3.1. Borrowings
(i) Net borrowings
UNAUDITEDAUDITED
ALL VALUES IN $000S30 June 202231 December 2021
Bilateral CBA bank facility drawn down – non–current 125,000 125,000
Syndicated bank facility drawn down – non–current 277,660 276,237
Fixed rate bonds – non–current 200,000 200,000
Unamortised borrowings establishment costs (2,284) (2,584)
Net borrowings 600,376 598,653
Weighted average interest rate for drawn debt (inclusive of current interest rate swaps, margins and line fees)4.07%3.81%
Weighted average term to maturity (years)3.513.87
(ii) Composition of borrowings
UNAUDITED
ALL VALUES IN $000S
AS AT 30 JUNE 2022
Issue DateMaturity DateInterest Rate
Facility drawn /
amount
Undrawn
facilityFair Value
Syndicated Bank Facility C–2–Jul–24Floating 100,000 100,000
PFI01028–Nov–1728–Nov–244.59% 100,000 – 99,484
Syndicated Bank Facility A–2–Jul–25Floating 150,000 – 150,000
PFI0201–Oct–181–Oct–254.25% 100,000 – 98,812
Syndicated Bank Facility B–2–Jul–26Floating 27,660 122,340 27,660
Bilateral CBA Bank Facility–16–Apr–28Floating 125,000 – 125,000
Total borrowings 602,660 122,340 600,956
AUDITED
ALL VALUES IN $000S
AS AT 31 DECEMBER 2021
Issue DateMaturity DateInterest Rate
Facility drawn /
amount
Undrawn
facilityFair Value
Syndicated Bank Facility C–2–Jul–23Floating 100,000 100,000
PFI01028–Nov–1728–Nov–244.59% 100,000 – 103,803
Syndicated Bank Facility A–2–Jul–25Floating 150,000 – 150,000
PFI0201–Oct–181–Oct–254.25% 100,000 – 103,159
Syndicated Bank Facility B–2–Jul–26Floating 26,237 123,763 26,237
Bilateral CBA Bank Facility–16–Apr–28Floating 125,000 – 125,000
Total borrowings 601,237 123,763 608,199
The Group has long-term revolving facilities (A and B) with a banking syndicate comprising ANZ Bank New Zealand Limited (ANZ), Bank of New Zealand
(BNZ), Commonwealth Bank of Australia (CBA) and Westpac New Zealand Limited (Westpac) (each providing $75,000,000), for $300,000,000.
BNZ provides the Group with a further $100 million facility (C). Finally, the Group has a long-term bilateral facility with CBA, providing $125,000,000.
The carrying values of the bank facilities approximate the fair value of the facilities because the loans have floating rates of interest that reset every
30-90 days.
12
PROPERTY FOR INDUSTRY LIMITED INTERIM FINANCIAL STATEMENTS — 2022
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
The fair value of the fixed rate bonds is based on their listed market prices at balance date and is classified as Level 1 in the fair value hierarchy
(2021: Level 1). Interest on the PFI010 Bonds is payable quarterly in February, May, August and November in equal instalments, while interest on
the PFI020 Bonds is payable quarterly in January, April, July and October; also in equal instalments. Both bonds are listed on the NZDX.
(iii) Security
The Group’s bank facilities and fixed rate bonds are secured by way of a security trust deed and registered mortgage security which is required to be
provided over Group properties with current valuations of at least $1,450,000,000 (31 December 2021: $1,450,000,000). In addition to this, the bank
facility agreements and the fixed rate bond terms also contain a negative pledge. The Company and PFI No. 1 are guarantors to the bank facilities and
the fixed rate bonds.
3.2. Derivative financial instruments
(i) Fair values
UNAUDITEDAUDITED
ALL VALUES IN $000S30 June 202231 December 2021
Non-current assets 27,586 11,623
Current liabilities (68) (710)
Non-current liabilities (6,921) (4,608)
Total 20,597 6,305
(ii) Notional values, maturities and interest rates
UNAUDITEDAUDITED
30 June 202231 December 2021
Notional value of interest rate swaps - fixed rate payer - start dates commenced ($000s) 400,000 400,000
Notional value of interest rate swaps - fixed rate receiver1 - start dates commenced ($000s) 200,000 200,000
Notional value of interest rate swaps - fixed rate payer - forward starting ($000s) 100,000 120,000
Total ($000s) 700,000 720,000
Percentage of borrowings fixed (%)66%67%
Fixed rate payer swaps:
Average period to expiry - start dates commenced (years) 3.36 3.66
Average period to expiry - forward starting (years from commencement) 4.10 4.09
Average (years) 3.52 3.76
Fixed rate payer swaps:
Average interest rate2 - start dates commenced (%)2.58%2.58%
Average interest rate2 - forward starting (% during effective period)2.59%2.69%
Average (%)2.58%2.61%
1 The Group has $200 million fixed rate receiver swaps for the duration of the two $100 million fixed rate bonds, the effect of the fixed rate receiver swaps is to convert the two
$100 million fixed rate bonds to floating interest rates.
