V A L U E A D D N O. 1 Q U I N N S R O A D

Transcription

1 V A L U E A D D N O. 1 S O U T H G A T E P E A C H G R O V E Q U I N N S R O A D E V A N S R O A D G O J O H N S T O N B I R M I N G H A M D R I V E

2 S H F Y 16H U A N N U A L R E P O R T

3 E R B R O O K E R O A D V A L U E A D D N O. 1 S O U T H G A T E P E A C H G R O V E Q U I N N S R O A D E V A N S R O A D G O J O H N S T O N B I R M I N G H A M D R I V E S H A N D S R O A D

4 04 "Our strategy is to consolidate our position as one of New Zealand s premier property fund managers" View from 36 Kitchener Street. Value Add Fund No.1.

5 05

6 PORTFOLIO BY LOCATION 06 TOTAL OF NEW ZEALAND AND AUSTRALIA PROPERTIES: 143 * TOTAL SUM OF THE NEW ZEALAND AND AUSTRALIAN PORTFOLIO: $1.456 billion BRISBANE NUMBER OF PROPERTIES: SUM OF VALUATIONS: 12 $115.8m TARANAKI NUMBER OF VALUATIONS: SUM OF VALUATIONS: NELSON NUMBER OF PROPERTIES: SUM OF VALUATIONS: 14 $73.8m 1 $3.9m * Total properties of 143 includes 4 directly held properties (all in Auckland with the value of $88.9 million) and the remaining 139 properties are managed by Augusta. SOUTHLAND & OTAGO NUMBER OF PROPERTIES: SUM OF VALUATIONS: 4 $30.1m

7 AUCKLAND NUMBER OF PROPERTIES: SUM OF VALUATIONS: 69 $866m 07 NORTHLAND NUMBER OF PROPERTIES: SUM OF VALUATIONS: WAIKATO NUMBER OF PROPERTIES: SUM OF VALUATIONS: 2 $19.2m 8 $69.4m BAY OF PLENTY NUMBER OF PROPERTIES: SUM OF VALUATIONS: HAWKES BAY NUMBER OF PROPERTIES: SUM OF VALUATIONS: 2 $23.5m 5 $54.2m MANAWATU & WHANGANUI NUMBER OF PROPERTIES: SUM OF VALUATIONS: 12 $48.0m CANTERBURY NUMBER OF PROPERTIES: SUM OF VALUATIONS: WELLINGTON NUMBER OF PROPERTIES: SUM OF VALUATIONS: 9 $123.7m 5 $28.4m

8 08 36 Kitchener Street Value Add Fund No.1. View of 36 Kitchener Street. Value Add Fund No.1.

9 CONTENTS KEY HIGHLIGHTS 10 TIMELINE OF AUGUSTA ANNUAL REVIEW 16 FIVE YEAR SUMMARY 20 CHAIRMAN'S REPORT 21 STRATEGIC UPDATE 26 FUNDS MANAGEMENT FOCUS 28 FY16 DEAL HISTORY 30 VALUE ADD FUND 34 PORTFOLIO PERFORMANCE 36 DIRECTORS' PROFILES 40 SENIOR MANAGEMENT 43 COMMUNITY & SPONSORSHIP 44 FUNDS MANAGEMENT - 45 ADDITIONAL INFORMATION INVESTOR RELATIONS 46 DIRECTORS RESPONSIBILITIES STATEMENT 47 CORPORATE GOVERNANCE 48 GENERAL DISCLOSURES FINANCIAL STATEMENTS & OTHER INFORMATION 54 INDEX 57 FINANCIAL STATEMENTS 58 INDEPENDENT AUDIT REPORT 88 SHAREHOLDER STATISTICS 89 DIRECTORY 90

10 KEY HIGHLIGHTS FINANCIAL PERFORMANCE NET PROFIT UP 7 GAIN ON REVALUATION.07 OF million Net Profit After Taxation of $13.52 million up 30% compared to a profit of $10.39 million in 2015 year. The result includes an unrealised gain on revaluation of $7.70 million at the Finance Centre for the full year INVESTMENT PROPERTY SEGMENT PERFORMANCE UP NORMALISED DISTRIBUTABLE PROFIT UP Investment property segment performance up 20% or $0.39 million (after tax). Normalised distributable cash profit (non-gaap measure) increased by 17% to $5.68 million (up from $4.86 million). FUNDS MANAGEMENT SEGMENT PERFORMANCE UP 16 Funds management segment performance up 16% or $0.44 million (after tax). Net asset value (NAV) increased from 83 cents per share to 94 cents per share. The independent funds management valuation (prepared by PwC) provides a further 14 to 21 cents per share (NAV) - which is not included in the Statement of Financial 77 Position. pay out ratio of Cash dividends paid equating to 5 cents per share a pay out ratio of 77% based on a normalised operating earnings of 6.50 cents per share.

11 FUNDS MANAGEMENT CONTINUOUS GROWTH Higher corporate costs due to increased levels of compliance, additional resources, project costs and due diligence costs incurred on deals not proceeding. new syndications Seven new syndication deals completed during the year generating $7.02 million of upfront revenue. Independent PwC valuation of the funds management business completed will confirm the to loss of Portfolio Investment Entity (PIE) status from 1 July. Augusta subsidiary, Augusta Funds Management Limited, is now licensed under the Financial Markets Conduct Act. A strong start to FY 2017 with the Augusta Value Add Fund No.1, Ashburton Central and an Australian syndication completed in the first quarter. Further pipeline of offers being the Graham St. Buildings in Auckland CBD.

12 INVESTMENT PROPERTY FUTURE DIVESTMENT Higher WALE at 6.3 years, up from 5.9 years over the past 12 months. Portfolio occupancy is up from 94% last year. 97 PORTFOLIO OCCUPANCY: 12 The Finance Centre is well positioned for exit. Divestment of 7 City Road returning a capital gain on sale of $0.96 million. Balance sheet capacity to fully or partially underwrite new deal.

13 THE EVOLUTION OF AUGUSTA 13 JUNE 2001 Augusta Group founded as Private Property Investment Group with two staff and home office. FEBRUARY 2003 Augusta Capital Management created for Property Syndication. NOVEMBER 2005 Augusta makes plans to merge syndicates to create a Listed Property Trust. Augusta's first office, The Chancery, Auckland CBD PORTFOLIO SIZE 3.4m PORTFOLIO SIZE 70m Assets under management of $3.40 million. Assets under management of $70 million. 1 st PURCHASE AUGUST 2001 MAY 2002 MAY 2003 Augusta's first acquisition of a small industrial building for refurbishment and re-leasing. Augusta develops 'The Galleries' in Auckland as their first significant residential development of 26 apartments. Augusta purchases first property for syndication - the Vertex Pacific Building in Hamilton for $3.4m. With no brand and no reputation and a few ads in The Herald, the $1.85m equity raise was one of Augusta s most difficult. SIGNIFICANT NATIONAL AND GLOBAL EVENTS JULY 2002 Labour Party s Helen Clark wins a second term in the general election. NOTE: Prior to March 2012, Augusta Funds Management was privately owned but was the external manager of Kermadec Property Fund from the time of its IPO. Assets under management after December 2006 includes the assets of Kermadec managed by Augusta Funds Management as well as property syndicates managed by Augusta Funds Management. FEBRUARY 2004 The Lord of the Rings: Return of the King wins eleven Academy Awards. JULY 2003 JUNE 2005 Michael Campbell wins the US Golf Open. New Zealand Stock Exchange is listed, trading as NZX.

14 DECEMBER 2006 Kermadec Property Fund IPO $61.25m equity raised. "We've gone public!" SHARE PRICE 1.02 Augusta has its stock debut at $1.02, up 2c on the day. MARCH 2012 Augusta, the private company, and Kermadec, the public company, are merged. Internalisation of management contract. Purchase of funds management business. Kermadec renamed as Augusta Capital Limited. Augusta is now a listed property funds manager. The only one on the NZX. PORTFOLIO SIZE 125m PORTFOLIO SIZE 259m PORTFOLIO SIZE 310m Assets under management of $125 million. Assets under management of $259 million. MARCH 2013 Assets under management of $310 million. MAY 2007 Purchase of 7 City Road. JULY 2008 Purchase of the Finance Centre Podium to complete total Finance Centre acquisition. DECEMBER Great South Rd syndication the first syndicated deal since the onset of the GFC. AUGUST 2007 The beginning of the Global Financial Crisis (GFC) - described as the worst financial crisis since the Great Depression of the 1930s. JULY 2007 KiwiSaver scheme introduced. Willie Apiata becomes the first recipient of the Victoria Cross for New Zealand. NOVEMBER 2008 John Key and National take over from Labour and Helen Clark after winning the General Election. SEPTEMBER 2008 New Zealand s economy goes into recession for the first time since SEPTEMBER 2010 The first of a series of major earthquakes to hit Christchurch, New Zealand s second-largest city. FEBRUARY 2009 New Zealand s economy shrinks for the fifth consecutive quarter, making it officially the longest recession in the country s history.

15 APRIL 2014 Purchase of KCL, Augusta s biggest competitor. Augusta triples its Funds Management business overnight. Strategic alliance with Bayleys. FEBRUARY Financial Markets Conduct Act Licence. APRIL Launch of the Augusta Value Add Fund No.1 Limited. At the time Augusta's biggest ever capital raise and our first wholesale fund. Augusta House, Auckland CBD PORTFOLIO SIZE PORTFOLIO SIZE PORTFOLIO SIZE PORTFOLIO SIZE 1.18b 1.27b 1.45b 1.60b Assets under management now $1.18 billion. APRIL 2015 Assets under management now $1.27 billion. MARCH Assets under management now $1.45 billion. JUNE Pipeline of upcoming offers will take assets under management to $1.60 billion by end of. SEPTEMBER 2014 Spark, Building C syndication commences. At the time Augusta's biggest ever capital raise. APRIL 2015 Southgate, Takanini syndication commences. AUGUST 2015 Sale of 7 City Rd. MAY Unconditional contracts for NZME Buildings Graham St Auckland for $210m. Building A is Augusta's biggest ever capital raise. SEPTEMBER 2013 Team New Zealand lose 8-9 against USA Oracle after leading the series 8-1. NOVEMBER 2015 New Zealand wins the Rugby World Cup at Twickenham. NOVEMBER 2011 The National Government is re-elected. OCTOBER 2011 New Zealand wins the Rugby World Cup in Auckland.

16 16 SECTION A N N U A L R E V I E W 0

17 17 1Hugo Johnson Drive - An Augusta managed syndicate.

18 AUGUSTA HOUSE 19 VICTORIA STREET WEST, AUCKLAND 18

19 19 19 Victoria Street West has recently been re-named Augusta House and now sports Augusta branding on two high profile sides of the building.

20 FIVE YEAR SUMMARY 20 ($m) Net Revenue Property Portfolio Net Revenue FM Recurring Fees Net Revenue FM New Deals Net Revenue Cleaning Services Corporate & Administration Costs (7.16) (6.36) (2.11) (1.90) (1.39) Funding Costs (2.93) (3.09) (2.66) (2.03) (1.77) Unrealised Net Change in Value of Investment Properties (2.19) 1.86 (1.38) 2015 ($m) 2014 ($m) 2013 ($m) 2012 ($m) Profit / (Loss) and Total Comprehensive Income for the Year After Tax (0.65) Distributable Profit* Distributable Profit cents per share ($m) ($m) ($m) ($m) ($m) Total Assets Total Liabilities Shareholders Equity Net Interest Bearing Debt to Investment Assets (%) 36.5% 37.6% 45.9% 36.2% 36.6% Shares on Issue (m) Cash Dividends (cps) Net Tangible Assets Per Share (excluding intangible assets and goodwill) ($) Net Assets Per Share ($) DISTRIBUTABLE PROFIT RECONCILIATION ($m) Profit Before Property Revaluation, Gain (Loss) on Disposal and Termination Fee (Before Tax) Lease surrender fees received (after tax impact) (0.38) - - Add back: Asset write off costs (after tax impact) Add back: Acquisition / Transition costs (after tax impact) Add back: Lease incentive paid on settlement Less: Cash Tax Paid (1.52) (0.62) (1.23) (0.42) - Distributable Profit* * The distributable profit is a non-gaap reporting measure. The Directors believe that this view is useful because it better reflects the operating profit and excludes non cash / one-off items which are not available to be distributed to investors. Record net profit after tax of $13.52 million ($m) 2014 ($m) 2013 ($m) 2012 ($m)

21 CHAIRMAN'S REPORT FINANCIAL RESULTS The audited results for the year ended 31 March record a profit of $13.52 million compared to a profit of $10.39 million in the prior year. The principal components of the result are; Improved net earnings after tax were driven by; 1. The Funds Management business, up $0.44 million or 16% on last year. This was due to the successful promotion of seven new investment offerings generating gross income of $7.02 million. 2. Investment Property performance after tax increased $0.39 million or 20% on last year. This result was due to the Finance Centre earnings, boosted due to higher occupancy, and higher rental income from Kitchener Street which was warehoused until being sold to Augusta Value-Add Fund No.1 Limited, partly offset by the divestment of 7 City Road. 3. A positive revaluation gain of $7.07 million compared with a valuation increase in 2015 of $4.37 million. Distributable cash profit (net profit after income tax paid, excluding revaluations, mark to market of interest rate swaps, deferred tax and one off transactions) increased by $0.82 million or 17% from $4.86 million to $5.68 million. This equates to earnings per share of 6.5 cents for the year compared to 5.8 cents per share last year. The table on the following page notes the changes year on year. This year has been one of building capabilities as new members joined the corporate team. There has also been a strong emphasis on funds management to set a platform for a growth in recurring earnings and this led to an increase in corporate costs of $0.80 million / 13%. This included resourcing for compliance obligations and licensing under the Financial Markets Conduct Act. Further material due diligence costs were incurred in respect to deals not proceeding. Augusta Capital Limited has also signalled that it expects to lose its Portfolio Investment Entity status from 1 July as the market value of the funds management business exceeds 10% of the Company s total assets. An independent valuation completed by PwC indicated a market valuation range from $28 - $34.8 million. The future divestment of the directly held portfolio has also been a focus so as to create balance sheet capacity for future warehousing of assets and underwriting capability, as well as establishing seed funding capability in respect to new investor-ready sector specific funds. The Augusta Capital Board considers the result to be a solid performance and note that future revenue from incurred costs prior to 31 March will not be received until the first quarter of the year ending 31 March 2017 as well as the recurring management fees generated. This will be a feature of earnings from funds management generally and will give rise to some earnings volatility. This volatility is expected to reduce over time as the company builds its base recurring fees. 21 TRANSFORMATION OF AUGUSTA'S REVENUE PROFILE ($M) Property Portfolio Funds Management - Recurring Fees Funds Management - New Deal Fees Cleaning Services

22 CHAIRMAN'S REPORT [CONTINUED] The below table outlines the material year on year movements; YEAR ON YEAR IMPACTS 2015 YEAR ON YEAR VARIANCE 22 Operating Earnings $m $m $m Commentary - Key Variances Property Revenue Management Fees Impact of increased occupancy and increased rents offset by divestment Base management fees plus transactional fee income offset by divestment of managed properties Offeror Fees deals completed in FY16 Underwriting Fees Cleaning Services Organic growth Augusta provided for $69 million of equity underwritten. $105 million of equity was raised Gross Revenue Operating Costs (4.83) (4.76) (0.07) Net Revenue Corporate Costs (7.16) (6.36) (0.80) Property management (Bayleys) and costs associated to transactional income Increased compliance and AML costs. Personnel costs due to creation of new roles Funding Costs (2.93) (3.09) 0.16 Lower effective interest rates Net Profit Before Taxation Normalised Distributable Profit (non-gaap) Increase of 17% Quinns Hill Road, Brisbane - Augusta's latest Australian property syndication.

