CFS Retail Property Trust Group ARSN ARSN Appendix 4E Annual Results for the 12 months ended 30 June 2013 CFX

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1 CFX CONTENTS Results for announcement ASX announcement Additional information Financial Report CFS Retail Property Trust Group ARSN ARSN Appendix 4E Annual Results for the 12 months ended 30 June 2013 Our approach to retail property investment

2 CFS Retail Property Trust Group 1 Appendix 4E - Results for announcement to the market For the year ended 30 June months to 30-Jun Jun-12 Variance % 2.1 Revenue from ordinary activities (excluding investment property and associate revaluations) (0.6) Investment property revaluations (168.2) Share of associate's revaluations (1.9) (3.9) 2.0 Total revenue from ordinary activities (166.8) (18.4) Expenses from ordinary activities (excluding investment property and financial derivatives revaluations) (29.3) Investment property revaluations Financial derivatives revaluations (84.4) Total expenses from ordinary activities (52.5) (10.6) Income tax benefit Profit from ordinary activities after tax (114.2) (27.9) 2.3 Net profit (114.2) (27.9) Distribution per stapled security Cents 2 date Record Payment date 2.4/2.5 Interim Dec Feb-13 Final Jun Aug-13 Total For explanation of figures in 2.1 to 2.4 refer to the attached documents: ASX announcement, Additional information and Financial Report. Other information required under ASX Listing Rule 4.3A Page Statement of comprehensive income (Rule 4.3A Item No. 3) 10 Statement of financial position (Rule 4.3A Item No. 4) 11 Statement of cash flows (Rule 4.3A Item No. 5) 12 Statement of changes in equity (Rule 4.3A Item No. 6) 13 Distributions (Rule 4.3A Item No. 7) Above, 29 Distribution reinvestment plan (Rule 4.3A Item No. 8) 39 Net tangible assets per security (Rule 4.3A Item No. 9) 57 Details of entities over which control has been gained or lost during the year (Rule 4.3A Item No. 10) Nil Details of associates (Rule 4.3A Item No. 11) 35 Details of joint ventures (Rule 4.3A Item No. 11) N/A Other significant information (Rule 4.3A Item No. 12) Summary of significant accounting policies 14 Events occurring after the reporting date 56 Foreign entities (Rule 4.3A Item No. 13) N/A Commentary on results (Rule 4.3A Item No. 14) ASX Announcement - Annual Results The information presented above is based upon the audited Financial Report for 30 June Refer to page 59 - Independent auditor's report. Michelle Brady Date: 20 August 2013 Company Secretary Notes 1. CFS Retail Property Trust Group (CFX) comprises CFS Retail Property Trust 1 ARSN and CFS Retail Property Trust 2 ARSN The franked amount per security for the year ended 30 June 2013 is cents. Details of the full-year tax components of distributions will be provided in the Annual Tax Statements which will be sent to securityholders on 28 August 2013.

3 Responsible Entity: Commonwealth Managed Investments Limited ABN AFSL Colonial First State Property Retail Pty Limited ABN Manager of CFS Retail Property Trust Group Registered Address: Ground Floor, Tower 1, 201 Sussex Street Sydney NSW 2000 Australia Principal Office of the Manager: Level 4, Tower 1, 201 Sussex Street Sydney NSW 2000 Australia Telephone: Facsimile: August 2013 CFS RETAIL PROPERTY TRUST GROUP (CFX) Annual results for the 12 months ended 30 June 2013 CFS Retail Property Trust Group (CFX) has met the challenges of a difficult retail environment to deliver investors a distribution of 13.6 cents per security for the year ended 30 June 2013, a 3.8% increase on the prior year. Angus McNaughton, Managing Director, Property, Colonial First State Global Asset Management, said: CFX has delivered another creditable full-year result, despite Australian retail markets continuing to face the challenge of a cautious consumer. Michael Gorman, CFX Fund Manager, said: CFX continues to deliver on its strategy of providing long-term sustainable returns to investors. CFX ended the year with a close to fully-let portfolio, modestly improving retail sales growth, a strong and flexible balance sheet, and an increase in distributions being paid to securityholders. Key operating highlights for the year included: net profit of $295.0 million, compared to $409.2 million in the prior year, with the decrease primarily due to differences in property valuations between the two periods a 3.5% increase in distributable income 1 to $384.6 million a distribution of 13.6 cents per security, up 3.8% on the prior year like-for-like net property income 2 increasing 2.0%, reflecting modest rental growth, while total net property income decreased 2.0% to $537.2 million due to the sale of a 50% interest in The Myer Centre Brisbane in March 2012 net tangible asset backing (NTA) per security reducing to $2.04 from $2.07 at 30 June 2012 total assets increasing to $8.6 billion from $8.4 billion at 30 June 2012 reinstating the distribution reinvestment plan, a funding source for CFX s development pipeline, raising $56.9 million restructuring over $940 million of debt instruments, and a further $550 million post year end gearing 3 remaining conservative at 28.8% completing projects at Roxburgh Park, Brimbank and Forest Hill on time and on budget and making solid progress on developments at Emporium Melbourne and DFO Homebush close to full portfolio occupancy at 99.4% specialty store sales growth of 2.4% from our comparable 4 shopping centre portfolio 5 achieving a slight increase on rents on renewal, with fixed 5% annual increases for specialty stores that were re-leased, and having the whole portfolio 6 NABERS-rated Distributable income is a key non-ifrs earnings measure used by management to assess the performance of CFX. It represents CFX s underlying and recurring earnings from ordinary operations. Refer to page 2 for the reconciliation of net profit to distributable income. Net property income and like-for-like net property income are unaudited, non-ifrs financial information and are not key earnings measures of CFX. They are used by management to monitor the performance of the property portfolio. Refer to Appendix 2 for the calculation of net property income and like-for-like net property income. Gearing equals borrowings as a proportion of total assets. For this calculation, borrowings is the amount of debt drawn and total assets exclude the fair value of derivatives. Comparable centres refer to those centres that are not undergoing or have not undergone substantial redevelopment in either period of comparison. Shopping centre portfolio excludes Myer Melbourne, the DFO retail outlet centres and 15 Bowes Street, Woden. All centres that are able to be rated which excludes the DFO retail outlet centres, Post Office Square, The Entertainment Quarter, Myer Melbourne and any other asset which was impacted by refurbishment or development or there was insufficient metering.

4 For more information on CFX s performance during the period, refer to the Appendix 4E which was released today and can be found on CFX s website, cfsgam.com.au/cfx Financial results CFX s net profit for the 12 months to 30 June 2013 was $295.0 million, compared to $409.2 million for the prior year. The net profit includes a net loss on investment properties and associate valuations of $63.1 million (compared to a $164.3 million net gain for the prior year) and a net loss on derivatives valuations of $3.5 million (compared to a $87.9 million net loss for the prior year). Distributable income was up 3.5% to $384.6 million, compared to $371.5 million for the prior year. On a like-for-like basis, net property income was up 2.0%, supported by fixed annual rental increases and close to full occupancy. Total net property income reduced by 2.0% largely reflecting the sale of a 50% interest in The Myer Centre Brisbane in March Reconciliation of net profit to distribution, for the year ended 30-Jun Jun-12 Net profit Adjustments: net loss/(gain) from property valuations 63.1 (164.3) net loss from derivative valuations straight-lining revenue (2.4) (2.8) movement in fair value of unrealised performance fees (5.5) 3.4 non-cash convertible notes interest expense convertible notes buy-back expense project and other items Distributable income/distribution Capital management Mr Gorman said: Despite ongoing weakness in the global economy over the past 12 months, we have seen a growing appetite for longer-dated debt from corporate bond investors and banks, and an active corporate bond market with relatively attractive all-in costs for quality covenants. We have taken advantage of the current demand to improve CFX s debt costs, duration and diversity during the year. We also reinstated our distribution reinvestment plan. The plan is a funding source for CFX s development pipeline which will raise $56.9 million from the June 2013 distribution. The change in other key debt metrics is detailed below: As at 30-Jun-13 a As at 30-Jun-13 As at 30-Jun-12 Weighted average interest rate b (%) Weighted average debt duration (years) Weighted average interest rate on hedged debt c (%) Weighted average hedged debt duration c (years) Undrawn debt facilities () a. Adjusted for post year end events, including the extension of $400 million of bank debt facilities and the execution of $150 million of interest rate swaps. b. Including margins and line fees. c. Including all fixed-rate debt and excluding margins and fees. At 30 June 2013, CFX s gearing was 28.8% up from 26.6% at 30 June 2012, with borrowings of $2,486 million and undrawn debt facilities of $530 million. CFX s debt was 81.3% hedged at 30 June We restructured over $940 million of debt instruments during the year, extending our debt maturity to 3.1 years at 30 June 2013 from 2.8 years at 30 June Post year end, we restructured a further $550 million of debt instruments, improving our debt duration to 3.6 years. Investment performance CFX delivered a solid total return 7 of 10.5% for the year, albeit below the UBS Retail 200 Property Accumulation Index (the Index ). Over the five and 10-year periods, CFX outperformed the Index by 4.7 and 5.6 percentage points per annum respectively, and underperformed over the one and three year periods. 7 Total return comprises stapled security price performance and distribution income yield. 2

5 For the six months to 31 December 2012, CFX underperformed the customised retail property accumulation index 8 (the benchmark ) by 12.0 percentage points. For the six months to 30 June 2013, CFX underperformed the benchmark by 2.5 percentage points. However, after including carry-over outperformance of 45.6 percentage points to 30 June 2012, the Responsible Entity was entitled to performance fees for both periods totalling $10.3 million for the year. At 30 June 2013, the carry-over balance was 28.7 percentage points of positive performance relative to the benchmark. The fair value of the unrealised performance fee liability at 30 June 2013 is $29.2 million, a decrease of $5.5 million from 30 June The total performance fee expense is $4.8 million, representing the capped performance fees paid for the year offset by the reduction in the fair value of future performance fees. Full details of the performance fee are detailed in Note 14 of the Financial Report. Portfolio update CFX held total assets of $8.6 billion at the end of the year, increasing marginally from $8.4 billion at 30 June 2012, driven by capital expenditure on the development pipeline offset by a net valuation loss. CFX s portfolio consists of interests in 29 retail properties, located predominantly in the capital cities of all six Australian states, with 77% of the retail portfolio 9 comprising super-regional and regional shopping centres 10. Retail sales environment Mr Gorman said: While there continue to be challenges in the Australian retail environment, several macroeconomic indicators remain supportive for retail expenditure. Positive real wages growth continues, the housing market is picking up and the rate of growth in offshore travel has slowed in recent months compared to previous years. In response to several tough years in the retail sector, we are seeing retailers becoming more sophisticated in how they operate. Many have been reviewing their operating models and supply chains to implement significant efficiency gains. This has enabled them to offer goods at lower prices while maintaining or increasing their profit margins. If anything, the sentiment amongst our retailers is slightly better than it was 12 months ago. CFX s shopping centre portfolio reported total moving annual turnover (MAT) of $7.2 billion, up 2.0% compared to the prior year. Comparable specialty stores achieved 2.4% MAT growth this year, which is below our forecast of 3.0%, but an improvement on 2.1% reported to December 2012 and 1.7% to June This steady improvement in sales has been underpinned by solid MAT growth in food retail (+7.8%), retail services (+5.8%) and mobile phones (+3.9%), while apparel sales fell modestly (-1.1%). Mr Gorman said: We are very pleased with the MAT growth of 9.4% for comparable DFO centres for the year. This reflects the success of our marketing initiatives and extensive remixing implemented since acquiring these assets in 2010 which has seen the expansion of luxury, international and national brands in the tenancy mix. This has enabled us to drive re-leasing spreads of 25% since acquisition in late Despite an improvement in retail sales across the portfolio, leasing remains challenging. However, the quality of CFX s portfolio, coupled with improving sales growth, has enabled us to maintain a healthy leasing deal rate, with close to full occupancy of 99.4%. We have also continued to provide stability of income through our fixed 5% annual increases for specialty tenancies. For specialty tenants renewing, which was around 75% of expiries during the year, we have slightly increased rents. Including replacements, our overall re-leasing spread for the year was -1.1% for the shopping centre portfolio. Comparable shopping centre specialty store occupancy costs rose slightly to 17.3%, from 17.1% at 30 June 2012, supported in part by an increase in the productivity of our retailers, with specialty sales rising to $10,066 per sqm from $9,576 per sqm at 30 June We remain cautious on retail sales and forecast retail specialty sales growth of 3% for the CFX portfolio over FY14, added Mr Gorman. See Appendix 1 for further details on CFX s retail sales For the purposes of calculating the performance fee, the benchmark, which is the UBS Retail 200 Property Accumulation Index, is customised to remove the effect of CFX on the Index. A 20-day volume weighted average price (VWAP) is applied to both the CFX accumulation index and the customised index. Excluding Myer Melbourne and 15 Bowes Street, Woden. As defined by the Property Council of Australia. 3

6 Asset valuations Mr Gorman said: The transactional market for shopping centres has been particularly active this year, reflecting strong investor demand. Whilst there have been a limited number of transactions involving very large centres, we have seen support for current book values and higher demand for better quality assets. Capitalisation rate compression has been limited over the year, a trend also witnessed in CFX asset valuations. The shopping centre portfolio % at 30 June weighted average capitalisation rate tightened marginally to 6.43% from The entire CFX portfolio was independently valued during the year, which resulted in an unrealised $63.1 million net valuation loss compared to book value. The loss was driven by a number of asset-specific write downs. The remainder of the portfolio generally reported stable or rising valuations underpinned by steady income growth. Mr Gorman said: Valuations of Chadstone, Chatswood Chase, QueensPlaza and Rockingham continued to benefit from the strength of sales and rental growth. They was offset by the write down at Emporium Melbourne resulting in a net valuation loss across the portfolio of $63.1 million. Development Mr Gorman said: CFX s development pipeline is key to ensuring that we continue to create retail spaces which are fresh, vibrant and compelling and incorporate the latest retailers and trends. To that end, we have introduced a new large-format Coles, an Aldi and 40 specialty stores in the recently completed expansion of Roxburgh Park Shopping Centre, doubling its existing floorspace. We also completed two smaller convenience-based redevelopments which included the introduction of a new largeformat Coles and a fresh food precinct at Brimbank, and an Aldi and enhanced food offering at Forest Hill Chase. CFX s development pipeline is currently $1.2 billion. Projects currently under construction have a development cost of approximately $698 million (CFX share), with $209 million remaining to be spent. Key developments under construction Emporium Melbourne, Melbourne, VIC The structure of the Emporium Melbourne project is now largely complete. As noted in our announcement on 27 June 2013, the project is due to open in the first quarter of calendar year Leasing has progressed significantly in recent months with approximately 90% of income secured. The project will incorporate a range of concept and large flagship stores housing some of the world s best international and luxury brands, some of Australia s most noted fashion labels and iconic food operators, in a new building in the heart of the Melbourne CBD. Some of the key tenants secured include: Max Mara, Paul Smith, Adidas, Superdry, Super Glue, UNIQLO, Topshop, Coach, Salvatore Ferragamo, Mulberry, Scanlan & Theodore, sass & bide, Zimmerman, Oroton, MARCS, SABA, lululemon, Carla Zampatti, Georg Jensen, Alannah Hill and MAX&Co., as well as a range of quality food retailers. Mr Gorman said: The high quality of the tenancy mix that we have secured to date is an endorsement of the world-class nature of this development. The $590 million (CFX share) development is targeting a year-one yield on costs of approximately 5%. DFO Homebush, Homebush, NSW We have made significant progress on the $100 million development of DFO Homebush that was commenced in November Leasing is well progressed, with 85% of income secured. The project involves the addition of a food court and bulky goods retailers, a remix of tenancies, an expansion and reconfiguration of the car park, adding 500 new car spaces, as well as a substantial upgrade to the existing building. Luxury tenants Armani, Zegna and Michael Kors have already opened stores anchoring a premium mall. Burberry, Max Mara and Bose have recently been secured further enhancing the tenant mix. The project is targeting an initial year-one yield of greater than 7% and an internal rate of return of greater than 10%, with 11 Excluding Myer Melbourne, the DFO retail outlet centres and 15 Bowes Street, Woden. 4

