0% found this document useful (0 votes)
48 views44 pages

Annual Report 2018 4 PDF

This annual report summarizes the financial results and performance of the AIMS Property Securities Fund for the year ending June 30, 2018. Key highlights include: - Net asset value increased from $93.1 million to $105.8 million and net tangible assets per unit grew from $2.09 to $2.37, an increase of 13.4%. - Since June 2013, the fund has maintained a debt-free position in line with its conservative investment strategy. Net tangible assets have grown from $1.17 to $2.37 over this period, an increase of 103.3%. - Share price has risen from $0.67 to $1.58 since June 2013, an increase of

Uploaded by

Annie Lam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
48 views44 pages

Annual Report 2018 4 PDF

This annual report summarizes the financial results and performance of the AIMS Property Securities Fund for the year ending June 30, 2018. Key highlights include: - Net asset value increased from $93.1 million to $105.8 million and net tangible assets per unit grew from $2.09 to $2.37, an increase of 13.4%. - Since June 2013, the fund has maintained a debt-free position in line with its conservative investment strategy. Net tangible assets have grown from $1.17 to $2.37 over this period, an increase of 103.3%. - Share price has risen from $0.67 to $1.58 since June 2013, an increase of

Uploaded by

Annie Lam
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 44

AIMS PROPERTY SECURITIES FUND

AIMS Funds Management ASX Code: APW SGX Code: BVP


A Member of AIMS Financial Group
Annual Report 2018
Contents
Financial Results Summary 1

Chairman’s Report 2

Board of Directors 4

Corporate Governance Statement 6

Financial Report 10

Stock Exchange Information 38

Corporate Directory 40
About the Fund
The AIMS Property Securities Fund (“the Fund”) is a diversified real estate securities fund, investing across a wide
range of unlisted and listed property trusts. It has exposure to domestic and overseas commercial real estate
through specialist property investment managers.

The Fund is listed on the Australian Securities Exchange (ASX code: APW) and the Singapore Stock Exchange
(SGX Code: BVP).

Financial Results Summary


Financial results summary for the year ended 30 June 2018

Income Statement $Million


Year to 30 June 2018
Distribution and Interest Income 2.92
Net Gains On Financial Assets Held At Fair Value Through Profit Or Loss 12.04
Total Expenses (0.94)
Net Profit For The Year Before Finance Costs 14.02

Finance Costs 1.28


Change In Net Assets Attributable To Unitholders 12.74

Balance Sheet $Million


30 June 2018
Total Assets 106.13
Net Assets 105.83

Summary Statistics
Year to 30 June 2018
Ordinary Units On Issue (Million) 44.61
Earning Per Unit: (Cents) 28.56
Distribution Per Unit (Cents) 2.8652
NTA Per Unit $2.37
Unit Price (Last Trade Price) A$1.58
S$1.66

Annual Report 2018 01


Chairman’s Report

Overview Prudential Investment Management


It has been 10 years since the Global Financial Learning from our experience in the GFC, AIMS
Crisis (GFC), which triggered one of the greatest has carefully followed its prudent, conservative and
financial downturns in recent history. A sudden and patient investment approach, focusing not only on
large drop in commercial real estate, followed the income but also capital growth potential. We have
breakdown of global financial systems and since adhered to the following principles in our investment
that time, the commercial real estate market, has strategy:
made a steady and strong recovery. Currently, we
find ourselves in challenging times, with value in the
1. Power as investor. Where possible, hold material
or majority interest in unlisted investments, such
real estate sector being difficult to come by. Most
that the Fund is able to influence the strategy and
assets are overvalued and sellers come to market
direction of the investment.
with unrealistic expectations of price, which are
surprisingly being met by local and foreign buyers. 2. Alignment of investor and fund manager’s
interest. Invest in funds where the fund manager
We believe the real estate cycle is at a high point, holds a material interest in the fund to ensure that
with many factors looking to tip it over the edge. the fund manager’s interests are aligned with our
The trade war between America and China is unitholders.
one example of global influence that may trigger
a downturn in the commercial real estate sector.
Furthermore, the Royal Commission has put a lot
3. Sufficient liquidity for listed investments.
There
must be acceptable liquidity if the investment is
of pressure on local banks to tighten lending policy
listed.
and focus only on high quality loans. The regulators
have also increased the lender’s requirements for
capital reserves putting additional strain on their 4. Investment direction. Underlying assets must
lending requirements. Our Fund is an excellent typically be in good locations, with value add or
position to take advantage of the opportunities that long-term development potential. The assets
will arise, once these several pressures eventuate should ideally produce an income stream, to service
into reduced prices in the commercial real estate conservative borrowings and have potential for
market. rental increases through active management.

5. Conservative gearing. Maintained zero gearing


since 2013 and also monitor the underling
investments’ debt facilities, so as to sustain a
conservative look-through gearing level.

02 AIMS Property Securities Fund


Performance Highlights Management and Staff
• Over the past financial year, Net Asset Value I would like to take this opportunity to thank the
(NAV) has increased from $93.1 million to Board, our senior management team and all the
$105.8 million and Net Tangible Assets (NTA) staff, for their commitment and contribution over the
have grown from $2.09 to $2.37 per unit, an past financial year, which has enabled the Fund to
increase of 13.4%. deliver an outstanding result.

• Since June 2013, the fund has maintained Finally, I would like to thank all of the unitholders
a debt free position, keeping in line with our for their continued support during the past year. In
conservative investment strategy highlighted particular, I would like to extend our gratitude to
above. those investors who showed their faith in AIMS,
since it took over MacarthurCook back in 2009 and
• Since June 2013, NTA has grown from $1.17 to continue to show their commitment to this Fund.
$2.37, representing an increase of 103.3%.
The Board is pleased with a number of outcomes it
• Since June 2013, share price has risen from has been able to achieve this financial year. AIMS
$0.67 to $1.58 in June 2018, representing an remains committed to the Fund and to delivering the
increase of 137%. best outcomes for all unitholders.

• Over the past 5 years (Jun-13 – Jun-18), the


Fund’s compound total return p.a. has been Yours faithfully,
a spectacular 22.1%. This has significantly
outperformed the S&P/ASX 200 A-REIT’s
compound total return index p.a., which only
achieved 12.0% for the same period.

George Wang
Executive Chairman
AIMS Fund Management Limited

Annual Report 2018 03


Board of Directors

Mr George Wang Mr Richard Nott AM


Executive Chairman Non-Executive Independent Director
Chairman of the Audit Committee

George is the founding CEO of AIMS Financial Group and Richard Nott is a former General Manager and Chief
an active participant in both the Australian and Chinese Executive of CGU Lenders Mortgage Insurance Ltd,
financial services industries. George came to Australia General Manager Corporate Banking at Standard
from China nearly 30 years ago and founded AIMS Chartered Bank Australia Ltd, General Manager Banking
Financial Group two years later. Since inception, AIMS and Associate Director at Australian Bank. He has also
has evolved into a diversified financial services group, had a twenty-six-year career with CBC/National Australia
active in the areas of lending, securitisation, investment Bank throughout Australia and Europe. Richard was
banking, real estate funds management and property, Managing Director Australia for Mortgage Guaranty
resources, high-tech and infrastructure investment. Insurance Corporation until April 2016.

In the course of developing AIMS Financial Group into a Richard’s qualifications include a Bachelor of Science
significant financial services group in Australia, George (Hons), Master of Business Administration, Master of
has developed a strong skill base in the areas of lending, Commerce and Master of Insurance and Risk Management.
securitisation, real estate funds management, structured He is a Fellow of Australian and New Zealand Institute of
finance and innovative financial product development. Insurance and Finance, the Chartered Insurance Institute
(UK), the Chartered Institute of Bankers (UK) and various
George has developed an extensive business network Accounting, Chartered Secretaries, Governance, HR and
in both Australia and China. In China, George is active Management Institutes. He is also a Senior Fellow and
in the Chinese financial sector. He is an advisor for a life member of FINSIA.
number of Chinese Government bodies and Government
agencies. He holds the position of Deputy President of Richard is President of the Australia-Britain Society and
the International Trade Council of China, a constituent he is Australian Representative of the Friends of St.
body of China Council for the Promotion of International George’s and Descendants of the Knights of the Garter.
Trade. He is a member of the Cook Society and Fred Hollows
Foundation. He was made a Member of the Order of
In Australia, George is the President of the Australia- Australia (AM) in 2012 for services to banking, insurance
China Finance & Investment Council. As the President of and several major charities.
Australia-China Finance & Investment Council, George
has been laying the foundation for the financial bridge Richard was appointed as a Non-Executive Independent
between Australia and China for many years. Director and Chairman of the Audit Committee on 5
August 2010.
George was appointed as director on 14 July 2009 and as
Executive Chairman on 7 August 2009. During the past five years has acted as a non-executive
director of the following entities:
During the past five years he has acted as a non-executive • Prime Insurance Group
director or director of the following entities: • RHG Limited
• AIMS Financial Group
• AIMS AMP Capital Industrial REIT
• Sydney Stock Exhcnage (formerly known as Asia
Pacific Stock Exchange)

04 AIMS Property Securities Fund


Mr John Love
Non-Executive Independent Director

John is currently a non-Executive Director. He was the


former Chairman of Mortgage Guaranty Insurance
Corporation Australia and former Chairman and a
member of the Audit, Governance and Risk Management
Committee for The Australian Wine Society Cooperative
Limited. He was previously the General Manager of an
Australian mezzanine property finance company. John
was also previously the Head of Corporate Banking
Australia and Head of Credit at Standard Chartered Bank
Australia Limited.

John’s qualifications include a Bachelor of Commerce


(Qld), a Master of Business Administration (AGSM) and
a Master of Insurance and Risk Management (Deakin). In
addition, he is a Certified Practicing Accountant, a Fellow
of the Tax Institute of Australia, a Fellow of the Chartered
Institute of Secretaries, a Fellow of FINSIA, a Fellow of
the Australian Institute of Company Directors, a Fellow of
the Australian and New Zealand Institute of Insurance and
Finance, Certified Insurance Professional and a Fellow of
the Australian Mutuals Institute.

John was appointed as a Non-Executive Independent


Director on 30 March 2011.