23 CHAIRMAN'S REPORT [CONTINUED] SEGMENT REPORTING Investment Property () Funds Management () Cleaning () Total () Total gross revenues 8,979 12, ,933 Total net revenues 6,664 10, ,104 Corporate costs (1,630) (5,458) (74) (7,162) EBIT 5,034 4, , Funding costs (2,471) (459) - (2,930) Net Profit Before Tax & One Offs 2,563 4, ,012 SEGMENT REPORTING YEAR ON YEAR NPAT normalised 2,360 3, ,682 NPAT Last year normalised 1,972 2, ,859 Year on year (8) 823 Year on year % 20% 16% (11%) 17% The investment property result was impacted by the initial stages of divesting the directly held portfolio, being the sale of 7 City Road. The earnings from the Finance Centre were up on the prior year due to higher levels of occupancy and rents. The funds management business EBIT was $4.84 million which matches that reflected in the PwC independent valuation. $7.02 million of transaction fees were generated. Recurring net management fees remained flat, as sales of existing managed properties offset portfolio growth. Metroclean s revenue increased but this increase in revenue was absorbed by increased administrative costs. Overheads in respect to funds management increased due to additional resourcing requirements. A legal counsel as well as a compliance manager were recruited during the period. Additional costs were incurred in respect to AML compliance and management s attention was also dedicated to the application for a Financial Markets Conduct Act licence and the development of a customer relationship management system. $0.35 million was also incurred in respect to due diligence costs for deals that did not proceed. This is a cost of Augusta s business and demonstrates the lengths taken to ensure all necessary due diligence is undertaken and Augusta will not proceed on an offering without completing that due diligence. FUNDS MANAGEMENT Seven new syndication deals were completed generating $7.02 million of upfront fee income, consisting of offeror fees of $5.12 million and underwriting fees of $1.90 million. The total value of the assets purchased across New Zealand and Australia was in excess of NZ$160.0 million and the corresponding equity raised was over NZ$105.0 million. (Two of the seven assets purchased were in Australia with a total asset value and equity raise of A$16.8 million and A$10.8 million respectively). Augusta subscribed for $12.45 million of the Southgate syndicate on settlement as a result of the underwrite commitment and this investment was divested within three months of settlement. Management fees, including transactional income remained flat year-on-year. The impact of new deals, FY2015 and FY ($0.28 million) and fee growth on existing properties ($0.08 million) was offset by sale/loss of management of properties ($0.29 million) and lower transactional income ($0.05 million). Management s focus is to grow the recurring income stream from funds under management. Current Annualised base management fees are currently $5.1 million (last year was $4.3 million) but with additional fees able to be derived in respect to transactional activity such as leasing, project management and sales. The new Augusta Value-Add Fund No.1 has created a further non-recurring earnings stream with potential longer term performance fees. INVESTMENT PROPERTY PORTFOLIO DIRECTLY HELD The uplift in valuations is driven by sharpening cap rates, increased WALE and occupancy. Market rental levels have remained relatively constant. The valuations have also been prepared on the basis of a new retail title at the Finance Centre where all retail tenancies are being subdivided onto a separate title. The Finance Centre Car Park is now also being valued separately from the Finance Centre Podium. The new titles are due in the coming months. The 36 Kitchener Street property which was held for sale at balance date was sold into Augusta Value-Add Fund No.1 established by the Group on 1 April. Augusta still holds the bare land at Silverdale which is expected to settle in June. During the year 7 City Road was sold realising a profit of $0.96 million after provision for the vendor underwrite on the vacant space. The directly owned portfolio summary is outlined on the following page;

24 CHAIRMAN'S REPORT [CONTINUED] INVESTMENT PROPERTY Carrying Value Net Market Rent Net Yield (Market) Occupancy WALE Mar 16 $000 Mar 16 $000 Mar 16 % Mar 16 % Mar 16 Years 24 Finance Centre Car Park 28,700 1, % Finance Centre Podium 9, % Victoria St West 28,800 2, % Retail Title 21,500 1, % Total (as at 31 March ) 88,900 6, % Hibiscus Highway - held for sale 1, Kitchener St held for sale 16,500 TOTAL 106,800 5 YEAR PERFORMANCE OF THE FINANCE CENTRE % % 8.17% 8.01% % VALUE $M % 7.06% 7.5% 7.0% 6.5% MKT RENTAL YIELD % CAPEX ($M) WALE(YRS) OCCUPANCY (%) 91% 92% 84% 94% 97% Valuation ($m) Market Rental Yield (%) LEASING AND OCCUPANCY Overall portfolio occupancy was 97% at year end, up from 94% at March The company had a weighted average lease expiry (WALE) of 6.3 years at 31 March, an increase on the 5.9 years as at March 2015 due to increased occupancy. PORTFOLIO VALUATIONS Under NZ IFRS accounting standards, the company s investment properties are re-valued to fair market value. Independent valuers CB Richard Ellis provided valuations of the Finance Centre as at 31 March. A revaluation gain of $7.07 million for the full year was achieved which equated to a 9% increase in value at the Finance Centre. The average cap rate based on market rents for the portfolio as at 31 March was 7.06% ( %).

25 CHAIRMAN'S REPORT [CONTINUED] BALANCE SHEET AND TREASURY Total assets were $136.8 million at year end compared to $124.4 million as at March 2015 and liabilities decreased from $55.2 million to $54.8 million. The contingent consideration payable to the KCL vendors has now been fully paid. Borrowings increased by $3 million during the year to facilitate deposit payments. The company s constitution limits borrowings to a ratio of 50% of the gross asset value (GAV). Internal treasury policy is for a long term target ratio of approximately 35%. At balance date this ratio was 36.5%. ( %). Augusta Capital Limited s lenders (ASB) require core borrowings to not exceed 45% of directly held investment property portfolio value. The core debt ratio was 42.6% as at 31 March. $10.8 million of core bank debt was repaid on 1 April on settlement of the Kitchener Street property reducing the above ratios. The Group s banking facilities with ASB run through to March The facilities are subject to annual review and extension. $22.5 million of the $48.9 million drawn debt as at balance date is hedged with various hedging terms. The weighted average term of hedging is 4.2 years. $43.1 million of debt is drawn as at 20 May. The sale of 7 City Road created the necessary capacity to warehouse Kitchener Street prior to the establishment of Augusta Value-Add Fund No.1. This is an example of what future balance sheet capability can create in respect to driving funds management growth. OUTLOOK Augusta has continued to grow its business through diversification of its income from directly owned property to funds management revenue that is not as capital demanding. We expect the future income to provide improved shareholder returns and want to grow sustainable income to deliver enhanced dividends. Augusta s movement towards a funds management company is expected to be further advanced when an exit of the Finance Centre is complete. The Finance Centre has not been held for sale at reporting date as the timing of an exit cannot be determined but a future exit will create balance sheet capacity for future warehousing of assets and underwriting capability, as well as establishing seed funding capability in respect to new investor-ready sector specific funds. We are building our skill base and relationships to develop a more diverse range of investment products with both capital growth and cash yield characteristics and have the ability to continue to use our balance sheet capacity to secure new assets to support the growth of the funds management business. The recent launch of the Augusta Value-Add Fund No. 1 is a good example of this direction. We approach the next year with a stable team and structure. We have identified quality offers for release and we will continue to apply a disciplined approach to our assessments. The Board s expectation is for the year ahead to maintain the improving trend in earnings with a key focus on increasing recurring contracted earnings. 25 P.J. Duffy Chairman 14 June "We are building our skill base and relationships to develop a more diverse range of investment products with both capital growth and cash yield characteristics."

26 STRATEGIC UPDATE 26 AUGUSTA IS AT AN IMPORTANT STAGE IN ITS EVOLUTION, INCLUDING:

27 Market leading position in our core syndication market. Further launch of more diverse range of investment products with both capital growth and cash yield characteristics. Limited opportunities for growth in our direct property portfolio without substantial new capital, and favourable market conditions for diversifying our direct portfolio. 27 Building A Graham Street, Auckland.

28 FUNDS MANAGEMENT FOCUS 28 ASSETS UNDER MANAGEMENT ($M) 1,178 1, , KCL & IPT Acquisitions , Augusta Capital - Directly Owned Augusta Syndicates (NZ and AUS) Other Properties Under Management AUGUSTA CAPITAL LTD ASSETS UNDER MANAGEMENT GROWTH ($M) Assets Under Management up $186m /14% FY17 Outlook ,267 1,456 1,610 FY15 NET GROWTH REVALUATIONS VALUE ADD FUND No1 FY16 FY17 PIPELINE DIVESTMENTS OUTLOOK CONTINUED GROWTH The continuing success and growth of the Augusta Capital Limited s (ACL) funds management business has meant it has been valued in a range of $28.0 million - $34.8 million. A consequence of this, however, is that ACL will no longer be a Portfolio Investment Entity (PIE) from 1 July. This loss of PIE status arises due to the market value of the funds management business and other subsidiaries exceeding 10% of ACL s total assets. Augusta commissioned an independent market valuation of the funds management business which was produced by PwC. This independent report refers to a valuation range of $28.0 million - $34.8 million based on a multiple range of times Earnings before Interest Tax, Depreciation and Amortisation (EBITDA). The market value is now in excess of the 10% asset threshold (and now sits at between 16% - 21% of the total asset value of ACL).

29 29 Quinns Hill Road, Brisbane, Australia. Quinns Hill Road is the largest equity raise by Augusta for an Australian property at AU$14million. * * The Quinns Hill Road syndication settles on 1 July.

30 FY16 DEAL HISTORY QUALITY TENANT(S), LEASE TERM, LOCATION & ADAPTABILITY 30 SOUTHGATE Category: Bulk Retail Location: Auckland Tenant: Various Settlement: April 2015 Purchase Price: $58.5 million Capital Raise: $34.3 million BIRMINGHAM DRIVE Category: Industrial Location: Christchurch Tenant: PMP Settlement: June 2015 Purchase Price: $9.4 million Capital Raise: $6.0 million This large multi-tenanted and modern retail centre settled on 30 April Anchored by Mitre 10 Mega on a 13 year lease from April This property has a high profile corner position in the growth Auckland location of Takanini. Fully occupied by PMP (NZ) Limited under a new 10 year lease. Situated in a Christchurch area that is a popular commercial and industrial location, the building had been upgraded to a minimum of 67% of current new building standards. This property represented an ideal opportunity to obtain an industrial investment in the regenerating Christchurch market. TOTAL ASSETS SYNDICATED 160million

31 FY16 DEAL HISTORY [CONTINUED] 31 EVANS ROAD Category: Industrial Location: Brisbane, Australia Tenant: Orrcon Settlement: June 2015 Purchase Price: A6.1 million Capital Raise: A$4.0 million SHERBROOKE ROAD Category: Industrial Location: Brisbane, Australia Tenant: Akzo Nobel Settlement: December 2015 Purchase Price: A$10.7 million Capital Raise: A$6.8 million Occupied by Orrcon (a subsidiary of ASX listed BlueScope Steel) the property was a functional office factory/ warehouse close to good arterial traffic routes and within 10 kilometres of the Brisbane CBD. Completion of this settlement adds further to the good range of Australian properties that we have in our portfolio. New building completed in June Occupied by Akzo Nobel Pty Limited on an 8 year lease. Situated close to established arterial traffic routes and within 15 kilometres of the Brisbane CBD. TOTAL 105 EQUITY RAISED million

32 FY16 DEAL HISTORY [CONTINUED] 32 SHANDS ROAD Category: Industrial Location: Christchurch Tenant: Countdown Settlement: December 2015 Purchase Price: $39.5 million Capital Raise: $25.2 million PEACHGROVE Category: Supermarket Location: Hamilton Tenant: Countdown Settlement: December 2015 Purchase Price: $18.0 million Capital Raise: $11.0 million This property is the South Island Distribution Centre for Progressive Enterprises Limited which owns Countdown, Fresh Choice and Super Value stores within New Zealand. Located in the established industrial suburb of Hornby, the property has a prominent corner location and comprises a total land area of hectares. There is a scope for future expansion. This is a new Countdown supermarket, located on Peachgrove Road, within the eastern suburbs of Hamilton. It is well located with respect to the University and Ruakura Research Station. A 15 year lease. 7 TOTAL DEAL.02 FEES million

33 FY16 DEAL HISTORY [CONTINUED] 33 HUGO JOHNSTON Category: Industrial Location: Auckland Tenant: Oji (CHH) Settlement: March Purchase Price: $17.6 million plus development spend $9.0 million Capital Raise: $17.0 million The Hugo Johnston Limited Partnership is a re-syndication of a previous Augusta scheme at Hugo Johnston Drive, enabling development works to be undertaken at the site. The tenant, Oji Fibre Solutions, signed a new 15 year lease upon the re-syndication. Of the original $9.6 million of equity, $8.0 million was re-invested into the new scheme which equates to 83.3%. On top of this, existing investors put in an additional $3.95 million, hence $11.95 million came from existing investors out of the $17.0 million raised (70.3%). For the remaining equity raised, $3.3 million came from existing Augusta investors in other syndicates and $1.75 million came from new investors to Augusta.

