2003 Full Financial Reports for

Transcription

1 2003 Full Financial Reports for VC Direct Investment Trust (ARSN ) and VC Property Investment Trust (ARSN ) Macquarie Direct Property Management Limited (ABN ) is a wholly owned subsidiary of Macquarie Bank Limited and is the Responsible Entity of VC Direct Investment Trust and VC Property Investment Trust. Investments in these Trusts are not deposits with nor liabilities of Macquarie Bank Limited (ABN ) nor any Macquarie Bank Group company and are subject to investment risk including possible delays in repayment and loss of income or principal invested. Neither Macquarie Bank Limited, Macquarie Direct Property Management Limited nor any Macquarie Bank Group company guarantees the performance of the Trusts or the repayment of capital from the Trusts. This report does not contain investment advice nor is it an offer to invest in units of the Trusts. This report has been prepared without taking into account the personal objectives, financial situation or needs of particular individuals. Before acting, we recommend potential investors speak to a financial and/or other professional adviser. Macquarie Direct Property Management Limited is entitled to fees for acting in the capacity of Responsible Entity. Macquarie Bank Limited, its related bodies corporate and officers and directors of those entities may hold units in the Trusts from time to time..

2 DIRECTORS REPORT The directors of Macquarie Direct Property Management Limited (manager), the responsible entity of VC Direct Investment Trust (VC Direct) and VC Property Investment Trust (VC Investment), present their report together with the financial reports of VC Direct and VC Investment for the financial year ended 30 June Directors The following persons held office as directors of Macquarie Direct Property Management Limited during the financial year and up to the date of this report: Stephen Girdis Ian Pratt James Rae Richard Cutler Simon Jones (appointed 17 April 2003 as alternate for Stephen Girdis). 2. Principal Activities of VC Direct and VC Investment The principal activity of VC Direct during the financial year was property investment. The principal activity of VC Investment during the financial year was investment in units in VC Direct. There were no significant changes in the nature of the activities of VC Direct and VC Investment (Trusts) during the financial year. 3. Distributions The distribution of VC Direct s income for the financial year ended 30 June 2003 was cents per unit. Interim distributions of , and cents per unit were paid on 31 October 2002, 7 February 2003 and 30 April 2003 respectively. A final distribution for the financial year ended 30 June 2003 of cents per unit was paid on 11 August These distributions included cents per unit which represented interest on loans provided by unitholders that was paid during the financial year. The distribution of VC Investment s income for the financial year ended 30 June 2003 was cents per unit. Interim distributions of 2.72, 2.72 and 2.72 cents per unit were paid on 31 October 2002, 7 February 2003 and 30 April 2003 respectively. A final distribution for the financial year ended 30 June 2003 of 2.72 cents per unit was paid on 11 August Review of Operations The performance of the Trusts, as represented by the results of their operations, was as follows: Property Rental Income 2,220-2,155 - Investment Income Net Profit 1, , Value of Assets Value of Trusts Assets 24,138 10,897 24,052 10,815 The value of the Trusts assets is derived using the basis set out in Note 1 to the financial statements. 1

3 DIRECTORS REPORT (CONT.) 6. Interests in the Trusts The movement in equity of VC Direct and VC Investment during the financial year is set out below: Units Issued during the Year - 20, Units on Issue 10,150,000 4,616,490 10,150,100 4,596, Changes in the State of Affairs In the opinion of the directors, there were no significant changes in the state of affairs of VC Direct and VC Investment during the financial year under review. 8. Matters Subsequent to the End of the Financial Year Since the end of the financial year, the directors are not aware of any matter or circumstance not otherwise dealt with in this report or financial reports that has significantly affected or may significantly affect the operations of VC Direct and VC Investment, the results of their operations or the state of affairs of VC Direct and VC Investment in the financial years subsequent to the financial year ended 30 June Likely Developments and Expected Results of Operations At the time of making this report, it is anticipated that the results of VC Direct and VC Investment will continue to be in accordance with manager s estimates. 10. Indemnification and Insurance of Officers and Auditor No insurance premiums are paid for out of the assets of VC Direct and VC Investment in regards to insurance cover provided to either the officers of Macquarie Direct Property Management Limited or the auditor of the Trusts. So long as the officers of Macquarie Direct Property Management Limited act in accordance with the Trusts Constitutions (Constitutions) and the Corporations Act 2001, the officers remain indemnified out of the assets of VC Direct and VC Investment against losses incurred while acting on behalf of VC Direct and VC Investment. The auditor of VC Direct and VC Investment is in no way indemnified out of the assets of the Trusts. 11. Fees Paid to and Interests Held in the Trusts by the Manager or its Associates Fees paid or payable to the manager and its associates out of VC Direct and VC Investment during the financial year are disclosed in Note 4 to the financial statements. The interests in VC Direct and VC Investment held by the manager or its associates as at 30 June 2003 are disclosed in Note 20 to the financial statements. 12. Environmental Regulations The operations of VC Direct and VC Investment are not subject to any particular environmental regulations under Commonwealth, State or Territory law. 2