During the past five years he has acted as a non-executive


director or director of the following entities:
• Mortgage Guarantee Insurance Corporation Australia
• The Australian Wine Society Co-operative Limited

Annual Report 2018 05


Corporate Governance Statement
AIMS Property Securities Fund functions: against certain criteria. Non-
(“the Fund”) is a listed managed • The Board is responsible Executive Independent
investment scheme whose units for the overall corporate Directors may meet periodically
are traded on the Australian governance of the without any executive
Securities Exchange (ASX) and Responsible Entity, including management to ensure that
the Singapore Exchange (SGX). formulating its strategic there is full and frank discussion
The fund has no employees direction and monitoring amongst Directors of issues
and its day-to-day functions and the business objectives. affecting the Responsible Entity.
investments are managed by The Board delegates day
the Responsible Entity, AIMS to day management of the Principle 2. Structure the Board
Fund Management Limited. The Responsible Entity’s affairs to add value
parent company of AIMS Fund to the Executive Chairman 2.1 Board Composition
Management Limited is Great and senior executives.
World Financial Group Pty Ltd The composition of the Board
• The structure, roles and is structured to maintain
(“the Group”). functions of the Board are a mix of directors from
set out in a Board Charter, difference backgrounds with
The directors of the Responsible but in broad terms, the
Entity (“the Board”) recognise complementary skills and
Board Charter clarifies the experience. Details of each
the importance of good respective roles of the Board
corporate governance. The director at the date of this report
and senior management. are given in the Director’s report,
Fund’s corporate governance
framework, policies and • To assist in the including the period in office,
practices are designed to ensure execution of its oversight skills, experience, and expertise
the effective management and and management relevant to the position of the
operations of the Fund and will responsibilities, the Board director.
remain under regular review. has established an Audit,
Risk and Compliance The Board may comprise up to
A description of the Fund’s Committee. This committee ten individual Directors with a
practices in respect of has its own written mandate, minimum of three. Directors will
the 8 Principles and which is reviewed on a be classified as Independent,
Recommendations from the regular basis and it reports Non-Executive or Executive.
ASX Corporate Governance back to the Board on
Council’s Revised Corporate their activities through the The attributes of the Board
Governance Principles and presentation of reports are to include expertise and
Recommendations (ASX and minutes of committee experience in business and
Recommendations) are set out meetings. financial management, capital
below. All these practices, unless • The Board holds regular raising and legal experience,
otherwise stated, were in place three monthly meetings, property, lending and financial
for the entire 2018 financial year. plus strategy meetings and services industry knowledge and
extraordinary meetings compliance orientation.
Principle 1. Lay solid at such times as may be
foundations for management required during the year. When a Board vacancy exists,
and oversight or where it is considered that
• An agenda for the meetings the Board would benefit from
1.1 Functions of Board and is determined to ensure that the services of a new Director
senior executives certain standing information with particular skills, the existing
is addressed and other Board selects a candidate with
Primary responsibility for the items which are relevant to
management and oversight of the appropriate experience and
reporting deadlines and/or expertise. Appropriate checks
the Responsible Entity rests with regular review are scheduled
the Board, whose overall role is of the potential candidates will
when appropriate. be undertaken including but
to build long term sustainable
value for the Fund’s Unitholders, not limited to reference checks,
1.2 Evaluation performance of national police checks and
while respecting the interests senior executives
of all stakeholders. In meeting bankruptcy checks.
The performance of senior
its responsibilities, the Board executives is reviewed annually
undertakes the following

06 AIMS Property Securities Fund


The directors of the Responsible Each Director has the right to •
3.2 Share trading policy
Entity at the date of this report access all relevant information The Board has adopted a Share
are: in respect of the Responsible Trading Policy, which can be
Entity and to make appropriate viewed on the website of AIMS.
• George Wang
enquiries of senior management. Directors and staff (including their
• Richard Nott
Subject to prior consultation immediate family or any entity for
• John Love
with the Executive Chairman, a which they control investment
The Board assessed the Director may seek independent decisions) must ensure that any
independence of its Non- professional advice from a trading in securities issued by
Executive Independent Directors suitably qualified advisor. the Fund is undertaken within the
according to the definition framework set out in this Policy.
contained within the Principles Principle 3 - Promote ethical
and concluded that two of the and responsible decision
The Policy reflects the insider
members of the Board were making
trading provisions of the
independent. The Board actively promotes Corporations Act 2001, such
2.2 Independent chair ethical and responsible decision that Directors and management
making. are prohibited from trading in
The Chairman of the Board is
securities of any fund controlled
Mr George Wang, who is not
3.1 Code of conduct by the Responsible Entity whilst
independent according to the
The Board has adopted a Code in possession of unpublished
criteria set out in the Principles.
of Conduct which can be viewed price sensitive information.
The position of Chairman for
on the website of AIMS. The Subject to any knowledge or
the purposes of Board meetings
Code of Conduct applies to circumstances that impose a
may however rotate on a regular
all Directors, and staff of the specific prohibition on some or
basis. Given the independence
Responsible Entity. The Code all Directors and management
of the Board, it is not considered
sets out the core values of the trading, as a general policy, price
necessary at this stage for the
Responsible Entity and the sensitive information is deemed
Chairman to be independent.
expectations for how employees to be in the public domain once
2.3 Roles of Chairman and should conduct their business a reasonable time (generally 48
Fund Manager affairs including: hours) has elapsed following an
The roles of Chairman of the announcement to allow the market
• Acting in the best interests of to absorb the contents of the
Board and Fund Manager are
Unitholders over and above announcement. For reporting of
not held by the same individual.
their own interests. financial results under the ASX’s
2.4 Nomination Committee • Acting with due skill, care periodic disclosure requirements,
and diligence in conducting the general rule adopted by the
Given the size and structure of
their business. Responsible Entity is to restrict
the AIMS, the Board does not
• Preserving Unitholder trading by Directors and staff for
have a Nomination Committee.
confidentiality at all times. a period of six weeks before the
Some of the roles and
• Respecting the intellectual announcement of the results.
responsibilities (where practical)
property rights of others.
are undertaken by the Board or
• Protecting and promoting the
some of its members.
integrity of the market.
Avoiding and/or disclosing
2.5 Performance evaluation
any real or perceived
processes
conflicts of interest.
The Board is responsible for • Being true to their word.
reviewing the performance of • Respecting the dignity of
Directors. others.
• Never knowingly misleading
2.6 Diversity or deceiving others.
As the RE and the Fund do • The Code of Conduct is
not employ any employees discussed with each new
the principle of diversity is not employee as part of their
applicable to the RE or the Fund. induction training.

Annual Report 2018 07


Corporate Governance Statement Continued

Principle 4 - Safeguard integrity composition, structure, activities and to comply with


in financial reporting membership requirements and the continuous disclosure
procedures for the Audit, Risk requirements contained in the
4.1 Audit Committee and Compliance Committee are Corporations Act 2001 and the
The Board has established an set out in the Audit, Risk and ASX Listing Rules.
Audit, Risk and Compliance Compliance Committee Charter,
Committee, which provides which can be viewed on the The Responsible Entity has
assistance to the Board in website of AIMS. a Continuous Disclosure
fulfilling its corporate governance Policy to ensure that it meets
responsibilities in relation to the The Board relies on the continuous disclosure
Responsible Entity’s financial management for day to day obligations.
reporting, internal controls monitoring of the internal
Principle 6 - Respect the rights
structure, risk management controls within the Responsible
systems and external audit
of Unitholders
Entity. Financial performance is
functions. monitored on a regular basis by 6.1 Communications policy
management who report to the AIMS’s policies for
The Audit, Risk and Compliance Board at the scheduled Board communication with
Committee review the meetings and through Audit, Unitholders are set out in its
performance of the external Risk and Compliance Committee Communications Policy, which
auditors on an annual basis meetings. can be viewed on the website
and meets with them during of AIMS. The aim of the Board
the year to review findings. The The Board requires the is to ensure that investors
Committee has full access to Executive Chairman and the are informed of all major
all books, records, facilities and Chief Financial Officer (or his/her developments affecting AIMS
personnel of the Responsible equivalent) to provide a written through:
Entity, as well as the authority statement that the financial
to engage independent counsel statements of the Responsible • the annual report;
and other advisers it determines Entity present a true and fair • disclosures made to the
necessary to carry out its duties. view, in all material respects, ASX in the form of market
of its financial position and announcements and investor
4.2 Structure of the Audit operational results. In addition, updates;
Committee confirmation is provided that all • notices and explanatory
The members of the Audit, Risk relevant accounting standards memoranda of annual
and Compliance Committee are: have been appropriately applied. general meetings and other
Unitholder meetings;
• Mr Richard Nott - Chairman Principle 5 - Make timely and • responses to enquiries from
• Mr John Love balanced disclosure Unitholders; and
At any given time, the • occasional letters/updates
Committee must comprise no 5.1 Disclosure policies from the Executive
less than two Independent Chairman or the Fund
The Board is committed to the
Directors as selected by the Manager to specifically
promotion of investor confidence
Board. All the Committee inform Unitholders of key
by providing full and timely
members are financially literate. matters of interest.
information to all Unitholders
and market participants about
4.3 Audit Committee Charter
the Responsible Entity’s
The role and responsibilities,

08 AIMS Property Securities Fund


Principle 7 - Recognise and management and internal control the Remuneration Committee
manage risk systems on an ongoing basis are carried out by the Executive
through regular certifications Chairman in conjunction with the
7.1 Risk management policies and review undertaken by Human Resources Manager.
AIMS has established the finance and compliance
procedures for: functions together with a formal The Responsible Entity also
annual review. reviews and approves senior
• the oversight of risk
executive total remuneration
management activities
7.3 Executive risk management packages and terms of
through the roles of the
declaration employment annually, having
Board and the Audit, Risk
The Board requires the regard to performance, relevant
and Compliance Committee;
Executive Chairman and the comparative information and,
and
Chief Financial Officer (or his/her where relevant, independent
• a risk management expert advice.
equivalent) to report to it on the
framework and policy for the
effectiveness of the Responsible
identification, management 8.2 Remuneration structure
Entity’s management of its
and monitoring of material
material business risk in The Executive Chairman and
business risks.
conjunction with the review senior executives receive
The Risk Management of the half year and full year salary packages which may
Framework and Policy forms a financial results. The Board include performance based
part of the Responsible Entity’s also receives assurances from components designed to reward
Policy Manual. the Executive Chairman and the and motivate. Non-Executive
Chief Financial Officer (or his/her Independent Directors receive
7.2 Risk management systems equivalent) that the declaration fees agreed on an annual basis
The Board has primary oversight provided in accordance with by the Board. There are no
of risk management policies and section 295A of the Corporations retirement schemes in place
practices and has adopted an Act is founded on a sound for Non-Executive Independent
appropriate risk management system of risk management and Directors.
framework and policy. internal controls and that the
system is operating effectively in The remuneration for the Board
In accordance with its Charter, all material respects in relation to and senior executives is paid by
the Audit, Risk and Compliance the financial reporting of risks. the Responsible Entity.
Committee has more direct
responsibility for overseeing the The Fund does not have any
risk management framework and material exposure to economic,
risk management practice. AIMS environmental and social
has a Legal & Compliance team, sustainability risks.
who are responsible for reporting
to the Board on compliance Principle 8 - Remunerate fairly
issues and recommending ways and responsibly
in which the Responsible Entity
may improve its systems and 8.1 Remuneration committee
compliance monitoring. Due to the size and structure of
AIMS, the Board does not have
The Board reviews the a Remuneration Committee.
effectiveness of the risk The role and responsibilities of