34 FUNDS MANAGEMENT FOCUS VALUE ADD FUND NO.1 34 Augusta is one of the most active participants in the commercial property market in New Zealand, and in particular Auckland, and through our strategic alliance with New Zealand s largest real estate group, Bayleys Real Estate there are not many deals that we do not see. Traditionally we have been primarily buyers of typical investment-grade assets with long leases and low risk profiles providing passive and dependable yield. That said, we are frequently presented with, and find in the market, opportunities to acquire assets that have solid fundamentals including location and future potential. Often that potential doesn t come wrapped in a bow and needs to be unlocked. We have assembled a portfolio of five assets for our Value-Add Fund No.1 that we regard as top locations in Auckland. All the properties provide a running cash yield through their existing 100% occupancy, but each in their own right provide an opportunity for us to add value through our management expertise. Each property has a number of options for how to unlock their potential. The multi-asset nature of the portfolio, covering the industrial and office sectors with future residential opportunities, in itself provides potential as well as a diversification of risk in the same fund. In essence, this portfolio with the combined skill-sets and expertise of Augusta and Bayleys Real Estate management teams means the Augusta Value-Add Fund No.1 will provide Yield, with Potential Upside. The acquisition of the properties for the Fund settled on 1 April. The launch of this Fund under the branding Augusta Private Partners is the first step in a diversification of product offerings. PORTFOLIO KEY Victoria Street Kitchener Street Cook Street Carbine Road McDonald Street

35 35 CITY ASSETS

36 FUNDS MANAGEMENT PORTFOLIO PERFORMANCE 36 BY REGION FY15 ($'000) FY16 ($'000) CHANGE NORTHLAND $18,700 $19, % NORTH AUCKLAND $78,905 $84, % WEST AUCKLAND $73,850 $81, % AUCKLAND CBD $210,888 $224, % SOUTH AUCKLAND $261,640 $273, % WAIKATO $63,050 $67, % BAY OF PLENTY $22,660 $23, % HAWKES BAY $50,020 $51, % TARANAKI $56,200 $58, % MANAWATU $30,860 $31, % WELLINGTON $24,615 $23, % CHRISTCHURCH $88,430 $89, % SOUTHLAND & OTAGO $30,560 $31, % TOTAL* $1,010,378 $1,061, % OTHER $394,820 PROPERTIES TOTAL ASSETS $1,456,102 UNDER MANAGEMENT * Funds Management Portfolio Performance Analysis excludes the Australian properties and other properties under management that are not required to be valued at 31 March. Total assets under management as at 31 March was $1.456 billion.

37 FUNDS MANAGEMENT PORTFOLIO PERFORMANCE [CONTINUED] VALUATION MOVEMENT ($'000) NO. OF PROPERTIES AVERAGE CAP RATE CURRENT OCCUPANCY PERCENTAGE WALE (YEARS) 37 $ % 100% 2.3 $5, % 100% 3.8 $7, % 100% 7.1 $13, % 98% 5.3 $12, % 100% 4.4 $4, % 100% 9.5 $ % 100% 6.6 $1, % 100% 7.1 $2, % 99% 6.8 $ % 99% 2.8 -$ % 67% 3.6 $1, % 100% 7.4 $ % 97% 5.8 $50, % 98.0%

38 FUNDS MANAGEMENT PORTFOLIO PERFORMANCE [CONTINUED] 38 BY PROPERTY TYPE FY15 ($'000) FY16 ($'000) CHANGE COMMERCIAL $132,928 $137, % INDUSTRIAL $264,195 $276, % OFFICE $212,575 $225, % RETAIL $375,180 $393, % CAR PARK $25,500 $28, % TOTAL* $1,010,378 $1,061, % OTHER $394,820 PROPERTIES TOTAL ASSETS $1,456,102 UNDER MANAGEMENT "Strong growth in the Auckland and Waikato regions." * Funds Management Portfolio Performance Analysis excludes the Australian properties and other properties under management that are not required to be valued at 31 March. Total assets under management as at 31 March was $1.456 billion.

39 FUNDS MANAGEMENT PORTFOLIO PERFORMANCE [CONTINUED] VALUATION MOVEMENT ($'000) NO. OF PROPERTIES AVERAGE CAP RATE CURRENT OCCUPANCY PERCENTAGE WALE (YEARS) 39 $4, % 99.6% 4.4 $12, % 100.0% 5.4 $12, % 92.5% 4.0 $18, % 99.3% 6.8 $3, % 95.9% 11.3 $50, % 98.0% "Steady growth across all sectors."

40 DIRECTORS' PROFILES 40 PAUL DUFFY INDEPENDENT CHAIRMAN Dip Urb Val Paul Duffy has over 35 years experience in the property investment/development industry, including CEO/ executive director of DNZ Property Fund (now named Stride Property) for 13 years. During his career, Paul held the position of general manager of Fletcher Property Limited and was joint managing director of US Real Estate Subsidiaries for the Abu Dhabi Investment Authority. In this role he oversaw the formation of a large real estate portfolio in the United States and Europe. Paul is currently a director of a number of private companies. Paul lives in Auckland MARK FRANCIS NON-INDEPENDENT EXECUTIVE DIRECTOR BCom (Fin) Mark has a commerce degree in finance and for the last 18 years has worked in many aspects of property investment and development with companies such as Village Roadshow and Force Corporation and his own private investment vehicles. Mark is a founding director of NZX listed Augusta Capital Limited (formerly Kermadec Property Fund Limited). Mark has significant experience and background in property development and construction projects. Mark s primary business prior to the formation of Augusta Capital Management in 2003 was property development with significant projects across all sectors including commercial, retail, industrial and residential. These projects included minor refurbishments and extensions and full scale greenfield development of retail centres and apartment complexes and ranged in size from $500,000 to $30,000,000. Mark lives in Auckland.

41 DIRECTORS' PROFILES [CONTINUED] 41 BRYCE BARNETT NON-INDEPENDENT EXECUTIVE DIRECTOR CA, FPINZ Bryce is a Chartered Accountant and a Fellow of the Property Institute of New Zealand. He began his career in the Inland Revenue before becoming the Chief Accountant of the Moller Group of Companies in From there he joined General Properties Consolidation Limited as the Managing Director involved in property development and investment throughout New Zealand. In 1989 Bryce became the General Manager of MacDow Properties, a subsidiary of the McConnell Dowell Corporate. Bryce was responsible for that company s development and investment activity throughout New Zealand. In 1993 Bryce established KCL Property. KCL Property was acquired by Augusta Funds Management in April JOHN LOUGHLIN INDEPENDENT DIRECTOR MBA, BCA, FCA, FCIS, ANZIIF (fellow), INFINZ (fellow), FNZIM, AFInstD John Loughlin is a professional company director. He is chairman of Powerco Limited, Tru-Test Corporation Limited, East Pack Limited and Havelock North Fruit Co. Limited. He is also a director of Port of Napier Limited and Bay Venues Limited. John lives in Havelock North. Bryce lives in New Plymouth.

42 DIRECTORS' SECTION HEADING PROFILES FOR THE YEAR ENDED [CONTINUED] 31 MARCH 2015 [CONTINUED] 42 MARTIN GOLDFINCH INDEPENDENT DIRECTOR BCom, LLB Martin is a senior professional with extensive commercial experience across a range of industries in both public and private companies. He holds degrees in Law and Commerce from Auckland University. He is currently the Private Equity Manager for Accident Compensation Corporation (ACC). He also has current directorships with Les Mills Holdings Limited, Youi Holdings Pty Limited and its Australian holding company Youi Holdings Limited and is a Council Member of NZ Venture Capital Association. Martin lives in Auckland. MARK PETERSEN INDEPENDENT DIRECTOR Dip Urb Val, SNZPI Mark is a Professional Director and corporate adviser who has worked in the commercial property sector for the past 35 years. Initially working as a registered valuer, Mark s background includes development management, project management and investment management. Mark was Managing Director of NZX listed Shortland Properties Limited from 1989 to Mark is currently a director of CentrePort Limited, Wellington s container port company and its subsidiaries and is an advisory Board member for Te Tumu Kainga, a trust administered by the Maori Trustee for the provision of affordable housing. Mark is a former director of Wellington Waterfront Limited, a former director of Australian property focused private equity funds which were established and managed by Grant Samuel and is a past Chair of the NZ Hockey Federation. Mark is currently an Executive Director of D H Flinders, a Melbourne headquartered corporate advisory firm providing corporate and funds management advice in Australia, New Zealand and South East Asia. Mark lives in Wellington. NOTE: The full list of Augusta Board Committees and details of the Director's memberships of these committees are detailed on Page 48.

43 SENIOR MANAGEMENT OF AUGUSTA PHIL HINTON EXECUTIVE DIRECTOR Phil has over 35 years property experience in New Zealand, previously as a registered valuer and partner of Telfer Young (Taranaki) Limited, specialising in commercial property valuations for twenty years. He joined the KCL Property group of companies in 2002 and specialised in investment, analysis, management and development. KCL Property was acquired by Augusta Funds Management in April Phil is a past President and Board member of the Property Institute of New Zealand and a member of the Institute of Directors. Phil is a licensed Real Estate Agent, a Fellow of the New Zealand Institute of Valuers and has a Fellowship from the New Zealand Property Institute. HAYDEN BRYANT PORTFOLIO MANAGER Hayden has a very strong background in Commercial and Industrial Agency. With over 14 years in the market, Hayden has had senior roles with major international agency firms including Jones Lang LaSalle and CBRE. Hayden has recently returned from Melbourne where he was Managing Director of CBRE, focusing on corporate leasing, acquisitions and development. Hayden now resides in Auckland. 43 SIMON WOOLLAMS CHIEF FINANCIAL OFFICER Simon has a commerce degree majoring in accountancy and is a Chartered Accountant. Simon has a strong financial background including roles with BDO Spicers, UK experience and ANZ National Bank in the property and finance teams. Simon has been with Augusta since NEW ROLES ESTABLISHED IN LUKE FITZGIBBON LEGAL COUNSEL & COMPANY SECRETARY Luke joined Augusta in January from Chapman Tripp where he spent 8 years in the corporate team where he advised on securities laws (including for Augusta s syndications), mergers and acquisitions as well as general commercial and corporate advice. Luke s role at Augusta is to oversee and advise on all legal aspects of the Augusta business. STEPHEN BROWN-THOMAS DEVELOPMENT & PROJECT MANAGER Stephen was previously with KCL and DTZ and has over 10 years experience in development, asset and project management. In addition, a compliance manager was also recruited reporting to the Legal Counsel & Company Secretary. A stable and skilled resource base to drive growth.

44 COMMUNITY AND SPONSORSHIP 44 Augusta Golf Day, New Plymouth. 7 April. Augusta s Community Sponsorship covers a range of organisations including the Westpac Rescue Helicopter in Auckland, Taranaki Basketball and the New Plymouth Golf Club Taranaki Open Event. Augusta has sponsored the Westpac Rescue Helicopter in Auckland for five years, underlining the strong focus the company has for the community benefit that comes from a helicopter service such as this. Particularly with Search and Rescue and Accident and Emergency events, the ability of a helicopter service to save lives cannot be underestimated. The needs of New Zealand s largest city and its growing population reinforce the requirement for this type of service operating on a 24/7 basis in critical and time sensitive situations. The Augusta Taranaki Mountainairs play in the National Basketball League (NBL) throughout New Zealand and have been sponsored by Augusta since Representing the Taranaki province, they have been able to showcase the Augusta brand in areas of the country where many of our investors reside. For the first time in 2015, Augusta was the major sponsor of the Augusta Taranaki Golf Open held at the Ngamotu Course in New Plymouth. The Augusta name is indelibly linked to the sport of golf, so the fit in sponsoring a significant national event like this is easy to see. The 2015 event was held early in October and featured a range of international and national professional players competing over a 72 hole championship format.

45 FUNDS MANAGEMENT ADDITIONAL INFORMATION FINANCIAL MARKETS CONDUCT ACT WHAT DOES IT MEAN? As a funds manager, the recently introduced Financial Markets Conduct Act, requires Augusta Funds Management (AFM) to be licensed. Just like driving a car, the licensing process and standards are designed to ensure AFM is fit to drive a funds management business. We have embraced this requirement as we believe it further demonstrates our skills and expertise. For that reason, we were delighted that AFM was the first specialist property funds manager to be granted a licence. That licence will enable AFM to continue offering to both retail and wholesale investors a range of funds in different structures. Obtaining the licence was critical for our strategic plans going forward. ANTI-MONEY LAUNDERING No doubt a number of Augusta Capital shareholders will have, both with Augusta and across their various investments, gained exposure to the Anti-Money Laundering legislation (AML). While there is a cost to the business from the AML law, AML is a necessary fact of life at Augusta. The law is designed to ensure businesses take appropriate measures to guard against money laundering and terrorism financing. We have a team dedicated to working with customers to ensure all appropriate customer due diligence information is provided. Our AML compliance programme is part of our wider compliance programme and demonstrates we are committed to best practice in compliance. We see it also as an opportunity to get a better knowledge and understanding of our customers in the funds management business. HEALTH & SAFETY The new Health and Safety at Work Act 2015 not only affects employers (who need to look after health and safety risks for their employees) but a number of other categories of business, including commercial property landlords. This introduces risk to the business which we are actively managing through various health and safety policies, processes and procedures that we have introduced. Leading up to the Act s introduction on 4 April and continuing after that date, we have been working closely with Bayleys Property Services, who property manage our properties on a day to day basis. Health and safety reports on both the directly owned portfolio and the managed portfolio have been commissioned. We are currently working through how health and safety risks can be eliminated or managed and in a number of instances, have successfully achieved this. There are regular reviews and spot checks internally to monitor progress and the board has established a Health and Safety Committee to oversee the management of health and safety risks. Health and safety is an example of where our larger scale and resources ensures we can quickly implement successful processes to deal with changing legislation and requirements for the business. 45 AFM is licensed under the Financial Markets Conduct Act 2013 as a manager of: Other Managed Investment Schemes, which are invested in Property Syndicates/Real Property Proportionate Ownership Schemes; and Managed Investment Schemes Managed Funds, where the Managed Funds are invested solely in real property (listed and unlisted).