4 DIRECTORS REPORT (CONT.) 13. Rounding of Amounts to the Nearest Thousand Dollars VC Direct and VC Investment are registered schemes of a kind referred to in Class Order 98/0100 issued by the Australian Securities and Investments Commission (ASIC) relating to the rounding off of amounts in the directors report and financial reports. Amounts in the directors report and financial reports have been rounded to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated. This report is made in accordance with a resolution of the Board of Directors. Stephen Girdis Chairman Sydney 12 September

5 FINANCIAL REPORT STATEMENT OF FINANCIAL PERFORMANCE Income Note Property Income Property Rental Income 2,220-2,155 - Property Expenses 3 (52) - (47) - Net Property Income 2,168-2,108 - Other Income Investment Income Interest Income Adjustment to Carrying Amount of Investment in Associate Total Income 2, , Expenditure Manager s Fee Borrowing Costs Other Expenses Total Expenditure Net Profit 6 1, , Investment Revaluations Credited Directly to Reserves 16(a) - 4 2, Increase in Equity (Excluding Transactions with Unitholders) 1, ,154 1,502 Distribution Net Profit 1, , Undistributed Income Brought Forward Transfer to Reserves 16(b) - (24) - (45) Undistributed Income Carried Forward 6 (226) - (168) - Distribution Paid and Payable 6,7 1, , Distribution Paid and Payable per Unit (cents) Basic Earnings per Unit (cents) Diluted Earnings per Unit (cents) The above Statement of Financial Performance should be read in conjunction with the accompanying notes. 4

6 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2003 Current Assets Note Cash Receivables Other Total Current Assets Non-Current Assets Investments 10 23,300 10,726 23,300 10,653 Total Non-Current Assets 23,300 10,726 23,300 10,653 Total Assets 24,138 10,897 24,052 10,815 Current Liabilities Payables Interest Bearing Liabilities 14(a) - 5, Provisions Other Total Current Liabilities 555 5, Non-Current Liabilities Interest Bearing Liabilities 14(b) ,654 Total Non-Current Liabilities ,654 Total Liabilities 555 5, ,816 Net Assets 23,583 5,047 23,525 4,999 Equity Contributed Equity 15 21,504 4,616 21,504 4,596 Reserves 16 1, , Undistributed Income Total Equity 23,583 5,047 23,525 4,999 The above Statement of Financial Position should be read in conjunction with the accompanying notes. 5

7 STATEMENT OF CASH FLOWS Cash Flows from Operating Activities Note Inflows/ Inflows/ Inflows/ Inflows/ (Outflows) (Outflows) (Outflows) (Outflows) Property Rental Income Received* 2,577-2,351 - Property Expenses Paid (254) - (255) - Other Operating Expenses Paid (203) - (243) - Interest Received Net GST Remitted to the ATO (141) - (16) - Net Cash Flows from Operating Activities 18 1,999-1,855 - Cash Flows from Investing Activities Distributions Received from Investments Net Cash Flows from Investing Activities Cash Flows from Financing Activities Distributions Paid to Unitholders (1,894) (493) (1,837) (465) Net Cash Flows from Financing Activities (1,894) (493) (1,837) (465) Net Increase in Cash Held Cash at the Beginning of the Year Cash at the End of the Year *Property rental income is inclusive of outgoings income received from tenants. The above Statement of Cash Flows should be read in conjunction with the accompanying notes. 6