Annual Report 2018 09


Financial Report
AIMS Property Securities Fund (ARSN 111 442 150)

Director’s Report 11

Auditor’s Independence Declaration 17

Statement of Profit or Loss and


Other Comprehensive Income 18

Statement of Financial Position 19

Statement of Changes in Equity 19

Statement of Cash Flows 20

Notes to the Financial Statements 21

Directors’ Declaration 33

Independent Auditor’s Report 34

10 AIMS Property Securities Fund


Directors’ Report
for the year ended 30 June 2018

The Directors of AIMS Fund Management Limited, the Mr Richard Nott AM


Responsible Entity of AIMS Property Securities Fund (“the BSc (Hons), MCom, MBA, MIRM
Fund”), present their report together with the Financial Non-Executive Independent Director & Chairman of the
Report of the Fund for the financial year ended 30 June Audit Committee
2018. Non-Executive Independent Director
Chairman of the Audit Committee
The Responsible Entity’s registered office and principal
Richard Nott is a former General Manager and Chief
place of business is Level 41, 259 George Street, Sydney,
Executive of CGU Lenders Mortgage Insurance Ltd,
NSW 2000.
General Manager Corporate Banking at Standard
Chartered Bank Australia Ltd, General Manager Banking
DIRECTORS
and Associate Director at Australian Bank. He has also
The Directors of the Responsible Entity during the had a twenty-six-year career with CBC/National Australia
financial year are shown below. Directors were in office to Bank throughout Australia and Europe. Richard was
the date of the report unless otherwise stated: Managing Director Australia for Mortgage Guaranty
Insurance Corporation until April 2016.
Mr George Wang
BE Richard’s qualifications include a Bachelor of Science
Executive Chairman (Hons), Master of Business Administration, Master of
Commerce and Master of Insurance and Risk Management.
George is the founding CEO of AIMS Financial Group and He is a Fellow of Australian and New Zealand Institute of
an active participant in both the Australian and Chinese Insurance and Finance, the Chartered Insurance Institute
financial services industries. George came to Australia (UK), the Chartered Institute of Bankers (UK) and various
from China nearly 30 years ago and founded AIMS Accounting, Chartered Secretaries, Governance, HR and
Financial Group two years later. Since inception, AIMS Management Institutes. He is also a Senior Fellow and
has evolved into a diversified financial services group, life member of FINSIA.
active in the areas of lending, securitisation, investment
banking, real estate funds management and property, Richard is President of the Australia-Britain Society and
resources, high-tech and infrastructure investment. he is Australian Representative of the Friends of St.
George’s and Descendants of the Knights of the Garter.
In the course of developing AIMS Financial Group into a He is a member of the Cook Society and Fred Hollows
significant financial services group in Australia, George Foundation. He was made a Member of the Order of
has developed a strong skill base in the areas of lending, Australia (AM) in 2012 for services to banking, insurance
securitisation, real estate funds management, structured and several major charities.
finance and innovative financial product development.
Richard was appointed as a Non-Executive Independent
George has developed an extensive business network Director and Chairman of the Audit Committee on 5
in both Australia and China. In China, George is active August 2010.
in the Chinese financial sector. He is an advisor for a
number of Chinese Government bodies and Government During the past five years has acted as a non-executive
agencies. He holds the position of Deputy President of director of the following entities:
the International Trade Council of China, a constituent
body of China Council for the Promotion of International • Prime Insurance Group
Trade. • RHG Limited

In Australia, George is the President of the Australia-


China Finance & Investment Council. As the President of
Australia-China Finance & Investment Council, George
has been laying the foundation for the financial bridge
between Australia and China for many years.

George was appointed as director on 14 July 2009 and as


Executive Chairman on 7 August 2009.

During the past five years he has acted as a non-executive


director or director of the following entities:
• AIMS Financial Group
• AIMS AMP Capital Industrial REIT
• Sydney Stock Exhcnage (formerly known as Asia
Pacific Stock Exchange)

Annual Report 2018 11


Directors’ Report Continued

Mr John Love
BCom, MBA, MIRM, CPA
Non-Executive Independent Director
John is currently a non-Executive Director. He was the former Chairman of Mortgage Guaranty Insurance Corporation
Australia and former Chairman and a member of the Audit, Governance and Risk Management Committee for The
Australian Wine Society Cooperative Limited. He was previously the General Manager of an Australian mezzanine
property finance company. John was also previously the Head of Corporate Banking Australia and Head of Credit at
Standard Chartered Bank Australia Limited.

John’s qualifications include a Bachelor of Commerce (Qld), a Master of Business Administration (AGSM) and a Master
of Insurance and Risk Management (Deakin). In addition, he is a Certified Practicing Accountant, a Fellow of the Tax
Institute of Australia, a Fellow of the Chartered Institute of Secretaries, a Fellow of FINSIA, a Fellow of the Australian
Institute of Company Directors, a Fellow of the Australian and New Zealand Institute of Insurance and Finance, Certified
Insurance Professional and a Fellow of the Australian Mutuals Institute.

John was appointed as a Non-Executive Independent Director on 30 March 2011.


During the past five years he has acted as a non-executive director or director of the following entities:
• Mortgage Guarantee Insurance Corporation Australia
• The Australian Wine Society Co-operative Limited

COMPANY SECRETARIES

Claud Chaaya (Appointed on 7 August 2017)


Claud is currently the director of property funds management at AIMS Financial Group. The business unit has over AU
$2 billion in assets under management.

With over 10 years’ experience in the real estate sector, he has worked in funds management, equity raisings, research,
project management and transactions in both domestic and offshore capital markets. He has been involved in real
estate transactions totalling over AU $1 billion, covering both multi-sector and multi-risk portfolios.

He has helped raise over half a billion dollars in equity from offshore and domestic capital, including the Australian
Federal Government. He has also aided in the establishment of proprietary risk management software for real estate,
a first of its kind in the industry.

His qualifications include a double degree in Law and Commerce, majoring in Finance, with qualifying subjects in
Actuarial Studies and Computer Science. He has taught as a lecturer at the University of Technology Sydney (UTS)
and is occasionally invited as a guest lecturer at the Universities of Sydney and New South Wales, given his specialist
knowledge in real estate financial modelling and legal real estate structuring.

Jim Stewart (Appointed on 24 May 2017, Resigned on 7 August 2017)

Jim currently holds the position of Managing Director, Investment Funds for AIMS Financial Group and has significant
experience in Funds Management, Corporate Management and Company Secretary duties.

Jim has held a number of Directorships and Company Secretary positions for both listed and private companies over the
last 25 years, and has experience in many countries and jurisdictions. He has managed Investment Funds, Corporate
Groups, Wealth Funds and Government Enterprises, and has a background in audit, corporate finance and investment
management

PRINCIPAL ACTIVITIES
The Fund is a registered managed investment scheme domiciled in Australia. The Fund is listed on both the Australian
Securities Exchange (ASX) and the Singapore Exchange (SGX). The investment objective of the Fund is to provide
investors with regular quarterly income and the potential for long term capital growth. During the year, the Fund held
investments in a portfolio of property related securities diversified by property sectors, geographic locations and fund
managers.

12 AIMS Property Securities Fund


REVIEW OF OPERATIONS
Summary of business model
The Fund is a listed fund which manages a portfolio of real estate securities investments with the objective of providing
regular stable income and the potential for capital growth.

The Fund generates its revenue primarily by ‘harvesting’ the dividends and distributions received from the companies
and trusts in its portfolio. Additional income is derived from interest earned on cash deposits. In the financial year ended
30 June 2018, dividends and distributions made up 18.4% of the Fund’s total revenue (2017: 65%). The variance in
distribution income from 2017 to 2018 is only $3,714,000 million vs $2,753,000, respectively. The make-up when
compared to overall revenue is vastly different between both years, due to the large net gains on financial assets held
at value, which rose significantly in 2018 from $1,832,000 (2017) to $12,037,000.

The Fund’s costs of operation have fallen by 20% in this financial year, given that the Responsible Entity no longer
receives a funds management fee (from 1 December 2016). During the financial year, the Fund’s annual expenses
were equivalent to 0.88% of total assets, which is significantly lower than last year’s value of 1.25%. The Fund’s main
expense items are generally rent and employee expenses, professional fees, listing fee, custodian fee, share registry
fee and general expenses.

The low proportion of variable costs implies that in general, profit will fluctuate according to the performance, and in
particular the distributions of each of the underlying investments in the portfolio.

The Fund offers investors a professionally managed, diversified and traded exposure to the Australian and Singapore
property markets. During the past five years, the Fund has produced a compound annual total return of 22.10% as
measured by the movement in traded unit prices assuming distributions paid are reinvested. This return compares
favourably with a return of 12.01% per annum from the total return of S&P/ASX 200 A-REIT Index, which includes the
reinvestment of distributions.

Investment process
The investment team, led by the Chief Executive Officer and overseen by the non-executive Directors, is responsible
for constructing and maintaining an appropriately diversified portfolio which generates stable income and the potential
for long-term capital growth.

The investment process, which involves the monitoring and review of existing investments as well as analysing potential
new investments, includes extensive research, site visits and industry conferences, as well as economic and sector
analysis to help identify emerging trends and assist with the timing of transactions.

The structure of a listed fund is ideally suited to building a long-term portfolio, as the Fund does not experience
investor redemptions which might otherwise force desirable long-term holdings to be sold. Instead, unitholders wishing
to liquidate their holding in the Fund simply sell their shares on the stock exchanges. This stability allows the Fund to
take advantage of short-term market fluctuations in order to buy or add to long-term holdings when prices trade below
the long-term valuations calculated by the investment team. The selling of investments is relatively rare and generally
only occurs due to takeovers or when it is perceived that the long-term value of an investment is compromised by
deteriorating industry conditions or other concerns.

Review of activities and events during the year


The Fund’s assets are invested in a mix of listed and unlisted property securities. Over the past financial year, the
Fund’s total return compared to the S&P/ASX 200 Total Return Index was lower being 7.59% vs 13.04% (5.45% under-
performance). This is mainly due to the discount on the Fund, as can be seen from below, the Net Assets Attributable
To Unitholders grew by 13.63%, which is marginally higher than the total return of the S&P/ASX 200 Total Return Index.