46 INVESTOR RELATIONS 46 INVESTING IN AUGUSTA CAPITAL LIMITED Shares in the Company are quoted under the issuer code AUG on the NZX Main Board. There is only one class of securities, being Ordinary Fully Paid Shares. ANNUAL AND INTERIM REPORTS The Company s Annual report will be sent to Shareholders in June of each year. The interim report and annual reports will be available on the Company website at the end of June and November of each year. WEBSITE The Company s website address is The website contains information on the history, structure, governance and latest news on the Company, including details of the portfolio, financial reports and press releases. REGISTRY The registry for the shares of the Company is Link Market Services Limited. Investors should contact the registry if they wish to change their investment details such as address, method of receipt of dividend or general NZX inquiries. MANAGEMENT Any inquiries about Augusta Capital Limited can be directed to L.J. Fitzgibbon, Legal Counsel & Company Secretary, Augusta Capital Limited. luke@augusta.co.nz Phone (09) Fax (09) ANNOUNCEMENTS All announcements of material information to the NZX Main Board are posted on the Company s website at Copies of announcements can be requested from the Legal Counsel & Company Secretary at luke@augusta.co.nz

47 DIRECTORS RESPONSIBILITIES STATEMENT The Financial Reporting Act 2013 and the Financial Markets Conduct Act 2013 requires the Directors to prepare financial statements for each financial year that present fairly the financial position of the Company and of the financial performance and cash flows for that period. In preparing these financial statements, the directors are required to; select suitable accounting policies and then apply them consistently; make judgements and estimates that are reasonable and prudent; and state whether applicable accounting standards have been followed, subject to any material departures disclosed and explained in the financial statements The Directors are responsible for keeping proper accounting records, which disclose with reasonable accuracy at any time the financial position of the Company, and to enable them to ensure that the financial statements comply with the Companies Act They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. The Directors have pleasure in presenting the financial statements for the year ended 31 March. The Board of Directors of the Company authorised these financial statements for issue on 14 June. For and on behalf of the Board of Directors. 47 P.J. Duffy Chairman M.E. Francis Director 14 June 14 June

48 CORPORATE GOVERNANCE 48 The Board comprises six Directors: four Independent Directors (of which one is the Chairman) and two Executive Directors. The Company s Constitution provides for the appropriate number of Directors to be between three and seven but requires the number of Independent Directors represented on the Board to in all cases constitute a majority. The independent directors are Paul Duffy, Martin Goldfinch, Mark Petersen and John Loughlin. Mark Francis and Bryce Barnett are executive directors, with Mark Francis the designated executive director for the purpose of NZX Main Board Listing Rule (c). The Board is committed to maintaining the highest standards of business behaviour and accountability. Accordingly, the Board has adopted corporate governance policies and practices designed to promote responsible conduct of the Company. Details of the Company s key policies and the charters for the Board and each of its committees can be found at the Company s website: including the Company s code of ethics and environmental policy. The corporate governance principles adopted and followed by the Company differ from the Corporate Governance Best Practice Code issued by the NZX in the following ways: the Company does not maintain a nominations committee to recommend director appointments to the Board; directors are not encouraged to take a portion of their remuneration via a performance-based equity securities compensation plan or encouraged to invest a portion of their cash remuneration in purchasing the Company s equity securities. BOARD COMMITTEES The Board has a number of formally constituted committees that comprise the Directors. Committees established by the Board will review and analyse policies and strategies which are within their terms of reference. The committees are as follows: AUDIT AND RISK MANAGEMENT COMMITTEE The Audit and Risk Management Committee is responsible for monitoring and reviewing the effectiveness of the Company s controls in the areas of operational risk and financial reporting. The members are Mark Petersen (Chair) and John Loughlin. REMUNERATION COMMITTEE The Remuneration Committee addresses remuneration policy and sets salary terms and conditions. The members are John Loughlin (Chair) and Martin Goldfinch. HEALTH AND SAFETY COMMITTEE The Health and Safety Committee assists the Board to fulfil its health and safety responsibilities and ensure compliance with all health and safety legislative and regulatory requirements. The committee also supports the ongoing improvement of health and safety in the workplace and the properties managed by Augusta. The members are Mark Francis (Chair) and Mark Petersen. COMPLIANCE COMMITTEE The Compliance Committee assists the Board in its responsibilities relative to compliance with policies and procedures as well as legal and regulatory compliance. The members are Mark Francis (Chair), Mark Petersen and Martin Goldfinch.

49 GENERAL DISCLOSURES DIRECTORS INTERESTS IN TRANSACTIONS Directors have declared interests in the following transactions with Augusta Capital Limited during the year: As at 31 March 2015 On 1 April 2014 B.R. Barnett (along with the other shareholders in KCL Property Limited) sold their interests in KCL Property Limited and its subsidiaries to Augusta Funds Management Limited for $15 million. There were various retentions associated with the contract and $10 million was settled on 1 April 2014 with further retention payments made during the year ending 31 March totalling $424,000. On 23 April 2015 a further 3,638,792 shares were issued at a share of $0.80c representing a value of $2,911,034 or 97% of the $3 million earn out. During the year ended 31 March the following are dealings in Augusta Capital shares involving Directors of the Company or its subsidiaries: INTERESTS IN THE SHARES OF THE COMPANY The interests of the Directors in the shares of Augusta Capital Limited were; As at 31 March Ordinary Shares J.J. Loughlin 37,286 M.E. Francis 14,620,000 B.R. Barnett* 4,911,034 *further 88,966 shares issued to Te Kukumara Investments Limited, in which B.R. Barnett has a relevant interest, on 16 May increasing shareholding to 5,000, SHARE ACQUISITIONS SHARE DEALINGS Number of shares acquired Nature of acquisition Class of shares Consideration paid Date of acquisition B.R. Barnett* 2,911,034 Share Issue Ordinary $2,328, April 2015 P.M. Hinton* 727,758 Share Issue Ordinary $582, April 2015 * Shares issued after satisfaction of earn-out criteria from acquisition of KCL Property Limited. P.M. Hinton is a director of Augusta Funds Management Limited only. DIVIDENDS Gross Dividend Imputation Credit Net Dividend Cents Cents Final dividend recommended (not recognised as a liability as at 31 March ); on ordinary shares ,093 Dividends paid in the year; on ordinary shares ,370

50 GENERAL DISCLOSURES [CONTINUED] 50 NATURE OF OPERATIONS AND PRINCIPAL ACTIVITIES The principal activities during the period were that of commercial and industrial property investment, funds management specialised in property and cleaning services. There has been no change in the nature of these activities during the period. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has agreed to indemnify all the Directors for: a. costs incurred in defending any liability for any act or omission made by the Director in their capacity as a director and for to which they are acquitted, judgment is given in their favour or the proceeding is discontinued; b. any liability in their capacity as a director (other than liability to the Company or its subsidiaries) for any act or omission as a director except where due to the wilful default or fraud, any criminal liability, breach of the duty to act in good faith, breach of any fiduciary duty and any other liability for which the giving of an indemnity is prohibited by law. During the financial year, the company has paid premiums (as permitted by sections 162(3)-(5) of the Companies Act 1993) in respect of a Directors and Officers Liability Policy insuring all the Directors of Augusta Capital Limited (subject to the policy terms and conditions) against claims arising whilst they are acting in their individual or collective capacities as Directors and Officers. The payment of insurance premiums was expressly approved by the Board, who consider the cost is fair to the Company. DIRECTOR REMUNERATION FOR THE YEAR ENDED 31 MARCH P.J. Duffy Independent Chairman 36,041 J.J. Loughlin Independent Director 61,250 M Goldfinch Independent Director 65,000 R.M Petersen Independent Director 67,500 P.D. Wilson Former Independent Chairman 75,000 TOTAL $304,790 In addition to the director fees noted above, the total remuneration and value of other benefits paid to M.E. Francis was $475,000 and B.R. Barnett was $630,165. Included in B.R. Barnett s remuneration was a special bonus of $138,000 relating to the sale and purchase agreement and employment contract. REMUNERATION OF EMPLOYEES WHOSE REMUNERATION AND BENEFITS EXCEEDED $100, , , , , , , , , , , , , , , , , , , , , , , , ,999 1 Total 12 DIRECTORSHIPS The names of the directors of the Company as at 31 March are set out in the Director Profiles on pages 37 to 39. P.D. Wilson ceased to be a Director of Augusta Capital Limited and Augusta Finds Management Limited on 16 December The following people held office as directors of the Company s subsidiaries at 31 March : Augusta Funds Management Limited: P.J. Duffy, J.J. Loughlin, M.G. Goldfinch, R.M. Petersen, B.R. Barnett, P.M. Hinton and M.E. Francis Metroclean Limited: M.E. Francis AUDITOR S REMUNERATION Fees paid to auditors (EY) for the year ended 31 March were $85,000 (2015 $82,500). Other non-audit services (tax, compliance and consulting advice) from EY for the year ended 31 March were $64,000 (2015 $55,000). DONATIONS Donations of $5,261 were made during the year ($Nil 2015). GENDER DISCLOSURES The breakdown of the gender composition of the Company s directors and executive team for the previous two years is as follows; FINANCIAL YEAR BOARD OFFICERS Male Female Male Female 12 months ending 31 March months ending 31 March 6-6 -

51 GENERAL DISCLOSURES [CONTINUED] INTERESTS REGISTER In addition to the disclosure above regarding share acquisitions and director indemnities and insurance, the following are relevant disclosures in relation to changes in the Interests Registers of the Company and its subsidiaries following 1 April 2015; 51 DIRECTOR COMPANY / TRANSACTION B.R. Barnett AFM GP (Shands Road) Limited AFM LP Limited AFM GP (Peachgrove Road) Limited AFM GP (Hugo Johnston Drive) Limited Issue of Performance Share Rights under Augusta Capital Long Term Incentive Plan Director Director Director Director Participant in LTI Plan J.J. Loughlin Havelock North Fruit Co. Limited Rockit Nutrition Limited Rockit Trading Company Limited Director Director Director M.E. Francis AFM GP (Shands Road) Limited AFM LP Limited AFM GP (Peachgrove Road) Limited AFM GP (Hugo Johnston Drive) Limited Issue of Performance Share Rights under Augusta Capital Long Term Incentive Plan Director Director Director Director Participant in LTI Plan P.J. Duffy Keystone Nominees Limited Diversified Management Limited Whitby Village (2009) Limited Moturoa Island Limited Hayphil Investments Limited Philhay Investments Limited Hayphil Property Limited Able Scaffolding Limited Twenty Twenty Property Partners Limited Leighs Construction Ltd Leighs Construction Holdings Director Director Director Director Director Director Director Director Director Director Director

52 GENERAL DISCLOSURES [CONTINUED] 52 INTERESTS REGISTER [CONTINUED] P.J. Duffy [Continued] Twenty Twenty Property Finance Limited Augusta Value Add Fund No. 1 Limited Carbine Road Limited Cook St Limited Director Director Director Director 151 Victoria Street West Limited Director Kitchener St Limited McDonald St Limited Director Director R.M. Petersen DH Flinders NZ Limited Helsingor Properties Limited Helsingor Holdings Limited Centreport Limited Augusta Funds Management Limited Augusta Capital Limited Harbour Quays Property Limited Centreport Properties Limited Harbour Quays A1 Limited Harbour Quays D4 Limited Harbour Quays F1 F2 Limited Harbour Quays F1 F2 Limited Augusta Value Add Fund No. 1 Limited Carbine Road Limited Cook St Limited Director & Shareholder Director Director Director Director Director Director Director Director Director Director Director Director Director Director 151 Victoria Street West Limited Director Kitchener St Limited McDonald St Limited Director Director

53 53 36 Kitchener Street, Auckland. Value Add Fund No.1.

54 54 0 F I N A N C I A L I N F O R M A T I O N SECTION

55 55 2

56 56 Shands Road, Christchurch - an Augusta managed syndicate.

57 INDEX 57 CONSOLIDATED STATEMENT 58 OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT 59 OF CHANGES IN EQUITY CONSOLIDATED STATEMENT 60 OF FINANCIAL POSITION CONSOLIDATED STATEMENT 61 OF CASH FLOWS NOTES TO THE CONSOLIDATED 62 FINANCIAL STATEMENTS 1. CORPORATION INFORMATION SUMMARY OF SIGNIFICANT 62 ACCOUNTING POLICIES 3. SIGNIFICANT ACCOUNTING 63 JUDGEMENTS AND ESTIMATES 4. FINANCIAL RISK MANAGEMENT 63 OBJECTIVES AND POLICIES 5. SUBSIDIARIES SEGMENT INFORMATION NET REVENUE COSTS AND EXPENSES INCOME TAX EARNINGS PER SHARES DIVIDENDS PAID AND PROPOSED 74 TO SHAREHOLDERS 12. CASH AND CASH EQUIVALENTS TRADE AND OTHER RECEIVABLES INVESTMENT PROPERTIES FIXED ASSETS INTANGIBLE ASSETS AND GOODWILL TRADE PAYABLES AND ACCRUALS INTEREST-BEARING LOANS 82 AND BORROWINGS 19. FINANCIAL INSTRUMENTS ISSUED CAPITAL AND RESERVES COMMITMENTS AND CONTINGENCIES RELATED PARTY DISCLOSURES LEASE COMMITMENTS EVENTS AFTER THE BALANCE SHEET DATE 87

58 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 MARCH 58 NOTE 2015 Revenue Property Revenue 7,393 6,672 Management Fees 5,314 5,297 Offeror Fees 5,119 3,443 Underwriting Fees 1,903 1,129 Cleaning Services Income Operating Costs Recovered 1,485 1,616 Distribution Income Gross Revenue 21,933 18,600 Less Operating Costs (4,829) (4,763) Net Revenue 7 17,104 13,837 Less Corporate Costs Administration Costs 8 (7,162) (6,362) Profit Before Financing, Fair Value Movements and Gain / (Loss) on Disposal 9,942 7,475 Finance Income Finance Expenses 8 (3,048) (3,239) Net Finance Costs (2,930) (3,088) Profit Before Fair Value Movements and Gain / (Loss) on Disposal 7,012 4,387 Capital Gain on Sale of Property Management Rights - 1,555 Unrealised Gain / (Loss) in Value of Investment Properties 14 7,071 4,368 Unrealised Gain / (Loss) on Interest Rate Swap (465) (1,440) Contingent Consideration Discount Adjustment 33 (898) Gain / (Loss) on Disposal of Assets 962 (138) Net Profit / (Loss) Before Taxation 14,613 7,834 Taxation Expense Current Taxation 9 (1,515) (624) Deferred Taxation ,175 Taxation Expense (1,096) 2,551 Profit / (Loss) and Total Comprehensive Income for the year 13,517 10,385 Basic/Diluted Earnings Per Share cents cents The above Consolidated Statement of Comprehensive Income should be read in conjunction with the accompanying notes.

59 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 MARCH NOTE Share Capital Retained Earnings / (Deficit) Total Balance as at 1 April ,742 (18,037) 60,705 Issue of Shares 2,075-2,075 Profit / (Loss) for the year - 10,385 10,385 Total comprehensive income for the year ended 31 March ,385 10,385 Dividends 11 - (3,977) (3,977) Balance as at 31 March ,817 (11,629) 69, Share Capital Retained Earnings / (Deficit) Total Balance as at 1 April ,817 (11,629) 69,188 Issue of Shares 20 3,712-3,712 Profit / (Loss) for the year - 13,517 13,517 Total comprehensive income for the year ended 31 March - 13,517 13,517 Dividends 11 - (4,370) (4,370) Balance as at 31 March 84,529 (2,482) 82,047 The above Statement of Changes in Equity should be read in conjunction with the accompanying notes.

60 CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 31 MARCH 60 NOTE 2015 Current Assets Cash and Cash Equivalents 12 5, Trade and Other Receivables 13 2, Capitalisation of Rental Incentives - 93 Prepaid Expenses Income Tax Receivable Deposits Paid (Purchase of Property) 13 4,873 2,537 Retentions Total Current Assets 13,063 5,098 Investment Properties Held for Sale 14 17,900 1,600 Non Current Assets Investment Properties 14 88, ,100 Other Investments 50 - Capitalisation of Rental Incentives Intangible Assets 16 7,386 7,386 Goodwill 16 8,994 8,994 Fixed Assets Total Non Current Assets 105, ,654 Total Assets 136, ,352 Current Liabilities Income Received in Advance Trade Payables and Accruals 17 1,926 2,137 GST Payable Current Portion of Interest Rate Swap Retention Contingent Consideration ,676 Borrowings 18-2,000 Fair Value of Rental Underwrite Total Current Liabilities 3,333 8,423 Non Current Liabilities Borrowings 18 48,900 43,900 Contingent Consideration Non Current Portion of Interest Rate Swap 19 1,613 1,370 Deferred Taxation ,359 Total Non Current Liabilities 51,453 46,741 Total Liabilities 54,786 55,164 Shareholders Equity 20 82,047 69,188 Total Liabilities and Shareholders Equity 136, ,352 For and on behalf of the Board of Directors, who authorise the issue of these Consolidated Financial Statements; Director: Date: 14 June Director: Date: 14 June The above Consolidated Statement of Financial Position should be read in conjunction with the accompanying notes.