8 1. Significant Accounting Policies The significant policies which have been adopted in the preparation of these financial statements are stated to assist in a general understanding of the financial reports. (a) Basis of Preparation These financial reports have been prepared in accordance with the historical cost convention, except for certain assets which, as noted, are at fair value. The financial reports of VC Direct and VC Investment are general purpose financial reports and have been prepared in accordance with the requirements of the Constitutions dated 7 May 1998 and 16 June 1998 respectively and in accordance with Accounting Standards, other authoritative pronouncements of the Australian Accounting Standards Board, Urgent Issues Group Consensus Views and the Corporations Act The accounting policies adopted in preparing the financial reports have been consistently applied by VC Direct and VC Investment except as otherwise indicated. (b) Valuation of Investments The Constitution of VC Direct requires that all investments in real property must be revalued at regular intervals appropriate to the nature of the property. VC Direct s property investments are revalued to market value by an independent valuer at intervals not exceeding three years. In addition, the property investments will be revalued whenever there is a significant change in market value within the period. This revaluation is based on market value which represents the price at which the property investments could be sold at the date of revaluation assuming reasonable exposure to the market and a reasonable settlement period. The property investments are stated at fair value. In accordance with Accounting Standard AASB 1041: Revaluation of Non-Current Assets, properties that have been independently valued in the past 12 months are carried at that valuation. Where properties have not been independently valued in the past 12 months, they are carried at directors valuation. Unrealised gains arising on revaluation of property investments are accounted for by crediting the asset revaluation reserve. Unrealised losses arising on revaluation of property investments are charged to the asset revaluation reserve to the extent they reverse any previous revaluation increment and any residual is charged to the Statement of Financial Performance and transferred to the capital reserve. Property acquisition costs are capitalised into the value of the property investments at the time of purchase. Additions and other expenditure on property investments which are capital in nature are capitalised as incurred. The liability for capital gains tax that may arise if the properties were sold is not accounted for in these financial statements. VC Direct is required to distribute to unitholders any taxable capital gains arising on the sale of the property investments and is therefore not liable to pay capital gains tax. (c) Depreciation Land and buildings have the function of an investment and are regarded as a composite asset. In accordance with Accounting Standards, property investments are not subject to depreciation. Accordingly, the buildings and any component thereof (including plant and equipment) are not depreciated. Taxation allowances for the depreciation of buildings and plant and equipment are claimed by VC Direct and contribute to the tax deferred components of distributions. 7

9 1. Significant Accounting Policies (Cont.) (d) Investments in Associates Investments in associates are accounted for using the equity method, in accordance with AASB 1016: Accounting for Investments in Associates. VC Investment s share of the profits or losses of VC Direct is recognised as income in the Statement of Financial Performance and its share of movements in reserves is recognised in the Statement of Financial Position. Associates are those entities over which VC Investment has significant influence. (e) Receivables Receivables are carried at the amounts due to VC Direct and VC Investment. Rent and outgoings receivable are due for settlement within 30 days of recognition. The collectability of debts is reviewed on an ongoing basis. Debts which are known to be uncollectable are written off in the period in which they are identified. A provision for doubtful debts is raised where some doubt as to collection exists. (f) Borrowing Costs Borrowing costs associated with the acquisition or construction of a qualifying asset are capitalised as part of the cost of that asset. Borrowing costs not associated with qualifying assets are capitalised and amortised over the term of the borrowing period. (g) Deferred Expenditure Significant items of expenditure having a future benefit are amortised over the periods to which they relate. (h) Payables Liabilities are recognised for amounts to be paid in the future for goods or services received, whether or not billed to VC Direct and VC Investment. The amounts are unsecured and are usually paid within 30 or 60 days of recognition. (i) Interest Bearing Liabilities Bank loans held by VC Investment are carried at their principal amounts. Interest is paid by VC Direct on unitholder bank loans on the unitholders behalf and is recorded as a distribution paid during the financial year. (j) Equity Transaction Costs Transaction costs arising on the issue of equity are recognised directly in equity as a reduction of the proceeds of equity instruments to which the costs relate. (k) Capital Reserve In accordance with the provisions of the Constitutions, amounts may be transferred from the capital reserve to fund distributions. (l) Property Rental Income Property rental income represents income earned from the rental of VC Direct s property investments (exclusive of outgoings recovered from tenants) and is brought to account on an accruals basis. 8