7 the majority of outlet stores open by Christmas 2013 and completion of the whole development expected by June Future development Chadstone Shopping Centre, Chadstone, VIC Reinforcing Chadstone as Australia s premier shopping centre destination, the project is expected to involve redeveloping the northern end of the centre producing up to 20,000 sqm of additional retail floor area and introducing new international retailers. The planning scheme also allows for the development of office and hotel space along the Princes Highway. All six of the required planning permit applications have been submitted to council. The retail project is now in the design development phase and has an indicative cost of $240 million (CFX share). Responsible property investment As a responsible property investor, we consider environmental, social and governance factors in everything we do. Our approach continues to achieve outstanding global recognition. Mr Gorman said: During the year, we were recognised as a disclosure and performance leader in the Carbon Disclosure Project (CDP) for Australia and New Zealand. We were rated a Green Star (ranked 20 out of 451 property funds and companies globally) by the Global Real Estate Sustainability Benchmark (GRESB), and were recognised for our market-leading approach to valuations and corporate governance by the Asia Pacific Real Estate Association (APREA). CFX was also again included in the FTSE4Good, DJSI World, DJSI Asia Pacific and the Australian SAM Sustainability Index (AuSSI). We are also proud to announce that we had our entire portfolio achieve NABERS ratings. The weighted average portfolio rating for NABERS Energy is 3.0 stars and for NABERS Water is 3.4 stars, Mr Gorman added. Our responsible property investment program has resulted in efficiencies being achieved across the portfolio. CFX s shopping centres: are 8.2% more energy efficient 12 are 20.5% more water efficient 12 have 15.9% lower emissions intensity 12, and in FY13 diverted 29% of waste from our centres away from landfill. This year we engaged with our stakeholders to identify the environmental, social and governance (ESG) matters that are material to them. By identifying our stakeholders level of interest and engagement compared to CFX on a range of ESG matters, we have been able to prioritise these into our business model. In FY14, we are looking to further improve our transparency and disclosure by reporting in accordance with the Global Reporting Initiative (GRI) G4 framework. Comprehensive detail in relation to the Manager s approach to responsible property investment can be found on CFX s website, cfsgam.com.au/cfx Internalisation proposal On 24 July 2013, the Commonwealth Managed Investments Limited (CMIL) Board announced it had received a highly conditional, indicative and incomplete proposal from Commonwealth Bank of Australia to internalise the management of CFX and for CFX to acquire its wholesale property funds management and integrated retail property management and development businesses. The CMIL Board has established an Independent Board Committee (IBC) of independent Directors, being Chairman Richard Haddock AM, Nancy Milne OAM and James Kropp, to consider the proposal. Mr Haddock said: The Board of CMIL can give no assurance that the proposal or any other proposal will proceed. It is also noted that the approval of CFX securityholders would be required. The IBC has engaged independent advisers to assist with its consideration of the proposal and will update the market when it is in a position to do so, Mr Haddock added. 12 Like-for-like shopping centre portfolio which excludes those centres where GLA has varied by more than 10% since the FY08 base year. 5

8 Outlook Mr Gorman said: This year, CFX will focus on delivering further value through the intensive asset management of our portfolio, refining the tenant mixing and driving traffic and sales performance. On the development pipeline, we are focused on the delivery and opening of the world-class Emporium Melbourne project and DFO Homebush, arguably Australia s premier outlet centre. We will also progress the design development of the next stage of Chadstone. CFX plans to further refine the quality of its portfolio through the sale of non-core sub-regional shopping centres. Given the higher yielding nature of this type of centre, their divestment would result in a short-term dilution to earnings, which over time would be partially offset by the reinvestment of the proceeds. The proceeds will initially be used to retire debt, providing CFX with flexibility to pursue value enhancing initiatives such as investing in its development pipeline or acquiring properties. On the basis that these non-core assets are sold during the year, CFX provides full-year distribution guidance 13 per security of 13.2 to 13.3 cents. If these assets are not sold during the year, CFX s distribution guidance would be revised to 13.7 to 13.8 cents, Mr Gorman concluded. For further information please contact: ENDS Michael Gorman Angus McNaughton Fund Manager Managing Director, Property CFS Retail Property Trust Group Colonial First State Global Asset Management Phone: Phone: mgorman@colonialfirststate.com.au amcnaughton@colonialfirststate.com.au Investor and media contacts: Penny Berger Troy Dahms Head of Investor Relations and Communications Investor Relations and Communications Manager Colonial First State Global Asset Management Colonial First State Global Asset Management Phone: or Phone: or pberger@colonialfirststate.com.au tdahms@colonialfirstate.com.au About CFS Retail Property Trust Group (CFX) CFX is a retail sector-specific Australian Real Estate Investment Trust (A-REIT) which invests in high quality retail assets including super-regional, regional and sub-regional shopping centres and DFO retail outlet centres across Australia. CFX is managed by entities within CFSGAM Property on behalf of more than 17,000 investors from 21 countries, comprising a portfolio of 30 assets with a total asset value of $8.6 billion at 30 June About CFSGAM Property CFSGAM Property is the specialist property division of Colonial First State Global Asset Management, and is one of the largest real estate fund managers in Australia with $17 billion in funds under management. CFSGAM Property offers a fully integrated real estate investment platform including investment management, asset management, development management, origination and execution. CFSGAM Property manages a suite of wholesale investment products, as well as three listed real estate investment trusts in Australia and New Zealand. 13 Assuming performance fees are payable for the full financial year and there is no unforeseen material deterioration to existing economic conditions. Guidance is based upon the current operating model (Refer to Note 20 of the Financial Report for details concerning potential changes to this operating model, which may impact on future distributions). 6

9 Appendix 1 12-month comparison tables Retail sales by category for the 12-month rolling period to 30 June 2013 are detailed below: Category Comparable 14 MAT 30-Jun-13 Growth () (%) 30-Jun-13 () Actual MAT Growth (%) Department stores (1.2) (1.3) Discount department stores (0.9) Supermarkets 1, , Mini majors (0.5) (1.2) Retail specialty 2, , Other retail Shopping centre portfolio 6, , DFO retail outlet centres Total portfolio 6, , Retail specialty store sales by category for the 12-month rolling period to 30 June 2013 are detailed below: Shopping centre portfolio Comparable MAT Actual MAT Retail specialty category 30-Jun-13 () Growth (%) 30-Jun-13 () Growth (%) Food retail Food catering Apparel (1.1) (1.6) Jewellery Leisure (5.8) (6.3) General retail (0.7) Homewares Mobile phones Retail services Total retail specialty 2, , Comparable centres refer to those centres that are not undergoing or have not undergone substantial redevelopment in either period of comparison. Other retail includes cinemas and sales reporting tenancies under 400 sqm including travel agents, auto accessories, Lotto and other entertainment and non-retail stores. General retail includes giftware, pharmacy and cosmetics, pets, discount variety, florists and toys. 7

10 Appendix 2 Calculation of net property income For the year ended 30-Jun-13 () 30-Jun-12 () Change (%) Extract from Statement of Comprehensive Income in the Financial Report - Rental and other property income Share of net profit from associate before fair value adjustments a Rates, taxes and other outgoings (201.2) (189.3) - Repairs and maintenance (15.6) (15.8) - Bad and doubtful debts expense (2.5) (2.2) Adjustments - straight-lining revenue b (2.4) (2.8) - amortisation of project items b other items b estimated net earnings from CFSPAM c for the current year Net property income (2.0) Like-for-like adjustments - Net property income from development-affected properties d (69.0) (70.8) - Net property income adjustment for changes in ownership of properties e 0.0 (20.3) - Other one-off adjustments f (2.3) 0.0 Like-for-like net property income a. Excluding non-property related net profit from associate of $0.1m (FY12: $0.2m). b. Refer to Note 2 of the Financial Report for further explanation of these items. c. CFSPAM derives car park and electricity on-selling income from CFX's portfolio of shopping centres. CFX's share of CFSPAM's earnings for the current year will be recognised as dividend income when the dividend is declared by CFSPAM. d. Properties have been excluded from the like-for-like calculation where income has been significantly affected by development in either year. Properties excluded are Bayside Shopping Centre, Brimbank Shopping Centre, Forest Hill Chase, Emporium Melbourne and Roxburgh Park Shopping Centre. e. On 26 March 2012, CFX sold a 50% share in The Myer Centre Brisbane. An adjustment is made to the like-for-like calculation to reflect the change in ownership interest. f. Net property income related to the industrial component of DFO Homebush has been excluded from the like-for-like calculation as it was not included in the prior year. 8

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13 CFS Retail Property Trust Group Key occupancy statistics by property As at 30 June 2013 Retail vacancies 1 by area FY14 expiries by area 2 Property % No. % Altona Gate Shopping Centre Bayside Shopping Centre Brimbank Shopping Centre Broadmeadows Shopping Centre Castle Plaza Shopping Centre Chadstone Shopping Centre Chatswood Chase Sydney Clifford Gardens Shopping Centre Corio Shopping Centre Eastlands Shopping Centre Elizabeth Shopping Centre The Entertainment Quarter Forest Hill Chase Grand Plaza Shopping Centre Lake Haven Shopping Centre The Myer Centre Brisbane Northgate Shopping Centre Northland Shopping Centre Post Office Square QueensPlaza Rockingham Shopping Centre Rosebud Plaza Shopping Centre Roxburgh Park Shopping Centre Runaway Bay Shopping Village Shopping centre portfolio DFO retail outlet centres DFO Essendon DFO Homebush DFO Moorabbin DFO South Wharf Total retail portfolio Notes: 1. Vacancies do not include holdovers. 2. Proportion of retail specilty store leases expiring in the 12 months to 30 June 2014, including vacancies and holdovers.

14 CFS Retail Property Trust Group Shopping centre sales by centre - total For the year ending 30 June 2013 MAT 30-Jun-13 MAT 30-Jun-12 MAT growth MAT 30-Jun-13 Property % $/sqm Altona Gate Shopping Centre ,188 Broadmeadows Shopping Centre (2.0) 5,456 Castle Plaza Shopping Centre ,103 Chadstone Shopping Centre 1, , ,164 Chatswood Chase Sydney ,948 Clifford Gardens Shopping Centre ,305 Corio Shopping Centre (1.6) 6,604 Eastlands Shopping Centre (0.5) 6,688 Elizabeth Shopping Centre ,213 The Entertainment Quarter ,135 Grand Plaza Shopping Centre ,070 Lake Haven Shopping Centre ,531 The Myer Centre Brisbane (5.1) 5,945 Northgate Shopping Centre ,256 Northland Shopping Centre ,878 Post Office Square ,758 QueensPlaza ,356 Rockingham Shopping Centre ,550 Rosebud Plaza Shopping Centre ,659 Runaway Bay Shopping Village ,654 Comparable shopping centre portfolio 1 6, , ,112 Development impacted centres Bayside Shopping Centre (2.4) 4,557 Brimbank Shopping Centre (5.9) 5,481 Forest Hill Chase (2.6) 5,261 Roxburgh Park Shopping Centre ,913 Total shopping centre portfolio 7, , ,772 Notes: 1. Comparable centres refer to those centres that are not undergoing or have not undergone substantial redevelopment in either period of comparison.

15 CFS Retail Property Trust Group Shopping centre sales by centre - retail specialty stores 1 For the year ending 30 June 2013 MAT 30-Jun-13 MAT 30-Jun-12 MAT growth MAT 30-Jun-13 Urbis retail Avg 11/12 MAT/sqm Occ cost 2 30-Jun-13 Urbis retail Avg 11/12 Occ cost 2 Property % $/sqm $ % % Altona Gate Shopping Centre (2.4) 6,523 7, Broadmeadows Shopping Centre (0.7) 6,525 7, Castle Plaza Shopping Centre ,225 7, Chadstone Shopping Centre ,549 11, Chatswood Chase Sydney ,764 9, Clifford Gardens Shopping Centre ,442 7, Corio Shopping Centre (3.9) 5,406 7, Eastlands Shopping Centre (7.0) 7,355 7, Elizabeth Shopping Centre ,906 9, The Entertainment Quarter ,469 n.a n.a. Grand Plaza Shopping Centre ,955 7, Lake Haven Shopping Centre (1.1) 9,113 7, The Myer Centre Brisbane (8.6) 11,426 11, Northgate Shopping Centre (2.2) 9,353 7, Northland Shopping Centre (1.6) 8,253 9, Post Office Square (6.2) 12,480 11, QueensPlaza ,222 11, Rockingham Shopping Centre ,918 7, Rosebud Plaza Shopping Centre (1.1) 7,174 7, Runaway Bay Shopping Village ,968 7, Comparable shopping centre portfolio 3 2, , , Development impacted centres Bayside Shopping Centre (3.1) 6,505 9, Brimbank Shopping Centre (9.6) 5,583 7, Forest Hill Chase (6.0) 6,044 7, Roxburgh Park Shopping Centre ,214 6, Total shopping centre portfolio 2, , , Notes: 1. Retail specialty stores are sales reporting tenancies under 400 sqm excluding travel agents, auto accessories, Lotto and other entertainment and non-retail stores. 2. Occupancy cost includes GST and marketing levy. 3. Comparable centres include those centres that are not undergoing or have not undergone substantial redevelopment in either period of comparison.

16 CFS Retail Property Trust Group Shopping centre sales by category For the year ending 30 June 2013 Comparable MAT 1 Actual MAT 30-Jun Jun-12 Growth 30-Jun Jun-12 Growth Category % % Department stores (1.2) (1.3) Discount department stores (0.9) Supermarkets 1, , , , Mini majors (0.5) (1.2) Retail specialty stores 2, , , , Other retail Shopping centre portfolio 6, , , , DFO retail outlet centres Total portfolio 6, , , , Notes: 1. Comparable centres include those centres that are not undergoing or have not undergone substantial redevelopment in either period of comparison. 2. Other retail includes cinemas and sales reporting tenancies under 400 sqm including travel agents, auto accessories, Lotto and other entertainment and non-retail stores.

17 CFS Retail Property Trust Group DFO retail outlet centre sales For the year ending 30 June 2013 Total centre sales MAT 30-Jun-13 MAT 30-Jun-12 MAT growth MAT 30-Jun-13 Property % $/sqm DFO Essendon ,424 DFO Moorabbin ,927 DFO South Wharf ,917 Comparable DFO retail outlet centre portfolio ,006 Development impacted centres DFO Homebush (2.8) 10,102 DFO retail outlet centre portfolio ,722 Retail specialty store sales 3 MAT 30-Jun-13 MAT 30-Jun-12 MAT growth MAT 30-Jun-13 Occ cost 4 30-Jun-13 Property % $/sqm % DFO Essendon , DFO Moorabbin , DFO South Wharf , Comparable DFO retail outlet centre portfolio , Development impacted centres DFO Homebush (0.4) 11, DFO retail outlet centre portfolio , Notes: 1. Excluding Homemaker Hub as not all tenancies report sales. 2. Comparable centres refer to those centres that are not undergoing or have not undergone substantial redevelopment in either period of comparison. 3. Retail specialty stores are sales reporting tenancies under 400 sqm excluding travel agents, auto accessories, Lotto and other entertainment and non-retail stores. 4. Occupancy cost includes GST and marketing levy.