Over the course of the financial year, the Fund’s investment portfolio returned 14.76%* and the Fund’s market unit price
increased by 4.65% for the financial year, however the market unit price is still trading at a discount to net tangible asset
backing per unit.

*Fund’s investment portfolio return is equal to total return of investment (distribution income + gain in fair value of investments) is
divided by the value of the investment (total non-current assets).

Annual Report 2018 13


Directors’ Report Continued

The major changes to the portfolio during the year are as follows:
Sales No. of Units Amount ($)
Arena REIT 2,164,364 4,802,000
Blackwall Property Trust 5,847,669 7,561,000
Total 12,363,000

Purchases No. of Units Amount ($)


AIMS Real Estate Opportunity Fund 19,000,000 19,000,000
Total 19,000,000

Overall the number of investments held in the portfolio remained the same at 10 (2017: 10) and the number of managers
remained the same at 7 (2017: 7).

REVIEW OF FINANCIAL POSITION AND PERFORMANCE


A number of key performance indicators are used by the Directors and management in their assessment of the Fund’s
performance, including profit, earnings per unit, distributions paid to unitholders, unitholders’ equity, net tangible asset
backing per unit, total portfolio return and control of management costs. The Directors are pleased these indicators
were all assessed positively, indicating a very successful year.
The comprehensive gain attributable to unitholders for the year ended 30 June 2018 is $14,020,000 (2017: $4,541,000).
This result includes an unrealised gain on investments of $12,037,000 (2017: unrealised gain of $1,832,000). The
Fund’s distribution income decreased from $3,714,000 to $2,753,000 during the year, a drop of 25.88%. The Fund
decreased its distributions to unitholders from $2,946,000 to $1,279,000 during the year.
The Fund’s financial position improved over the course of the year, with net assets increasing from $93,137,000 to
$105,828,000. The cash asset at year-end was $4,822,000, representing 4.54% of the Fund’s total assets. Cash on
hand fluctuates throughout the year according to the timing of distributions received, distributions paid, and investment
purchases or disposals.
The Fund’s total assets were valued at $106,129,000 as at 30 June 2018 (2017: $93,910,000) in accordance with the
accounting policies set out in Note 3 of the Financial Report. The net tangible asset value was $2.37 per ordinary unit
(2017: $2.09 per unit). The net tangible asset calculation excludes the Deferred Units on issue.

The performance of the Fund is represented by the aggregation of the percentage capital growth and percentage
distribution of income to Australian registered Unitholders and Singapore registered Unitholders respectively, in the
following table:
ASX listed Units SGX listed Units
Year ended Year ended Year ended Year ended
30 June 2018 30 June 2017 30 June 2018 30 June 2017
% % % %

Distribution Return 2.59 5.33 1.77 5.43


Growth Return 5.00 15.38 6.41 20.00
Total Return 7.59 20.71 8.18 25.43

The distribution return is calculated on the basis of the gross distribution to Unitholders before deducting any withholding
tax which may be applicable. The growth return relates to the movement between closing trade prices on the respective
ASX and SGX at 30 June 2018 and the closing trade prices on 30 June 2017. The market price of the Fund’s Units
(as represented by the closing trade price) on the ASX at 30 June 2018 was AUD$1.58 (2017: AUD$1.50). The market
price of the Fund’s units on the SGX at 30 June 2018 was SGD$1.66 (2017: SGD$1.56).

Returns have been calculated after fees and assuming reinvestment of distributions within Australia, in accordance with
IFSA Standard 6.00 Product Performance - calculation and presentation of returns. Reinvestment of distributions is not
available to Singaporean Unitholders whose registered address with The Central Depository (Pte) Limited is outside
Australia.

14 AIMS Property Securities Fund


FUTURE DEVELOPMENTS, PROSPECTS AND BUSINESS STRATEGIES
The Fund has cash available for additional long-term investment opportunities and other capital initiatives. It will
continue to focus on producing results in accordance with its stated investment objective.

The results of the Fund’s future investment activities will depend primarily on the performance of the unit price of, and the
distributions received from, the entities in which the Fund has invested. The performance of those entities is influenced
by many factors which are difficult to predict, including economic growth rates, inflation, interest rates, exchange rates,
regulatory changes and taxation levels. There are also specific issues such as management competence, capital
strength, industry trends and competitive behaviour.

The Fund is conservatively managed and the diversification of the investment portfolio holdings helps to reduce overall
risk and the volatility of the Fund’s earnings and capital fluctuations.

The Fund will continue to focus on controlling costs whilst growing its unitholder funds. The constantly changing
nature of markets and other investment conditions requires management and the Directors to diligently appraise any
opportunities that may present themselves. The Fund does not envisage any significant changes to its business model.

The Fund will continue to be managed in accordance with the investment objectives and guidelines as outlined in the
current product disclosure statement and in accordance with the provisions of the Fund Constitution.

DISTRIBUTIONS PAID OR RECOMMENDED

$’000 Cents per unit $’000 Cents per unit


2018 2018 2017 2017
Sep quarter distribution paid 523 1.1707 965 2.1443
Dec quarter distribution paid 220 0.4926 657 1.4660
Mar quarter distribution paid 357 0.8001 652 1.4622
Jun quarter distribution payable 179 0.4018 672 1.5059
1,279 2.8652 2,946 6.5784

SIGNIFICANT CHANGES IN STATE OF AFFAIRS


Other than as noted in “Results and Review of Operations”, there were no significant changes in the state of affairs of
the Fund which occurred during the financial year ended 30 June 2018.

AFTER BALANCE DATE EVENTS


Other than the events mentioned in Note 18 of the Financial Report, there has not arisen in the interval between the end
of the financial year and the date of this report any item, transaction or event of a material and unusual nature likely, in
the opinion of the directors of the Responsible Entity of the Fund, to affect significantly the operations of the Group, the
results of those operations, or the state of affairs of the Group, in future financial years.

Annual Report 2018 15


Directors’ Report Continued

ENVIRONMENTAL ISSUES
The Fund’s operations are not subject to any significant environmental regulation under Commonwealth, State or
Territory legislation.

OTHER RELEVANT INFORMATION


The following is a list of other relevant information required to be reported under the Corporations Act 2001:
• Fees paid to the Responsible Entity – refer to note 16 to the financial statements;
• Units held by the directors of the Responsible Entity – refer to note 16 to the financial statements;
• Units held by the Responsible Entity and Associates – refer to note 16 to the financial statements;

INDEMNIFYING OFFICERS OR AUDITOR


Under the Fund’s constitution, the Responsible Entity is indemnified out of the Fund’s assets for any loss, damage
expense or other liability incurred by it in properly performing or exercising any of its powers, duties or rights in relation
to the Fund.

Insurance premiums have been paid, during or since the end of the financial year for all of the directors of the
Responsible Entity of the Fund. The contract of insurance prohibits disclosure of the nature of the liability and the
amount of the premium.

No indemnities have been given or insurance premiums paid, during or since the end of the financial year, for the
auditor of the Fund.

Total fee paid and expenses reimbursed to the Responsible Entity is $604,497 (2017: $615,425). All transactions with
related parties are conducted on normal commercial terms and conditions. From time to time, the Responsible Entity
or its director-related entities may buy or sell units in the Fund. These transactions are subject to the same terms and
conditions as those entered into by other Fund investors and are subject to corporate governance policies of AIMS
Financial Group.

Non-audit services paid to the auditor, amounted to $13,535 (2017: $13,535). These figures were approved by the
Audit Risk & Compliance Committee.

ROUNDING OF AMOUNTS
The Fund is of a kind referred to in ASIC Corporations (Rounding in Financial/Directors’ Reports) instrument 2016/191,
and in accordance with that instrument, amounts in the financial report and directors’ report have been rounded off to
the nearest thousand dollars, unless otherwise stated.

AUDITOR’S INDEPENDENCE
The auditor’s independence declaration is set out on page 17 and forms part of the directors’ report for the financial
year ended 30 June 2018.

Signed in accordance with a resolution of the Directors of AIMS Fund Management Limited:

George Wang
Executive Chairman

21st day of September 2018

16 AIMS Property Securities Fund


Auditor’s Independence Declaration

Annual Report 2018 17


Statement of Profit or Loss and
Other Comprehensive Income
for the year ended 30 June 2018

Note 2018 2017


($‘000s) ($‘000s)

Distribution income 2,753 3,714


Interest income 13 166 172
Net gains on financial assets held at fair value through 12,037 1,832
profit or loss
Net investment Income 13 14,956 5,718

Responsible Entity fees 16 - 181


Administration expenses 6 936 996
Total expenses 936 1,177

Net gain for the year before financial costs 14,020 4,541

Finance costs
Distributions to Unitholders 7 1,279 2,946

Other comprehensive income


Other comprehensive income for the year - -

Change in net assets attributable to Unitholders 12 12,741 1,595

The Statement of Profit or Loss and other Comprehensive Income is to be read in conjunction with the notes to the financial statements

18 AIMS Property Securities Fund


Statement of Financial Position
as at 30 June 2018

Note 2018 2017


($‘000s) ($‘000s)

CURRENT ASSETS
Cash and cash equivalents 8 4,822 1,649
Trade and other receivables 9 1,122 1,641
Financial assets held at fair value through profit or loss 10 - 11,000
Total current assets 5,944 14,290

NON-CURRENT ASSETS
Financial assets held at fair value through profit or loss:
Listed property securities 10 12,081 24,277

Unlisted property securities 10 86,104 55,343

Other financial assets:

Loan to Felix St Fund 16 2,000 -

Total non-current assets 100,185 79,620


Total assets 106,129 93,910

CURRENT LIABILITIES
Financial liabilities held at amortised cost:
Trade and other payables 11 301 773
Total current liabilities 301 773
Non-current Liabilities - -

Total liabilities (excluding net assets attributable to Unitholders) 301 773

Net assets attributable to Unitholders 12 105,828 93,137

The Statement of Financial Position is to be read in conjunction with the notes to the financial statements

Statement of Changes in Equity


for the year ended 30 June 2018

The Fund’s net assets attributable to Unitholders are classified as a liability under AASB132 Financial Instruments:
Presentation. As such the Fund has no equity, and no changes in equity have been presented for the current or
comparative year.