10 1. Significant Accounting Policies (Cont.) (m) Income Tax Under current income tax legislation, VC Direct and VC Investment are not liable to income tax provided their taxable income (including assessable realised capital gains) is fully distributed to unitholders. (n) Derivatives VC Direct VC Direct has entered into an interest rate swap agreement to hedge against the risk of an increase in interest rates on the unitholders debt. Derivative financial instruments are not held for speculative purposes and are not recognised in the financial statements on inception. The net payments or receipts due under the swap agreement are accounted for on an accruals basis and are included as part of VC Direct s distribution paid during the financial year. VC Investment VC Direct has entered into an interest rate swap agreement to hedge against the risk of an increase in interest rates on VC Investment s debt. Derivative financial instruments are not held for speculative purposes and are not recognised in the financial statements on inception. The net payments or receipts due under the swap agreement are accounted for on an accruals basis and are included in VC Investment s interest expense. (o) Comparative Figures Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current financial year. 2. Trust Formation and Termination VC Direct and VC Investment were established on 7 May 1998 and 16 June 1998 respectively. The operations of VC Direct commenced with the acquisition of BBC Hardwarehouse, Villawood on 4 September 1998 and VC Investment commenced on 22 September 1998 with the acquisition of units in VC Direct. The Trusts will terminate on their 12th anniversary unless they are terminated earlier in accordance with the provisions of the Constitutions dated 7 May 1998 and 16 June 1998 respectively. 9

11 3. Property Expenses Airconditioning Cleaning Council Rates Electricity Fire Protection Gardening Insurance Land Tax Lease Fees Lease Incentives Property Management Fees Repairs and Maintenance Water Rates Other Less: Recoveries from Tenants (292) - (267) - Total Property Expenses Manager s Fee The manager of the Trusts is Macquarie Direct Property Management Limited, a wholly owned subsidiary of Macquarie Bank Limited. The manager s fee of $145,000 (2002: $141,000) is calculated as 0.6% per annum of the gross assets of VC Direct, payable quarterly in arrears. VC Direct and VC Investment do not provide any other benefits to the manager other than those described in Note

12 5. Other Expenses* ASIC Fees Audit Fees Bank Fees Compliance Fees Legal Fees Postage Printing Registry Fees Taxation Advice Fees Unitholders Communication Valuation Fees - - (8) - Other *Other expenses for VC Direct have been paid in accordance with the Constitutions. Other expenses for VC Investment have been funded by VC Direct as detailed in the Prospectus dated 11 September Undistributed Income Note Undistributed Income Brought Forward Net Profit 1, , Transfer to Reserves 16(b) - (24) - (45) Available for Distribution 2, , Distributions to Unitholders during the Year 7 (1,664) (376) (1,608) (349) Provision for Distribution 7,12 (276) (126) (257) (117) Undistributed Income Carried Forward

13 7. Distribution Payable Distributions provided for or paid by VC Direct and VC Investment are: Distributions Paid VC Direct: Interim distributions of , and cents per unit were paid on 31 October 2002, 7 February 2003 and 30 April 2003 respectively VC Investment: Interim distributions of 2.72, 2.72 and 2.72 cents per unit were paid on 31 October 2002, 7 February 2003 and 30 April 2003 respectively Interest was paid during the year on behalf of unitholders out of the gross distribution to SPAL Limited representing interest payable on the unitholder loan facility, as detailed in Note , , Distribution Payable Cash component of the final distribution of 2.72 cents per unit was paid on 11 August Total Distributions Paid and Payable 1, , The distribution for the financial year by VC Direct was 20.12% tax deferred (2002: 28.76% tax deferred). The distribution for the financial year by VC Investment was 35.36% tax deferred (2002: 52.13% tax deferred). 8. Receivables Rent Receivable Outgoings Receivable Sundry Debtors Other Assets Prepayments