18 CFS Retail Property Trust Group Net Property Income (NPI) 30 June 2013 NPI + (inc flowback) 12 months to 30-Jun-13 NPI + (inc flowback) 12 months to 30-Jun-12 NPI + (ex flowback) 12 months to 30-Jun-13 NPI + (ex flowback) 12 months to 30-Jun-12 Property Variance Variance % % Investment properties Altona Gate Shopping Centre ^ (0.1) (1.5) (0.1) (1.7) Bayside Shopping Centre ^ (1.3) (3.3) (1.2) (3.2) Brimbank Shopping Centre ^ (0.1) (1.0) (0.4) (3.6) Broadmeadows Shopping Centre ^ (0.5) (2.1) (0.4) (1.7) Castle Plaza Shopping Centre ^ Chadstone Shopping Centre ^ Chatswood Chase Sydney ^ Clifford Gardens Shopping Centre ^ Corio Shopping Centre ^ DFO Essendon ^ DFO Homebush ^ DFO Moorabbin ^ DFO South Wharf ^ Eastlands Shopping Centre ^ (0.7) (5.8) (0.7) (5.7) Elizabeth Shopping Centre ^ Forest Hill Chase ^ (0.4) (1.9) (0.4) (2.2) Grand Plaza Shopping Centre ^ (0.0) (0.1) Lake Haven Shopping Centre ^ The Myer Centre Brisbane ^ (21.9) (46.2) (21.8) (46.5) Myer Melbourne - department store Myer Melbourne - Emporium Melbourne (0.1) (10.1) 0.0 (0.0) 0.0 n/a Northgate Shopping Centre ^ (0.3) (3.8) (0.3) (3.7) Northland Shopping Centre ^ (0.0) (0.1) (0.1) (0.4) Post Office Square ^ QueensPlaza ^ Rockingham Shopping Centre ^ Rosebud Plaza Shopping Centre ^ (0.4) (4.7) (0.4) (5.1) Roxburgh Park Shopping Centre Runaway Bay Shopping Village ^ Bowes Street Sundry (0.0) (4.7) (0.0) (4.7) Total (10.1) (1.8) (10.9) (2.0) Property held via investment in associate Bent Street Trust (The Entertainment Quarter) ^ GRAND TOTAL (9.9) (1.8) (10.7) (2.0) Like-for-like total * Includes 30-Jun-13 net income impact of $28.9 million (30 Jun 12: $26.2 million) consisting of underpinned rental income for development properties during construction phase, capitalised marketing costs and amortisation of development related leasing incentives and lease arrangement fees. ^ * Derived electricity and/or carpark income via a special purpose vehicle. A total amount of $1.6 million (30 Jun 12: $1.6 million) has been included in the current year NPI. The special purpose vehicle will declare a dividend after finalising its tax position. CFX will take up this electricity and carpark income in the form of dividend income when the dividend is declared. Properties excluded from the like-for-like calculation are Bayside Shopping Centre, Brimbank Shopping Centre, Forest Hill Chase, Emporium Melbourne and Roxburgh Park Shopping Centre. Properties have been excluded where income has been significantly affected by development for either of the full comparable years. The like-forlike calculation has also been adjusted for changes in ownership of properties in either of the comparison years, and also significant one-off items impacting either of the years. The redevelopment of Bayside Shopping Centre was completed in August The current year includes income related to the industrial component of the site. An amount of $2.25 million has been excluded from the like-for-like calculation as it was not included in the comparative year. 3. The Forest Hill Chase entertainment precinct development was completed in July , On 26 March 2012, CFX sold a 50% share in The Myer Centre Brisbane. An adjustment is made to the like-for-like calculation to reflect the change in ownership interest. 5. The Emporium Melbourne development is in progress. The site was acquired for redevelopment and net property income (excluding flowback income) is therefore capitalised in the redevelopment project. 6. Represents distribution income from Bent Street Trust which includes property, electricity and carpark income from The Entertainment Quarter (TEQ). CFX owns 50% of the units in Bent Street Trust which, in turn, owns 100% of the leasehold of TEQ. CFX, therefore, indirectly owns 50% of the property.

19 CFS Retail Property Trust Group Valuation information by property As at 30 June 2013 Valuation company Valuation date Valuation Discount rate 1 Terminal yield Capitalisation rate Property () (%) (%) (%) Altona Gate Shopping Centre m3 Property Nov Colliers International Nov Bayside Shopping Centre 2 Knight Frank Jun Knight Frank Jun Brimbank Shopping Centre Knight Frank Jun Knight Frank Jun Broadmeadows Shopping Centre 2 Jones Lang LaSalle Jun Savills Jun Castle Plaza Shopping Centre 2 Savills Nov Knight Frank Nov Chadstone Shopping Centre 3 CBRE Dec-12 1, (50% interest) CBRE Dec-11 1, Chatswood Chase Sydney Jones Lang LaSalle May Jones Lang LaSalle May Clifford Gardens Shopping Centre Urbis Jun Savills Jun Corio Shopping Centre m3 Property Nov m3 Property Nov DFO Essendon 2 Savills Jun CBRE Jun DFO Homebush CBRE Dec CBRE Jun DFO Moorabbin Savills Jun CBRE Jun DFO South Wharf 2 Savills Jun (50% interest) CBRE Jun Eastlands Shopping Centre Urbis Nov Savills Nov Elizabeth Shopping Centre 2 CBRE Jun Jones Lang LaSalle Jun The Entertainment Quarter CBRE Jun (50% interest) CBRE Dec Forest Hill Chase 2 Jones Lang LaSalle May Jones Lang LaSalle May Grand Plaza Shopping Centre Savills Jun (50% interest) CBRE Dec Lake Haven Shopping Centre 2 Savills Nov Colliers International Nov The Myer Centre Brisbane CBRE Nov (50% interest) CBRE Nov Myer Melbourne - Department store Knight Frank Dec (33% interest) Jones Lang LaSalle Dec Myer Melbourne - Emporium Melbourne Jones Lang LaSalle Jun n.a. n.a. n.a. (50% interest) Jones Lang LaSalle Dec n.a. n.a. n.a. Northgate Shopping Centre Colliers International May Colliers International May Northland Shopping Centre 2 Jones Lang LaSalle Dec (50% interest) Jones Lang LaSalle Dec Post Office Square Savills Nov Colliers International Nov QueensPlaza Knight Frank May Knight Frank May Rockingham Shopping Centre 2 Jones Lang LaSalle Jun (50% interest) Jones Lang LaSalle Dec Rosebud Plaza Shopping Centre Urbis Nov Urbis Nov Roxburgh Park Shopping Centre 2 Urbis Jun Urbis Jun Runaway Bay Shopping Village 2 CBRE Jun (50% interest) CBRE Dec Bowes Street, Woden Jones Lang LaSalle May Jones Lang LaSalle Nov Notes: 1. Used to calculate discounted cash flow over 10 years. 2. Property values include ancillary assets comprising homemaker centres at Broadmeadows, DFO Essendon and DFO South Wharf, vacant land at Castle Plaza, Elizabeth, Rockingham and Roxburgh Park, an entertainment centre at Bayside, a strip shop at Forest Hill, a business park at Lake Haven, a childcare centre at Northland, a tavern at Runaway Bay, and two car parks at DFO South Wharf. 3. Including houses on adjacent land.

20 CFS Retail Property Trust Group Reconciliation of book values by property () 30-Jun-13 Book value 30-Jun-12 Acquisitions/ (Divestments) Capex and incentives Straightlining revenue Independent valuation changes AIFRS revaluation changes Book value 30-Jun-13 Opening WIP 30-Jun-12 Net WIP movement Closing WIP 30-Jun-13 Property Investment properties Altona Gate Shopping Centre (14.7) Bayside Shopping Centre (0.4) Brimbank Shopping Centre (0.1) Broadmeadows Shopping Centre (5.6) (0.2) Castle Plaza Shopping Centre (7.8) Chadstone Shopping Centre 1, (0.7) , ,667.0 Chatswood Chase Sydney (0.3) Clifford Gardens Shopping Centre Corio Shopping Centre (6.7) DFO Essendon (0.3) DFO Homebush DFO Moorabbin (0.3) DFO South Wharf (0.3) (0.3) Eastlands Shopping Centre (0.4) Elizabeth Shopping Centre (7.0) (0.3) Forest Hill Chase (0.2) (7.8) Grand Plaza Shopping Centre (0.2) (0.3) Lake Haven Shopping Centre (0.1) The Myer Centre Brisbane (0.5) Myer Melbourne - department store (0.7) Myer Melbourne - Emporium Melbourne (125.9) (28.1) Northgate Shopping Centre (3.1) (0.1) Northland Shopping Centre (0.8) Post Office Square (0.1) (4.2) QueensPlaza (1.1) Rockingham Shopping Centre (0.7) (0.4) Rosebud Plaza Shopping Centre Roxburgh Park Shopping Centre (5.1) (0.5) Runaway Bay Shopping Village Bowes Street, Woden (0.5) (2.4) Sundry (0.4) Total 8, (58.8) (2.4) 8, ,526.6 Book value incl. WIP 30-Jun-13 Property held via investment in associate Bent Street Trust (The Entertainment Quarter) (1.9) (0.1) Grand total 8, (60.7) (2.5) 8, ,560.2 Notes 1. Sundry properties include those held for future redevelopment of shopping centres. 2. CFX holds 50% of The Entertainment Quarter via units in Bent Street Trust. CFX's equity accounted investment includes its share of the non-property assets and liabilities of Bent Street Trust.

21 CFS Retail Property Trust Group Debt Summary As at 30 June Key debt statistics Debt structure Total borrowings 2 $2,486.1m Debt maturity profile 1,5 : Borrowings as a proportion of total assets % Weighted average interest rate (including margins and line fees) 5.6% Weighted average debt maturity 3.6 years Portion of debt hedged % Weighted average interest rate on hedged debt (excluding margins and fees) 4 5.1% Weighted average maturity of hedged debt years FY14 FY15 FY Credit rating Short term Long term Standard & Poor's A-1 A Debt position as at 30 June (AUD) Facility size Drawn Undrawn Type Maturity Bank debt facility Sep Bank debt facility Aug Bank debt facility Oct Sources of debt 5 : Bank debt facility Jun Bank debt facility Nov Bank debt facility Sep Bank debt facility Jun % Bank debt facility 5 Jul Bank debt facility Aug Bank debt facility 5 Aug Short term notes (STNs) Jul/Sep FY17 FY18 FY19 Beyond % Key: Bank debt Medium term notes Conv ertible notes US Private Placement Medium term notes (MTNs) May Medium term notes (MTNs) Dec % Medium term notes (MTNs) May Medium term notes (MTNs) Dec % Convertible notes Aug Convertible notes 6 Jul US Private Placement 7 Feb Hedge maturity profile for the financial years ended 1 US Private Placement 7 Feb US Private Placement 7 Feb US Private Placement 8 Jul US Private Placement 9 Jul US Private Placement 9 Jul Total 3, , ,500 2,000 1,500 Notes 1. Adjusted for post year end events, including the extension of $400 million bank debt facilities and 1,000 the execution of $150 million of interest rate swaps. 2. Borrowings is the amount of debt drawn as per Note 11 of the Financial Report equal to $2,483.0 million, 500 adjusted for the fair value of cross-currency swaps of $3.1 million. 3. Total assets excludes the fair value of derivative financial instruments of $4.2 million Including all fixed-rate debt. FY14 FY15 FY16 FY17 FY18 FY19 5. The bank debt facilities expiring in July 2018 and August 2018 include same day funding facilities. The STNs are backed by these facilities and as such, do not add to the overall capacity of CFX, and for this reason are not included in the debt charts. 6. Noteholders have a put option of 4 July Converted to AUD at AUD/USD This tranche of the USPP is denominated in AUD. 9. Converted to AUD at AUD/USD % 6% 5% 4% 3% 2%

22 Asset summaries CFX Asset summaries Date acquired APR 94 Tenant distribution Speciality store lease expiry Myer Melbourne, VIC

23 ALTONA GATE SHOPPING CENTRE BAYSIDE SHOPPING CENTRE includes more than 80 specialty stores. Bayside Shopping Centre is a regional shopping centre situated in CBD. The centre is anchored by Myer, Coles, Target, Safeway, Kmart, Hoyts cinemas, and includes more than 260 specialty stores. Melbourne Date acquired CFX ownership Centre type Date acquired Melbourne APR % Sub-regional APR 94 + CFX ownership 100% Centre type Regional Tenant distribution Discount department stores 28.5% Supermarkets 30.1% Mini majors 9.2% Specialty shops 24.4% Other retail 4.3% Non-retail 3.5% Tenant distribution Department stores 18.4% Discount department stores 16.1% Supermarkets 10.7% Other majors 3.3% Mini majors 12.9% Specialty shops 27.9% Other retail 9.3% Non-retail 1.4% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 33.0% 28.5% 8.4% 10.9% 19.2% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 13.2% 12.2% 13.9% 24.2% 36.5% Altona Gate Shopping Centre North Altona, VIC Total retail area (GLA) (sqm)* 26,897 Number of car spaces 1,640 Vacancy (%) Valuation date Capitalisation rate (%) 8.25 Discount rate (%) 9.75 Terminal yield (%) NABERS Energy rating 3.0-star 4.0-star Bayside Shopping Centre Frankston, VIC Total retail area (GLA) (sqm)* 88,701 Number of car spaces 3,448 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 6.25 Discount rate (%) 9.00 Terminal yield (%) NABERS Energy rating 3.5-star 4.5-star

24 Asset summaries BRIMBANK SHOPPING CENTRE BROADMEADOWS SHOPPING CENTRE and includes more than 100 specialty stores. The centre completed Melbourne Date acquired OCT 02 CFX ownership 100% Centre type Sub-regional Melbourne Date acquired APR 94 + CFX ownership 100% Centre type Regional Tenant distribution (by GLA) Discount department stores 18.3% Supermarkets 33.4% Mini majors 15.9% Specialty shops 20.3% Other retail 5.9% Non-retail 6.2% Tenant distribution Discount department stores 24.8% Supermarkets 14.4% Mini majors 17.1% Specialty shops 26.2% Other retail 11.1% Non-retail 6.4% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 24.6% 16.4% 12.2% 2.7% 44.1% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 32.9% 12.9% 10.5% 12.2% 31.5% Brimbank Shopping Centre Deer Park, VIC Total retail area (GLA) (sqm)* 38,724 Number of car spaces 1,680 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 7.75 Discount rate (%) 9.35 Terminal yield (%) NABERS Energy rating 1.5-star 4.0-star Broadmeadows Shopping Centre Broadmeadows, VIC Total retail area (GLA) (sqm)* 60,652 Number of car spaces 3,051 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 7.50 Discount rate (%) 9.00 Terminal yield (%) NABERS Energy rating 3.5-star 3.0-star

25 CASTLE PLAZA SHOPPING CENTRE CHADSTONE SHOPPING CENTRE The centre is anchored by Target, Coles and Foodland and includes more than 60 specialty stores. includes more than 500 specialty stores, featuring a major Australia for total sales. Adelaide Date acquired CFX ownership Centre type Date acquired Melbourne APR OCT % Sub-regional APR 94 CFX ownership 50% Centre type Super-regional Tenant distribution Discount department stores 34.2% Supermarkets 29.1% Specialty shops 22.6% Other retail 7.4% Non-retail 6.7% Tenant distribution Department stores 22.4% Discount department stores 8.2% Supermarkets 5.8% Other majors 1.4% Mini majors 11.9% Specialty shops 30.2% Other retail 7.1% Non-retail 13.0% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 39.9% 22.8% 8.8% 7.9% 20.6% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 16.3% 20.5% 26.1% 17.1% 20.1% Castle Plaza Shopping Centre Edwardstown, SA Total retail area (GLA) (sqm)* 22,793 Number of car spaces 1,345 Vacancy (%) Valuation date Capitalisation rate (%) 8.00 Discount rate (%) 9.75 Terminal yield (%) NABERS Energy rating 1.5-star 2.5-star Chadstone Shopping Centre Chadstone, VIC Total retail area (GLA) (sqm)* 155,181 Number of car spaces 9,324 Vacancy (%) ,655.0 Valuation date Dec-12 Capitalisation rate (%) 5.25 Discount rate (%) 8.00 Terminal yield (%) ,667.0 NABERS Energy rating 4.0-star Not rated

26 Asset summaries SHOPPING CHATSWOOD CENTRE CHASE SYDNEY SHOPPING CLIFFORD GARDENS CENTRE SHOPPING CENTRE Country Road and includes more than 200 specialty stores. Sydney Date acquired April acquired CFX ownership 1994 NOV % Centre type Sub-regional Regional Date acquired April acquired 1994 APR OCT CFX ownership 100% Centre type Sub-regional Toowoomba Tenant distribution (by GLA) Department stores 32.7% Discount department stores 10.9% Supermarkets 6.1% Mini majors 13.0% Specialty shops 35.8% Other retail 0.8% Non-retail 0.7% Tenant distribution Discount department stores 30.8% Supermarkets 29.3% Mini majors 6.2% Specialty shops 26.4% Other retail 0.1% Non-retail 7.2% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 16.3% 18.5% 21.0% 20.6% 23.6% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 30.2% 14.3% 24.5% 11.9% 19.1% Chatswood Chase Sydney Chatswood, NSW Total retail area (GLA) (sqm)* 58,557 Number of car spaces 2,441 Vacancy (%) Valuation date May-13 Capitalisation rate (%) 5.75 Discount rate (%) 8.50 Terminal yield (%) NABERS Energy rating 3.5-star 2.5-star Clifford Gardens Shopping Centre Toowoomba, QLD Total retail area (GLA) (sqm)* 27,515 Number of car spaces 1,604 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 7.75 Discount rate (%) 9.50 Terminal yield (%) NABERS Energy rating 3.5-star 4.0-star

27 CORIO SHOPPING CENTRE DFO ESSENDON more than 90 specialty stores. Melbourne Date acquired CFX ownership Centre type Date acquired CFX ownership Melbourne APR OCT % Sub-regional APR OCT % Centre type Retail outlet Tenant distribution Discount department stores 18.7% Supermarkets 25.6% Mini majors 10.3% Specialty shops 28.0% Other retail 0.2% Non-retail 17.2% Tenant distribution Mini majors 10.2% Specialty shops 89.3% Non-retail 0.5% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 32.7% 13.8% 19.0% 16.4% 18.1% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 14.5% 5.6% 50.0% 16.3% 13.6% Corio Shopping Centre Corio, VIC Total retail area (GLA) (sqm)* 28,037 Number of car spaces 1,430 Vacancy (%) Valuation date Capitalisation rate (%) 8.00% Discount rate (%) 9.50% Terminal yield (%) 8.25% NABERS Energy rating n.a.~ n.a.~ ~ Not rateable due to refurbishment. DFO Essendon Strathmore, VIC Total retail area (GLA) (sqm)* 19,698 Number of car spaces 2,137 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 7.75 Discount rate (%) Terminal yield (%) NABERS Energy rating n.a.~ n.a.~ ~ Not rateable as there is no NABERS tool for this type of asset.