61 CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 MARCH NOTE 2015 Cash Flows from Operating Activities Cash provided from: Receipts from Tenants 10,284 9,053 Offeror Fees 5,854 3,959 Underwriting Fees 1,603 1,129 Management fees 5,799 6,426 Cleaning Services Finance Income Distribution Income Cash applied to: Operating Expenditure (5,659) (5,482) Finance Expense (3,084) (3,206) Administration Costs (7,260) (6,595) Income Tax Paid (1,184) (1,204) Net GST Payable (1,237) (1,209) Net Cash Flows from Operating Activities 12 5,810 3, Cash Flows from Investing Activities Cash provided from: Sale of Investment Property 20,996 24,183 Sale of Other Investments 12,450 6,700 Retention Received Deposit refunded 8,819 7,218 Cash applied to: Capital Expenditure on Investment Properties (824) (3,218) Work in progress (1,034) (470) Purchase of Investment Property (16,500) (9,755) Purchase of Other Investments (12,450) (6,700) Deposit on Purchase of Investment Property (11,155) - Purchase of Fixed Assets (360) - Retention Paid (117) - Contingent Consideration Payments - (848) Acquisition of a Subsidiary, Net of Cash Acquired - (5,038) Acquisition Costs - (413) Net Cash Flows used in Investing Activities 83 11,659 Cash Flows from Financing Activities Cash provided from: Borrowings 22,450 26,918 Cash applied to: Dividends (4,370) (3,977) Borrowings (19,450) (38,868) Net Cash Flows from Financing Activities (1,370) (15,927) Cash at the Beginning of the Year 627 1,448 Net Increase / (Decrease) in Cash 4,523 (821) Cash as at 31 March 12 5, The above Consolidated Statement of Cash Flows should be read in conjunction with the accompanying notes.

62 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH CORPORATE INFORMATION The consolidated financial statements of Augusta Capital Limited (the Company ) and its subsidiaries (collectively the Group ) for the year ended 31 March were authorised for issue in accordance with a resolution of the Directors on 14 June. The Company is a limited company incorporated and domiciled in New Zealand and whose shares are listed on the New Zealand Stock Exchange. The Company is an FMC Reporting Entity under the Financial Markets Conduct Act The registered office is located in Level 2, 4 Viaduct Harbour Avenue, Auckland, The nature of the operations and principal activities of the Group are that of investment in funds management specialising in property, commercial property and cleaning services. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) BASIS OF PREPARATION The consolidated financial statements have been prepared in accordance with generally accepted accounting practice in New Zealand ( NZ GAAP ). For the purpose of complying with NZ GAAP, the Company and its subsidiaries are for-profit entities. The consolidated financial statements have also been prepared on a historical cost basis, except for investment properties, derivative financial instruments and contingent consideration which have been measured at fair value. The financial statements are presented in New Zealand dollars and all values are rounded to the nearest thousand dollars (). (B) STATEMENT OF COMPLIANCE The consolidated financial statements comply with New Zealand equivalents to International Financial Reporting Standards ( NZ IFRS ). The consolidated financial statements also comply with International Financial Reporting Standards ( IFRS ). Changes in accounting policies The accounting policies adopted are consistent with those of the previous financial year. Accounting Standards that are issued but not yet effective A number of new standards, amendments to standards and interpretations are effective for reporting periods on or after 1 April 2017, and have not been adopted in preparing these consolidated financial statements by the Group. None of these are expected to have a significant effect on the consolidated financial statements of the Group, except the following: NZ IFRS 9 Financial Instruments - This standard is part of a wider project to replace NZ IAS 39 Financial Instruments: Recognition and Measurement. The standard establishes two primary measurement categories for financial assets: amortised cost and fair value. The basis of classification will depend on the Group's business model for managing the financial asset and contractual cash flow characteristics of the financial asset. The existing NZ IAS 39 requirements, being the classification for financial liabilities and the ability to use fair value is retained, however where fair value is used it will be accounted for as follows: the change attributable to the changes in credit risk are presented in other comprehensive income, while the remaining change is presented in profit or loss. If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect of the changes in credit risk are also presented in profit or loss. The Group has not yet assessed the impact of this standard. The application date for this standard is for accounting periods beginning on or after 1 January 2018 hence the application date for the Group is 1 April NZ IFRS 15 establishes principles for reporting useful information to users of financial statements about the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity s contracts with customers. NZ IFRS 15 supersedes: a. NZ IAS 11 Construction Contracts b. NZ IAS 18 Revenue c. NZ IFRIC 13 Customer Loyalty Programmes d. NZ IFRIC 15 Agreements for the Construction of Real Estate e. NZ IFRIC 18 Transfers of Assets from Customers f. NZ SIC-31 Revenue Barter transactions Involving Advertising Services The core principle of NZ IFRS 15 is that an entity recognises revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity recognises revenue in accordance with that core principle by applying the following steps: Step 1: Identify the contract(s) with a customer Step 2: Identify the performance obligations in the contract Step 3: Determine the transaction price Step 4: Allocate the transaction price to the performance obligations in the contract Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation The Group has not yet assessed the impact of this standard. The application date for the standard is for accounting periods beginning on or after 1 January 2017 hence the application date for the Group is 1 April IFRS 16 is the new standard on the recognition, measurement, presentation and disclosure of leases. This standard will replace: (a) NZ IAS 17 Leases; (b) NZ IFRIC 4 Determining whether an Arrangement contains a Lease; (c) NZ SIC-15 Operating Leases Incentives; and (d) NZ SIC-27 Evaluating the Substance of Transactions. Involving the legal form of a lease.

63 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] The Group has not yet assessed the impact of this standard. The Application of NZ IFRS 16 is required for annual periods beginning on or after 1 January (C) BASIS OF CONSOLIDATION The consolidated financial statements of the Group comprise the financial statements of the Company and its subsidiaries as at and for the year ended 31 March each year. Subsidiaries are all those entities over which the Company is exposed, or has rights, to variable returns from its investment with the entity and has the ability to affect those returns through its power over the entity. The existence and effect of potential voting rights that are currently exercisable or convertible are considered, if those rights are substantive, when assessing whether a Company controls another entity. The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances, transactions, unrealised gains and losses resulting from intra-group transactions and dividends have been eliminated in full. 3. SIGNIFICANT ACCOUNTING JUDGEMENTS AND ESTIMATES In applying the Group s accounting policies management continually evaluates judgements, estimates and assumptions based on experience and other factors, including expectations of future events that may have an impact on the Group. Actual results may differ from the judgements, estimates and assumptions. Judgements made by the Directors in the application of NZ IFRS, that have significant effects on the financial statements and estimates with a significant risk of material adjustments in the next year are disclosed, where applicable, in the relevant notes to the financial statements. Significant judgements, estimates and assumptions made by the Group in the preparation of these consolidated financial statements are outlined below. The preparation of these consolidated financial statements requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the Group s accounting policies. Although the Group has internal control systems in place to ensure that estimates can be reliably measured, actual amounts may differ from those estimates. The areas involving a higher degree of judgement or areas where assumptions are significant to the Group include following; Operating Lease Commitments Group as Lessor (Note 23) Classification of Investment Property held as Held for Sale (Note 14) Taxation (Note 9) Valuations of Investment Properties (Note 14) Impairment of Goodwill & Intangibles (Note 16) 4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES The Group s principal financial instruments, other than derivatives, comprise bank loans, cash and short-term deposits. The main purpose of these financial instruments is to provide funding for the Group s operations. The Group has various other financial instruments such as trade receivables, trade payables and contingent consideration, which arise directly from its operations. The Group also enters into derivative transactions consisting principally of interest rate swaps. The purpose is to manage interest rate risk arising from the Group s operations and its sources of finance. It is, and has been throughout the period under review, the Group s policy that no trading in financial instruments shall be undertaken. The main risks arising from the Group s financial instruments are interest rate risk, credit risk and liquidity risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below. The Group also monitors the market price risk arising from all financial instruments and the Group s accounting policies in relation to derivatives are set out below. Interest rate risk The Group s exposure to market risk for changes in interest rates relates primarily to the Group s long-term debt obligations. The level of debt is disclosed in Note 18. To manage this in a cost-efficient manner, the Group enters into interest rate swaps, in which the Group agrees to exchange, at specified intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount. As the Group holds interest rate swaps in respect of $22.5 million of the total Group debt, there is a risk that their economic value will fluctuate because of changes in market interest rates. The notional value of interest rate swaps is disclosed in Note 19, and it is acknowledged that this risk is a by-product of the Group s attempt to manage its cash flow interest rate risk. These swaps are entered into to economically hedge underlying and forecast debt obligations. At 31 March, after taking into account the effect of interest rate swaps which is in respect of 46% (or $22.5 million) of the Group s borrowings, and with the balance of the debt (54% or $26.4 million) based on interest floating rates, the effective interest rates including margins are below for both the Group and Company; $8.5 million at the effective rate of 5.35% $8.5 million at the effective rate of 6.85% $5.5 million at the effective rate of 6.50% $26.4 million at the effective rate of 4.32% The Group however has further exposure to changes in the floating liquidity premium margin, which is currently reviewed by ASB Bank on a quarterly basis. All other bank margins are fixed over the term of the loan facility, with the exception of potential future margin review changes, which ASB Bank has a right to review; in circumstances such as if the loan covenants are breached. As at balance date the Group had the following financial assets exposed to New Zealand variable interest rate risk that are not designated in cash flow hedges; 2015 Cash at bank and in hand 5,

64 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) The following demonstrates the sensitivity to the profit before tax and Shareholders Equity, resulting from a reasonably possible change in interest rates, with all other variables held constant. This is also on the basis of the cash deposits being available for a full year, and the interest rate change is also relevant for a full year. The below is based on an increase or decrease in interest rates of 50 basis points (+/- 0.5%); 2015 Profit or loss impact of interest rate movement (+ 50 basis points) 264 1,036 Profit or loss impact of interest rate movement (- 50 basis points) (264) (1,036) Shareholders Equity impact of interest rate movement (+ 50 basis points) - - Shareholders Equity impact of interest rate movement (- 50 basis points) - - Credit risk Credit risk arises from the financial assets of the Group, which comprise cash and cash equivalents and trade and other receivables. In management s opinion, the Group trades only with recognised, creditworthy third parties, whose obligations to the Group are contractually enforceable under tenancy agreements and carpark licenses. Receivable balances are monitored on an ongoing basis. As the Group has a wide spread of tenants over many industry sectors as well as holding contractual management rights in respect to the funds management business and cleaning operations, it is not exposed to any significant concentration of credit risk. Assessments are made where appropriate in respect to new tenants including verification of financial position and industry reputation. Amounts which are past due are reviewed and any necessary provision for doubtful debts is raised where appropriate, based on all factors considered. The doubtful debts provision as at 31 March is $nil (2015 $Nil). No other past due receivables are impaired. The balance of the financial assets which are past due but not impaired as at 31 March is $311,554 (2015 $98,566). The aging of these past due financial assets (receivables) is greater than 30 days but less than 90 days. During the year, there was $42,840 bad debts which were written off (2015 $Nil) and there was no recovery of doubtful debts recorded during the year (2015 $Nil). With respect to credit risk arising from the other financial assets of the Group, which comprise interest received on cash and cash equivalents and interest rate swaps in respect to the receive portion, the Group s exposure to credit risk arises from default of the counter party, with a maximum exposure equal to the carrying amount of these instruments. ASB Bank Limited, who is the counter party in respect to the financial assets of the Group, currently holds an AA- credit rating (issued by Standard & Poors). Spark, Building C, Auckland - an Augusta managed syndicate.

65 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 4. FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) Liquidity risk Liquidity risk arises from the Group s financial liabilities and the ability to meet all its obligations to repay financial liabilities as and when they fall due. The Group s objective is to maintain a balance between continuity of funding and flexibility through the use of bank loans, and ordinary shares. The table below reflects all contractually fixed pay-offs for settlement and repayments resulting from recognised financial liabilities. This table is based on all interest rate variables being held constant over the relevant period of time. It does not allow for potential future margin increases as these can not be easily identified as at balance date. All payments are undiscounted and the timing of the cash flows is based on the contractual terms of the underlying contract. 65 AS AT 31 MARCH 1 month 2-3 months 3 months - 1 year 1-2 years 2-5 years Total Financial Liabilities $'000 $'000 $'000 $'000 $'000 $'000 Non-derivative financial liabilities Trade payables Interest payable ,584 2,112-4,224 Borrowings ,900-48,900 Contingent consideration Derivative financial liabilities Interest rate swap (net settled) ,828 Total ,899 51, ,146 AS AT 31 MARCH month 2-3 months 3 months - 1 year 1-2 years 2-5 years Total Financial Liabilities $'000 $'000 $'000 $'000 $'000 $'000 Non-derivative financial liabilities Trade payables Interest payable 616 1, ,090 Borrowings 2, ,900-45,900 Contingent consideration 3, ,788 Derivative financial liabilities Interest rate swap (net settled) ,289 Retention Payable Total 6, ,313 44, ,965 Spark, Building C, Auckland - an Augusta managed syndicate.

66 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (CONTINUED) The interest payable above represents interest payable on the borrowings at the floating interest rate plus the bank s margin as at balance date. While the interest rate swap (net) payable represents the interest payable on the borrowings, based on the interest rate differential between the floating rate and the swap rate, assuming no change in the floating rate from balance date. $22.5 million was drawn down at various stages during the year and $19.5 million has subsequently been repaid as a permanent reduction in the loan facilities (2015 $26.9 million of debt was drawn down and $38.9 million was subsequently repaid). Trade payables and interest costs will be paid out of working capital and operating cash inflows. Last year contingent consideration payments (earn out) were funded out of the Offeror fee income generated on each deal. The remaining contingent consideration has and will be settled through the issue of new shares. The net settlement sale proceeds on future contracted asset sales may also be used to repay borrowings. The balance of the borrowings are expected to be refinanced on their maturity in March 2018 and are not to be repaid. Management have frameworks in place to monitor the Group s liquidity and to ensure that banking covenants are complied with. Cash flow reports and banking covenant analysis is prepared and reviewed on a regular basis throughout the year. The table below outlines the carrying amounts at balance date for each of the following categories; AS AT 31 MARCH Fair value through profit and loss Loans and Receivable Other Amortised Cost Cash and cash equivalents - 5,150 - Trade and other receivables - 2,779 - Interest rate swap gain (loss) (2,063) - - Bank borrowings - - (48,900) Trade payables and interest accrued - - (1,926) Contingent consideration (112) - - Deposits Paid - 4,873 - Total (2,175) 12,802 (50,826) AS AT 31 MARCH 2015 Fair value through profit and loss Loans and Receivable Other Amortised Cost Cash and cash equivalents Trade and other receivables Interest rate swap gain (loss) (1,597) - - Bank borrowings - - (45,900) Trade payables and interest accrued - - (2,137) Contingent consideration (3,788) - - Deposits Paid - 2,537 - Retention Payable (287) - - Retention Receivable Total (5,313) 4,056 (48,037) 5. SUBSIDIARIES The consolidated financial statements of the Group include: Country of % of equity interest Name incorporation 2015 Augusta Fund Management Limited New Zealand 100% 100% Metroclean Limited New Zealand 100% 100% Augusta Funds Management Limited and Metroclean Limited focus on funds management specialising in property and providing cleaning services respectively.