The Statement of Changes in Equity is to be read in conjunction with the notes to the financial statements

Annual Report 2018 19


Statement of Cash Flows
for the year ended 30 June 2018

Note 2018 2017


($‘000s) ($‘000s)

CASH FLOWS FROM OPERATING ACTIVITIES


Distributions received 3,272 3,144
Interest received 166 172
Management fees paid - (217)
Other expenses paid (915) (959)
Net cash inflows from operating activities 8 2,523 2,140

CASH FLOWS FROM INVESTING ACTIVITIES


Proceeds from returns of capital 109 66
Proceeds from matured term deposit 11,000 -
Proceeds from sale of investments 12,363 515
Acquisition of Investments (19,000) (11,329)
Net cash flows (used in) / from investing activities 4,472 (10,748)

CASH FLOWS FROM FINANCING ACTIVITES

Payments for unit buyback 12 (50) (650)


Payments for loan to Felix St Fund (2,000) -
Distributions paid (1,772) (3,098)
Net cash flows (used in) financing activities (3,822) (3,748)

Net (decrease) / increase in cash and cash equivalents 3,173 (12,356)


Cash and cash equivalents at beginning of the year 1,649 14,005
Cash and cash equivalents at the end of the year 8 4,822 1,649

The Statement of Cash Flows is to be read in conjunction with the notes to the financial statements

20 AIMS Property Securities Fund


Notes to the Financial Statements
for the year ended 30 June 2018

1. GENERAL INFORMATION instrument 2016/191, and in account on an accruals basis except


These financial statements cover accordance with that instrument, all where stated otherwise.
AIMS Property Securities Fund financial information presented in
(“the Fund”) as an individual entity Australian dollars has been rounded Distribution income
domiciled in Australia. The address to the nearest thousand unless For all listed and unlisted securities,
otherwise stated. distribution income is recognised at
of the Fund’s registered office is at
Level 41, 259 George Street, Sydney, the date the securities are quoted ex-
NSW 2000. The Fund is a registered 4. USE OF ESTIMATES AND distribution.
Managed Investment Scheme under JUDGEMENTS Interest income and expense
Corporations Act 2001 and is listed Interest income and expense is
on both the ASX and SGX. The fund In preparing these financial
statements, management has recognised in the profit or loss as it
is a for-profit entity. The Responsible accrues, using the effective interest
Entity of the Fund is AIMS Fund made judgements, estimates
and assumptions that affect the method.
Management Limited.
application of accounting policies (B) Income tax and other taxes
The annual financial report for the and the reported amounts of assets,
liabilities, income and expenses. (i) Income Taxes
year ended 30 June 2018 was Under current income tax legislation,
authorised for issue by the Directors Actual results may differ from these
estimates. the Fund is not liable to pay income
of the Responsible Entity on 21 tax provided that the taxable income
September 2018. and taxable realised gains are fully
The estimates and underlying
assumptions are reviewed on distributed to unitholders.
The Fund invests in a portfolio of
property related securities diversified an ongoing basis. Revisions to (C) Investment entities
by property sectors, geographic accounting of estimates made in
determining the fair value of unlisted The Fund has determined that it is an
locations and fund managers.
property securities are recognised investment entity under the definition
in the period in which the estimate in AASB 10 Consolidated Financial
2. BASIS OF PREPARATION
is revised if the revision affects only Statements as it meets the following
(A) Statement of compliance that period or in the period of the criteria:
The financial statements are general revision and future periods if the (a) The Fund has obtained funds for
purpose financial statements which revision affects both current and the purpose of providing unitholders
have been prepared in accordance future periods. with investment management
with Australian Accounting Standards services;
issued by the Australian Accounting Accounting policies which are subject (b) The Fund’s business purpose,
Standards Board (AASB) and the to significant accounting estimates which are communicated directly to
Corporations Act 2001. The financial and judgements at the reporting date unitholders, is investing solely for
statements also comply with the and have a significant risk of causing returns from capital appreciation and
International Financial Reporting material adjustments to the financial investment income; and
Standards (IFRSs) issued by the statements in the next annual (c) The performance of investments
International Accounting Standards reporting period include estimates made through the Fund are measured
Board (IASB). of fair value for unlisted property and evaluated on a fair value basis.
securities (see notes 10 and 14).
As a result, the Fund accounts for
(B) Basis of measurement
5. SIGNIFICANT ACCOUNTING its investments in investees on a fair
The financial statements have been value basis.
POLICIES
prepared on an accrual basis and
are based on historical cost with the Significant accounting policies have (D) Accounting Standards and
exception of investments in property been applied consistently to all Interpretations issued but not yet
securities, which are measured at periods presented in these financial effective
fair value. statements, except where otherwise A number of new standards,
stated. amendments to standards and
3. FUNCTIONAL AND PRESENTATION interpretations are effective for annual
CURRENCY A number of significant accounting periods beginning after 1 July 2018
The Financial Report is presented policies are presented below. Other and have not been applied early in
in Australian dollars, which is the significant accounting policies are preparing these financial statements.
Fund’s functional currency. contained in the notes to the financial Those which may be relevant to the
statements to which they relate. Fund are set out below. The Fund did
The Fund is of a kind referred to not adopt these standards early.
in ASIC Corporations (Rounding (A) Income and expenses
in Financial/Directors’ Reports) Income and expenses are brought to

Annual Report 2018 21


Notes to the Financial Statements Continued

Standard/Interpretation Impact
AASB 9 Financial Instruments AASB 9, published in July 2014, replaces the existing guidance in AASB 139 Finan-
cial Instruments: Recognition and Measurement. AASB 9 includes revised guidance
on the classification and measurement of financial instruments, including a new
expected credit loss model for calculating impairment on financial assets, and the
new general hedge accounting requirements. It also carries forward the guidance
on recognition and derecognition of financial instruments from AASB 139. AASB 9
is effective for annual reporting periods beginning on or after 1 January 2018, with
early adoption permitted. AASB 9 is applicable to the Fund from 1 July 2018. AASB 9
does not have a material impact on the Fund’s Financial statements as it measures
its investments at fair value through profit or loss.

AASB 15 Revenue from Contracts with The AASB has issued a new standard for the recognition of revenue. This will
Customers replace AASB 118 Revenue which covers contracts for goods and services and
AASB 111 which covers construction contracts. The new standard is based on the
principle that revenue is recognised when control of a good or service transfers
to a customer - so the notion of control replaces the existing notion of risks and
rewards. AASB 15 is applicable to the Fund from 1 July 2018.
The Fund’s main sources of revenue are interest, distribution income and gains
on financial instruments held at fair value. All of these are outside the scope of the
new revenue standard. As a consequence, AASB15 does not have a significant
impact on the Fund’s accounting policies or the amounts recognised in the financial
statements.

6. ADMINISTRATION EXPENSES
2018 2017
($‘000s) ($‘000s)
Professional fees 128 303
Admin fee (paid up to 30 November 2016) (note 16) - 82
Rent, Admin and employee expenses reimbursement (note 16) 605 352
Listing fees 95 101
Custodian fees 48 60
Share registry fees 37 70
Other expenses 23 28
936 996

7. DISTRIBUTIONS PAID AND PAYABLE

2018 2017

($’000s) Cents per unit ($’000s) Cents per unit


Sep quarter distribution paid 523 1.1707 965 2.1443
Dec quarter distribution paid 220 0.4926 657 1.4660
Mar quarter distribution paid 357 0.8001 652 1.4622
Jun quarter distribution payable 179 0.4018 672 1.5059
1,279 2.8652 2,946 6.5784

*Previous year figure is adjusted due to the unit consolidation.

22 AIMS Property Securities Fund


In accordance with the Fund’s constitution and applicable taxation legislation, the Fund distributes its taxable income
in full to the Unitholders who are presently entitled to the income. As the Fund fully distributes its taxable income, it is
not subject to tax.

Financial assets held at fair value may include unrealised capital gains. Should such a gain be realised, that portion of
the gain that is subject to capital gains tax will be distributed so that the Fund is not subject to capital gains tax.
Realised capital losses are not distributed to Unitholders and are retained in the Fund to be offset against any current
or future realised capital gains. If realised capital gains exceed realised capital losses, the excess is distributed to the
Unitholders.

Distributions to Unitholders are ma¬de, net of any applicable withholding tax.

8. CASH AND CASH EQUIVALENTS

2018 2017
($‘000s) ($‘000s)
Cash at bank 4,822 1,649
4,822 1,649

Reconciliation of cash flows from operating activities


Profit for the year before finance costs 14,020 4,541
Adjustments for:

Net unrealised gain on investments (12,147) (1,828)


Net realised loss/(gain) on investments 110 (12)
Change in trade and other payables 21 -
Change in trade and other receivables 519 (561)
Cash flows from operating activities 2,523 2,140

Cash and cash equivalents in the statement of financial position consist of cash at bank and short-term deposits that
are readily convertible into known amounts of cash. The Fund considers a short-term deposit to have a maturity of three
months or less and be subject to an insignificant risk of change in value.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash at bank.

9. TRADE AND OTHER RECEIVABLES


2018 2017
($‘000s) ($‘000s)
Accrued income 1,118 1,637
GST receivable 4 4
1,122 1,641

Recognition and measurement


Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective
interest method, less an allowance for impairment. Collectability of trade receivables is reviewed on an ongoing basis.
Individual debts that are known to be uncollectable are written off when identified. An impairment provision is recognised
when there is objective evidence that the Fund may not be able to collect the receivable. Financial difficulties of the
debtor, default payments or debts more than 60 days overdue are considered objective evidence of impairment. The
amount of the impairment loss is the difference between the receivable carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest rate.

Impairment losses are recognised in profit or loss. When a trade receivable for which an impairment allowance had
been recognised before it becomes uncollectable in a subsequent period, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against doubtful debt expense in the profit or loss.

Annual Report 2018 23


Notes to the Financial Statements Continued

10. FINANCIAL ASSETS

2018 2017
($‘000s) ($‘000s)
(i) Financial assets at fair value
Term Deposits - 11,000
Listed property securities 12,081 24,277
Unlisted property securities(1) 86,104 55,343
Total financial assets at fair value 98,185 90,620

Reconciliation
Carrying amount at the beginning of the year 90,620 58,032
Additions - cost 19,000 11,329
The conversion of financial assets at cost - 20,000
Revaluation to fair value 12,147 1,828
Term deposit matured (11,000) -
Disposals including returns of capital (12,582) (569)
98,185 90,620

(1)
The fair value of these unlisted property securities as at the end of the reporting periods are estimated based on the
net tangible asset of the underlying funds, which are closed-end or open-ended with no redemption windows. As the
underlying assets and liabilities of these funds are measured at fair value or their carrying value approximates their
fair value, the net tangible asset represents the best estimate of fair value of these investments in unlisted funds. The
realisable value and liquidity of the investments are subject to the underlying funds’ performance, their ability to comply
with loan covenants, and/or their ability to sell down assets. As at 30 June 2018 the fair value of investments in closed
end funds and open ended funds with no redemption windows amounted to $86,104,000 (2017: $55,343,000).