28 Asset summaries DFO HOMEBUSH DFO MOORABBIN completed by June Sydney Date acquired OCT 10 CFX ownership Centre type Date acquired CFX ownership Melbourne 100% Retail outlet APR OCT % Centre type Retail outlet Tenant distribution (by GLA) Mini majors 12.5% Specialty shops 85.6% Non-retail 1.9% Tenant distribution Mini majors 21.3% Specialty shops 78.1% Other retail 0.1% Non-retail 0.5% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 14.6% 11.1% 2.4% 16.9% 55.0% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 32.6% 12.7% 13.8% 16.0% 24.9% DFO Homebush Homebush, NSW Total retail area (GLA) (sqm)* 10,754 Number of car spaces 1,379 Vacancy (%) Valuation date Dec-12 Capitalisation rate (%) 7.25 Discount rate (%) 9.50 Terminal yield (%) NABERS Energy rating n.a.~ n.a.~ ~ Not rateable as there is no NABERS tool for this type of asset. DFO Moorabbin Cheltenham, VIC Total retail area (GLA) (sqm)* 25,219 Number of car spaces 1,373 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 8.25 Discount rate (%) Terminal yield (%) NABERS Energy rating n.a.~ n.a.~ ~ Not rateable as there is no NABERS tool for this type of asset.

29 DFO SOUTH WHARF EASTLANDS SHOPPING CENTRE stores. than 90 specialty stores. Melbourne Date acquired CFX ownership Centre type Date acquired APR DEC % Retail outlet APR 94 CFX ownership 100% Centre type Regional Hobart Tenant distribution Mini majors 28.2% Specialty shops 64.8% Other retail 6.3% Non-retail 0.7% Tenant distribution Discount department stores 32.0% Supermarkets 21.7% Mini majors 9.5% Specialty shops 29.7% Other retail 6.4% Non-retail 0.7% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 12.4% 52.2% 12.4% 6.3% 16.7% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 42.1% 20.6% 15.1% 6.6% 15.6% DFO South Wharf South Wharf, VIC Total retail area (GLA) (sqm)* 32,533 Number of car spaces 3,002 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 7.50 Discount rate (%) Terminal yield (%) NABERS Energy rating n.a.~ n.a.~ ~ Not rateable as there is no NABERS tool for this type of asset. Eastlands Shopping Centre Rosny Park, TAS Total retail area (GLA) (sqm)* 33,064 Number of car spaces 1,448 Vacancy (%) Valuation date Capitalisation rate (%) 7.25 Discount rate (%) 9.50 Terminal yield (%) NABERS Energy rating 4.0-star 3.0-star

30 Asset summaries ELIZABETH SHOPPING CENTRE THE ENTERTAINMENT QUARTER 190 specialty stores. The Entertainment Quarter is an entertainment precinct, Adelaide Date acquired + CFX ownership 100% Centre type Regional Sydney Date acquired APR 94 CFX ownership 50% Centre type Other Tenant distribution (by GLA) Department stores 12.5% Discount department stores 20.4% Supermarkets 10.2% Mini majors 11.4% Specialty shops 21.7% Other retail 10.9% Non-retail 12.9% Tenant distribution Mini majors 5.2% Specialty shops 7.2% Other retail 36.3% Non-retail 51.3% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 15.7% 17.7% 27.0% 21.6% 18.0% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 50.5% 19.5% 4.4% 15.3% 10.3% Elizabeth Shopping Centre Elizabeth, SA Total retail area (GLA) (sqm)* 73,521 Number of car spaces 3,259 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 7.00 Discount rate (%) 9.00 Terminal yield (%) NABERS Energy rating 3.5-star 3.5-star + CFX acquired 50% in Jul-98 and 50% in Jan-05. The Entertainment Quarter Moore Park, NSW Total retail area (GLA) (sqm)* 24,848 Number of car spaces 2,008 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) Discount rate (%) Terminal yield (%) NABERS Energy rating n.a.~ n.a.~ ~ Not rateable as there is no NABERS tool for this type of asset.

31 FOREST HILL CHASE GRAND PLAZA SHOPPING CENTRE includes more than 170 specialty stores. The centre completed a specialty stores. Melbourne Date acquired CFX ownership Centre type CFX ownership APR JAN % Regional APR OCT % Brisbane Date acquired Centre type Regional Tenant distribution Discount department stores 27.5% Supermarkets 15.4% Mini majors 12.9% Specialty shops 23.3% Other retail 15.4% Non-retail 5.5% Tenant distribution Discount department stores 37.0% Supermarkets 18.5% Mini majors 6.0% Specialty shops 22.9% Other retail 12.3% Non-retail 3.3% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 30.6% 10.3% 7.4% 16.7% 35.0% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 25.3% 15.8% 14.7% 18.7% 25.5% Forest Hill Chase Forest Hill, VIC Total retail area (GLA) (sqm)* 59,485 Number of car spaces 3,402 Vacancy (%) Valuation date May-13 Capitalisation rate (%) 7.25 Discount rate (%) 9.00 Terminal yield (%) NABERS Energy rating 2.5-star 2.5-star Grand Plaza Shopping Centre Browns Plains, QLD Total retail area (GLA) (sqm)* 53,121 Number of car spaces 2,501 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 6.75 Discount rate (%) 9.13 Terminal yield (%) NABERS Energy rating 3.5-star 4.0-star + CFX acquired 100% in Oct-02 and sold 50% in Dec-07.

32 Asset summaries LAKE HAVEN SHOPPING CENTRE THE MYER CENTRE BRISBANE centre located in the heart of Brisbane. The centre is anchored by and includes more than 180 specialty stores. Date acquired + CFX ownership 100% Centre type Sub-regional Date acquired CFX ownership Centre type APR NOV % CBD regional Brisbane Tenant distribution (by GLA) Discount department stores 19.0% Supermarkets 20.2% Mini majors 9.8% Specialty shops 18.3% Other retail 16.4% Non-retail 16.3% Tenant distribution Department stores 49.4% Discount department stores 11.5% Supermarkets 3.1% Mini majors 7.3% Specialty shops 20.9% Other retail 6.3% Non-retail 1.5% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 32.1% 26.6% 17.5% 7.0% 16.8% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 30.0% 18.0% 14.0% 16.4% 21.6% Lake Haven Shopping Centre Lake Haven, NSW Total retail area (GLA) (sqm)* 39,082 Number of car spaces 1,692 Vacancy (%) Valuation date Capitalisation rate (%) 7.50 Discount rate (%) 9.25 Terminal yield (%) NABERS Energy rating 2.5-star 4.0-star The Myer Centre Brisbane Brisbane, QLD Total retail area (GLA) (sqm)* 63,664 Number of car spaces 1,482 Vacancy (%) Valuation date Capitalisation rate (%) 6.50 Discount rate (%) 8.75 Terminal yield (%) NABERS Energy rating 2.0-star 2.5-star

33 MYER MELBOURNE NORTHGATE SHOPPING CENTRE Melbourne Central. The total project will comprise approximately 85,000 sqm of retail space and is scheduled for completion in includes more than 60 specialty stores. Melbourne Date acquired CFX ownership Centre type Date acquired APR 94 46% + CBD regional APR 94 Hobart CFX ownership Centre type 100% Sub-regional Tenant distribution (by GLA) Department stores 100.0% Tenant distribution (by GLA) Discount department stores 29.9% Supermarkets 24.4% Mini majors 6.2% Specialty shops 32.6% Other retail 0.1% Non-retail 6.8% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 22.7% 19.4% 17.0% 16.0% 24.9% Myer Melbourne department store Melbourne, VIC Total retail area (GLA) (sqm)* 38,729 Vacancy (%) Based on a blended calculation of CFX ownership of 33% of Myer Melbourne department store and 50% of Emporium Melbourne. Northgate Shopping Centre Glenorchy, TAS Total retail area (GLA) (sqm)* 19,278 Number of car spaces 873 Vacancy (%) Valuation date May-13 Capitalisation rate (%) 8.25 Discount rate (%) Terminal yield (%) NABERS Energy rating 3.0-star Not rated

34 Asset summaries NORTHLAND SHOPPING CENTRE POST OFFICE SQUARE stores. Melbourne Date CFX ownership 50% Centre type Date APR 94 CFX ownership 100% Centre type Other Brisbane Tenant distribution Department stores 20.1% Discount department stores 14.5% Supermarkets 9.0% Other majors 2.0% Mini majors 9.0% Specialty shops 30.4% Other retail 8.2% Non-retail 6.8% Tenant distribution Specialty shops 94.0% Other retail 5.7% Non-retail 0.3% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 13.6% 25.7% 26.4% 19.6% 14.7% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 24.8% 14.7% 3.3% 21.5% 35.7% Valuation date Dec star 1, Valuation date Nov n.a.~ n.a.~

35 QUEENSPLAZA ROCKINGHAM SHOPPING CENTRE Coles Central, features luxury retailers such as Chanel, Louis Vuitton, specialty stores. than 210 specialty stores. Brisbane Date acquired CFX ownership Centre type Date acquired CFX ownership APR % CBD regional APR OCT % Centre type Regional Tenant distribution Department stores 68.3% Supermarkets 4.1% Mini majors 1.2% Specialty shops 18.3% Other retail 0.1% Non-retail 8.0% Tenant distribution Discount department stores 24.4% Supermarkets 14.3% Mini majors 15.5% Specialty shops 29.9% Other retail 9.2% Non-retail 6.7% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 18.9% 7.0% 7.9% 24.9% 41.3% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 31.1% 34.3% 11.3% 8.3% 15.0% QueensPlaza Brisbane, QLD Total retail area (GLA) (sqm)* 35,936 Number of car spaces 600 Vacancy (%) Valuation date May-13 Capitalisation rate (%) 5.75 Discount rate (%) 8.50 Terminal yield (%) NABERS Energy rating 2.0-star 2.5-star Rockingham Shopping Centre Rockingham, WA Total retail area (GLA) (sqm)* 60,699 Number of car spaces 3,021 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 6.25 Discount rate (%) 8.75 Terminal yield (%) NABERS Energy rating 0.0-star 2.0-star + CFX acquired 12.5% in Oct-02, 4.2% in May-05 and 33.3% in Dec-07.

36 Asset summaries ROSEBUD PLAZA SHOPPING CENTRE ROXBURGH PARK SHOPPING CENTRE CBD. The centre is anchored by Kmart, Coles, Safeway and Target and includes more than 60 specialty stores. and Aldi and includes more than 60 specialty stores. The centre Melbourne Date acquired CFX ownership Centre type Date acquired CFX ownership Melbourne 100% Sub-regional APR DEC % Centre type Sub-regional Tenant distribution (by GLA) Discount department stores 55.6% Supermarkets 15.1% Mini majors 1.8% Specialty shops 23.5% Other retail 1.3% Non-retail 2.7% Tenant distribution Supermarkets 47.4% Mini majors 18.7% Specialty shops 23.6% Other retail 3.3% Non-retail 7.0% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 38.6% 10.6% 10.5% 20.6% 19.7% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 0.0% 2.8% 3.3% 10.2% 83.7% Rosebud Plaza Shopping Centre Rosebud, VIC Total retail area (GLA) (sqm)* 24,122 Number of car spaces 1,070 Vacancy (%) Valuation date Capitalisation rate (%) 8.00 Discount rate (%) 9.75 Terminal yield (%) NABERS Energy rating 3.0-star 5.0-star Roxburgh Park Shopping Centre Roxburgh Park, VIC Total retail area (GLA) (sqm)* 24,366 Number of car spaces 1,201 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 7.75 Discount rate (%) 9.50 Terminal yield (%) NABERS Energy rating n.a.~ n.a.~ + Land: Dec-97; Opened: Dec-99.

37 RUNAWAY BAY SHOPPING VILLAGE 15 BOWES STREET, WODEN Date acquired CFX ownership Centre type Date acquired CFX ownership Canberra APR OCT % Regional APR OCT % Asset type Gold Coast Tenant distribution Discount department stores 32.0% Supermarkets 23.0% Mini majors 14.4% Specialty shops 21.5% Other retail 2.4% Non-retail 6.7% Tenant distribution Non-retail 100.0% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 36.0% 21.3% 13.9% 8.0% 20.8% Speciality store lease expiry FY14 FY15 FY16 FY17 BEYOND 54.8% 0.0% 0.0% 0.0% 45.2% Runaway Bay Shopping Village Runaway Bay, QLD Total retail area (GLA) (sqm)* 42,469 Number of car spaces 2,280 Vacancy (%) Valuation date Jun-13 Capitalisation rate (%) 7.25 Discount rate (%) 9.25 Terminal yield (%) NABERS Energy rating 3.0-star 4.5-star 15 Bowes Street, Woden Woden, ACT 9,108 Number of car spaces 11 Vacancy (%) Valuation date May-13 Capitalisation rate (%) Discount rate (%) Terminal yield (%) NABERS Energy rating 3.5-star Not rated

38 FINANCIAL REPORT FOR THE YEAR ENDED 30 JUNE 2013 Contents DIRECTORS REPORT... 2 AUDITOR S INDEPENDENCE DECLARATION... 9 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME CONSOLIDATED STATEMENT OF FINANCIAL POSITION CONSOLIDATED STATEMENT OF CASH FLOWS CONSOLIDATED STATEMENT OF CHANGES IN EQUITY NOTES TO THE FINANCIAL STATEMENTS DIRECTORS DECLARATION INDEPENDENT AUDITOR S REPORT CFS Retail Property Trust Group (CFX) comprises CFS Retail Property Trust 1 ARSN and CFS Retail Property Trust 2 ARSN , the units of which are stapled and listed on the Australian Securities Exchange (ASX). 1