2 Excluding margin and fees.
3. FUNDING (continued)
3.1. Borrowings (continued)
13
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
NOTES 2022
(iii) Movement in fair value of derivative financial instruments
UNAUDITEDAUDITED
ALL VALUES IN $000S30 June 202231 December 2021
Interest rate swaps 14,293 4,912
Total movement in fair value of derivative financial instruments 14,293 4,912
Key estimates and assumptions: Derivative financial instruments
The fair value of derivative financial instruments are determined from valuations prepared by independent treasury advisers using Level 2 valuation
techniques (31 December 2021: Level 2). These are based on the present value of estimated future cash flows accounting for the terms and maturity
of each contract and the current market interest rates at reporting date. Fair values also reflect the current creditworthiness of the derivative
counterparty. These values are verified against valuations prepared by the respective counterparties. The valuations were based on market rates at
30 June 2022 of between 2.86% for the 90 day BKBM (31 December 2021: 0.97%) and 4.07% for the 10 year swap rate (31 December 2021: 2.65%).
There were no changes to these valuation techniques during the reporting period.
3. FUNDING (continued)
3.2. Derivative financial instruments (continued)
14
PROPERTY FOR INDUSTRY LIMITED INTERIM FINANCIAL STATEMENTS 2022
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
4. INVESTOR RETURNS AND INVESTMENT METRICS
IN THIS SECTION
This section summarises the earnings per share and net tangible assets per share, which are common investment metrics.
4.1. Earnings per share
(i) Basic earnings per share
UNAUDITEDUNAUDITED
6 months ended
30 June 2022
6 months ended
30 June 2021
Total comprehensive income for the period attributable to the shareholders of the Company ($000s) 23,780 273,542
Weighted average number of ordinary shares (shares) 505,504,676 502,300,565
Basic earnings per share (cents) 4.70 54.46
(ii) Diluted earnings per share
The calculation of diluted earnings per share has been based on the profit attributable to ordinary shareholders and weighted-average number of
ordinary shares outstanding after adjustment for the effects of all dilutive potential ordinary shares. Weighted average number of shares for the purpose
of diluted earnings per share has been adjusted for 69,024 (30 June 2021: 93,087) rights issued under the Group’s LTI Plan as at 30 June 2022. This
adjustment has been calculated using the treasury share method.
UNAUDITEDUNAUDITED
6 months ended
30 June 2022
6 months ended
30 June 2021
Total comprehensive income for the period attributable to the shareholders of the Company ($000s) 23,780 273,542
Weighted average number of shares for purpose of diluted earnings per share (shares) 505,573,700 502,393,652
Diluted earnings per share (cents) 4.70 54.45
4.2. Net tangible assets per share
UNAUDITEDAUDITEDUNAUDITED
30 June 202231 December 202130 June 2021
Net assets ($000s) 1,563,174 1,562,662 1,395,707
Less: Goodwill ($000s) – (29,086) (29,086)
Net tangible assets ($000s) 1,563,174 1,533,576 1,366,621
Closing shares on issue (shares) 504,880,705 505,493,668 503,478,807
Net tangible assets per share (cents) 310 303 271
15
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
NOTES 2022
5. OTHER
IN THIS SECTION
This section includes additional information that is considered less significant in the understanding of the financial performance and position of the
Group, but is disclosed to comply with NZ IAS 34 ‘Interim Financial Reporting’ and IAS 34 ‘Interim Financial Reporting’.