Financial assets at fair value through profit or loss


Classification
The financial assets at fair value through profit or loss comprise financial instruments designated at fair value through
profit or loss upon initial recognition. These financial assets include unlisted property securities that are not held for
trading purposes and listed property securities which may be sold and term deposits.

The fair value through profit or loss classification is in accordance with AASB 139 Financial Instruments: Recognition
and Measurement. The fair value through profit or loss classification is applicable for all of the financial assets held by
the Fund as the Fund’s performance is evaluated on a fair value basis and information about the Fund is provided on
that basis to the directors of the Responsible Entity.

Recognition
The Fund recognises financial assets and financial liabilities on the date it becomes a party to the contractual provisions
of the instrument. Financial assets are recognised using trade date accounting. From this date, any gains and losses
arising from changes in fair value of the financial assets or financial liabilities are recorded. Financial liabilities are not
recognised unless one of the parties has performed their part of the contract, or the contract is a derivative contract not
exempted from the scope of AASB 139.

Measurement
Financial assets at fair value through profit or loss are measured initially at fair value (excluding transaction cost).
Transaction costs on financial assets classified at fair value through profit or loss are expensed immediately.

Subsequent to initial recognition, all instruments classified at fair value through profit or losses are measured at fair
value with changes in their fair value recognised in the profit or loss.

24 AIMS Property Securities Fund


Fair value measurement principles
The fair value of financial instruments is based on their quoted market prices at the reporting date without any deduc-
tion for estimated future selling costs. Financial assets are priced at current bid price, whilst financial liabilities are
priced at current asking price.

Investments in unlisted managed investment schemes are recorded at the exit price or the Net Tangible Asset (NTA)
value as reported by the managers of such schemes as at the reporting date if the exit price is not available.

Derecognition
The Fund derecognises a financial asset when the contractual rights to the cash flows from the financial asset expire
or it transfers the financial asset and the transfer qualifies for de-recognition in accordance with AASB 139. A financial
liability is derecognised when the obligation specified in the contract is discharged, cancelled or expired.

11. TRADE AND OTHER PAYABLES

2018 2017
($‘000s) ($‘000s)
Accrued expenses 122 101
Distributions payable 179 672
Total payables 301 773

Trade and other payables are carried at amortised cost and due to their short-term nature are not discounted. They
represent liabilities for goods and services provided to the Fund prior to the end of the financial year that are unpaid
and arise when the Fund becomes obliged to make future payments in respect of the purchase of these goods and
services. The amounts are unsecured and are usually paid within 60 days of recognition.

12. NET ASSETS ATTRIBUTABLE TO UNITHOLDERS


2018 2017
No. of No. of No. of $ No. of No. of No. of $
Ordinary Deferred Total Units (‘000s) Ordinary Deferred Total Units (‘000s)
Units Units (‘000s) Units Units (‘000s)
(‘000s) (‘000s) (‘000s) (‘000s)
Opening balance 44,659 1,753 46,412 93,137 450,907 1,753 452,660 92,192
Consolidated (1 for 10) - - - - - (405,816) -

Share buyback (53) - (53) - - (432) (650)


(50) (432)
Change in net assets - - - 12,741 - - - 1,595
attributable to Unitholders
Closing balance 44,606 1,753 46,359 105,828 44,659 1,753 46,412 93,137

Annual Report 2018 25


Notes to the Financial Statements Continued

All Ordinary Units in the Fund carry equal rights and each unit represents a right to the underlying assets of the Fund.
Deferred Units in the Fund carry no right to participate in any distribution of the Fund. Deferred Units are converted to
ordinary units on the terms set out in the Fund’s constitution. At 30 June 2018, 1,752,605 (2017: 1,752,605) Deferred
Units were on issue. Deferred units were issued to the Responsible Entity and are convertible to Ordinary Units to settle
performance fees if the performance hurdles were met. However, the supplemental deed of the Fund’s constitution
removed the payment of performance fees to the Responsible Entity (see Note 16) and as such the Deferred Units will
no longer be converted to Ordinary Units.

Non-distributable income, which may comprise unrealised changes in the fair value of investments, net capital losses,
tax-deferred income, accrued income not yet assessable and non-deductible expenses, is reflected in the profit or loss
as a change in net assets attributable to Unitholders. These items are included in the determination of distributable
income in the period for which they are assessable for taxation purposes.

Capital risk management

The Responsible Entity manages the Fund’s capital to ensure that it will be able to continue as a going concern with
the primary objective being the protection of unitholder value. Capital includes cash and cash equivalents as presented
on the statement of financial position.

13. OPERATING SEGMENTS


The Fund invests in a portfolio of property related securities diversified by property sectors, geographic locations
and fund managers. The performance of the portfolio as a whole and of each investment is reported to and reviewed
by the Board of the Responsible Entity at least quarterly. All decisions relating to acquisitions, disposal and asset
allocation are made in accordance with the Fund’s investment policy and required to be approved by the Board of the
Responsible Entity. The Fund has assessed that each investment is considered a reportable segment.

Information related to each reportable segment is set out below. Distribution income and changes in fair value of each
investment are used to measure performance because the Board believe that this information is the most relevant in
evaluating the results of the respective segments. The accounting policies for distribution income and changes in fair
value are disclosed in notes 5(A) and 10.

Financial Performance
2018 2017
Investments Sectors Distribution Changes Total Distribution Changes Total
Income in Fair Segment Income in Fair Segment
$ Value Income $ Value Income
(‘000s) $ $ (‘000s) $ $
(‘000s) (‘000s) (‘000s) (‘000s)
Listed
Blackwall Limited Diversified 102 139 241 99 829 928
Blackwall Property Trust Diversified 380 (42) 338 497 1,177 1,674
APN Regional Property Fund Office 232 317 549 260 134 394
Arena REIT Childcare 272 (118) 154 320 718 1,038
AIMS AMP Capital Industrial Industrial 275 (130) 145 383 3 386
REIT
Unlisted
AIMS Property Fund (St Kilda Office 285 7,178 7,463 456 608 1,064
Road)
MacarthurCook Office Property Office - 310 310 - 96 96
Trust
AIMS Property Fund (Felix St) Office - (289) (289) 600 (2,964) (2,364)
AIMS Property Fund (Laverton) Industrial 1,144 3,273 4,417 1,066 38 1,104
Pelathon Pub Fund Pubs 63 (35) 28 33 1,193 1,226
AIMS Real Estate Opportunity Diversified - 1,434 1,434 - - -
Fund
Total by Segments 2,753 12,037 14,790 3,714 1,832 5,546

26 AIMS Property Securities Fund


Segment Assets
2018 2017
Investments Sectors Carrying Distribution/ Total Carrying Distribution/ Total
Value Dividend Income Segment Value Dividend Income Segment
$ Receivables Assets $ Receivables Assets
(‘000s) $ $ (‘000s) $ $
(‘000s) (‘000s) (‘000s) (‘000s)
Listed
Blackwall Limited Diversified 2,624 - 2,624 2,486 - 2,486
Blackwall Property Trust Diversified - - - 7,602 - 7,602
APN Regional Property Fund Office 2,709 58 2,767 2,392 58 2,450
Arena REIT Childcare 1,075 16 1,091 5,995 82 6,077
AIMS AMP Capital Industrial Industrial 5,673 - 5,673 5,803 98 5,901
REIT
Unlisted
AIMS Property Fund (St Kilda Office 26,999 - 26,999 19,821 - 19,821
Road)
MacarthurCook Office Property Office 6,838 - 6,838 6,528 - 6,528
Trust
AIMS Property Fund (Felix St) Office 10,155 600 10,755 10,444 600 11,044
AIMS Property Fund (Laverton) Industrial 19,423 400 19,823 16,150 765 16,915
Pelathon Pub Fund Pubs 2,255 44 2,299 34 2,433
2,399
AIMS Real Estate Opportunity Diversified 20,434 - 20,434 - - -
Fund
Total by Segments 98,185 1,118 99,303 79,620 1,637 81,257

Reconciliations of 2018 2017 Reconciliations of 2018 2017


segment assets $ $ segment income $ $
(‘000s) (‘000s) (‘000s) (‘000s)
Total segment assets 99,303 81,257 Total segment income 14,790 5,546
Cash and cash equivalents 4,822 1,649 Interest income 166 172

Other assets 4 4 Net investment income 14,956 5,718

Term deposit - 11,000


Loan to a related party 2,000 -
Total assets 106,129 93,910

14. FINANCIAL INSTRUMENTS - FAIR VALUE MEASUREMENT


The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their
levels in the fair value hierarchy. It does not include fair value information for financial assets and financial liabilities not
measured at fair value as the carrying amount is a reasonable approximation of their fair value.
Fair Value ($’000)
30 June 2018 Level 1 Level 2 Level 3 Total Carrying Value
$ (‘000s)
Financial assets measured at fair value

Listed property securities 12,081 - - 12,081 12,081


Unlisted property securities - - 86,104 86,104 86,104
12,081 - 86,104 98,185 98,185
Financial liabilities not measured at fair value
Net Assets attributable to Unitholders 70,255 - - 70,255 105,828
70,255 - - 70,255 105,828

30 June 2017 Level 1 Level 2 Level 3 Total Carrying Value


$ (‘000s)
Financial assets measured at fair value

Listed property securities 24,277 - - 24,277 24,277


Unlisted property securities - - 55,343 55,343 55,343
Term Deposits - 11,000 - 11,000 11,000
24,277 11,000 55,343 90,620 90,620

Financial liabilities not measured at fair value


Net Assets attributable to Unitholders 66,989 - - 66,989 93,137
66,989 - - 66,989 93,137

Annual Report 2018 27


Notes to the Financial Statements Continued

The different levels have been defined as follows:


• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities.
• Level 2: inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either
directly (i.e., as prices) or indirectly (i.e., derived from prices).
• Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs).

Valuation technique and significant unobservable inputs


The following table shows the valuation techniques used in measuring Level 1 and 3 fair values, as well as the
significant unobservable inputs used.
Type Valuation technique Significant unobserv- Inter-relationship between key
able inputs unobservable inputs and fair
value measurement
Listed property securities Market price: Quoted close mar- Not applicable Not applicable
ket prices at the reporting date
– Level 1 Market price: Quoted closing Not applicable Not applicable
market prices at the reporting
date
Net Assets attributable to Market price: Quoted closing Not applicable Not applicable
Unitholders – Level 1 market prices at the reporting
date
Term Deposits – Level 2 Discounted cash flow Not applicable Not applicable

Unlisted property securi- Net Tangible Asset: Investments As the underlying funds The estimated fair value would in-
ties – Level 3 in unlisted managed investment are unlisted and frozen for crease/ (decrease) if the NTA of
schemes are recorded at the redemptions, it is uncertain the underlying funds increases/(de-
Net Tangible Asset (NTA) price that the investments can creases)
as reported by the managers of be realised at NTA
such schemes at the reporting
date

Level 3 fair values


The following table shows reconciliation from the opening balances to the closing balances for Level 3 fair values.