39 DIRECTORS REPORT The Directors of Commonwealth Managed Investments Limited (CMIL), the Responsible Entity (RE) for CFS Retail Property Trust 1 (CFX1 or the Trust ), present their report together with the financial statements of CFS Retail Property Trust Group (CFX) for the financial year ended 30 June CFX comprises CFS Retail Property Trust 1, its controlled entities, and CFS Retail Property Trust 2 (CFX2). 1.1 Directors The names of the Directors of the Responsible Entity at any time during the financial year and up to the date of this report are: (i) Chairman Non-Executive Director R M Haddock AM (independent) (ii) Non-Executive Directors J F Kropp (independent) N J Milne OAM (independent) R E Griffiths (iii) M J Venter Executive Directors 1.2 Principal activities CFS Retail Property Trust 1 is a registered managed investment scheme domiciled in Australia and has its principal place of business at Level 4, Tower 1, 201 Sussex Street, Sydney, New South Wales The Responsible Entity of CFS Retail Property Trust 1 is incorporated and domiciled in Australia and has its registered office at Ground Floor, Tower 1, 201 Sussex Street, Sydney, New South Wales The CFS Retail Property Trust Group (CFX) comprises CFS Retail Property Trust 1 and CFS Retail Property Trust 2, the units of which are stapled to form a stapled security. CFX stapled securities trade as one security on the Australian Securities Exchange (ASX). The stapled CFX structure allows the stapled group to explore ways of generating additional income streams from CFX s portfolio of shopping centre assets in addition to CFX s principal activity of investment in retail property. There were no other significant changes in the nature of CFX s activity during the financial year. 1.3 Distributions Total distributions paid/payable to stapled securityholders for the financial year ended 30 June 2013 amounted to $384.6 million, representing 13.6 cents per stapled security (Jun 2012: $371.5 million, representing 13.1 cents per stapled security, excluding the capital distribution to satisfy the initial issue of CFS Retail Property Trust 2 units on 6 June 2012). (a) Distributions for the six months ended 31 December 2012 The distribution paid for the six months ended 31 December 2012 was $192.3 million (6.8 cents per stapled security). (b) Distributions for the six months ended 30 June 2013 The distribution declared but not paid for the six months ended 30 June 2013 is $192.3 million (representing 6.8 cents per stapled security). 2

40 DIRECTORS REPORT 1.4 Operating and financial review CFX is an externally managed A-REIT that invests in a diversified portfolio of high quality, predominantly regional, large sub-regional, and retail outlet centres in Australia. CFX is focused on providing long-term sustainable returns for securityholders through intensively managing its assets, disciplined investment decisions, and prudent capital management. The Responsible Entity adopts a leading approach to corporate governance and responsible investment in its management of CFX. CFX aims to maximise rents through reweighting exposure to tenants where there is strength in underlying consumer demand. It seeks opportunities to further enhance rental growth by redeveloping its shopping centres to take advantage of new consumer trends and to cater for new retailers and retailing formats. CFX periodically acquires centres that improve the long-term earnings prospects of the portfolio and sells centres where it believes capital might best be deployed elsewhere. CFX targets a modest gearing level of 25% to 35%. This allows CFX to take on some leverage which can enhance income returns for equity investors. Keeping gearing modest allows the flexibility to fund development expansions and acquisitions. (a) Financial results and operations Key financial and operational highlights over the financial year include: The consolidated net profit for the financial year ended 30 June 2013 decreased by 27.9% to $295.0 million (Jun 2012: $409.2 million). The decrease primarily reflects the net differences in the revaluation of investment properties and derivatives between the two years. Rental and other property income, net of property-related expenses being rates, taxes and other outgoings, repairs and maintenance, and bad and doubtful debts expense, was down 2.7% to $505.8 million (Jun 2012: $519.9 million), reflecting the sale of a 50% interest in The Myer Centre Brisbane in March For comparison purposes, adjusting the prior year equivalent by $20.0 million to reflect the change in ownership of this asset, results in an increase of 1.2%. This was supported by specialty tenant leases with fixed 5% annual increases and modest rental growth from non-specialty tenants. Re-leasing spreads for new specialty tenant leases were slightly negative, reflecting the challenging retail sales environment. Despite this environment, CFX has maintained close to full portfolio occupancy of 99.4% (Jun 2012: 99.7%). Borrowing costs were $110.8 million, down from $141.7 million for the prior year, reflecting CFX s renegotiation of debt facilities and the fall in official interest rates over the year. CFX s weighted average interest rate reduced to 5.6% at 30 June 2013 from 6.0% at 30 June Net profit was impacted by net revaluation losses on investment properties and associates of $63.1 million (Jun 2012: $164.3 million gain), including a $125.9 million loss on the revaluation of Emporium Melbourne. The Emporium Melbourne development and revaluation loss is detailed in the Financial Position section of this Directors report. Excluding the impact of Emporium Melbourne, CFX recorded net revaluation gains of $62.8 million, broadly reflecting modest income growth with stable capitalisation rates. Key assets Chadstone Shopping Centre, Chatswood Chase Sydney and QueensPlaza recorded solid increases driven by income growth, and Rockingham Shopping Centre was driven by a combination of income growth and a tightening in the capitalisation rate. Sub-regional shopping centre valuations typically reflected flat to slightly negative growth as a consequence of the weaker leasing environment for these properties. Included within net profit is a net loss on the fair value of interest rate swaps of $3.5 million (Jun 2012: $87.9 million). The current year result reflects the relatively minor reduction in interest rates during the year, whereas the drop in interest rates was far more significant in the comparative year. The swaps have been effective in meeting the objective of providing CFX with greater certainty of financing costs. Consolidated net profit has been adjusted for fair value adjustments, certain unrealised and non-cash items, and other items that are non-recurring or capital in nature, to determine distributable income for the financial year ended 30 June 2013 of $384.6 million (Jun 2012: $371.5 million). Distributable income is a key earnings measure used by management to assess CFX s performance. A reconciliation of net profit to distributable income is set out in the following table: 3

41 DIRECTORS REPORT 1.4 Operating and financial review (continued) (a) Financial results and operations (continued) Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Net profit for the year Adjustments (1) : - straight-lining revenue (2.4) (2.8) - fair value adjustments from investment properties and associate 63.1 (164.3) - other fair value adjustments to derivatives movement in fair value of unrealised performance fees (5.5) non-cash convertible notes interest expense convertible notes buy-back expense amortisation of project items other items Distributable income Distributions paid and payable (excluding capital distribution) (1) Refer to note 2 to the financial statements for an explanation of the adjustments to net profit to determine distributable income for the year. (b) Distributable income increased by 3.5% to $384.6 million (Jun 2012: $371.5 million), primarily due to lower financing costs and modest rental growth, after adjusting for the sale of a 50% interest in The Myer Centre Brisbane in the prior year. CFX s total distribution for the financial year was $384.6 million (Jun 2012: $371.5 million), which represents a 3.8% increase in distributions per stapled security to 13.6 cents per stapled security (Jun 2012: 13.1 cents per stapled security). Financial position Key features of CFX s financial position at reporting date include: Primarily as a result of revaluations of investment properties, net assets decreased by 1.5% to $5,764.4 million (Jun 2012: $5,854.9 million), resulting in a net tangible asset backing per stapled security at 30 June 2013 of $2.04 (Jun 2012: $2.07). CFX s gearing is 28.8% (Jun 2012: 26.6%), comfortably within the target range of 25% to 35%. The increase in gearing reflects capital expenditure, with CFX completing or progressing the following redevelopments: o Roxburgh Park Shopping Centre $65 million redevelopment completed in May 2013 on time and on budget. The redevelopment included two new supermarkets, three new minimajors and 40 new specialty stores. The centre has more than doubled in size to approximately 25,000 sqm, and continues to focus on convenience-based retailing, with 700 car spaces added as part of the project. o Forest Hill Chase Shopping Centre and Brimbank Shopping Centre the $20 million redevelopment of Forest Hill Chase Shopping Centre, and the $34 million redevelopment of Brimbank Shopping Centre were both completed in June 2013 on time and on budget. o Emporium Melbourne - the opening of the development is now scheduled for the quarter ended 31 March 2014 following delays in construction largely as a result of wet weather. The delay has resulted in an estimated increase in project costs of $15 million (CFX share), largely reflecting the additional interest costs to be incurred. In addition, CFX has revised downwards income forecasts to reflect the subdued retail leasing market and rents achieved for the significant volume of leasing deals now completed. The combination of these factors has resulted in a revised project cost of $590 million (CFX share) and a target year-one yield on costs of approximately 5%. o DFO Homebush - the $100 million redevelopment commenced following council approval of the amended Development Application (DA) in November The redevelopment involves a remix of tenancies, the addition of a food court and bulky goods retailers, an expansion and reconfiguration of the car park, as well as a substantial upgrade to the existing building. 4

42 DIRECTORS REPORT 1.4 Operating and financial review (continued) (b) Financial position (continued) CFX s capital management activities during the year resulted in the restructuring of $943.7 million of debt, improving the underlying fundamentals of the balance sheet. As a result of its continued active capital management, the weighted average duration of CFX s debt increased to 3.1 years at 30 June 2013 from 2.8 years at 30 June 2012, and the weighted average interest rate reduced to 5.6% at 30 June 2013 from 6.0% at 30 June 2012, in part due to the fall in official interest rates over the year. At 30 June 2013, borrowings are 81.3% hedged (Jun 2012: 87.4%). Subsequent to reporting date, CFX renegotiated terms on cash advance facilities totalling $400.0 million, extending the weighted average debt duration from 3.1 years to 3.6 years. These facilities, which were due to mature in the 2015 financial year, now mature in the 2019 financial year. At 30 June 2013, CFX has $530.0 million undrawn cash advance facilities expiring beyond one year with which to fund its $398.0 million current debt obligations. Undrawn facilities in excess of current debt obligations will be used to fund CFX s development pipeline. CFX s most restrictive debt covenants and corresponding results at 30 June 2013 are as follows: Covenant Actual Loan to value ratio (LVR) (1) 50% or less 33% Interest cover ratio (ICR) (2) 1.8 times or greater 3.3 times (1) LVR is calculated for CFX1 as total liabilities divided by total assets. This calculation excludes the liabilities and assets pertaining to CFX2. (2) ICR is calculated as earnings before interest divided by net interest expense for CFX1. For the purposes of this calculation, earnings represents net profit excluding all fair value adjustments, straight-lining revenue, borrowing costs and net interest expense on interest rate swaps. Interest expense is the sum of borrowing costs, net interest expense on interest rate swaps, and capitalised interest, less non-cash convertible notes interest and adjustments for convertible notes buy-back expense. (c) As detailed in note 14(d)(ii), the Responsible Entity is entitled to a performance fee if CFX s total return exceeds its benchmark. Although the amount of the performance fee to be paid each period is capped, the carry-over outperformance may be used to generate performance fee entitlement in future periods. At 30 June 2013, the carry-over outperformance is 28.7 percentage points (Jun 2012: 45.6 percentage points). The fair value of this outperformance has been estimated to be $29.2 million (Jun 2012: $34.7 million). The fair value has been calculated by assigning probabilities to the likelihood of paying capped performance fees in future periods, and discounting these estimated cash flows to the reporting date. Actual performance fees paid in future periods may differ from the fair value reported. The decrease in the fair value of outperformance reflects underperformance of 14.5 percentage points for the financial year. Business strategies and prospects for future financial years CFX will continue to enhance the performance of its properties through redevelopment. CFX s development pipeline is approximately $1.2 billion, with developments targeting an average yield on first year income of 6.5% to 8.0% (excluding Emporium Melbourne). Projects currently under construction have a development cost of approximately $698 million, with $209 million remaining to be spent. Projects in the planning stage include the $260 million (CFX share) major redevelopment of Chadstone Shopping Centre, which will involve redeveloping approximately 60,000 sqm and producing an additional 25,000 sqm of retail floor area, adding further international retailers and reinforcing Chadstone as Australia s premier shopping centre destination. The current planning scheme also allows for office or hotel development. Ministerial Gazettal of the rezoning required for the development was achieved during the year. 5

43 DIRECTORS REPORT 1.4 Operating and financial review (continued) (c) Business strategies and prospects for future financial years (continued) CFX plans to further refine the quality of its portfolio through the sale of non-core subregional shopping centres. Given the higher yielding nature of this type of centre, their divestment would result in a short-term dilution to earnings, which over time would be partially offset by the reinvestment of the proceeds. The proceeds would initially be used to retire debt, providing CFX with flexibility to pursue value enhancing initiatives such as investing in its development pipeline or acquiring properties. On the basis that these non-core assets are sold during the year, CFX provides distribution guidance of 13.2 to 13.3 cents per stapled security for the 2014 financial year. If these assets are not sold during the year, CFX s distribution guidance would be revised to 13.7 to 13.8 cents per stapled security. The distribution guidance is based upon the current operating model. Refer to section 1.6 of this report for details concerning potential changes to this operating model, which may impact upon future distributions. The material risks that could affect CFX s achievement of the financial prospects noted above include a further deterioration in retail sales impacting on CFX s ability to achieve leasing forecasts, potential increases in construction and interest costs, delays in project completions, and the inability to secure sufficient funding. CFX seeks to mitigate these risks via: o the ongoing appointment of a large, experienced property management team with appropriate specialisation in retail leasing and development o active capital management ensuring all debt expiring in the short to medium term is refinanced well in advance of expiry date. This includes $398.0 million current debt obligations and $717.3 million debt expiring in the 2015 financial year. As noted above, subsequent to year end $400.0 million of the cash advance facilities originally due to expire in the 2015 financial year have been refinanced and now mature in the 2019 financial year o the maintenance of a strong balance sheet and credit rating. CFX will continue to target gearing of 25% to 35%, enabling flexibility for acquisition opportunities and delivery of its development pipeline and o the targeting of 65% to 85% of borrowings at fixed rates of interest, thereby providing greater certainty of financing costs. 1.5 Significant changes in the state of affairs In the opinion of the Directors, there were no significant changes in the state of the affairs of CFX that occurred during the financial year other than those matters stated in this report. 1.6 Matters subsequent to the end of the financial year On 24 July 2013, the CMIL Board announced it had received a highly conditional, indicative and incomplete proposal from Commonwealth Bank of Australia (the Bank) to internalise the management of CFX and for CFX to acquire the wholesale funds management and integrated retail property management and development business from the Bank. The CMIL Board has established a sub-committee of Independent Directors being Richard Haddock AM, Nancy Milne OAM and James Kropp to consider the proposal. The CMIL Board can give no assurance that the proposal or any other transaction will proceed. It is also noted that the approval of CFX securityholders would be required for the proposal to proceed. In August 2013, CFX renegotiated a $300.0 million cash advance facility, extending expiry from January 2015 to August 2018, and a $100.0 million cash advance facility, extending expiry from November 2014 to August As a consequence, CFXs weighted average duration of debt significantly increases from 3.1 years to 3.6 years. The Directors are not aware of any other matter or circumstance that has arisen since 30 June 2013 that has significantly affected, or may significantly affect, CFX s operations, the results of those operations or the state of the affairs of CFX, in future financial years other than those matters stated in this report. 6

44 DIRECTORS REPORT 1.7 Environmental regulation CFX provides data to the Commonwealth Bank of Australia (the Bank ), the ultimate parent of CMIL, in order for the Bank to fulfil its reporting obligations under the National Greenhouse and Energy Reporting Act 2007 and the Energy Efficiency Opportunity Act CFX monitors its legal obligations and is compliant for the reporting period. 1.8 Indemnification and insurance of officers No insurance premiums were paid out of the assets of CFX for insurance cover provided to either the officers of the Responsible Entity or the auditor of CFX. Where the officers of the Responsible Entity act in accordance with the CFX1 and CFX2 Constitutions and the Corporations Act 2001, the officers remain indemnified out of the assets of CFX against losses incurred while acting on behalf of CFX. The auditor of CFX is not indemnified out of the assets of CFX. 1.9 Responsible Entity interests and fees Fees paid and payable to the Responsible Entity during the financial year are disclosed in note 14(d). The Responsible Entity and its associates have not held any stapled securities in CFX either directly or indirectly during the financial year, as set out in note 14(j) Interests in CFX No Director of the Responsible Entity held any stapled securities in CFX at the end of, or during, the financial year, as set out in note 14(j). No Director of the Responsible Entity has received or become entitled to receive any benefit by reason of a contract made by CFX, or a related entity of CFX, with a Director, or with a firm of which a Director is a member, or with an entity in which a Director has a substantial interest, other than remuneration in their capacity as Director of the Responsible Entity. The movement in stapled securities on issue in CFX during the financial year, along with the number of stapled securities on issue at the end of the financial year, is disclosed in note Non-audit services The Responsible Entity may employ CFX s auditor on assignments in addition to its statutory audit duties. Details of the amount paid or payable to the auditor for audit and non-audit services are set out in note 18. The Directors, in accordance with advice received from the Audit Committee, are satisfied that the provision of the non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act 2001 and did not compromise the auditor independence requirements of the Corporations Act 2001 for the following reasons: all non-audit services have been reviewed by the Audit Committee to ensure that they do not impact the impartiality and objectivity of the auditor and none of the services undermine the general principles relating to auditor independence as set out in APES 110 Code of Ethics for Professional Accountants Rounding of amounts CFX1 is of a kind referred to in Class Order 98/100 issued by the Australian Securities and Investments Commission (ASIC) relating to the rounding off of amounts in the Directors report. Accordingly, amounts in the Directors report have been rounded off to the nearest tenth of a million dollars () in accordance with that Class Order, unless stated otherwise Auditor PricewaterhouseCoopers continues in office as the auditor of CFX. 7

45 DIRECTORS REPORT 1.14 Auditor s independence declaration A copy of the auditor s independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 9. Signed in accordance with the resolution of the Directors of Commonwealth Managed Investments Limited. R M Haddock AM Director Sydney 20 August

46 Auditor s Independence Declaration As lead auditor for the audit of CFS Retail Property Trust 1 for the year ended 30 June 2013, I declare that to the best of my knowledge and belief, there have been: a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the audit; and b) no contraventions of any applicable code of professional conduct in relation to the audit. This declaration is in respect of CFS Retail Property Trust 1, and the entities it controlled during the period, including CFS Retail Property Trust 2. TJO Peel Partner PricewaterhouseCoopers 20 August 2013 Sydney PricewaterhouseCoopers, ABN Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: , F: , Liability limited by a scheme approved under Professional Standards Legislation.