5.1. Administrative expenses
ALL VALUES IN $000S
UNAUDITEDUNAUDITED
6 months ended
30 June 2022
6 months ended
30 June 2021
Audit fees and other fees paid to auditors 81 63
Employee expense 2,233 1,927
Directors' fees 284 264
Office expenses 437 468
IT - licence fees and support 89 6
IT - implementation costs 172 69
Depreciation 75 91
Other expenses 582 469
Total administrative expenses 3,953 3,357
16
PROPERTY FOR INDUSTRY LIMITED INTERIM FINANCIAL STATEMENTS — 2022
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
5. OTHER (continued)
5.2. Taxation
(i) Reconciliation of accounting profit before income tax to income tax expense
ALL VALUES IN $000S
UNAUDITEDUNAUDITED
6 months ended
30 June 2022
6 months ended
30 June 2021
Profit before income tax 35,747 285,976
Prima facie income tax calculated at 28% (10,009) (80,073)
Adjusted for:
Non-tax deductible revenue and expenses(13) 140
Fair value gain on investment properties 5,446 69,495
Loss on disposal of investment properties (37) (1)
Goodwill impairment (8,144)–
Depreciation 2,925 2,186
Disposal of depreciable assets (263) (210)
Deductible capital expenditure 237 441
Lease incentives, fees and fixed rental income 109 351
Derivative financial instruments 4,002 1,375
Impairment gains (63) 42
Current tax prior period adjustment (203) 157
Other (20) (127)
Current taxation expense (6,033) (6,224)
Depreciation (1,680) (4,530)
Lease incentives, fees and fixed rental income (141) (204)
Derivative financial instruments (4,002) (1,376)
Impairment gains 63 (42)
Other (174) (58)
Deferred taxation expense (5,934) (6,210)
Total taxation reported in Consolidated Statement of Comprehensive Income (11,967) (12,434)
17
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
NOTES 2022
5. OTHER (continued)
5.2. Taxation (continued)
(ii) Deferred tax
ALL VALUES IN $000S
AUDITEDUNAUDITEDUNAUDITED
31 December 2021
As at
6 months ended
30 June 2022
Recognised in profit
30 June 2022
As at
Deferred tax assets
Impairment gains – (63) (63)
Other (263) 156 (107)
Gross deferred tax assets (263) 93 (170)
Deferred tax liabilities
Investment properties 32,917 1,821 34,738
Derivative financial instruments 1,765 4,002 5,767
Gross deferred tax liabilities 34,682 5,823 40,505
Share-based payment reserve – 19 –
Net deferred tax liability 34,419 5,935 40,335
5.3. Goodwill
UNAUDITEDAUDITED
ALL VALUES IN $000S30 June 202231 December 2021
Opening balance 29,086 29,086
Impairment loss (29,086) –
Goodwill – 29,086
On 30 June 2022, the market value of PFI, based on the quoted market price, was below the value net assets of PFI. PFI, with the assistance of an
independent expert, assessed whether objective evidence of impairment of goodwill exists, the outcome of which was that an impairment test has been
performed. PFI has estimated the recoverable amount by performing fair value less costs of disposal (FVLCOD) and value in use valuation approaches.
PFI has estimated the recoverable amount of the Property for Industry Limited CGU using FVLCOD (as the higher of the two valuation approaches),
resulting in an impairment loss of $29.086 million (2021: $NIL) against the carrying amount of goodwill.
Recognition and Measurement
Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the fair value of the identifiable net
assets acquired.
Goodwill is measured at cost less accumulated impairment losses. It is tested annually for impairment or more frequently if events or changes in
circumstances indicate potential impairment. An impairment loss is recognised if the carrying amount exceeds the estimated recoverable amount.
Impairment losses are recognised in the Consolidated Statement of Comprehensive Income.
For impairment testing, assets are grouped together into the smallest group of assets that generates cash inflows from continuing use that are largely
independent of the cash inflows of other assets or CGUs. PFI have identified one CGU, representing the entire Group.
To assess whether goodwill is impaired, the carrying amount of the CGU is compared to the recoverable amount, determined based on the greater of
its value in use and its fair value less costs of disposal. Fair value less costs of disposal is the price that would be received to sell an asset in an orderly
transaction between market participants at the measurement date, less the costs of disposal. Value in use is based on the estimated future cash
flows, discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the
risks specific to the asset or CGU.
18
PROPERTY FOR INDUSTRY LIMITED INTERIM FINANCIAL STATEMENTS — 2022
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
5. OTHER (continued)
5.3. Goodwill (continued)
Key estimates and assumptions: Goodwill
All goodwill relates to the Property for Industry Limited CGU.
The fair value of the Property for Industry Limited CGU for goodwill impairment testing is determined using Level 3 valuation techniques
(2021: Level 3). Fair value less costs of disposal is measured by calculating the fair value of the Property for Industry Limited CGU using a 1 day
volume-weighted average share price at the reporting date of $2.44 (2021: $2.86), applying a control premium (15.2%, as determined by a third party
as at 30 June 2022, 2021: 15.8%) and deducting costs of disposal. In performing a sensitivity analysis a control premium range of between 15-20%
(as determined by a third party as at 30 June 2022 and based on observable premiums) has been used. When a fair value less cost of disposal is
estimated, critical judgements and estimates are made in relation to the appropriate premium in assessing fair value of investment as a whole.