67 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 6. SEGMENT INFORMATION The Group has identified its operating segments based on the internal reports that are reviewed and used by the Board of Directors in assessing performance on a monthly basis. The Group had three distinct divisions, being investment property, funds management and cleaning services. During the year ended 31 March these three segments were reported to the Board. FOR THE YEAR ENDED 31 MARCH 67 Revenues Investment Property () Funds Management () Cleaning () Unallocated () Elimination ($'000) Total () Third party 8,980 12, ,933 Inter segment 2, (2,876) - Total gross revenues 11,757 12, (2,876) 21,933 Total net revenues 6,664 10, ,104 Overheads (1,630) (5,458) (74) - - (7,162) EBIT 5,034 4, ,942 Net Funding Costs (2,471) (459) (2,930) Profit before revaluation 2,563 4, ,012 Capital Gain/ (Loss) on Disposal Revaluation of Investment Property 7, ,071 Other adjustments (432) - (432) Profit before taxation 10,596 4, (432) - 14,613 Total Assets 117,143 19, ,833 Total Liabilities 44,753 7, ,176-54,786 Other Disclosures Investment Property* 106, ,800 Capital Expenditure Intangible Assets & Goodwill - 16, ,380 *includes held for sale. A reconciliation of the unallocated segment is as follows; Contingent consideration discount adjustment 33 Unrealised profit / (loss) on the fair value of interest rate swaps (465) Loss before tax of unallocated segment (432) During the year ended 31 March ; 7 City Road was sold for $22.8 million on 19 August Including disposal costs and recognition of the fair value of the rental underwrite position there was a gain on sale of $0.96 million attributable to the sale. During the year ended 31 March the Company charged overheads costs incurred to both Augusta Funds Management Limited and Metroclean Limited, being the subsidiary Companies. This overhead cost allocation was based on various factors, the most material being personnel costs as well as the administrative costs of running each business. Borrowings and all other liabilities such as income received in advance, trade payables, accruals, the fair value of interest rate swaps and all tax liabilities are managed on a group basis and are not allocated to operating segments. All other assets, aside from investment property, funds management assets and fixed assets, such as cash in hand, trade receivables, tax receivables and prepayments are managed on a group basis and are not allocated to operating segments.

68 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 6. SEGMENT INFORMATION (CONTINUED) FOR THE YEAR ENDED 31 MARCH Revenues Investment Property () Funds Management () Cleaning () Unallocated () Elimination () Total () Third party 8,286 9, ,600 Inter segment 2, (3,152) - Total gross revenues 11,272 9, (3,152) 18,600 Total net revenues 5,369 8, ,837 Overheads (1,106) (5,134) (123) - - (6,362) EBIT 4,263 3, ,475 Net Funding Costs (2,356) (732) (3,088) Profit before revaluation 1,489 2, ,387 Revaluation of Investment Property 4, ,368 Loss on Disposal of Assets (97) (42) (139) Other adjustments (783) - (783) Profit before taxation 5,760 2, (783) - 7,834 Total Assets 106,838 22, (5,749) 124,352 Total Liabilities 41,363 12, ,597 (169) 55,164 Other Disclosures Investment Property 101, ,700 Capital Expenditure 2, ,930 Intangible Assets & Goodwill - 16, ,380 A reconciliation of the unallocated segment is as follows; Contingent consideration discount adjustment (898) Unrealised profit / (loss) on the fair value of interest rate swaps (1,440) Capital gain on sale of property management rights 1,555 Loss before tax of unallocated segment (783) During the year ended 31 March 2015; Unit D, 17 Lambie Drive was sold for $2,058,000 on 6 June 2014 and Unit E, Lambie Drive was sold for $1,895,000 on 2 September 2014 which was the carrying value. Including disposal costs there was a loss on sale of $0.1m attributable to the sale of the two units. This property was held for sale as at 31 March The property situated at 18 Hibiscus Highway was purchased on 25 March 2014 in the prior year for $22.35 million. This property is held for sale and was purchased with the intention of future syndication. The property is currently subject to a subdivision process and Lot 1 was sold for $20.85 million on 7 May The property was sold into a new property Scheme established by the Group. The balance of land which was purchased for $1.5 million is still currently held by the Group valued at $1.4 million, but which is held in trust by the new Scheme until the new title is issued. During the year ended 31 March 2015 the Company charged overheads costs incurred to both Augusta Funds Management Limited and Metroclean Limited, being the subsidiary Companies. This overhead cost allocation was based on various factors, the most material being personnel costs as well as the administrative costs of running each business. Borrowings and all other liabilities such as income received in advance, trade payables, accruals, the fair value of interest rate swaps and all tax liabilities are managed on a group basis and are not allocated to operating segments. All other assets, aside from investment property, funds management assets and fixed assets, such as cash in hand, trade receivables, tax receivables and prepayments are managed on a group basis and are not allocated to operating segments.

69 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 7. NET REVENUE Net Revenue shown in the consolidated statement of comprehensive income comprises amounts received and receivable by the Group for: Net Revenue () 2015 () Rentals charged to tenants in the ordinary course of business 7,393 6,672 Income from new Offers 5,119 3,443 Recurring management fees 5,314 5,297 Income from Underwriting new Offers 1,903 1,129 Cleaning services income Other income Operating cost recoveries from tenants and customers 1,485 1,616 Less Operating costs incurred (4,829) (4,763) Net Revenue 17,104 13, Rental revenue is recognised to the extent that it is probable that economic benefits will flow to the Group and the revenue can be reliably measured, on a straight line basis over the lease term. Recoveries from tenants are recognised as revenue in the year the applicable costs are accrued. Known advance rental income associated with early termination of a tenancy is recognised at the date of the agreed lease termination. Income derived from establishment of new Offers is recorded when a new Offer has been completed, the Scheme has commenced trading and the settlement of the relevant property has occurred. Income from the management of the new Scheme is recorded on an annual basis and based on the terms of the relevant management agreements. Income from cleaning services is recognised once the service has been completed. Operating cost recoveries represent the costs recovered from tenants during the year in respect to contractual rental agreements whereby the tenant is responsible for specific operating costs. These recoveries are not netted off against the operating costs incurred. In respect to cleaning supplies, certain cleaning supply costs are recovered from customers Operating costs Property operating costs (2,132) (2,326) Property management fees (1,634) (1,414) Metroclean operating costs (608) (390) Costs of sale transactional income (406) (260) Leasing costs (49) (373) Total operating costs (4,829) (4,763) Operating costs relate to costs incurred in running the directly owned portfolio including insurance, utilities and maintenance costs. Tenants are responsible for maintenance and holding costs associated with their tenancy, where they have contracted to do so in their tenancy agreements. Non recoverable operating expenses are the responsibility of the Group. Property management fees are paid to Bayleys Property Services in relation to managing the portfolio. Further costs of sale relate to the generation of transactional income from the managed portfolio.

70 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 8. COST & EXPENSES Administration costs Personnel costs (4,172) (3,937) Depreciation and amortisation (383) (86) Auditors Remuneration (1) (149) (158) Director fees (305) (173) Professional fees (655) (536) Other administration costs (1,498) (1,472) Total administration costs (7,162) (6,362) Finance Income / (Expenses) Bank loans and overdrafts interest (2,688) (2,802) Bank loan facility fees (360) (437) Bank interest earned Total net finance costs (2,930) (3,088) (1) Auditors remuneration as follows: Expenses incurred to Ernst & Young for; Audit of the Annual Report (85) (103) Tax compliance/consulting (64) (55) The annual audit fee includes the fees for both the annual audit of the consolidated financial statements and a review of the interim financial statements. Tax services include annual tax compliance and advice on PIE Status and the set up and taxation of the new Value Add Fund, including GST advice. EY also performs the audits of a number of syndicates managed by the Group. They are paid $32k for this service. Accounting Policy Employee Benefits Liabilities for wages and salaries, including non-monetary benefits, KiwiSaver employer contributions and annual leave that are expected to be settled within 12 months of the reporting date are recognised in respect of employees services up to the reporting date. They are measured at the amounts expected to be paid when the liabilities are settled. Goods and Services Tax (GST) Income, expenses and assets are recognised net of the amount of GST except: where the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the item as applicable; and receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position. Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. Finance Income Finance income consists of interest income and is recognised as interest accrues on cash deposits held using the effective interest method. This is a method of calculating the amortised cost of a financial asset and allocating the interest income over the relevant period using the effective interest rate, which is the rate which exactly discounts the future cash receipts through the expected life of the financial asset to the net carrying amount of the financial asset. Finance Expenses Finance expense, including borrowing costs, interest payable on borrowings and gain/loss on interest rate swaps are recognised as an expense in the profit or loss when incurred. Borrowing costs incurred do not relate to qualifying assets and hence are treated as an expense and are not capitalised. Other expenses and costs Operating and administration costs are recorded as an expense in profit and loss when incurred.

71 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 9. INCOME TAX Major components of income tax expense for the year ended 31 March are; 2015 Statement of profit and loss Current Tax Continuing Operations - Current income tax charge (1,515) (686) Prior year tax adjustment - 62 Current Tax (1,515) (624) 71 Net deferred income tax Depreciation claimed for taxation 128 2,742 Net change on revaluation of interest rate swap Capitalisation of rental incentives 158 (2) Accruals not deductible 3 32 Net deferred income tax 419 3,175 Income taxation expense reported in Statement of Comprehensive Income (1,096) 2,551 A reconciliation of the income tax income applicable to net profit before income tax at 28%, to the income tax expense in the Statement of Comprehensive Income for the year ended 31 March is as follows; 2015 Net profit (loss) before tax 14,613 7,834 Adjust for revaluations of investment land (7,071) (4,368) Adjust for capital loss / (gain) on disposal of property (985) 97 Adjust for sale of property management rights - (1,555) Adjust for contingent consideration (33) 898 Adjust for deductable expenditure (207) - Adjust for non deductible expenditure Adjusted net profit / (loss) before tax 6,493 2,906 Income taxation expense (28%) (1,818) (814) Adjustment for deferred tax (depreciation) 286 3,303 Adjustment for depreciation Adjustment to the prior year taxation expense 2 62 Income taxation expense recorded in the Statement of Comprehensive Income (1,096) 2,551 Southgate, Takanini, Auckland - an Augusta managed syndicate.

72 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 9. INCOME TAX (CONTINUED) Deferred income tax Deferred income tax at 31 March relates to the following; Deferred income tax liabilities Revaluation of interest rate swap (577) (447) Depreciation claimed for taxation 1,551 1,679 Capitalisation of rental incentives Gross deferred income tax liabilities 974 1,391 Deferred income tax assets Accruals not deductible Net deferred income tax 940 1,359 Accounting Policy - Income Tax Income tax on the profit or loss for the year comprises current and deferred tax. Income tax is recognised in profit or loss except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity. Current tax is the expected tax on the taxable income for the year, using rates enacted or substantially enacted at balance date, and any adjustment to income tax payable in respect of previous periods. Deferred tax is provided using the liability method on all temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. Deferred tax liabilities are recognised for all taxable temporary differences, except: When the deferred tax liability arises from the initial recognition of goodwill or an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor the taxable profit or loss In respect of the taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future Deferred income tax assets are recognised for all deductible temporary differences, carry-forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax assets and unused tax losses can be utilised, except: When the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss. When the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised. The carrying amount of any deferred income tax asset is reviewed at each balance date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

73 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 9. INCOME TAX (CONTINUED) Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at balance date. The Group has applied the rebuttable presumption under NZ IAS 12 that deferred tax on investment property measured using the fair value model in NZ IAS 40 is determined on the basis that its carrying amount will be recovered through sale. Judgement is required in assessing whether deferred tax assets and certain deferred tax liabilities are recognised on the statement of financial position. Deferred tax assets, including those arising from tax losses and deductible temporary differences, are recognised only when it is considered more likely than not that they will be recovered, which is dependent on the generation of sufficient future taxable profits. Assumptions about the generation of future taxable profits focus on future forecast and cashflow projections. Judgements are also required in respect to the application of income tax legislation. The judgements and assumptions are subject to risk and uncertainty and hence there is a possibility that changes in circumstances will alter expectations, which may then alter the amounts of deferred tax assets and liabilities recorded on the Statement of Financial Position and that may also lead to a corresponding adjustment to profit or loss EARNINGS PER SHARE The following reflects the income and share data used in the calculation of basic and diluted earnings per share computations; 2015 Net Profit / (Loss) After Tax Attributable to Shareholders of the Group 13,517 10,385 Weighted Average Number of Ordinary Shares 87,418 83,779 Earnings / (Loss) Per Share (cents) - Basic and Fully Diluted Accounting Policy - Basic Earnings Per Share Earnings per share is calculated by dividing the Net Profit After Tax Attributable to Shareholders by the weighted average number of shares on issue during the year. In the current year both basic earnings and diluted earnings are equivalent. Peachgrove Road Limited Partnership, Hamilton East - an Augusta managed syndicate.

74 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 11. DIVIDENDS PAID AND PROPOSED TO SHAREHOLDERS 74 Date Paid Date Paid Q4 prior year net dividend of 1.25 cps 1, /05/ /05/2014 Q1 net dividend of 1.25 cps 1, /08/2015 1,046 15/08/2014 Q2 net dividend of 1.25 cps 1, /11/2015 1,046 14/11/2014 Q3 net dividend of 1.25 cps 1, /02/ 1,046 13/02/2015 Total paid during the year 4, ,977 The Group s current distribution approach is to retain sufficient operating funds to cover business as usual capital expenditure and in prior periods the funding of the contingent consideration (earn out) payments arising from the purchase of the funds management business. The table below provides a reconciliation of the profit available for distribution for the Group for the year; The dividend for the quarter ended 31 March was announced on 21 April and is as follows; (Note this dividend is not recognised as a liability as at 31 March ) Dividends on ordinary shares, paid on 13 May ; Final imputed dividend for, 1.25 cents per share Imputation Credit Account 2015 At 31 March the imputation credits available for use in subsequent reporting periods are Accounting Policy - Provision for Dividends Provisions for dividends are recognised in the period that they are authorised and declared.