47 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME For the year ended 30 June 2013 Note Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Revenue Rental and other property income Interest income Dividend income 14(e) Alignment fee income 14(i) Other income Share of net profit from associate before fair value adjustments Share of associate s loss from fair value adjustments (1.9) (3.9) Share of net profit/(loss) accounted for using the equity method 9(a) 1.5 (0.7) Fair value adjustments to investment properties 7(b)(i) Total revenue and other income Expenses Net interest expense on derivatives Other fair value adjustments to derivatives Net loss on derivatives Fair value adjustments to investment properties 7(b)(i) Rates, taxes and other outgoings Repairs and maintenance Bad and doubtful debts expense Borrowing costs Responsible Entity s base fee 14(d)(i) Responsible Entity s performance fee 14(d)(ii) Auditor s remuneration Other expenses Total expenses Profit before tax for the financial year Income tax benefit 4(a) Net profit for the financial year Other comprehensive income - - Total comprehensive income for the financial year Net profit for the financial year attributable to stapled securityholders as: Equity holders of CFX Equity holders of CFX2 (non-controlling interests) (0.2) - Net profit for the financial year Total comprehensive income for the year attributable to stapled securityholders as: Equity holders of CFX Equity holders of CFX2 (non-controlling interests) (0.2) - Total comprehensive income for the financial year Jun Jun 2012 Earnings per security attributable to securityholders of CFX1: Basic earnings per security (cents) Diluted earnings per security (cents) The above consolidated statement of comprehensive income should be read in conjunction with the accompanying notes. 10

48 CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 30 June 2013 Note Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Current assets Cash and cash equivalents Receivables Derivatives 19(i) Prepayments Total current assets Non-current assets Investment properties 7 8, ,327.9 Investment in associate Deferred tax assets Total non-current assets 8, ,363.3 Total assets 8, ,434.1 Current liabilities Payables Distribution payable Responsible Entity s base management fees payable 14(d)(i) Responsible Entity s performance fees payable 14(d)(ii) Fair value of Responsible Entity s performance fee liability 14(d)(ii) Interest bearing liabilities Derivatives 19(i) Total current liabilities Non-current liabilities Interest bearing liabilities 11 2, ,588.9 Fair value of Responsible Entity s performance fee liability 14(d)(ii) Total non-current liabilities 2, ,618.9 Total liabilities 2, ,579.2 Net assets 5, ,854.9 Equity Capital and reserves attributable to stapled securityholders as: Securityholders of CFX1 Contributed equity 12 3, ,788.2 Undistributed reserves 13(a) 1, ,061.1 Total capital and reserves attributable to securityholders of CFX1 5, ,849.3 Securityholders of CFX2 Contributed equity Undistributed reserves 13(b) (0.2) - Total capital and reserves attributable to securityholders of CFX Total equity 5, ,854.9 The above consolidated statement of financial position should be read in conjunction with the accompanying notes. 11

49 CONSOLIDATED STATEMENT OF CASH FLOWS For the year ended 30 June 2013 Note Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Cash flows from operating activities Rental and other property income received Distributions received Dividend received Interest income received Interest income/(expense) on interest rate swaps 0.2 (4.5) Payments to suppliers (325.5) (318.2) Borrowing costs paid (132.5) (168.1) Net cash flows from operating activities Cash flows from investing activities Payments for property developments and improvements (225.8) (160.8) Proceeds from disposal of investment properties 7(b)(i) Net cash flows (used in)/from investing activities (225.8) Cash flows from financing activities Stapled securities bought back and cancelled 12 (0.9) (19.8) Stapled security issue costs paid 12 - (0.1) Proceeds from issue of conversion rights Payments for buy-back of conversion rights 12 - (2.1) Proceeds from interest bearing liabilities 1, ,097.0 Repayment of interest bearing liabilities (1,566.6) (2,144.4) Distributions paid (379.2) (366.3) Termination payments on interest rate swaps - (105.2) Net cash flows used in financing activities (131.6) (537.5) Net increase in cash and cash equivalents held Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year Non-cash financing and investing activities The above consolidated statement of cash flows should be read in conjunction with the accompanying notes. 12

50 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the year ended 30 June 2013 Note Attributable to securityholders of CFX1 Contributed equity Reserves Total Attributable to securityholders of CFX2 Contributed equity Reserves Total Total equity Total equity as at 1 July , , , ,835.8 Net profit for the financial year Other comprehensive income Total comprehensive income for the financial year Transactions with securityholders in their capacity as securityholders: Value of conversion rights on convertible notes issue Value of conversion rights on convertible notes repurchase 12 (2.1) - (2.1) (2.1) Stapled securities bought back and cancelled 12 (19.8) - (19.8) (19.8) Distributions paid and payable excluding capital distributions 5 - (371.5) (371.5) (371.5) CFX1 capital distribution reinvested as units in CFX2 5 (5.7) - (5.7) Stapled security issue costs (0.1) - (0.1) (0.1) Total equity as at 30 June , , , ,854.9 Net profit/(loss) for the financial year (0.2) (0.2) Other comprehensive income Total comprehensive income for the financial year (0.2) (0.2) Transactions with securityholders in their capacity as securityholders: Stapled securities bought back and cancelled 12 (0.9) - (0.9) (0.9) Distributions paid and payable 5 - (384.6) (384.6) (384.6) Total equity as at 30 June , , , (0.2) 5.4 5,764.4 The above consolidated statement of changes in equity should be read in conjunction with the accompanying notes. 13

51 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies This consolidated financial report is for CFS Retail Property Trust Group (CFX). CFX comprises CFS Retail Property Trust 1 (CFX1 or the Trust ) ARSN , its controlled entities, and CFS Retail Property Trust 2 (CFX2) ARSN The units of CFX1 and CFX2 are stapled and listed on the Australian Securities Exchange (ASX). The principal accounting policies adopted in the preparation of the financial statements are set out below and have been consistently applied to all years presented. (a) Basis of preparation This general purpose financial report has been prepared in accordance with the Trust Constitution, Australian Accounting Standards and Interpretations issued by the Australian Accounting Standards Board, other mandatory professional reporting requirements and the Corporations Act CFX is a for-profit entity for the purpose of preparing this financial report. This financial report has also been prepared in accordance with the historical cost convention, except for financial assets and liabilities (including derivatives) at fair value through profit and loss and investment properties. The financial report is presented in Australian dollars ($) and was approved by the Board of Directors on 20 August The Directors have the power to amend and reissue the financial report. Although CFX has a net current deficiency (current liabilities exceed current assets) at reporting date, CFX has sufficient current undrawn borrowing facilities (refer to note 11) and operating cash flows to meet this deficit. The financial report is therefore prepared on a going concern basis. i. Accounting for CFX In accordance with Australian Accounting Standards, CFX1 is deemed to control CFX2 from the stapling date. CFX1 is the acquirer and parent entity of CFX2, as CFX2 was created with the intention of stapling to CFX1. The results and equity attributable to CFX2, which is not held directly or indirectly by CFX1, are shown separately in the financial statements as non-controlling interests. ii. Compliance with IFRS The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board. iii. New accounting standards and interpretations The accounting policies adopted are consistent with those of the previous financial year, apart from the adoption of the following new standards, interpretations and amendments which became mandatory in the annual reporting period commencing 1 July 2012: AASB Amendments to Australian Accounting Standards Deferred tax recovery of underlying assets AASB Amendments to Australian Accounting Standards Presentation of items in other comprehensive income. The adoption of these standards and amendments did not result in any impact on the financial statements of CFX. 14

52 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (a) iii. Basis of preparation (continued) New accounting standards and interpretations (continued) In addition to the above, certain accounting standards and interpretations relevant to CFX have been issued or amended but are not yet mandatory and have not been adopted by CFX for the annual reporting period commencing 1 July The impact of the new or amended standards, along with the effective date, is set out below: - AASB 9 Financial Instruments (effective 1 July 2015) - AASB 10 Consolidated Financial Statements (effective 1 July 2013) - AASB 11 Joint Arrangements (effective 1 July 2013) - AASB 12 Disclosure of Interests in Other Entities (effective 1 July 2013) - AASB 13 Fair Value Measurement (effective 1 July 2013) - AASB 127 Separate Financial Statements (effective 1 July 2013) - AASB 128 Investments in Associates and Joint Ventures (effective 1 July 2013) - AASB Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective 1 July 2015) - AASB Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements (effective 1 July 2013) - AASB Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangements Standards (effective 1 July 2013) - AASB Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 July 2013) - AASB Amendments to Australian Accounting Standards Disclosures Offsetting Financial Assets and Financial Liabilities (effective 1 July 2013) - AASB Amendments to Australian Accounting Standards Offsetting Financial Assets and Financial Liabilities (effective 1 July 2014) - AASB Amendments to Australian Accounting Standards arising from Annual Improvements Cycle (effective 1 July 2013) - AASB Amendments to Australian Accounting Standards Mandatory Effective Date of AASB 9 and Transition Disclosures (effective 1 July 2013) - Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) - Amendments to IAS 36: Recoverable Amount Disclosures for Non-Financial Assets. AASB 9 Financial Instruments, AASB Amendments to Australian Accounting Standards arising from AASB 9 (December 2010) (effective 1 July 2015) and AASB Amendments to Australian Accounting Standards Mandatory Effective Date of AASB 9 and Transition Disclosures (effective 1 July 2013) AASB 9 contains new requirements for classification, measurement and de-recognition of financial assets and liabilities, replacing the recognition and measurement requirements in AASB 139 Financial Instruments: Recognition and Measurement. AASB 9 only permits the recognition of fair value gains and losses in other comprehensive income if they relate to equity investments that are not held for trading. As CFX currently classifies its financial assets either at amortised cost or fair value through the profit and loss, no impact relating to financial assets is expected on CFX s financial performance or financial position on adoption of this standard. AASB 9 also changes the accounting for financial liabilities that an entity chooses to account for at fair value through profit or loss, using the fair value option. For such liabilities, changes in fair value related to changes in own credit risk are presented separately in other comprehensive income, and will not be recycled to profit or loss in future periods. All other fair value changes are presented in the income statement. CFX continues to assess the impact of this standard. AASB Amendments to Australian Accounting Standards Mandatory Effective Date of AASB 9 and Transition Disclosures amended the application date of AASB 9 from 1 July 2013 to 1 July 2015 and consequently makes minor amendments to other standards which impact, or are impacted by AASB 9. 15

53 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (a) iii. Basis of preparation (continued) New accounting standards and interpretations (continued) AASB 10 Consolidated Financial Statements, AASB 11 Joint Arrangements, AASB 12 Disclosure of Interests in Other Entities, revised AASB 127 Separate Financial Statements, AASB 128 Investments in Associates and Joint Ventures, AASB Amendments to Australian Accounting Standards arising from the Consolidation and Joint Arrangement Standards (effective 1 July 2013) In August 2011, the AASB issued a suite of five new and amended standards which address the accounting for joint arrangements, consolidated financial statements and associated disclosures. AASB 10 replaces all of the guidance on control and consolidation in AASB 127 Consolidated and Separate Financial Statements, and Interpretation 12 Consolidation Special Purpose Entities. The core principle that a consolidated entity presents a parent and its subsidiaries as if they are a single economic entity remains unchanged, as do the mechanics of consolidation. However, the standard introduces a single definition of control that applies to all entities. It focuses on the need to have both power and exposure to, or rights to, variable returns before control is present. Power is the current ability to direct the activities that significantly influence returns. Returns must vary and can be positive, negative or both. There is also new guidance on participating and protective rights and on agent/principal relationships. CFX has undertaken an assessment of all its investments in entities and has not identified any additional investments that would need to be consolidated upon application of the new standard. AASB 11 introduces a principles-based approach to accounting for joint arrangements. The focus is no longer on the legal structure of joint arrangements, but rather on how rights and obligations are shared by the parties to the joint arrangement. Based on the assessment of rights and obligations, a joint arrangement will be classified as either a joint operation or joint venture. Joint ventures are accounted for using the equity method, and the choice to proportionately consolidate will no longer be permitted. Parties to a joint operation will account for their share of revenues, expenses, assets and liabilities in much the same way as under the previous standard. AASB 11 also provides guidance for parties that participate in joint arrangements but do not share joint control. CFX has undertaken an assessment of all of its joint arrangements in light of the new standards. CFX s investment currently classified as an associate will qualify as a joint venture under AASB 11 and will continue to be accounted for using the equity method. CFX s interests in jointly controlled assets will qualify as joint operations under AASB 11, and CFX will continue to account for its share of revenues, expenses, assets and liabilities. AASB 12 sets out the required disclosures for entities reporting under the two new standards, AASB 10 and AASB 11, and replaces the disclosure requirements currently found in AASB 128. Application of this standard by CFX will not affect any of the amounts recognised in the financial statements, but will impact the type of information disclosed in relation to CFX's investments. AASB 127 is renamed Separate Financial Statements and is now a standard dealing solely with separate financial statements. Application of this standard by CFX will not affect any of the amounts recognised in the financial statements. Amendments to AASB 128 provide clarification that an entity continues to apply the equity method and does not remeasure its retained interest as part of ownership changes where a joint venture becomes an associate, and vice versa. The amendments also introduce a partial disposal concept. CFX has assessed the impact of this standard upon its accounting for investments in entities and no material impact is expected. AASB 13 Fair Value Measurement, AASB Amendments to Australian Accounting Standards arising from AASB 13 (effective 1 July 2013) AASB 13 establishes a single source of guidance under AASB for determining the fair value of assets and liabilities. AASB 13 does not change when CFX is required to use fair value but, rather, provides guidance on how to determine fair value when fair value is required or permitted. AASB 13 also expands the disclosure requirements for all assets or liabilities carried at fair value. CFX has undertaken an impact assessment of this standard which involved comparing the valuation premise in AASB 13 to CFX s current valuation practice for all of its property investments. No material impact is expected on CFX s financial performance or financial position; however, additional disclosure particularly on the valuation of investment properties in the fair value hierarchy will be required in CFX s financial statements upon adoption of this standard. 16