14 10. Investments BBC Hardwarehouse, Villawood* 12,400-12,400 - Harvey Norman Centre, Campbelltown** 10,900-10,900 - Investment in VC Direct - 10,726-10,653 23,300 10,726 23,300 10,653 Valuation of Property Investments *BBC Hardwarehouse, Woodville Road, Villawood Acquisition date: 4 September Costs include initial and related acquisition costs of $11,310,360. The property was last independently valued on 31 December 2001 at $12,400,000. The valuer was Scott Young, B App Sc (Land Econ), ASIA, AAPI, Certified Practising Valuer, LandMark White (NSW) Pty Ltd. **Harvey Norman Centre, 4 Blaxland Road, Campbelltown Acquisition date: 13 November Costs include initial and related acquisition costs of $9,779,782. The property was last independently valued on 31 December 2001 at $10,900,000. The valuer was Scott Young, B App Sc (Land Econ), ASIA, AAPI, Certified Practising Valuer, LandMark White (NSW) Pty Ltd. Valuation of Investment in Associate The investment in the associate held by VC Investment is accounted for using the equity method of accounting, as detailed in Note 1(d). As at 30 June 2003, VC Investment held a 45% (2002: 45%) ownership interest in VC Direct. Carrying Amount at the Beginning of the Year 23,300 10,653 21,111 9,617 Additions Disposals Revaluation Increments ,189 1,036 Carrying Amount at the End of the Year 23,300 10,726 23,300 10, Payables Manager s Fee Sundry Creditors and Accruals GST Payable Interest Payable

15 12. Provisions Distribution Opening Balance Amount Available for Distribution 2, , Paid during the Year (1,921) (493) (1,864) (465) Undistributed Income Carried Forward (226) - (168) - Closing Balance* *The provision for distribution represents the distribution of VC Direct and VC Investment for the quarter ended 30 June 2003, which was paid on 11 August 2003 (2002: 9 August 2002). 13. Other Liabilities Rent Received in Advance Interest Bearing Liabilities (a) Current Bank Loan** - 5, (b) Non-Current Bank Loan** ,654 **The loan is secured by a registered first mortgage over the property investments of VC Direct. As detailed in Note 1, interest on the loan will be paid by the Trusts out of unitholders entitlements to income distributions. Interest is paid on unitholders bank loans on the unitholders behalf and is recorded as a distribution paid during the financial year. 15. Contributed Equity No. of Units Details Date 10,150,000 Units on Issue 30 June 2001 (1) 21,504-21,504-4,596,490 Units on Issue 30 June ,596-4,596 Units on Issue 30 June ,504 4,596 21,504 4,596 20,000 Units Issued 16 Aug 2002 (2) Units on Issue 30 June ,504 4,616 21,504 4,596 (1) Net of transaction costs of $1,131,000. (2) On 16 August 2002, a unitholder sold 20,000 units in VC Direct, to VC Investment. The unitholder was then issued 20,000 units in VC Investment to complete the transaction. As stipulated in the Constitutions, each unit represents a right to an individual share in the Trusts and does not extend to a right to the underlying assets of the schemes. There are no separate classes of units and each unit has the same rights attaching to it as all other units in the Trusts. 14

16 16. Reserves (a) Asset Revaluation Reserve Opening Balance 2, Revaluation Increments - 4 2, Closing Balance 2, , (b) Capital Reserve Opening Balance (336) (588) (336) (633) Transfer from Distribution Closing Balance (336) (564) (336) (588) Total Reserves 1, , Reconciliation of Cash For the purposes of the Statement of Cash Flows, cash includes cash on hand and in banks. Cash as at 30 June 2003 as shown in the Statement of Cash Flows is reconciled to the related item in the Statement of Financial Position as follows: Cash on Deposit Total Cash Reconciliation of Net Profit to Net Cash Flows from Operating Activities Net Profit 1, , Non-Cash Item: Adjustment to Carrying Amount of Investment in Associate - (24) - (45) Classified as Investing Activities Investment Income - (882) - (845) Classified as Financing Activities Borrowing Costs Change in Assets and Liabilities (Increase)/Decrease in Assets Receivables (22) (9) (63) (1) Other Assets 13 - (12) - Increase/(Decrease) in Liabilities Payables 10 9 (35) 1 Net Cash Flows from Operating Activities 1,999-1,855-15