75 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 12. CASH AND CASH EQUIVALENTS 2015 Cash at bank 5, Cash at bank earns interest at floating rates based on daily bank deposit rates. Reconciliation from the net profit after tax to the net cash flows from operations 2015 Net profit / (loss) after tax 13,517 10,385 Adjustments for; Revaluation change on investment properties (7,518) (4,368) Capital (gain) / loss on sale of investment property (1,087) 96 Revaluation change on interest rate swap 465 1,440 Asset write offs (loss on disposal of assets) - 42 Depreciation Sale of property management rights - (1,555) Contingent Consideration Discount Adjustment (33) 898 Acquisition costs Changes in assets and liabilities (Increase)/decrease in trade and other receivables (719) 664 (Increase)/decrease in capitalisation of rental incentives (Increase)/decrease in prepayments (Decrease)/increase in deferred tax (419) (3,174) (Decrease)/increase in income tax receivable 331 (651) (Decrease)/increase in income in advance - (760) (Decrease)/increase in trade payables and accruals (351) (75) (Decrease)/increase in GST payable 641 (146) Net cash flow from operating activities 5,810 3,447

76 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 13. TRADE AND OTHER RECEIVABLES Trade receivables Other receivables 1, Total Trade and Other Receivables 2, Trade receivables are non-interest bearing and are on <30 day terms, and rent is due on the first day of every month. Management fees are also paid on the first day of every month or quarter. Cleaning contract receivables are due on the 20th of the following month Deposits Paid (Purchases of Property) 4,873 2,537 Deposits Paid (Purchases of Property) are deposits made on properties that are to be used to establish new schemes or funds. The balance for the year ended 31 March relates to the 151 Victoria St West, 54 Cook Street, 100 Carbine Road and 11 McDonald St (Value Add Fund No.1) as well as Building A, 4 Graham St and 76 Quinns Hill Road, Brisbane. The deposits will be repaid by the scheme or fund (Value Add Fund No. 1) to the Group when the proportionate ownership scheme is established, on settlement of the purchase of the property. The deposit for the 4 properties relating to the Value Add Fund No1 were subsequently repaid to the Group on 1 April ($4,640,000) Accounting Policy - Trade and Other Receivables Trade and other receivables are initially recognised at fair value plus transaction costs and subsequently carried at amortised costs using the effective interest rate method less an allowance for any impairment losses. Due to their short term nature trade and other receivables are not discounted. Collection of trade receivables is reviewed on an ongoing basis at an individual debtor level. An impairment loss is recognised when there is objective evidence the Group will not be able to collect the receivable, which is due to either financial difficulties of the debtor, default on payments or debts that are more than 60 days overdue. Peachgrove Road Limited Partnership, Hamilton East - an Augusta managed syndicate.

77 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 14. INVESTMENT PROPERTIES Investment properties are stated at fair value, and were valued as at 31 March by CBRE and as at 31 March 2015 by Jones Lang Lasalle, which are both members of the New Zealand Institute of Valuers and are industry specialists in valuing these types of investment properties. The table below outlines the movements in the carrying values for all directly owned investment properties and investment properties held for sale for the year ended 31 March. Property Registered Valuer Valuation Revaluation Capex Mar-15 Mar-16 Mar-16 $000 $000 $000 Acquisition/ Disposal Mar-16 $000 Valuation Mar-16 $000 Finance Centre Carpark CBRE 25,500 3, ,700 Finance Centre Podium CBRE 9, , Victoria St West CBRE 25,400 2, ,800 Retail Title CBRE 20,200 1, ,500 Total (as at 31 Mar ) 80,500 7, , Kitchener St** (held for sale) ,500 16, Hibiscus Highway (held for sale) 1,600 (200) - - 1,400 7 City Road* 19, (19,630) - TOTAL*** 101,700 7, (3,130) 106, *7 City Road was sold on the 19 August 2015 for $22,800,000 **36 Kitchener St was purchased on 30 October 2015 for $16,500,000. This property has subsequently been sold on 1 April to the Value Add Fund No.1 ***Revaluation movement of $7.50m differs from the unrealised gain on revaluation of $7.07m due to adjustments made for capitalised rental incentives The table below outlines the movements in the carrying values for all directly owned investment property for the year ended 31 March Property Registered Valuer Valuation Revaluation Mar-14 Mar-15 $'000 $'000 Capital Expenditure Mar-15 $'000 Acquisition / (Disposal) Valuation Mar-15 Mar-15 $'000 $'000 Finance Centre Carpark Jones Lang Lasalle 25,500 Finance Centre Podium Jones Lang Lasalle 9, Victoria Street West Jones Lang Lasalle 25,400 Retail Title Jones Lang Lasalle 20,200 Total Finance Centre & 19 Victoria St West* 73,800 3,873 2,827-80,500 7 City Road Jones Lang Lasalle 19, ,600 Manukau Business Park (Lambie Drive)** 3, (4,004) - TOTALS 96,610 4,368 3,126 (4,004) 100, Hibiscus Highway, Silverdale*** Jones Lang Lasalle 22, (20,850) 1,600 TOTALS (including Assets held for sale) 119,060 4,368 3,126 (24,854) 101,700 During the year ended 31 March 2015; *The Finance Centre and 19 Victoria St West properties were valued on the basis of four titles for Finance Centre Car Park, Finance Centre Podium, 19 Victoria St West and a Retail title. The new retail title and changes to existing Car Park, Podium and 19 Victoria Street West titles have not yet been issued at balance date. ** Unit D, 17 Lambie Drive was sold for $2,058,000 on 6 June 2014 and Unit E, Lambie Drive was sold for $1,895,000 on 2 September 2014 which was the carrying value. Including disposal costs there was a loss on sale of $0.1m attributable to the sale of the two units. *** The property situated at 18 Hibiscus Highway was purchased on 25 March 2014 for $22.35 million. This property is held for sale and was purchased with the intention of future syndication. The property is currently subject to a subdivision process and Lot 1 was sold for $20.85 million on 7 May The property was sold into a new property Scheme established by the Group. The balance of land which was purchased for $1.5 million is still currently held by the Group but revalued as at 31 March 2014 being $1.6 million.

78 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 14. INVESTMENT PROPERTIES (CONTINUED) FOR THE YEAR ENDED 31 MARCH 78 Below is a table of effective net market yields, occupancy and weighted average lease information by property as at balance date for the Group. Property Carrying Value Net Market Rent Net Yield (Market) Occupancy WALE Mar-16 $000 Mar-16 $000 Mar-16 $000 Mar-16 $000 Mar-16 Years Finance Centre Carpark 28,700 1, % Finance Centre Podium 9, % Victoria St West 28,800 2, % Retail Title 21,500 1, % Total (as at 31 March ) 88,900 6, % Kitchener St 16, Hibiscus Highway 1,400 TOTAL 106,800 The table below outlines the valuation techniques used and key unobservable inputs to valuation of investment properties as at 31 March. Investment properties are fair valued based on non-market observable outputs (Level 3). Finance Centre Car Park Finance Centre Podium 19 Victoria Street West Retail Title Capitalisation Approach: Adopted capitalisation rate 6.50% 8.13% 7.38% 6.50% Discounted Cash Flow Approach: Discount rate 8.13% 9.13% 8.50% 8.13% Terminal yield 6.75% 8.38% 7.88% 7.00% Weighted rental growth (Average 10 years) 2.00% 1.70% 2.10% 2.80% CPI (Average 10 years) 2.00% 2.00% 2.00% 2.00% Market Combined Summary: Net passing income 6.37% 8.44% 7.61% 6.45% Weighted average lease term (by income) 11.3 years 4.3 years 3.3 years 5.7 years Net passing income per square metre - $209 $287 $264 Net lettable area (square metres) - 4,000 7,630 5,260 Current vacancy (% total Income) 0% 5.0% 6.0% 0% Adopted value $28,700,000 $9,900,000 $28,800,000 $21,500,000 The land located at 18 Hibiscus Highway, Silverdale is held at sale price based on an unconditional sale and purchase agreement at a value of $1.4 million. 36 Kitchener Street is held at purchase price, and subsequent sale price to Value Add Fund No. 1 on 1 April, being $16.5 million.

79 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 14. INVESTMENT PROPERTIES (CONTINUED) The duration of the cash flows and the specific timing of inflows and outflows are determined by events such as rent review, lease renewal and related re-letting, redevelopment, or refurbishment. The appropriate duration is typically estimated as gross income less vacancy, non-recoverable expenses, collection losses, lease incentives, maintenance cost, agent and commission costs and other operating and management expenses. The series of periodic net operating income, along with an estimate of the terminal value anticipated at the end of the projection period, is then discontinued. Significant increases (decreases) in estimated rental value and rent growth per annum in isolation would result in significantly higher (lower) fair value of the properties. Significant increases (decreases) in long-term vacancy rate and discount rate (and exit yield) in isolation would result in a significantly lower (higher) fair value. Generally, a change in the assumption made for the estimated rental value is accompanied by: A directionally similar change in the rent growth per annum and discount rate (and exit yield); and An opposite change in the long term vacancy rate. 79 Accounting Policy - Investment Properties, Including Investment Properties Held for Sale Investment properties are measured initially at cost, including transaction costs. Subsequent to initial recognition, investment properties are stated at fair value, which reflects market conditions at balance date. Fair value is determined by an independent valuation performed annually. Gains and losses arising from changes in the fair values of investment properties are recognised in profit or loss in the year in which they arise. The Group classifies investment property as held for sale when the carrying amount will be recovered through a sale transaction. The assets and liabilities must be held for immediate sale and the Group must be committed to selling the asset either through the entering into a contractual sale and purchase agreement or by entering into a campaign to market the property for sale with the clear intention of disposal. The sale must be highly probable, an active programme to locate a buyer must be in place and the disposal plan must have been initiated. A completed sale is expected to take place within one year from the date of classification. Investment properties are derecognised either when they have been disposed of or when the investment property is permanently withdrawn from use and no future economic benefit is expected from its disposal. Any gains or losses on the disposal of an investment property are recognised in profit or loss in the year of disposal. Independent valuations are used to determine the fair value of investment properties. Fair values are based on market conditions, being the estimated amount at which the assets could be exchanged between a knowledgeable willing buyer and a knowledgeable willing seller in an arm's length transaction at the date of valuation. For Augusta Capital Limited s properties there is an absence of current prices in an active market, for similar property in the same location and in the same condition with similar lease terms. Therefore the valuations are prepared following the discounted cash flow method and the capitalisation approach. The discounted cash flow method is based on the expected net rental cash flows applicable to each property, which are then discounted to their present value using a market determined, discount risk-adjusted rate applicable to the respective property. The capitalisation approach is also used as a valuation method which is based on the current contract rental and market rental and an appropriate yield for that particular property. The market value is a weighted combination of both the discounted cash flow and the capitalisation approach. The valuations also consider market assumptions of internal rates of return, rental growth, average lease terms, occupancy rates, and the costs associated with the initial purchase of the property and yield. All these assumptions are then compared, where possible, to market based evidence and transactions for properties in similar locations, condition and quality of accommodation. Where an unconditional sale and purchase agreement has been signed as at balance date, the sale price within the relevant sale and purchase agreement is deemed to represent the fair value at balance date.

80 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 15. FIXED ASSETS Fixed Assets Computer Equipment Fixed Assets Cleaning Equipment 4 7 Fixed Asset Motor Vehicle Fixed Assets Furniture and Fittings Accumulated Depreciation (571) (189) Fixed Assets Closing Balance Accounting Policy - Fixed Assets Fixed assets are measured at historical cost, less accumulated depreciation and impairment losses. Depreciation is calculated using the diminishing balance method to allocate the cost at depreciation rate as follows: Depreciation rate Method Computer Equipment 30-60% Diminishing Balance Motor Vehicle 40% Diminishing Balance Office Furniture and Fittings 10-20% Diminishing Balance 16. INTANGIBLE ASSETS AND GOODWILL 2015 Intangible Assets 7,386 7,386 Goodwill 8,994 8,994 Total 16,380 16,380 The intangible assets represent the funds management business assets purchased, which consists of management contracts at the time of acquisition. The goodwill represents the future value to be generated out of the funds management assets. The intangible assets and goodwill will be allocated across the funds management business as they represent a cashgenerating unit. The intangible assets are not amortised as the intangible assets are deemed to have an indefinite life. Impairment of the intangible assets and goodwill is assessed using an internal discounted cash flow model. The discount rate applied is 7.25% on the unleveraged pre-tax nominal cash flows. Based on the above assumptions, no impairment losses have been recognised in the period (2015: $nil). Any adverse changes in actual performance of the products and/or future rates of growth in the business, will reduce the calculated recoverable amount and may result in recognition of impairment in the carrying values of assets in future periods.

81 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 16. INTANGIBLE ASSETS AND GOODWILL (CONTINUED) Accounting Policy - Goodwill and Intangible Assets Goodwill acquired in a business combination is initially measured at cost of the business combination, being the excess of the consideration transferred over the fair value of the Group s net identifiable assets acquired and liabilities assumed. After initial recognition, goodwill is measured at the amount recognised at acquisition date less any accumulated impairment losses. For the purposes of impairment testing, goodwill is allocated to each of the Group s cash-generating units that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. Each cash-generating unit represents the lowest level within the Group at which the goodwill is monitored for internal management purposes. 81 Impairment is determined by assessing the recoverable amount of the cash-generating unit to which the goodwill relates. The Group performs its impairment testing as at 31 March each year using the discounted cash flows method based on expected future contracted management fee income. When the recoverable amount of the cash-generating unit is less than the carrying amount, an impairment loss is recognised. Intangible assets acquired are initially measured at cost, and then following initial recognition, are measured at cost, less any impairment losses and amortisation. The useful lives of intangible assets are assessed as either finite or indefinite. Intangible assets with indefinite useful lives are tested for impairment annually either individually or at the cash-generating unit level consistent with the methodology outlined for goodwill above. Such intangibles are not amortised. The useful life of an intangible asset with an indefinite life is reviewed each reporting period to determine whether indefinite life assessment continues to be supportable. If not, the change in the useful life assessment from indefinite to finite is accounted for as a change in an accounting estimate and is thus accounted for on a prospective basis. 17. TRADE PAYABLES AND ACCRUALS 2015 Trade payables Accruals 1,459 1,105 Interest accrued Total Trade, Interest and Other Payables 1,926 2,137 Trade payables are non-interest bearing and are normally settled on the 20th of the month following invoice date. Interest payable is settled quarterly throughout the financial year. Accounting Policy Trade Payable and Accruals Trade payables and accruals are initially measured at fair value less any transaction costs and subsequently carried at amortised cost and due to their short term nature and are not discounted. They represent liabilities for goods and services provided to the Group prior to the end of the financial year that are unpaid and arise when the Group becomes obliged to make future payments in respect to the purchase of these goods and services.