Level 3 Reconciliation $(’000s) $(’000s)


Balance at 1 July 55,343 35,170
Change in fair value - unrealised 11,871 (1,016)
Change in fair value - realised - (13)
Acquisitions 19,000 329
Acquisitions - receipt of capital return - 943
Conversion of financial assets at cost - 20,000 (1)
Disposals including returns of capital (110) (70)
Balance at 30 June 2018 86,104 55,343

(1)
The amount represents investments in income units of property funds, AIMS Property Fund (Felix St) and AIMS Property Fund
(Laverton). The units were purchased at capital cost of $1 each and earn fixed distribution income of up to 6% p.a. subject to the
financial ability of the underlying funds as determined by the Trustee. On 30 June 2017, the Trustee of AIMS Property Fund (Laverton)
have consolidated the Income Units and Class A units into 1,000,000 Ordinary Units. There has been no impact on ownership or
changes to the AIMS Property securities Fund’s financial position, with relation to its holding in the AIMS Property Fund (Laverton).
Similarly, the Trustee of AIMS Australia Property Investment Fund, which owns all the units in the AIMS Property Fund (Felix St.), have
consolidated the Income Units and Class A units into 1,000,000 Ordinary Units. The 1,000,000 Ordinary Units held by AIMS Australia
Property Investment Fund (AAPIF) were distributed to the AIMS Property Securities Fund. The end structure is simply AIMS Property
Securities Fund now owns 1,000,000 Ordinary Units in the AIMS Property Fund (Felix St.). Where before the Fund held the units in
AIMS Property Fund (Felix St) through AAPIF, in a flow through structure, it now directly holds all the interest in AIMS Property Fund
(Felix St). There has been no impact on ownership or changes to the AIMS Property Securities Fund’s financial position, in relation
to its holdings.

28 AIMS Property Securities Fund


Sensitivity analysis
For the fair values of investments in closed end funds and open ended funds with no redemption window (see note 10),
reasonably possible changes to the NTA, holding other inputs constant, would have the following effects.
2018 2017
$(‘000s) $(‘000s)
Impact on gain before finance cost
+10.00% (1,000 basis points) of the NTA 8,610 5,534
- 10.00% (1,000 basis points) of the NTA (8,610) (5,534)

15. FINANCIAL RISK MANAGEMENT AND FINANCIAL INSTRUMENTS


Overview
The Fund’s principal financial instruments are comprised of listed and unlisted property securities, receivables,
payables, and cash. The Fund has exposure to the following risks from its use of financial instruments:
• Credit risk
• Liquidity risk
• Market risk
Financial risk and risk management network
The board of directors of the Responsible Entity has overall responsibility for the establishment and oversight of
the Fund’s risk management network. The Fund’s risk management policies, including those related to its investment
activities is developed and monitored by an Audit and Risk Committee.

In addition to the policies adopted by the Audit and Risk Committee, the Responsible Entity has in place a
compliance plan which outlines the processes that will ensure both the Fund and Responsible Entity comply with the
requirements of the Australian Securities and Investment Commission (ASIC).

Credit risk
Credit risk is the risk that a counter-party to a financial instrument will fail to discharge an obligation or commitment
that it has entered into with the Fund. The Fund’s management has a credit policy in place and the exposure to credit
risk is monitored on an ongoing basis.

Credit risk arises from the financial assets of the Fund, which comprise cash and cash equivalents and trade
and other receivables. The Fund’s exposure to credit risk arises from potential default of the counter-party, with a
maximum exposure equal to the carrying amount of these instruments.

The Fund manages its credit risk from cash and cash equivalents by placing deposits with AA- rated banks. Trade
and other receivables as at the balance date primarily relate to distribution income receivables as at 30 June 2018,
$600,000 in distributions receivable is past due. However, the amount is not impaired (2017: nil).

Liquidity risk
Liquidity risk is the risk that the Fund will not be able to meet its financial obligations as they fall due. The Fund’s
approach to managing liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet
its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking
damage to the Fund’s reputation.

The following is the contractual maturity of financial liabilities. The table has been drawn up based on the undiscounted
cash flows of financial liabilities based on the earliest date on which the Fund can be required to pay. The table excludes
the net asset attributable to unitholders liability which is only payable if liquidated.
30 June 2018 Carrying amount Contractual cash 3 mths or less Above 4 mths
$’000 flows $’000 $’000
$’000
Accounts payable 301 301 301 -
Total 301 301 301 -

30 June 2017 Carrying amount Contractual cash 3 mths or less Above 4 mths
$’000 flows $’000 $’000
$’000
Accounts payable 773 773 773 -
Total 773 773 773 -

Annual Report 2018 29


Notes to the Financial Statements Continued

Market risk
Market risk is the risk that changes in the market prices, such as interest rates and equity prices will affect the Fund’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.

Price risk
The Company’s exposure to price risk relates primarily to the Company’s investments in listed and unlisted property
securities as disclosed in note 10. A change of 10% in price/NTA at the reporting date would be increase (decrease) gain
before finance cost by the amounts below. This sensitivity analysis assumes that all other variables remain constant.
2018 2017
($‘000s) ($‘000s)
Impact on gain before finance cost
+10.00% 9,819 7,962
-10.00% (9,819) (7,962)

Interest rate risk


The Fund’s exposure to market interest rates relates primarily to the Fund’s cash and cash equivalents and term
deposits investments. A change of 100 basis points in interest rates at the reporting date would be increase
(decrease) gain before finance cost by the amounts below. This interest sensitivity analysis assumes that all other
variables remain constant.
2018 2017
($‘000s) ($‘000s)
Impact on gain before finance cost
+1.00% (100 basis points) 48 126
-1.00% (100 basis points) (48) (126)

16. RELATED PARTIES


Key management personnel compensation and unitholdings
The fund deems the following Directors and Executives of the responsible entity to be key management personnel
(as at 30 June 2018):

George Wang - Executive chairman


Richard Nott - Non-executive Independent Director
John Love - Non-executive Independent Director
Jim Stewart - Company Secretary (resigned on 7 August 2017)
Claud Chaaya - Company Secretary (appointed on 7 August 2017)

As at the reporting date, details of directors who hold units for their own benefit or who have an interest in holdings
through a third party and the total number of such units held are listed as follows:
Director 2018 % holding 2017 % holding
No. of units No. of units
(‘000s) (‘000s)
Richard Nott 188 0.42 110 0.25
John Love 310 0.69 310 0.69
George Wang* 14,070 31.54 14,070 31.50
*George Wang holds the units indirectly through AIMS Capital Management Limited.
Responsible Entity Fees and other transactions
2018 2017
$ $
Management fee expense - 181,146
Admin fee - 82,081
Subtotal fees paid to the Responsible Entity - 263,227

Rent, admin and employee expenses reimbursed to the Responsible Entity 604,497 352,198
Total fees paid and expenses reimbursed to the Responsible Entity 604,497 615,425

Total accrued Responsible Entity fees included in trade and other payables as at 30 June 2018 is nil (2017: $49,950).

30 AIMS Property Securities Fund


From 1 December 2016, the supplemental deed of the Fund’s constitution removed the payment of any management
fee, performance fee or other remuneration to AIMS Fund Management Limited, as the responsible entity of the Fund.
AIMS Fund Management Limited continues to act as Responsible Entity and manager of the Fund but will not be
entitled to receive any fees under the Constitution. Under the supplemental deed, AIMS Fund Management Limited
continues to be entitled to be reimbursed out of the assets of the Fund for the reasonable and proper costs and
expenses incurred by Responsible Entity in engaging key persons to provide the necessary management services for
the ongoing management of the Fund.
Related party transactions
All transactions with related parties are conducted on normal commercial terms and conditions. From time to time, the
Responsible Entity or its director-related entities may buy or sell units in the Fund. These transactions are subject to
the same terms and conditions as those entered into by other Fund investors and are subject to corporate governance
policies of AIMS Financial Group.

Loan and guarantee to AIMS Property Fund (Felix St)


AIMS Property Fund (Felix St), the Fund’s investee has a loan facility of 14,190,000 with a bank which was due to
renew on 30 June 2018. The bank required AIMS Property Fund (Felix St) to provide a financial guarantee and a
security deposit as conditions for renewing the loan until 16 December 2020.
To support the investee to obtain the loan renewal, the Fund:

• signed a Guarantee and Indemnity with the bank on 12 June 2018, which guarantees repayment (up to $1,500,000)
by the Fund for any interest or expenses shortfall by AIMS Property Fund (Felix St) for the full term of the loan; and
• provided an interest free loan of $2,000,000 to AIMS Property Fund (Felix St), to be placed in the bank’s security
deposit account, as an offset to the overall loan amount of $14,190,000. The amount was placed with the bank as
at 30 June 2018 by AIMS Property Fund (Felix St). The deposit is required to be maintained with the bank until the
maturity of the loan.

Related party investments held by the Fund


The Fund may purchase and sell units in other approved funds managed by the Responsible Entity in the ordinary
course of business at application and redemption prices calculated in accordance with the constitution of those
Funds. Details of the Fund’s investments in other funds operated by the Responsible Entity on its related entity are
set out below.
2018 2017
Entity No. of % of Distribution No. of % of Distribution
units units on received units units on received
(‘000) issue /receivables (‘000) issue /receivables
($) ($)
MacarthurCook Office Property Trust (Whole- 10,781 36.85 - 10,781 36.85 -
sale units)
AIMS AMP Capital Industrial REIT Management 4,148 0.65 275,615 4,148 0.65 394,864
Ltd
AIMS Property Fund (St Kilda Rd) 40,672 90.24 284,869 40,672 90.24 456,180
AIMS Property Fund (Felix St) 1,000 100 - 1,000 100 600,000
AIMS Property Fund (Laverton) 1,000 100 1,143,888 1,000 100 1,065,751
AIMS Real Estate Opportunity Fund 19,000 99.0 - - - -

Units in the Fund held by related parties


Details of holdings in the Fund by the Responsible Entity, other funds operated by the Responsible Entity and other
related parties are set out below:
2018 2017

Entity Relationship No. of % of Distribution No. of % of Distribution


units units on paid units units on paid
(‘000) issue /payables (‘000) issue /payables
($) ($)
MacarthurCook Office Other related 3,990 8.94 114,489 3,405 7.63 198,489
Property Trust* party
AIMS Capital Manage- Other related 14,070 31.54 403,264 14,070 31.5 925,558
ment Limited party
KMP Other related 498 1.11 12,019 420 0.94 27,629
party

* Units were directly acquired from the ASX by MacarthurCook Office Property Trust.