54 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (a) iii. Basis of preparation (continued) New accounting standards and interpretations (continued) AASB Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements (effective 1 July 2013) AASB removes the requirement for CFX to include individual key management personnel disclosures. While this will reduce the disclosures that are currently required in the notes to the financial statements, it will not affect any of the amounts recognised in the financial statements. AASB Amendments to Australian Accounting Standards Disclosures Offsetting Financial Assets and Financial Liabilities (effective 1 July 2013), AASB Amendments to Australian Accounting Standards Offsetting Financial Assets and Financial Liabilities (effective 1 July 2014) AASB and AASB amend AASB 7 Financial Instruments: Disclosures and AASB 132 Financial Instruments: Presentation, respectively, by revising and clarifying the criteria where financial instruments can be offset in the financial statements. These standards are unlikely to affect the accounting for any of CFX s current offsetting arrangements but may require additional disclosures in relation to these arrangements. AASB Amendments to Australian Accounting Standards arising from Annual Improvements Cycle (effective 1 July 2013) AASB comprises a number of minor amendments to AASB 1, 101, 116, 132 and 134. Only the amendment to AASB 134 may apply to CFX. The amendment clarifies the disclosure requirements for segment assets and liabilities in interim reports but will not affect any of the amounts recognised in the financial statements. The following pronouncements have been issued by the International Accounting Standards Board (IASB); however, an equivalent pronouncement has not been issued by the Australian Accounting Standards Board. Therefore these have not been adopted at 30 June 2013 and CFX is currently assessing the impact of these pronouncements. - Investment Entities (Amendments to IFRS 10, IFRS 12 and IAS 27) - Amendments to IAS 36: Recoverable Amount Disclosures for Non-Financial Assets. (b) Parent entity financial information The financial information for the parent entity, CFX1, disclosed in note 22, has been prepared on the same basis as the consolidated financial statements, except for investments in controlled entities and associates which in the parent entity are classified as available-for-sale financial assets (refer to note 1(p)) in the statement of financial position. (c) Principles of consolidation i. Controlled entities The consolidated financial statements comprise the assets and liabilities of all controlled entities at 30 June 2013 and the results of all controlled entities for the financial year. CFX and its controlled entities are collectively referred to in this financial report as CFX. Controlled entities are all entities (including special purpose entities) over which CFX has the power to govern the financial and operating policies, generally accompanying a shareholding of more than one-half of the voting rights. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether CFX controls another entity. Controlled entities are fully consolidated from the date on which control is transferred to CFX and, where applicable, deconsolidated from the date on which control ceases. The acquisition method of accounting is used to account for the acquisition of controlled entities, and the balances and effects of transactions between all controlled entities are eliminated in full. In accordance with AASB 3 Business Combinations, CFX1 is deemed to control CFX2 from the stapling date. CFX1 is considered to be the acquirer, or parent, of CFX2, as CFX2 was created with the intention of stapling to CFX1. The results and equity attributable to CFX2, which is not held directly or indirectly by CFX1, are shown separately in the financial statements as non-controlling interests. The financial statements of controlled entities are prepared for the same reporting period as those of the parent entity, using consistent accounting policies. 17

55 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (c) ii. Principles of consolidation (continued) Associates Certain property investments are held via joint ownership arrangements. These joint ownership arrangements include the ownership of units in a single purpose unlisted trust over which CFX exercises significant influence, but which it does not control ( associate ). CFX has adopted the equity method of accounting for investments in associates. Under this method, the investment in associates in the statement of financial position is carried at cost plus post-acquisition changes in CFX s share of the associate s net assets, less any impairment in value. CFX s share of the associate s net profit after income tax expense is recognised in the consolidated statement of comprehensive income. Distributions received from the associates are recognised in the consolidated financial report as a reduction of the carrying amount of the investment. The reporting dates of associates are the same as those of CFX, and where associates accounting policies differ from CFX, adjustments are made so as to ensure consistency within CFX. iii. Jointly controlled assets CFX recognises its share of revenues, expenses, assets and liabilities in jointly controlled assets under the appropriate headings in the consolidated statement of financial position and statement of comprehensive income (rather than as a separate line item). (d) Segment reporting An operating segment is a group of assets and operations engaged in providing products and services that are subject to risks and returns that are different to those of other segments. CFX also determines and presents operating segments based on the information that is internally provided to CFX s chief operating decision makers and used in making strategic decisions. The chief operating decision makers have been determined as the Fund Manager, Mr Michael Gorman, and the Managing Director Property, Mr Angus McNaughton. (e) Foreign currency translation The functional and presentation currency of CFX and the parent entity is Australian dollars ($). The functional currency is the currency of the primary economic environment in which CFX operates. Transactions in foreign currencies are initially recorded in the functional currency at the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated to Australian dollars at the exchange rates ruling at reporting date. All foreign exchange differences in the consolidated financial report are recognised as a revenue or expense in the statement of comprehensive income in the period in which they arise, with the exception of differences in non-monetary assets measured at fair value. These are taken directly to the foreign currency translation reserve until the disposal of the net investment, at which time they are recognised in the statement of comprehensive income. CFX has US dollar (USD) denominated debt and corresponding highly effective cross-currency swaps which hedge the changes in the fair value of the debt relating to changes in the USD/AUD exchange rate and the benchmark USD interest rate. These swaps qualify for hedge accounting. Refer to note 1(r) for further details. (f) Revenue recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to CFX and the amount can be reliably measured. Fixed rental increases in CFX s leases are recognised on a straight-line basis over the term of the lease. Rent not received at reporting date is reflected in the statement of financial position as a receivable or, if paid in advance, as rent in advance. Contingent rental income is recognised as income in the reporting period in which it is earned. When CFX provides lease incentives to tenants (refer to note 1(o)), the costs of the incentives are recognised over the lease term, on a straight-line basis, as a reduction in rental income. Distribution and dividend revenue is recognised when CFX has the right to receive payment, being the date when they are declared. 18

56 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (f) Revenue recognition (continued) Interest income is recognised on an accruals basis using the effective interest method. A gain or loss on disposal of assets is calculated as the difference between the carrying amount of the asset at the date of disposal and the net proceeds from disposal, and is included in the statement of comprehensive income in the year of disposal. Where revenue is obtained from the sale of properties or assets, it is recognised when the significant risks and rewards have transferred to the buyer. This will normally take place on exchange of unconditional contracts. If revenue is not received at reporting date, it is included in the statement of financial position as a receivable and carried at amortised cost. (g) Expenditure All expenses are recognised in the consolidated statement of comprehensive income on an accruals basis. Property expenditure includes rates, taxes and other outgoings incurred in relation to investment properties, where such expenses are the responsibility of CFX. Borrowing costs incurred on interest bearing liabilities are included in note 1(v). The Responsible Entity s base fees and performance fees are set out in notes 14(d)(i), 14(d)(ii) and 1(u) respectively. (h) i. CFX1 Income tax Under current income tax legislation, CFX1 and its controlled entities (with the exception of CFX2) are not subject to income tax, provided that securityholders are presently entitled to the income as calculated for trust accounting purposes. ii. CFX2 Under current income tax legislation, CFX2 is treated as a company. Income tax expense/benefit for the financial year is the tax payable/receivable on the current year s taxable income based on the applicable income tax rate adjusted by changes in deferred tax assets and liabilities attributable to temporary differences and to unused tax losses. Deferred tax assets and liabilities are recognised for all deductible temporary differences and unused tax assets and unused tax losses carried forward to the extent that it is probable that taxable profit will be available, against which the deductible temporary differences and the carry-forward amount of unused tax credits and unused tax losses can be utilised. The carrying amount of deferred income tax assets is reviewed at each reporting 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. Unrecognised deferred income tax assets are reassessed at each reporting date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered. 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. (i) Goods and Services Tax (GST) Revenues, expenses and assets (with the exception of receivables) are recognised net of the amount of GST, unless the GST is not recoverable from the taxation authority. Where GST is not recoverable, it is recognised as part of the cost of acquisition, an expense, or equity. Receivables and payables are stated inclusive of GST. The net amount of GST recoverable from, or payable to, the taxation authority is included in the statement of financial position as receivable or payable. Cash flows are included in the statement of cash flows on a gross basis. The GST components of cash flows arising from investing or financing activities which are recoverable from, or payable to, the taxation authority are presented as operating cash flows. 19

57 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (j) Cash and cash equivalents Cash and cash equivalents includes cash at bank and short-term money market deposits with maturities of three months or less that are readily converted to cash. (k) Receivables Rental and sundry debtors are initially recognised at fair value and subsequently measured at amortised cost, which, in the case of CFX, is the original invoice amount less a provision for any uncollected debts. Collectability of rental debtors is reviewed on an ongoing basis, and bad debts are written off when identified by reducing the amount of the receivable in the statement of financial position. A specific provision is made for any doubtful debts where objective evidence exists that CFX will not be able to collect the amounts due according to the original terms of the receivables. Indicators that debts may be uncollectable include default in payment (more than 90 days overdue), significant financial difficulties of the debtor and the probability that the debtor will be placed in administration or bankruptcy. The debtor s circumstances relating to the default in payment are considered, and in some cases alternative payment arrangements may apply. If the debtor defaults on the terms of these arrangements, the debt will be recognised as doubtful. The amount of the doubtful debt provision is calculated as the difference between the original debt amount and the present value of the estimated future cash flows. The amount of the provision is recognised in the statement of comprehensive income as a bad and doubtful debts expense. Where a rental debtor for which a provision for doubtful debt had been recognised becomes uncollectable in a subsequent period, it is written off against the doubtful debt provision. Subsequent recoveries of amounts previously written off are credited against the bad and doubtful debts expense in the statement of comprehensive income. Normal commercial terms and conditions apply to receivables. All receivables with maturities greater than 12 months after reporting date are classified as non-current assets. (l) Non-current assets classified as held for sale For a non-current asset to be classified as held for sale, its carrying value must be expected to be recovered principally through a sale transaction rather than through continuing use. It must also be available for immediate use in its present condition, and its sale must be highly probable. Non-current assets which are classified as held for sale are measured at the lower of their carrying amount or fair value less costs to sell, except for investment properties, which are measured at fair value as set out in note 7. Non-current assets classified as held for sale are presented separately in the statement of financial position. (m) Investment properties Investment properties are direct property investments held for long-term rental yields and comprise either freehold or leasehold land, buildings, leasehold improvements and property that is under development for future use as investment property. Investment properties are initially recognised at cost plus associated costs of acquisition, including stamp duty. Subsequent to initial recognition, investment properties are stated at fair value. Fair value is the amount for which the investment property could be exchanged between knowledgeable, willing parties in an arm s length transaction. Gains and losses arising from changes in the fair value of investment properties are recognised in the statement of comprehensive income. Investment properties are independently valued at intervals of not more than one year, and all valuations are performed by registered valuers. 20

58 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (m) Investment properties (continued) At each reporting date, the Responsible Entity of CFX assesses the fair value of each investment property to ensure that its carrying value, as determined by the independent valuation adjusted for subsequent capital expenditure, reflects fair value. In determining fair value, the valuation methods of capitalisation of net income and discounted cash flows have been used. These are based upon assumptions and judgement in relation to future rental income, anticipated maintenance costs, and appropriate discount rates, and make reference to market evidence of transaction prices for similar properties. Refer to note 1(aa)(i) for the key assumptions used by CFX in determining fair value of its investment properties. The reported fair value of investment property reflects market conditions at the end of the reporting period. While this represents the best estimates as at the reporting date, actual sale prices achieved may be higher or lower than the most recent valuation. This is particularly relevant in periods of market illiquidity or uncertainty. Land and buildings (including integral plant and equipment) that comprise investment property are not depreciated. The carrying amount of investment properties may include the costs of acquisition, additions, refurbishments, redevelopments, improvements, lease incentives, assets relating to fixed increases in operating lease rental in future periods and borrowing costs incurred during the construction period of qualifying assets. Capital works in progress, where excluded from investment property valuations, are carried at cost where the Responsible Entity is satisfied that cost is a reasonable approximation of fair value. On completion, the cost of capital works in progress is transferred to the book value of the specific property and subsequently considered as part of the valuation process. Investment properties are derecognised when disposed of. The gain or loss on disposal is calculated as the difference between the carrying amount of the asset at the date of disposal and the net proceeds from disposal. It is included in the statement of comprehensive income in the same reporting period as the year in which disposal occurs. Where investment properties have been revalued, the potential effect of the Capital Gains Tax (CGT) on disposal has not been taken into account in the determination of the revalued carrying amount because CFX does not expect to be ultimately liable for CGT in respect of the assets. i. Property under development Property under development is classified as investment property and stated at fair value. In determining fair value, the following factors, among others, are considered: the stage of completion whether the project/property is standard (typical for the market) or non-standard the level of reliability of cash inflows after completion the development risk specific to the property past experience with similar developments status of development/construction permits, and the provisions of the construction contract. Refer to note 1(l) for investment properties that are classified as held for sale. ii. Government grants Government grants received as reimbursements of capital expenditure under the Green Building Fund are included as adjustments to carrying amounts of investment properties. 21

59 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (n) Leases Leases are classified at their inception as either operating or finance leases based on the economic substance of the agreement so as to reflect the risks and benefits incidental to ownership. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are classified as operating leases. The minimum lease payments of operating leases, which exclude contingent payments, are recognised as an expense in the statement of comprehensive income on a straight-line basis over the period of the lease. Lease income from operating leases where CFX is the lessor is recognised in income on a straight-line basis over the lease term (refer to note 1(f)). (o) Lease incentives Lease incentives may take the form of cash, rent-free periods, contributions to certain lessees costs, relocation costs and lessee or lessor owned fit-outs and improvements. These incentives are capitalised as part of the carrying value of the investment properties and amortised on a straight-line basis over the term of the lease as a reduction of rental income. The carrying amount of the lease incentives is reflected in the fair value of investment properties. (p) Available-for-sale financial assets Available-for-sale financial assets are non-derivatives that are either designated in this financial asset category or not classified in any other financial asset categories. Investments are designated as available-for-sale if they do not have fixed maturities, fixed or determinable payments and management intends to hold them for the medium-to-long term. These investments are carried at fair value. The fair values of investments that have an active market are determined by reference to quoted market prices. For investments with no active market, fair values are determined using valuation techniques which keep judgemental inputs to a minimum, including the fair value of underlying assets, recent arm s-length transactions and reference to market value of similar investments. Gains and losses on available-for-sale investments are recognised in the investment revaluation reserve in the statement of financial position and included in other comprehensive income in the statement of comprehensive income until the investment is sold or impaired. When available-for-sale financial assets are sold or impaired, cumulative gains recognised in the investment revaluation reserve are recognised in the statement of comprehensive income. Cumulative losses are recognised in the investment revaluation reserve to the extent that they reverse previously recorded gains, and when previously recorded gains have been reversed in full, any impairment loss below original cost (when significant and prolonged) is recognised in the statement of comprehensive income. Available-for-sale financial assets are classified as non-current assets unless management intends to dispose of the investments within 12 months of reporting date. 22

60 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (q) Financial assets and liabilities CFX classifies its financial assets in the following categories: financial assets at fair value through profit or loss, loans and receivables, held-to-maturity investments and available-for-sale financial assets. Financial liabilities are carried at amortised cost, except for foreign currency denominated notes which are carried at fair value. Classification of financial assets and liabilities depends on the purpose for which the assets and liabilities were acquired. CFX s classification is set out below: Financial asset/liability Classification Valuation basis Cash Fair value through profit and loss Fair value Refer to note 1(j) Receivables Loans and receivables Amortised cost Refer to note 1(k) Derivatives Fair value through profit and loss Fair value Refer to note 1(r) Investments Available-for-sale financial assets Fair value Refer to note 1(p) Payables Financial liability at amortised cost Amortised cost Refer to note 1(t) Foreign currency denominated notes Interest bearing liabilities (except for foreign currency denominated notes) Fair value through profit and loss Fair value Refer to notes 1(r) and 1(v) Financial liability at amortised cost Amortised cost Refer to note 1(v) i. Derecognition of financial instruments Financial assets and financial liabilities are derecognised when CFX no longer controls the contractual rights that comprise the financial instrument, which is normally the case when the instrument is sold or all the risks and rewards of ownership have transferred to an independent third party or CFX s obligations are extinguished. (r) Derivatives CFX is exposed to changes in interest rates and foreign exchange rates and uses derivatives including interest rate swaps, forward rate agreements and cross-currency swaps to hedge these risks. Derivatives are initially recognised at fair value on the date on which a derivative contract is entered into and are subsequently remeasured to fair value at each reporting date. The gain or loss on remeasurement to fair value is recognised in the statement of comprehensive income. Fair value at reporting date is calculated to be the present value of the estimated future cash flows of these instruments. The two key variables used in the valuation are the forward price curve and discount rates. Each instrument is discounted at the market interest rate appropriate to the instrument. There is a comprehensive hedging program implemented by CFX that is used to manage interest and exchange rate risk. Derivatives are not entered into for speculative purposes, and the hedging policies are approved and monitored by the Capital Management Committee. Derivatives are carried as assets when their fair value is positive and as liabilities when their fair value is negative. 23