The recoverable amount was based on the fair value less costs of disposal. Due to significant decline in market value, the carrying amount of Property
for Industry Limited CGU was determined to be higher than its recoverable amount and an impairment loss of $29.086 million was recognised against
goodwill. All other assets have been assessed and it has been determined that they are held at fair value with no impairment necessary.
5.4. Related party transactions
The Group has a related party relationship with the following party:
Related partyAbbreviationNature of relationship(s)
The Board of DirectorsDirectorsThe Board of Directors.
The following transactions with related parties took place:
ALL VALUES IN $000SRelated party
UNAUDITEDUNAUDITED
6 months ended
30 June 2022
6 months ended
30 June 2021
Directors' fees - annual feesDirectors 284 264
UNAUDITEDAUDITED
NUMBERRelated party30 June 202231 December 2021
Shares held beneficially in the company (number)Directors 214,367 194,367
No related party debts have been written off or forgiven during the year (2021: NIL).
5.5. Share Capital
On 25 May 2022, the Group announced an on-market share buyback programme to purchase up to 5% of its ordinary shares over a 12-month period.
During the interim period, the Group acquired and cancelled 724,527 ordinary shares on market at an average price of $2.41 for a total consideration of
$1,747,137 and the shares acquired were subsequently cancelled. Incremental costs of $15,414 incurred were deducted from equity. The buyback
programme was paused from the close of trading on 30 June 2022 pending the release of the Group’s interim financial statements.
19
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
NOTES 2022
5.6. Leases
(i) Amounts recognised in the Consolidated Statement of Financial Position
The Consolidated Statement of Financial Position shows the following amounts relating to leases:
UNAUDITEDAUDITED
ALL VALUES IN $000S30 June 202231 December 2021
Right-of-use assets1
Properties 93 140
Total right-of-use assets 93 140
1 Included in the line item ‘Property, plant and equipment’ in the Consolidated Statement of Financial Position.
Additions to the right-of-use assets during the 2022 financial year were $NIL (year ending 31 December 2021: $3,000).
ALL VALUES IN $000S30 June 202231 December 2021
Lease liabilities
Current2 105 101
Non-current3– 53
Total lease liabilities 105 154
2 Included in the line item ‘Accounts payable, accruals and other liabilities’ in the Consolidated Statement of Financial Position.
3 Included in the line item ‘Lease liabilities’ in the Consolidated Statement of Financial Position.
(ii) Amounts recognised in the Consolidated Statement of Comprehensive Income
The Consolidated Statement of Comprehensive Income shows the following amounts relating to leases:
UNAUDITEDUNAUDITED
ALL VALUES IN $000S
6 months ended
30 June 2022
6 months ended
30 June 2021
Depreciation charge of right-of-use assets
4
Properties (47) (51)
Total depreciation charge of right-of-use assets (47) (51)
4 Included in the line item ‘Administrative expenses’ in the Consolidated Statement of Comprehensive Income.
UNAUDITEDUNAUDITED
ALL VALUES IN $000S
6 months ended
30 June 2022
6 months ended
30 June 2021
Interest cost
5
(8) (11)
5 Included in the line item ‘Interest expense and bank fees’ in the Consolidated Statement of Comprehensive Income.
The total cash outflow for leases in 2022 was $57,000 (2021: $56,000).
5. OTHER (continued)
20
PROPERTY FOR INDUSTRY LIMITED INTERIM FINANCIAL STATEMENTS — 2022
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
5. OTHER (continued)
5.7. Operating segments
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating
decision-maker has been identified as the Board of Directors. The Group is internally reported as a single operating segment to the chief operating
decision-maker.
5.8. Capital commitments
As at 30 June 2022, the Group had capital commitments totalling $2,651,000 (31 December 2021: $4,875,000) as follows:
ALL VALUES IN $000S30 June 202231 December 2021
AddressProject
Shed 22, 23 Cable StreetSeismic works– 413
47A Dalgety DriveDesign and build– 1,558
3-5 Niall Burgess RoadRefurbishment 2,651 2,904
Total capital commitments 2,651 4,875
In addition, during the year ended 31 December 2021 the Group entered into an agreement to lease new office premises for an annual rent of $330,000
plus GST for a period of eight years from commencement date. Commencement date is expected to be in Q3, 2022.
5.9. Subsequent events
Following the Group’s announcement on 10 June 2022, the divestment of 39 Edmundson Street, Napier was settled on 8 July 2022 for a gross sales
price of $5.25 million.