17 19. Net Tangible Assets Net tangible assets are calculated as follows: Total Tangible Assets 24,138 10,897 24,052 10,815 Less: Total Liabilities (555) (5,850) (527) (5,816) Net Tangible Assets 23,583 5,047 23,525 4,999 Total Number of Units on Issue 10,150,000 4,616,490 10,150,000 4,596,490 Net Tangible Asset Backing per Unit $2.32 $1.09 $2.32 $ Related Party Transactions Manager The manager of VC Direct and VC Investment is Macquarie Direct Property Management Limited, a wholly owned subsidiary of Macquarie Bank Limited. Directors The names of persons who were directors of Macquarie Direct Property Management Limited at any time during the financial year were as follows: Stephen Girdis Ian Pratt James Rae Richard Cutler Simon Jones (appointed 17 April 2003 as alternate for Stephen Girdis). No amounts were paid by the Trusts directly to the directors of the manager. Manager s Fees and Other Transactions Under the terms of the Constitution of VC Direct, the manager is entitled to receive a management fee of a maximum of 1.0% per annum of the gross assets of VC Direct, calculated monthly. Pursuant to the Prospectus issued in September 1998, the manager has agreed to receive a fee payable of 0.6% per annum of the gross assets of VC Direct. Fees are to be paid on a quarterly in arrears basis. Manager s fee for the financial year paid or payable directly by VC Direct The non-recourse bank loan arranged by the manager on behalf of unitholders in VC Direct, is held with SPAL Limited, a related party of the manager. The interest rate is fixed at 6.48% per annum and interest is payable quarterly in arrears. 16

18 20. Related Party Transactions (Cont.) As at 30 June 2003, VC Direct held funds totalling $555,000 (2002: $450,000) on deposit with Macquarie Bank Limited. These balances may differ from the Statement of Financial Position due to unsettled transactions. VC Direct earns interest on deposits at commercial rates. Interest income from these deposits totalling $20,000 (2002: $18,000) was included in the determination of net profit for VC Direct for the financial year ended 30 June The above fees and transactions were based on normal commercial terms and conditions. Units Held by the Manager and Related Bodies Corporate of the Manager The aggregate number of VC Direct and VC Investment units held directly, indirectly or beneficially by directors or their related bodies corporate as at 30 June 2003 was nil (2002: nil). The manager held 100 units (2002: 100 units) in both VC Direct and VC Investment at 30 June Related bodies corporate of the manager and their associates held 5,000 units (2002: 5,000 units) in VC Direct and no units in VC Investment (2002: nil) as at 30 June Segment Information VC Direct is an unlisted property trust which invests in the bulky goods retail property market in Australia. 22. Earnings per Unit Basic Earnings per Unit (cents) Diluted Earnings per Unit (cents) Weighted Average Number of Ordinary Units Used in the Calculation of Basic Earnings per Unit 10,150,000 4,613,969 10,150,000 4,596,490 Net Profit of $1,998,000 (2002: $1,965,000) was used as earnings in calculating basic and diluted earnings per unit of VC Direct. Net Profit of $526,000 (2002: $511,000) was used as earnings in calculating basic and diluted earnings per unit of VC Investment. 17

19 23. Additional Financial Instruments Disclosures (a) Terms and Conditions Cash Surplus funds of VC Direct are held at call in the operating account of VC Direct. Interest is receivable quarterly in arrears. As at 30 June 2003, the interest rate on these funds was 3.96% per annum (2002: 3.96% per annum). VC Investment has no cash balances. Cash transactions are paid and received via VC Direct. Bank Loan The bank loan of VC Investment is an interest only loan and is due for repayment in November Details of security held by the bank is included in Note 14. The manager is negotiating with the lender to extend the period of the loan on similar terms and conditions to coincide with the expected sale of the properties. Interest Rate Swap VC Investment has entered into an interest rate swap agreement that entitles it to receive interest, at quarterly intervals, at a floating rate on a notional principal amount and obliges it to pay interest at a fixed rate on the same amount. The swap agreement allows VC Investment to raise long term borrowings at a floating rate and effectively swap them into a fixed rate of 6.48% per annum. The cost of the swap is incorporated by the lender in the quarterly charge and, as such, the swap is not separately disclosed in Note 23(b) below. The interest rate swap agreement terminates in November (b) Interest Rate Risk The Trusts exposures to interest rate risk and the effective interest rate on financial instruments at balance date are: VC Direct 30 June 2003 Floating Interest Rate Fixed Interest Rate Maturing 1 Year or Less 1 to 5 Years Over 5 Years Non- Interest Bearing Total Assets Cash Receivables Total Financial Assets Weighted Average Effective Interest Rate (% pa) 3.96% Liabilities Payables Distribution Payable Other Liabilities Total Financial Liabilities Net Financial Assets/(Liabilities) (308)

