Annual Report 2018 4 PDF
Annual Report 2018 4 PDF
Chairman’s Report 2
Board of Directors 4
Financial Report 10
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).
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
• 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.
George Wang
Executive Chairman
AIMS Fund Management Limited
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)
Director’s Report 11
Directors’ Declaration 33
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.
COMPANY SECRETARIES
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 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.
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.
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).
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
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).
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
% % % %
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.
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.
ENVIRONMENTAL ISSUES
The Fund’s operations are not subject to any significant environmental regulation under Commonwealth, State or
Territory legislation.
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
Net gain for the year before financial costs 14,020 4,541
Finance costs
Distributions to Unitholders 7 1,279 2,946
The Statement of Profit or Loss and other Comprehensive Income is to be read in conjunction with the notes to the financial statements
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
CURRENT LIABILITIES
Financial liabilities held at amortised cost:
Trade and other payables 11 301 773
Total current liabilities 301 773
Non-current Liabilities - -
The Statement of Financial Position is to be read in conjunction with the notes to the financial statements
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
The Statement of Cash Flows is to be read in conjunction with the notes to the financial statements
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) ($‘000s)
Professional fees 128 303
Admin fee (paid up to 30 November 2016) (note 16) - 82
Rent, Admin and employee expenses reimbursement (note 16) 605 352
Listing fees 95 101
Custodian fees 48 60
Share registry fees 37 70
Other expenses 23 28
936 996
2018 2017
Financial assets held at fair value may include unrealised capital gains. Should such a gain be realised, that portion of
the gain that is subject to capital gains tax will be distributed so that the Fund is not subject to capital gains tax.
Realised capital losses are not distributed to Unitholders and are retained in the Fund to be offset against any current
or future realised capital gains. If realised capital gains exceed realised capital losses, the excess is distributed to the
Unitholders.
2018 2017
($‘000s) ($‘000s)
Cash at bank 4,822 1,649
4,822 1,649
Cash and cash equivalents in the statement of financial position consist of cash at bank and short-term deposits that
are readily convertible into known amounts of cash. The Fund considers a short-term deposit to have a maturity of three
months or less and be subject to an insignificant risk of change in value.
For the purposes of the statement of cash flows, cash and cash equivalents consist of cash at bank.
Impairment losses are recognised in profit or loss. When a trade receivable for which an impairment allowance had
been recognised before it becomes uncollectable in a subsequent period, it is written off against the allowance account.
Subsequent recoveries of amounts previously written off are credited against doubtful debt expense in the profit or loss.
2018 2017
($‘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).
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.
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.
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.
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.
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.
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
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
(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.
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
$’000
Accounts payable 773 773 773 -
Total 773 773 773 -
Market risk
Market risk is the risk that changes in the market prices, such as interest rates and equity prices will affect the Fund’s
income or the value of its holdings of financial instruments. The objective of market risk management is to manage and
control market risk exposures within acceptable parameters, while optimising the return.
Price risk
The Company’s exposure to price risk relates primarily to the Company’s investments in listed and unlisted property
securities as disclosed in note 10. A change of 10% in price/NTA at the reporting date would be increase (decrease) gain
before finance cost by the amounts below. This sensitivity analysis assumes that all other variables remain constant.
2018 2017
($‘000s) ($‘000s)
Impact on gain before finance cost
+10.00% 9,819 7,962
-10.00% (9,819) (7,962)
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).
• 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.
* Units were directly acquired from the ASX by MacarthurCook Office Property Trust.
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.
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.
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
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:
Mr George Wang
Executive Chairman
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
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.
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.
www.aimsfunds.com.au