On 29 July 2022, the Group announced the divestment of 330 Devon Street East, New Plymouth for a gross sales price of $2.25 million. Settlement is
scheduled to take place on 25 August 2022, and this property has been classified as non-current assets classified as held for sale in these interim
financial statements.
On 22 August 2022, the Directors of the Company approved the payment of a net dividend of 1.800000 cents per share to be paid on 7 September 2022.
The gross dividend (2.379321 cents per share) carries imputation credits of 0.579321 cents per share. The payment of this dividend will not have any
tax consequences for the Group and no liability has been recognised in the Consolidated Statement of Financial Position as at 30 June 2022 in respect
of this dividend.
21
NOTES TO THE INTERIM FINANCIAL STATEMENTS
(
continued
)
FOR THE SIX MONTHS ENDED 30 JUNE 2022
Report on the interim financial statements
Our conclusion
We have reviewed the interim financial statements of Property for Industry Limited (the Company) and its controlled entity (the Group), which
comprise the consolidated statement of financial position as at 30 June 2022, and the consolidated statement of comprehensive income, the
consolidated statement of changes in equity and the consolidated statement of cash flows for the period ended on that date, and significant
accounting policies and other explanatory information.
Based on our review, nothing has come to our attention that causes us to believe that the accompanying interim financial statements of the Group
do not present fairly, in all material respects, the financial position of the Group as at 30 June 2022, and its financial performance and cash flows
for the period then ended, in accordance with International Accounting Standard 34 Interim Financial Reporting (IAS 34) and New Zealand
Equivalent to International Accounting Standard 34 Interim Financial Reporting (NZ IAS 34).
Basis for conclusion
We conducted our review in accordance with the New Zealand Standard on Review Engagements 2410 (Revised) Review of Financial Statements
Performed by the Independent Auditor of the Entity (NZ SRE 2410 (Revised)). Our responsibilities are further described in the Auditor’s
responsibilities for the review of the financial statements section of our report.
We are independent of the Group in accordance with the relevant ethical requirements in New Zealand relating to the audit of the annual financial
statements, and we have fulfilled our other ethical responsibilities in accordance with these ethical requirements. In addition to our role as auditor,
our firm carries out other services for the Group in the area of benchmarking of remuneration. The provision of these other services has not impaired
our independence.
Responsibilities of the Directors for the interim financial statements
The Directors of the Company are responsible on behalf of the Company for the preparation and fair presentation of these interim financial
statements in accordance with IAS 34 and NZ IAS 34 and for such internal control as the Directors determine is necessary to enable the
preparation and fair presentation of the interim financial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s responsibilities for the review of the financial statements
Our responsibility is to express a conclusion on the interim financial statements based on our review. NZ SRE 2410 (Revised) requires us to
conclude whether anything has come to our attention that causes us to believe that the interim financial statements, taken as a whole, are not
prepared in all material respects, in accordance with IAS 34 and NZ IAS 34.
A review of interim financial statements in accordance with NZ SRE 2410 (Revised) is a limited assurance engagement. We perform procedures,
primarily consisting of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other
review procedures. The procedures performed in a review are substantially less than those performed in an audit conducted in accordance with
International Standards on Auditing and International Standards on Auditing (New Zealand) and consequently does not enable us to obtain
assurance that we might identify in an audit. Accordingly, we do not express an audit opinion on these interim financial statements
Who we report to
This report is made solely to the Company’s Shareholders, as a body. Our review work has been undertaken so that we might state those
matters which we are required to state to them in our review 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 Shareholders, as a body, for our review procedures, for this report, or for the conclusion
we have formed.
The engagement partner on the review resulting in this independent auditor’s review report is Indumin Senaratne (Indy Sena).
For and on behalf of:
Chartered Accountants Auckland
22 August 2022
Independent auditor’s review report
To the shareholders of Property for Industry Limited
PricewaterhouseCoopers, PwC Tower, 15 Customs Street West, Private Bag 92162, Auckland 1142 New Zealand
T: +64 9 355 8000, www.pwc.co.nz
22
PROPERTY FOR INDUSTRY LIMITED INTERIM FINANCIAL STATEMENTS 2022
INTERIM FINANCIALS 2022
Property for Industry Limited
Shed 24,
Prince’s Wharf,
147 Quay Street,
Auckland 1010
PO Box 1147,
Shortland Street,
Auckland 1140
T 09 303 9450
E info@propertyforindustry.co.nz
www.propertyforindustry.co.nz
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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