20 23. Additional Financial Instruments Disclosures (Cont.) (b) Interest Rate Risk (Cont.) VC Investment 30 June 2003 Floating Interest Rate Fixed Interest Rate Maturing 1 Year or Less 1 to 5 Years Over 5 Years Non- Interest Bearing Total Assets Receivables Total Financial Assets Liabilities Payables Interest Bearing Liabilities - 5, ,679 Distribution Payable Total Financial Liabilities - 5, ,850 Weighted Average Effective Interest Rate (% pa) 6.48% Net Financial Liabilities - (5,679) (5,679) VC Direct 30 June 2002 Floating Interest Rate Fixed Interest Rate Maturing 1 Year or Less 1 to 5 Years Over 5 Years Non- Interest Bearing Total Assets Cash Receivables Total Financial Assets Weighted Average Effective Interest Rate (% pa) 3.96% Liabilities Payables Distribution Payable Other Liabilities Total Financial Liabilities Net Financial Assets/(Liabilities) (302)

21 23. Additional Financial Instruments Disclosures (Cont.) (b) Interest Rate Risk (Cont.) VC Investment 30 June 2002 Floating Interest Rate Fixed Interest Rate Maturing 1 Year or Less 1 to 5 Years Over 5 Years Non- Interest Bearing Total Assets Receivables Total Financial Assets Liabilities Payables Interest Bearing Liabilities - - 5, ,654 Distribution Payable Total Financial Liabilities - - 5, ,816 Weighted Average Effective Interest Rate (% pa) 6.48% Net Financial Liabilities - - (5,654) - - (5,654) Reconciliation of Net Financial Assets/(Liabilities) to Net Assets Note Net Financial Assets/(Liabilities) as Above 247 (5,679) 148 (5,654) Non-Financial Assets Investments 10 23,300 10,726 23,300 10,653 Prepayments Net Assets per Statement of Financial Position 23,583 5,047 23,525 4,999 20

22 23. Additional Financial Instruments Disclosures (Cont.) (c) Credit Risk Credit risk represents the economic loss that would be recognised if counterparties failed to perform as contracted. Financial Instruments Recognised in the Statement of Financial Position The credit risk on the financial assets of VC Direct and VC Investment which have been recognised in the Statement of Financial Position is the carrying amount, net of any provisions for doubtful debts. (d) Net Fair Values of Financial Assets and Liabilities Financial Instruments Recognised in the Statement of Financial Position The financial assets and liabilities of VC Direct and VC Investment are carried at amounts that approximate their net fair value. 24. Remuneration of Auditor During the financial year, the auditor of the Trust, PricewaterhouseCoopers, and its related practices earned the following remuneration: VC Direct 2003 $ VC Investment 2003 $ VC Direct 2002 $ VC Investment 2002 $ Audit of the Financial Report 5,417-6,600 - Other Assurance Services Taxation 4,373-3,363 - Total Remuneration 9,790-10,898-21

23 DIRECTORS DECLARATION The directors of Macquarie Direct Property Management Limited, the responsible entity, declare that the financial statements as set out on pages 4 to 21: (a) (b) comply with Accounting Standards, the Corporations Act 2001 and other mandatory professional reporting requirements; and give a true and fair view of VC Direct s and VC Investment s financial position as at 30 June 2003 and of their performance, as represented by the results of their operations and their cash flows, for the financial year ended on that date. In the directors opinion: (a) (b) the financial statements and notes are in accordance with the Corporations Act 2001; and there are reasonable grounds to believe that VC Direct and VC Investment will be able to pay their debts as and when they become due and payable. This declaration is made in accordance with a resolution of the directors. Stephen Girdis Chairman Sydney 12 September

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