Annual Report 2018 31


Notes to the Financial Statements Continued

At 30 June 2018, the Responsible Entity also held 1,752,605 Deferred Units (2017:1,752,605) issued at $0.00001 per
unit. A Deferred Unit carries no voting rights and no right to participate in any distribution from the Fund until it converts
into an Ordinary Unit. However, the supplemental deed of the Fund’s constitution removed the payment of performance
fees to the Responsible Entity (see Note 12) and as such the Deferred Units will no longer be converted to Ordinary
Units.

17. CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES AND ASSETS


Except for loan to related party and guarantee disclosed in note 16, the directors of the Responsible Entity are not
aware of any other potential liabilities, claims, contingent assets or capital commitments against the Fund as at balance
date.

18. SUBSEQUENT ENVENTS


Except for the following matters, there have not been any other events of a material and unusual nature likely in the
opinion of the Responsible Entity, to significantly affect the operations of the Fund, the results of the operations, or the
state of affairs of the Fund, in future financial years.

The Fund’s Responsible Entity is aware that AIMS Real Estate Funds Limited, the responsible entity of the MacarthurCook
Office Property Trust (OPT), has undertaken a strategic review of OPT. As part of the strategic review, OPT’s responsible
entity has indicated their ongoing commitment to manage OPT and provide an opportunity to generate further value for
members of OPT. OPT’s responsible entity is proposing to introduce a one-off process that allows existing members of
OPT to sell or buy their units from other OPT members. This may provide members of OPT with an additional liquidity
opportunity. OPT’s responsible entity is organising a meeting with members of OPT, which will discuss and vote on a
range of matters, including but not limited to: a resolution proposed by certain members holding retail units in OPT to
wind-up OPT; and a resolution in relation to the proposed amendments to the constitution of OPT in connection with
the future strategy for OPT. The Responsible Entity of the Fund has assessed that the matter has no material impact
on the Fund’s investment in OPT measured at NTA as at 30 June 2018, which is considered the best estimate of fair
value as at 30 June 2018.

On 16 March 2018, AIMS Property Fund (Felix St) signed a loan extension arrangement with the financier. This
agreement removed the Interest Cover Ratio (ICR) as a covenant and replaced this with a financial guarantee (see
Note 16) and a loan review event based on the investment property’s occupancy rate. As at 31 August 2018, the
occupancy rate fell marginally below the required occupancy level, creating a loan review event. The review event is
not a breach of covenant. The Responsible Entity is endeavouring to rectify the shortfall and is working closely with the
leasing agent to engage additional tenant interest in the asset. The Responsible Entity has provided the financier with
all the updated leasing information and as a result of the financial guarantee, security deposit for the loan (see Note
16), marginal nature of the reduction in occupancy and anticipated leasing activity, the Directors are of the view that the
loan facility will continue to be made available by the financier through to the maturity date.

Notwithstanding the aforementioned disclosures, as disclosed in Note 10 the fair value of the unlisted property
securities as at the end of the reporting periods are estimated based on the net tangible asset of the underlying funds.
As the underlying assets and liabilities of these funds are measured at fair value or their carrying value approximates
fair value, the net tangible asset represents the best estimate of fair value of these investments in unlisted funds. The
valuation of the investments will vary in line with the changes in the net tangible asset values of the underlying funds.
The realisable value and liquidity of the investments are subject to the underlying funds’ performance, their ability to
comply with loan covenants, and/or their ability to sell down assets.

19. AUDITORS’ REMUNERATION

2018 2017
$ $
Audit services
Auditors of the Fund - KPMG
Audit and review of the financial reports 55,500 54,500
Other regulatory audit services 7,000 7,000
Total 62,500 61,500

Other services:
Auditors of the Fund - KPMG
Taxation services 13,535 13,535
Total 13,535 13,535

32 AIMS Property Securities Fund


Director’s Declaration
for the year ended 30 June 2018

The directors of the Responsible Entity for AIMS Property Securities Fund (“the Fund”) declare that:

(a) The financial report as set out in pages 18 to 32 are in accordance with the Corporations Act 2001, including:

(i) Giving a true and fair view of the financial position of the Fund as at 30 June 2018 and of its performance, for
the financial year ended on that date;

(ii) In compliance with International Financial Reporting Standards as stated in note 2 to the financial statements;
and

(iii) Complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the
Corporations Regulations 2001.

(b) The directors have been given the declarations required by Section 295A of the Corporations Act 2001.

(c) As at the date of this declaration, in the Directors’ opinion, there are reasonable grounds to believe
that the Fund will be able to pay its debts as and when they become due and payable.

This declaration is made in accordance with a resolution of the Board of Directors made pursuant to Section 295(5) of
theCorporations Act 2001:

Signed in accordance with a resolution of directors of the Responsible Entity.

Mr George Wang
Executive Chairman

AIMS Fund Management Limited


Sydney
21st day of September 2018

Annual Report 2018 33


Independent auditor’s report
for the year ended 30 June 2018

34 AIMS Property Securities Fund


Annual Report 2018 35
Independent auditor’s report Continued

36 AIMS Property Securities Fund


Annual Report 2018 37
Stock Exchange Information
for the year ended 30 June 2018

STATEMENT OF QUOTED SECURITIES AS AT 30 JUNE 2018


• There are 1,054 unitholders holding a total 44,606,083 ordinary units
• The 20 largest unitholders between them hold 83.87% of the total units on issue

DISTRIBUTION OF QUOTED UNITS AS AT 30 JUNE 2018

Distribution of Unitholders Category (size of holding) Number of Unitholders


1 - 1,000 403
1,001 – 5,000 393
5,001 – 10,000 92
10,001 – 100,000 137
100,001 and over 29
Total 1,054

SUBSTANTIAL UNITHOLDINGS AS AT 30 JUNE 2018


The names of the Fund’s substantial unitholders pursuant to the provisions of section 671B of the Corporations Act
2001 are as follows:
Entity Unitholdings
AIMS Capital Management Limited 14,069,656

DIRECTORS’ UNITHOLDINGS
As at 30 June 2018, Directors of the Fund held a relevant interest in the following securities on issue by the Fund.
Director No. of units (‘000)
Richard Nott 188
John Love 310
George Wang 14,070

RESTRICTED SECURITIES
There are no restricted securities on issue by the Fund

38 AIMS Property Securities Fund


TOP 20 UNITHOLDERS
Top 20 holders of ordinary units at 30 June 2018
Rank Name Units % of Units
1. AIMS CAPITAL MANAGEMENT LIMITED 14,069,656 31.54%
2. The CENTRAL DEPOSITORY (PTE) LIMITED 4,491,149 10.07%
3. WO NOMINEES AC FUND PTY LTD 3,430,656 7.69%
4. PERPETUAL TRUSTEE COMPANY LIMITED <MCK 2,263,336 5.07%
5. OFFICE PROPERTY A/C> 2,082,676 4.67%
6. J P MORGAN NOMINEES AUSTRALIA LIMITED 1,726,267 3.87%
7. PERPETUAL TRUSTEE COMPANY LTD <MCKOPT A/C> 1,432,470 3.21%
8. ONE MANAGED INVT FUNDS LTD <SANDON CAPITAL INV LTD A/C> 1,423,000 3.19%
9. MR SIMON ROBERT EVANS + MRS KATHRYN MARGARET EVANS <KAMIYA- 1,232,136 2.76%
CHO SUPER FUND A/C>
10. HSBC CUSTODY NOMINEES 1,039,662 2.33%
11. NATIONAL NOMINEES LIMITED 970,335 2.18%
12. MR MICHIEL GEERDINK 764,951 1.71%
13. MR WARWICK SAUER 575,000 1.29%
14. BT PORTFOLIO SERVICES LIMITED <MRS MEREDYTH SAUER APP A/C> 409,000 0.92%
15. BT PORTFOLIO SERVICES LIMITED <DR TREVOR SAUER APP A/C> 374,579 0.84%
16. MS JIANFEI YU 310,000 0.69%

17. MR JOHN ROBERT LOVE 250,000 0.56%


18. MR GREGORY HUGH HALLIDAY + MR SIMON ROBERT EVANS + MR THO- 195,817 0.44%
MAS VERNON FURNER <RED OCTOBER SUPER FUND A/C>
19. MR DARRELL HUNTER RANDALL 189,626 0.43%
20. CITICORP NOMINEES PTY LIMITED 180,000 0.40%
Totals: Top 20 holders of FULLY PAID ORDINARY UNITS (TOTAL) 37,410,316 83.86%

TRANSACTIONS
The total number of transactions in securities during the reporting year was 18.

MANAGEMENT AGREEMENT
Management fees payable to the Responsible Entity are stipulated in the Fund’s constitution and are disclosed in Note
16 of the financial report. As at the date of the report, no management agreement is required between the Fund and
the Responsible Entity.

Annual Report 2018 39


Corporate Directory

The Fund’s units are quoted on the official list of the Australian Securities Exchange Limited (ASX) and the
Singapore Exchange Limited (SGX). The ASX code is APW and the SGX code is BVP.

AIMS Property Securities Fund Auditors


(ABN 79 004 956 558) KPMG
Level 41 Level 30, KPMG, International Towers Sydney 3,
259 George Street 300 Barangaroo Ave, Sydney, NSW 2000
Sydney NSW 2000
Telephone Facsimile
Telephone Facsimile +61 3 9288 5555 +61 3 9288 6666
+61 2 9217 2727 +61 2 9281 7611 Website: www.kpmg.com.au
Email
[email protected] Singapore Unit Register managed by
Website: www.aimsfunds.com.au
50 Raffles Place
Responsible Entity #32-01 Singapore Land Tower
Singapore 048623
AIMS Fund Management Limited
(ABN 79 004 956 558) (AFSL 258 052)
Telephone Facsimile
+65 6536 5355 +65 6536 1360
Level 41
Website: www.boardroomlimited.com
259 George Street
Sydney NSW 2000
Telephone Facsimile
+61 2 9217 2727 +612 9281 7611
Email
[email protected]
Website: www.aimsfunds.com.au

Australia Unit Register managed by


Computershare Investors Services Pty Limited
Yarra Falls 452 Johnston Street
Abbotsford VIC 3067
Telephone
+61 3 9415 4349
Website: www-au.computershare.com

40 AIMS Property Securities Fund


Annual Report 2018 41
AIMS Fund Management Limited
ABN 79 004 956 558

Level 41, 259 George Street Sydney NSW 2000 Australia


Phone: 1300 655 197, 1300 362 117
Email: [email protected]

www.aimsfunds.com.au

You might also like