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Financial results
INCOME AND EXPENSES
Total income for the full-year to 30 June 2016 was $150.2 million,
up by 3.7 per cent from last year. The increase in income was
mainly due to rental growth from the existing property portfolio,
additional rental income from the store expansions completed
during the year, and from completed property developments during
the previous year. On a like-for-like basis, excluding rental income
from properties acquired or upgraded during or since last year, rental
income increased by approximately 2.3 per cent for the year.
Finance costs of $24.3 million were 5.8 per cent lower than
last year, with higher borrowing levels being offset by a lower
weighted average cost of debt. The average level of borrowings
was 4.5 per cent higher than the previous year ($483.4 million
compared to $462.7 million). The weighted average cost of debt
for the year (finance costs less finance income, as a percentage of
average borrowings) was 5.0 per cent, compared to 5.5 per cent
for the previous year. The reduced cost of debt was the result of
lower interest rates and reduced bank fees and margins compared
to the previous year.
Other operating expenses of $6.2 million were slightly lower than
the previous year’s $6.4 million.
The management expense ratio for the year ended 30 June
2016 (expenses other than property outgoings and borrowing
costs as a percentage of average total assets) was 0.64 per cent
(2015: 0.65 per cent). The responsible entity waived $0.4 million
in management fees during the year to maintain consistency
between the growth of the management fee and growth in
distributable income.
PROFIT
Profit as disclosed in the Trust’s financial statements includes
unrealised gains or losses in the fair value of investment properties
as a result of the revaluation of the entire property portfolio every
six months (see revaluations section in Our property portfolio).
The unrealised revaluation gains or losses are recognised as
undistributed income as part of unitholders’ equity in the financial
statements and do not affect the profit available for distribution to
unitholders each period.
For the year ended 30 June 2016, net profit was $310.5 million,
including $202.6 million in gains in the fair value of investment
properties. This compares with net profit last year of $210.1
million which included gains of $108.5 million in the fair value of
investment properties.
Distributable profit for the year (excluding unrealised revaluation
gains or losses) was $107.9 million, compared to $101.6 million for
the previous year.
FINANCIAL POSITION
As at 30 June 2016, the Trust’s total assets were $2,200.5 million
(2015: $2,018.0 million) with unitholders’ equity of $1,645.4
million and total liabilities of $555.1 million. Investment properties
and assets held for sale made up the majority of total assets
comprising $2,184.2 million (2015: $1,981.3 million). Details of
investment properties are contained in the Our property portfolio
section at pages 15 to 21.
The underlying net tangible asset backing of the Trust’s units
(“NTA”) as at 30 June 2016 was $2.56 per unit, an increase
of 1.6 per cent from $2.52 per unit as at 31 December 2015
(30 June 2015: $2.24 per unit). The increase in NTA over the
six months to 30 June 2016 was due to the increase in net
assets through property revaluations.
DISTRIBUTION TO UNITHOLDERS
The Trust pays out 100 per cent of distributable profit each period,
in accordance with the requirements of the Trust’s constitution.
A final distribution of 8.50 cents per ordinary unit has been declared
and will be made on 25 August 2016 to unitholders on the Trust’s
register at 5.00 pm (AEST) on 30 June 2016. The final distribution
takes the total distribution for the year to 16.79 cents per unit
(2015: 15.84 cents per unit). The tax advantaged component of the
distribution is 25.44 per cent, which is higher than the previous year
due to the property divestments that occurred in the previous year,
and the taxable capital gains resulting from them.
Units allocated under the Trust’s Distribution Reinvestment Plan
(“DRP”) in respect of the final distribution will be issued at $3.75
per unit, representing the average of the daily volume weighted
MANAGING
DIRECTOR’S
REPORT
Rental growth from the existing
property investment portfolio and a
reduction in the weighted average
cost of debt contributed to a 6.0 per
cent increase in distributions per unit
compared to last year.
BWP Trust Annual Report 2016
9
Business Review