82 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 18. INTEREST-BEARING LOANS AND BORROWINGS Secured bank loan (ASB) Loan Maturity 31/03/ ,900 - Secured bank loan (ASB) Loan Maturity 30/06/ - 43,900 Secured bank loan (ASB) Loan Maturity 30/04/2015-2,000 Total 48,900 45,900 The drawn down facilities total $48.9 million at balance date with an expiry of 31 March 2018 in respect to total facilities of $50.9 million. The facilities are subject to annual review and can then be extended by one year post review. The current bank margin is 1.50% above the floating or hedged interest rate. $22.5 million of debt is hedged (46% of the total debt) via interest rate swap agreements and these are tabled below; $8.5 million hedged until November at rate of 3.85% plus bank margin of 1.5% $8.5 million hedged until November 2020 at rate of 5.35% plus bank margin of 1.5% $5.5 million hedged until April 2021 at rate of 5.00% plus bank margin of 1.5% A further $8.5 million has been hedged from November, when one of the current interest rate swaps expires, until November 2018 at the rate of 3.80% (plus bank margin of 1.5%) $26.4 million of the debt (54% of the total debt) is currently unhedged and the current floating rate is 2.70% as at balance date (plus bank margin of 1.5%). Below is a summary of the loan movements made during the year; Drawdown Underwrite (Takanini Nominees) $12,450,000 Repayment of underwrite ($12,450,000) Deposits Paid on Properties $3,000,000 Net Movement $3,000,000 FINANCING FACILITIES AVAILABLE At reporting date, the following financial facilities had been negotiated and were available; Total facilities 2015 Facilities used at reporting date - Secured bank loan (ASB) 48,900 45,900 Facilities unused at reporting date - Secured bank loan (ASB) 2, Secured bank loan (ASB) 50,900 46,000 LOAN SECURITY The loans are secured by a registered first mortgage over the investment property and assets of the Group, an assignment of leases over all present and directly acquired properties mortgaged to the ASB Bank and a first general security interest over the assets of the Group. LOAN COVENANTS ASB BANK The current loan covenants with ASB are: 1. Loan to Value Ratio (LVR) core debt (the Company) must represent no more than 45% of the mortgaged security value. The core debt relates solely to the directly owned portfolio 2. Interest Cover Ratio earnings before interest and tax to represent no less than 2.25 times interest costs (the Group) 3. Net rental from mortgaged securities to represent no less than 2.0 times the interest of the core debt 4. The WALE for the total Augusta Capital Limited property portfolio must not be less than 3 years.

83 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 18. INTEREST-BEARING LOANS AND BORROWINGS (CONTINUED) Accounting Policy - Interest-Bearing Loans and Borrowings Interest bearing loans and borrowings are initially recognised at fair value of the consideration less directly attributable transaction costs. Subsequent to initial recognition, interest-bearing loans and borrowings are stated at amortised cost using the effective interest method. Borrowings are classified as current liabilities unless the Group has an unconditional right to defer the settlement of the liability for at least 12 months after balance date. 83 Borrowing costs are recognised as an expense when incurred and not capitalised, as they do not relate to qualifying assets. See Note 8 for the accounting policy for Finance expenses. 19. FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENT Set out below is a comparison by category of carrying amounts and fair values of all of the Group s financial instruments in the financial statements. Carrying Amount Fair Value Financial liabilities Interest rate swaps 2,063 2,063 Contingent consideration Carrying Amount 2015 Fair Value 2015 Financial liabilities Interest rate swaps 1,597 1,597 Contingent consideration 3,788 3,788 The carrying amount of all other financial instruments approximates their fair value. Fair Value The following table provides the fair value movement hierarchy of the Group s financial assets and liabilities. Refer to Note 14 for the fair value measurement disclosures relating to investment properties. Year ended 31 March Year ended 31 March 2015 Quoted Market Price (Level 1) Market Observable Outputs (Level 2) Non Market Observed Outputs (Level 3) Quoted Market Price (Level 1) Market Observable Outputs (Level 2) Non Market Observed Output (Level 3) Interest rate swaps - (2,063) - - (1,597) - Contingent consideration - (112) - - (3,788)

84 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] FINANCIAL INSTRUMENTS AND FAIR VALUE MEASUREMENT (CONTINUED) The quoted market price method (Level 1) represents the fair value determined based on quoted prices in active markets as at the reporting date. For financial instruments not quoted in active markets (Level 2) the Group uses present value techniques, with a comparison to similar instruments for which market observable prices exist and other relevant models used by market participants, which includes current swap rates on offer and also the current floating interest rate. For financial instruments which are based on non-market observed inputs (Level 3), the Group uses present value techniques based on a forecasted future earnings. Accounting Policy - Financial Instruments Loans and Receivables and other Financial Liabilities at Amortised Cost Loans and receivables and other financial liabilities at amortised cost are initially recognised at fair value and then subsequently held at amortised cost using the effective interest rate method. Derivatives The Group uses derivative financial instruments (interest rate swaps) to economically hedge some of its exposure to interest rate risk arising from borrowings (see Note 4). The interest rate swaps convert certain variable interest rate borrowings to fixed interest rates reducing the exposure to fluctuations in floating interest rates. Such derivative financial instruments are carried at fair value. Any resulting gain or loss on re-measurement is recognised in profit or loss. The fair value of interest rate swaps is the estimated amount the Group would receive or pay to terminate the swap at balance date, taking into account current interest rates and the current creditworthiness of counterparties to the swap. The Group does not undertake speculative trading transactions or hold derivative financial instruments for trading purposes. Contingent Considerations The Group recognises contingent consideration liability at its fair value as part of the consideration transferred in exchange for the acquiree and subsequently remeasures at fair value through profit or loss. Accounting Policy - De-recognition of Financial Instruments The de-recognition of a financial instrument takes place when the Group no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold, or all the cash flows attributable to the instrument are passed through to an independent third party. A financial asset is derecognised when: The rights to receive cash flows from the asset have expired The Group has transferred its rights to receive cash flows from the asset or has assumed an obligation to pay the received cash flows in full without delay to a third party under a pass-through arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset A financial liability is derecognised when the obligation under the liability is discharged or cancelled, or expires. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognised in the profit or loss.

85 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 20. ISSUED CAPITAL AND RESERVES Ordinary Shares Thousands 2015 Thousands Number of issued and fully paid shares as at 31 March 87,418 83,779 Ordinary shares have no par value. Fully paid and ordinary shares carry one vote per share and carry the right to dividends. 85 Movement in ordinary shares on issue # of shares Thousands As at 1 April ,779 80,817 Issue of shares 3,639 3,712 At 31 March 87,418 84,529 On 16 May a further 111,208 shares were issued at $1.12 being the fair value increasing the share capital by $0.12 million. CAPITAL MANAGEMENT When managing capital, the Directors objective is to ensure the entity continues as a going concern as well as to maintain optimal returns to shareholders. As the market is constantly changing, management and the Board of Directors consider capital management initiatives. The Directors have the discretion to change the amount of the dividends to be paid to the shareholders accordingly, issue new shares or sell investment property to reduce debt. Management monitor capital through the gearing ratio (debt/investment assets). Loan-to-value ratio 2015 Total Group Debt 48,900 45,900 Total Group Assets 133, ,914 Gearing Ratio 36.5% 37.6% The ASB Bank Limited holds no security over any cash deposits as at 31 March (March 2015 $nil). Accounting Policy - Share Capital The costs associated with raising equity (including non claimable GST) in the Group are deducted from the proceeds of the share capital issued and are recorded as a deduction from equity. The costs associated with repurchasing shares are also deducted from the proceeds of share capital. These deduction costs are directly and incrementally incurred with any equity transactions. 21. COMMITMENTS AND CONTINGENCIES CAPITAL COMMITMENTS At 31 March the Group has capital commitments of $140,000 (2015 : $336,000). GUARANTEES The Company has the following contingent liabilities at 31 March ; ASB has provided a bond to the New Zealand Stock Exchange for the sum of $75,000, being the amount required to be paid by all Issuers listed on the New Zealand Stock Exchange, and the Company has provided a General Security Agreement over its assets in favour of ASB as security for this bond (2015 : $75,000).

86 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] RELATED PARTY DISCLOSURES SCHEMES UNDER MANAGEMENT Augusta Funds Management Limited, a subsidiary of the Company, owns the management contract rights of the Schemes. In some cases Augusta Funds Management holds a shareholding in the Nominee Company and the relevant Nominee Company is appointed by the Subscribers as their bare trustee to take and hold the Property on behalf of all the Subscribers in accordance with the terms of the management contracts. Augusta Funds Management Limited may hold 100% of the shares in the Nominee Companies but these Nominee Companies do not hold any proportionate shares within any of the Schemes under management and have no recorded assets or liabilities. The Schemes are unincorporated joint ventures between independent parties (Subscribers), established as a Proportionate Share Scheme (Scheme), whereby each Subscriber has acquired a proportionate interest (being a beneficial interest in the registered title) in respect to each relevant Property Scheme. A proportionate interest confers equal rights and obligations on the holder in respect to entitlements to income and capital belonging to the Scheme. In respect to each Scheme, such a Nominee Company is established to hold the relevant legal title and also acts as the registered proprietor in respect of the relevant investment property on behalf of the Subscribers within each Scheme. Transactions with these Schemes are deemed to be related parties due to the significant influence the Manager (Augusta Funds Management Limited and subsidiaries) holds over Schemes under management through the management deeds. The following table total the amount of transactions between the Group and these Schemes: Revenue 2015 Management fees 5,314 5,297 Offeror fees 5,119 3,443 Underwriting fees 1,903 1,129 Total 12,336 9,869 Amounts owed by Related Parties In most cases Mark Francis, John Loughlin, Bryce Barnett or Phil Hinton who are the Director(s) of the Group are also a Director(s) of these Nominee companies. In other cases where a vehicle under management is structured as a Company, Bryce Barnett and Phil Hinton are Directors. In some cases a limited partnership structure has been used. In such cases the General Partner is a subsidiary of Augusta Funds Management Limited. TRANSACTIONS WITH MAJOR SHAREHOLDERS Bryce Barnett and Phil Hinton, major shareholders of the Group, have interest in certain Schemes. All transactions between those Schemes and the Group were entered into arm s length at both normal market prices and normal commercial terms. The contingent considerations related to the acquisition of KCL Property Limited are payable to Bryce Barnett and Phil Hinton as at 31 March. On 16 May the contingent consideration was settled by issuing 111,208 shares. TRANSACTIONS WITH KEY MANAGEMENT PERSONNEL Director remuneration paid for the year ended 31 March is as follows; 2015 P.J. Duffy 36 - P.D. Wilson J.J. Loughlin M.E. Francis - 15 M.G. Goldfinch R.M. Petersen 68 7 Total Compensation paid for key personnel for the year ended 31 March is as follows; 2015 Salary and short term employee benefits 1,803 1,724 Bonus provision payable Total 2,163 2, LEASE COMMITMENTS OPERATING LEASE RECEIVABLES Substantially all of the property owned and leased by the Company is leased to third party tenants. Future minimum rental revenues under non-cancellable operating property leases are as follows: 2015 Due within one year 6,388 6,547 Due between one and five years 18,320 22,055 Due after five years 19,274 17,545 The Group s leasing arrangements are made with third party tenants, and are supported by relevant lease documentation. The lease terms vary between properties and individual tenants within those properties. The Group as the lessor grants the use of the space within these properties to a lessee (tenant) in return for a consideration, being a rental payment made by the lessee. There are no contingent rentals.

87 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH [CONTINUED] 23. LEASE COMMITMENTS (CONTINUED) Accounting Policy Leases The Group has entered into commercial property leases on its investment property portfolio. The Group has determined that it retains all the significant risks and rewards of ownership of these properties and has thus classified the leases as operating leases. Judgement is involved in the determination of whether an arrangement is or contains a lease is based on the substance of the arrangement. This requires an assessment of whether the fulfilment of the arrangement is dependent on the use of a specific asset or assets and that the arrangement conveys a right to use the asset. 87 Group as Lessor Rental leases, in which the Group retains substantially all the risks and benefits of ownership of the leased assets are classified as operating leases. Initial direct costs incurred in negotiating an operating lease are added to the carrying amount of the leased asset and recognised as an expense over the lease term on the same basis as the rental income. 24. EVENTS AFTER THE BALANCE DATE On 1 April the Group sold 36 Kitchener Street to the Augusta Value-Add Fund No.1 Limited for $16.5 million and $10.8 million of core debt was repaid from the proceeds. The Group also subscribed for $9.51 million shares in the Augusta Value-Add Fund No.1 Limited. This shareholding has now reduced to $6 million. On 15 April the Group entered into an unconditional sale and purchase agreement to purchase Building A, 4 Graham Street, Auckland for $115.8 million. On 27 May the group registered a replacement product disclosure statement for an offer of units in Building A Graham Street Limited Partnership. On 21 April The Directors of the Company declared a final dividend on ordinary shares in respect to the year ended 31 March. The total cash amount of the dividend is 1.25 cents per share and has been paid on 13 May. The dividend has not been provided for in the 31 March financial statements. On 21 April the Group registered a replacement product disclosure statement for an offer of units in Quinns Hill Road Partnership. On 6 May the Group completed a re-syndication of an existing property located in Ashburton. On 6 May the Group entered into an unconditional sale and purchase agreement to purchase Building B, 2 Graham Street, Auckland for $88.37 million. While Augusta Funds Management has unconditional underwriting commitments for a possible syndication of the property, (including from Augusta Capital for $12.5 million) it is still considering potential options for offering this property to the market. On 1 June - the Group announced the equity raising condition for Quinns Hill Road Partnership had been satisfied.

88 INDEPENDENT AUDITOR'S REPORT 88 TO THE SHAREHOLDERS OF AUGUSTA CAPITAL LIMITED REPORT ON THE FINANCIAL STATEMENTS We have audited the financial statements of Augusta Capital Limited and its subsidiaries (the Group ) on pages 58 to 87, which comprise the statement of financial position of the Group as at 31 March, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended of the Group, and a summary of significant accounting policies and other explanatory information. This report is made solely to the company's shareholders, as a body, in accordance with section 461G(1) of the Financial Markets Conduct Act Our audit has been undertaken so that we might state to the company's shareholders those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's shareholders as a body, for our audit work, for this report, or for the opinions we have formed. DIRECTORS RESPONSIBILITY FOR THE FINANCIAL STATEMENTS The directors are responsible for the preparation and fair presentation of the financial statements in accordance with generally accepted accounting practice in New Zealand, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. AUDITOR'S RESPONSIBILITY Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing (New Zealand). These auditing standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on our judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we have considered the internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates, as well as evaluating the overall presentation of the financial statements. We believe we have obtained sufficient and appropriate audit evidence to provide a basis for our audit opinion. Ernst & Young provides tax compliance advice, and taxation services to the Group in relation to PIE status and the set up and taxation of the new Value Add Fund, including GST advice. We also perform the audit of a number of syndicates managed by the Group. Partners and employees of our firm may deal with the Group on normal terms within the ordinary course of trading activities of the business of the Group. OPINION In our opinion, the financial statements on pages 58 to 87: comply with generally accepted accounting practice in New Zealand; comply with International Financial Reporting Standards; and present fairly, in all material respects, the financial position of the Group as at 31 March and the financial performance and cash flows of the Group for the year then ended. 14 June 2015 Auckland