61 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (r) Derivatives (continued) i. Interest rate swaps CFX enters into interest rate swap agreements that are used to convert certain variable interest rate borrowings to fixed interest rates or vice versa. The swaps are entered into with the objective of hedging the risk of adverse interest rate fluctuations. While the Responsible Entity has determined that these arrangements are economically effective, they have not satisfied the documentation, designation and effectiveness tests required by Australian Accounting Standards. As a result, they do not qualify for hedge accounting, and gains or losses arising from changes in fair value are recognised immediately in the statement of comprehensive income. ii. Cross-currency swaps Foreign currency denominated notes have been swapped back to Australian dollars via principal and interest cross-currency swaps. These swaps qualify for hedge accounting, as they have met the documentation, designation and effectiveness tests. Having satisfied these tests, these swaps are designated as fair value hedges of the underlying foreign currency exposures. Changes in the fair value of derivatives that qualify as fair value hedges are recorded in the statement of comprehensive income, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk. (s) Impairment of assets All non-financial assets, excluding investment properties (refer to note 1(m)), are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Where an indicator or objective evidence of impairment exists, an estimate of the asset s recoverable amount is made. An impairment loss is recognised in the statement of comprehensive income for the amount by which the asset s carrying amount exceeds its recoverable amount. Recoverable amount is the higher of an asset s fair value less costs to sell and value in use. (t) Payables Payables represent liabilities and accrued expenses owing by CFX at year end which are unpaid. The amounts are unsecured and usually paid within 30 days of recognition. Payables are recognised at amortised cost, and normal commercial terms and conditions apply to payables. A distribution payable to securityholders of CFX is recognised for the amount of any distribution approved on or before reporting date but not distributed at reporting date. All payables with maturities greater than 12 months after the reporting date are classified as noncurrent liabilities. (u) Performance fees The performance fee is calculated in accordance with the CFX1 Constitution. A liability is recognised for the amount of the Responsible Entity s performance fees that have become due and payable, as well as the fair value relating to the carry-over outperformance at reporting date. Fair value has been determined as the present value of future cash flows, based upon assumptions relating to the probability of paying capped performance fees in future periods, and the appropriate discount rate. Refer to note 14(d)(ii) for further details on performance fees and note 1(aa)(ii) for details of significant estimates and assumptions used in the determination of the fair value of the performance fee. (v) Interest bearing liabilities Interest bearing liabilities are recognised initially at fair value, being the consideration received net of transaction costs associated with the borrowing. Subsequent to initial recognition, interest bearing liabilities, other than foreign currency denominated notes, are recognised at amortised cost using the effective interest method. Under the effective interest method, any transaction fees, costs, discounts and premiums directly related to the borrowings are recognised in the statement of comprehensive income over the expected life of the borrowings. 24

62 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (v) Interest bearing liabilities (continued) Foreign currency denominated notes, which qualify for hedge accounting, are carried at fair value. Changes in fair value are recorded in the statement of comprehensive income. The fair value of the liability portion of CFX s convertible notes is determined using a market interest rate for an equivalent non-convertible bond at the date of issue. This amount is recorded as a liability until extinguished on conversion or maturity of the notes. The remainder of the proceeds is allocated to the conversion option and recognised in contributed equity as stapled securities on issue. Interest bearing liabilities are classified as current liabilities where the liability has been drawn under a financing facility which expires within one year. Amounts drawn under financing facilities which expire after one year are classified as non-current. i. Borrowing costs Borrowing costs include interest, amortisation of discounts or premiums relating to borrowings, and amortisation of ancillary costs incurred in connection with the arrangement of borrowings. Borrowing costs are expensed as incurred, unless they relate to a qualifying asset, and recognised in interest bearing liabilities in the statement of financial position. A qualifying asset is an asset which generally takes more than 12 months to be ready for its intended purpose. In these circumstances, borrowing costs incurred for the construction of a qualifying asset are capitalised to the cost of the asset for the period of time that is required to complete and prepare the asset. The capitalisation rate used to determine the amount of borrowing costs capitalised is the weighted average interest rate applicable to CFX s outstanding borrowings during the financial year. (w) Contributed equity Stapled securities on issue are classified as equity and recognised at the value of the consideration received by CFX. Incremental costs directly attributable to the issue of new stapled securities are recognised in equity as a deduction, net of tax, from the proceeds. Where CFX reacquires its own issued stapled securities, the consideration paid, including any directly attributable transaction costs, is deducted from equity. (x) Distributions In accordance with the CFX1 and CFX2 Constitutions, CFX distributes income adjusted for unrealised and other amounts, as determined by the Directors, to securityholders on a semi-annual basis. Refer to note 1(t) for the accounting policy for the distribution payable to securityholders at reporting date. (y) Earnings per security Basic earnings per security is calculated as net profit attributable to CFX1 securityholders for the financial year divided by the weighted average number of CFX1 securities on issue. Alternative basic earnings per security is calculated as net profit attributable to CFX1 securityholders for the financial year before fair value adjustments to investment properties, associates, derivatives, performance fees, non-cash convertible notes interest expense, straight-lining of rent increases and amortisation of project items, adjusted for other items, divided by the weighted average number of CFX1 securities. Diluted earnings per security is calculated by adjusting the basic earnings per CFX1 security to take into account the effect of interest and other borrowing costs associated with dilutive potential ordinary securities and the weighted average number of additional ordinary securities that would have been outstanding assuming the conversion of all dilutive potential ordinary securities, namely convertible notes converted into securities. The alternative diluted earnings per security equals the diluted earnings per security adjusted for fair value adjustments to investment properties, associates, derivatives, performance fees, straight-lining of rent increases, amortisation of project items, and adjustments for other items. (z) Rounding of amounts CFX is of a kind referred to in Class Order 98/100, issued by the Australian Securities and Investments Commission (ASIC). Accordingly, amounts in the financial report have been rounded to the nearest tenth of a million dollars (), unless stated otherwise. 25

63 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (aa) Critical accounting estimates and judgements The preparation of the financial statements requires the Responsible Entity to make judgements, estimates and assumptions that affect the amounts reported in the financial statements. The Responsible Entity bases its judgements and estimates on historical experience and other various factors it believes to be reasonable under the circumstances, but which are inherently uncertain and unpredictable, the result of which form the basis of the carrying values of assets and liabilities. As a result, actual results could differ from those estimates. The areas where a higher degree of judgement or complexity arises, or areas where assumptions and estimates are significant to CFX s financial statements, are detailed below: i. Valuation of investment properties Critical judgements are made by the Responsible Entity in respect of the fair values of investment properties (including properties under development and properties classified as held for sale ). As referred to in note 7, the fair values of these investments are reviewed regularly by the Responsible Entity with reference to external independent property valuations, recent offers and market conditions existing at reporting date. At reporting date, the key assumptions used by CFX in determining fair value for CFX s investment properties are outlined below: 30 Jun Jun 2012 Weighted average discount rate 8.8% 9.0% Weighted average terminal yield 6.8% 6.8% Weighted average capitalisation rate 6.5% 6.6% Expected vacancy period range 3-9 months 2-6 months Rental growth rate range 3.1%-4.4% 3.2%-4.4% All of the above key assumptions have been taken from the last independent valuation report for the assets in the portfolio. CFX continues to obtain independent valuations of properties at least annually (with the latest valuation details set out in note 7). The critical assumptions underlying the Responsible Entity s estimates of fair values relate to the receipt of contractual rents, expected future market rentals, maintenance requirements and discount rates that reflect current market uncertainties. If there is any change in these assumptions or regional or national economic conditions, the fair value of investment properties may differ. ii. Valuation of performance fees The Responsible Entity of CFX is entitled to a performance fee when CFX s total return (distributions and stapled security performance) outperforms the UBS Retail 200 Property Accumulation Index, which removes the effect of CFX on the index. Although the amount of the performance fee to be paid in each six-month period is capped, any outperformance in prior periods may be carried-over and used in the calculation of the performance fee in future periods. The fair value of the carry-over outperformance has been determined as the present value of future cash flows, based upon assumptions relating to the probability of paying capped performance fees in future periods and an appropriate discount rate. Therefore, the actual future performance fee may differ from the fair value of the carry-over outperformance included in these financial statements if any of these assumptions change. The performance fee entitlement is determined on CFX s cumulative performance since the last period in which a performance fee was accrued (being the date of last reset). The maximum fee entitlement for a six-month performance fee period absorbs percentage points of outperformance. 26

64 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Summary of significant accounting policies (continued) (aa) ii. Critical accounting estimates and judgements (continued) Valuation of performance fees (continued) Assuming no gross asset value growth and no change in outperformance, the capped cash flow for the six months to 30 June 2013 would continue over the next 25 performance periods until the current cumulative outperformance is fully deteriorated through the deduction of percentage points each six-month period. For the purposes of measurement, a probability factor has been assigned to each of these cash flows as follows: Periods up to 30 June 2014 a probability factor of 100% Period to 31 December 2014 a probability factor of 75% Period to 30 June 2015 a probability factor of 50% Thereafter a probability factor of 25%. These cash flows have been discounted at the approximate weighted average cost of capital of CFX. iii. Valuation of derivatives and foreign currency denominated notes The fair value of derivatives and foreign currency denominated notes is based on certain assumptions about future events and involves significant estimates. CFX determines the fair value of derivatives and USD denominated debt using a generally accepted pricing model based on a discounted cash flow analysis which uses assumptions supported by observable market rates. Whilst certain derivatives are not quoted in an active market, CFX s valuation technique makes the maximum use of market inputs and relies as little as possible on entity specific inputs. It incorporates all factors that market participants would consider in setting a price and is consistent with accepted economic methodologies for pricing financial instruments. Data inputs that CFX relies upon when valuing derivatives and foreign currency denominated notes relate to interest rates, volatility, counterparty credit risk and foreign exchange rates. Volatility in global financial markets makes it difficult to estimate with certainty the present value of the estimated future cash flows. Therefore the fair value of derivatives and USD denominated debt reported at 30 June 2013 may differ if there is volatility in interest rates or foreign exchange rates in future periods. Periodically, CFX calibrates the valuation technique and tests it for validity using prices from any observable current market transactions in the same instrument (ie without modification) or based on any available observable market data. The determination of fair value of derivatives and foreign currency denominated notes is described further in note 19(i). 2. Segment information CFX operates in one segment, being retail property in Australia. This operating segment, as described in note 1(d), has been determined based on internal reports provided to the Fund Manager, Mr Michael Gorman and the Managing Director Property, Mr Angus McNaughton, being CFX s chief operating decision makers. The Fund Manager assesses the performance of the operating segment based on distributable income and distribution per stapled security. Distributable income is an earnings measure, calculated as net profit under Australian Accounting Standards, adjusted for fair value adjustments, certain unrealised and non-cash items, and other items that are non-recurring or capital in nature. A reconciliation of net profit to distributable income and to distributions paid and payable (used in calculating the distribution per stapled security) is set out on the following page. 27

65 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Segment information (continued) Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Total revenue and other income Net profit for the financial year Adjustments: - straight-lining revenue (1) (2.4) (2.8) - fair value adjustments from investment properties and associate (2) 63.1 (164.3) - other fair value adjustments to derivatives (3) movement in fair value of unrealised performance fees (4) (5.5) non-cash convertible notes interest expense (5) convertible notes buy-back expense (6) amortisation of project items (7) other items (8) Distributable income Distributions paid and payable (excluding capital distribution) (9) Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Distribution per stapled security (excluding capital distribution) (9) (cents) The material adjustments to the net profit to arrive at distributable income for the financial year shown in the financial report are described below. (1) Straight-lining rental revenue, which is required by Australian Accounting Standards, is an unrealised non-cash amount. Therefore it has been excluded to better reflect distributable income from ordinary operations. (2) Net profit includes movements in the fair value of investment properties in accordance with Australian Accounting Standards. Similarly, movements in the value of the underlying investment properties of CFX s investment in an associate are required by Australian Accounting Standards, but do not reflect the cash distributions received from these investments. Fair value movements have been excluded to better reflect distributable income from ordinary operations. (3) Fair value movements in derivatives comprise mark-to-market movements required by Australian Accounting Standards for valuation purposes, including realised and unrealised amounts. These movements have been excluded to better reflect distributable income from ordinary operations. (4) Fair value movements in the carry-over of unrealised performance fees are required by Australian Accounting Standards for valuation purposes, but are unrealised non-cash amounts. These movements have therefore been excluded to better reflect distributable income from ordinary operations. (5) The difference between the actual coupon paid on CFX s convertible notes and the interest expense calculated at the market rate for an equivalent non-convertible bond is required to be recognised by Australian Accounting Standards. As it represents a non-cash amount, it has been excluded to better reflect distributable income from ordinary operations. (6) A portion of the convertible notes buy-back consideration in the comparative year (refer to note 11) has been set off against the carrying amount of the convertible notes liability, as required by Australian Accounting Standards. The difference between this portion and the carrying amount is classified as borrowing costs in the statement of comprehensive income. This amount has been excluded to better reflect distributable income from ordinary operations. (7) Certain payments such as lease incentives, leasing fees and legal fees relating to development projects are capitalised in investment properties. Amortisation of these items is recognised as an expense in accordance with Australian Accounting Standards. This amortisation has been excluded to better reflect distributable income from ordinary operations. (8) These items relate primarily to development projects and have been excluded to better reflect distributable income from ordinary operations. (9) Refer to note 5(a) for details concerning the capital distribution in the comparative year. The information provided to the Fund Manager in respect of total assets and total liabilities is measured in a manner consistent with relevant accounting policies and is presented in the same manner as the statement of financial position. The operating segment derives all its revenue in Australia, primarily from rental income of retail space from a large number of tenants. No single tenant or group under common control contributed to more than 10% of CFX s revenues. 28

66 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Rental and other property income Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Rental and other property income (excluding straight-lining revenue) Rental income resulting from straight-lining adjustments Total rental and other property income Income tax (a) Income tax benefit Current income tax expense - - Deferred income tax benefit/(expense) Income tax benefit (b) Reconciliation between income tax benefit and prima facie tax benefit Net profit before income tax benefit Less: Net profit before income tax attributable to stapled securityholders as equity holders of CFX1 (295.2) - (0.2) - Prima facie income tax benefit at 30% Income tax benefit Stapled securityholders distributions Distributions paid and payable by CFX during the financial year and previous financial year are: 30 Jun Jun 2012 Cents per stapled security Cents per stapled security Distribution paid February Distribution payable August Total distributions excluding capital distribution Capital distribution paid (a) Total distributions paid and payable (a) Capital distribution to satisfy the unit issue price of CFX2 units In the previous financial year, unitholders of CFS Retail Property Trust 1 approved the stapling of CFX1 units to units in CFX2 to form CFS Retail Property Trust Group, and CFX1 unitholders were issued one unit in CFX2 for every CFX1 unit held as at the record date of 5 June CFX1 unitholders were issued 2,835 million units in CFX2. The issue price for CFX2 units was satisfied by a capital distribution to CFX1 unitholders of $5.7 million, representing 0.2 cents per unit. 29

67 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Receivables Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Note Current Rental debtors 19(c) Less: Provision for doubtful debts 19(c) (6.0) (3.9) Distribution receivable from associate Receivables from related entities - managing agent 14(k) alignment fee income 14(i) Accrued income Other Total receivables

68 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Investment properties Non-current Ownership % Original purchase date Latest independent valuation date Additions/ (Disposals) since Independent valuation/ valuation (1) acquisition (1) Book value 30 Jun 13 Book value 30 Jun 12 ACT 15 Bowes Street, Woden (2) 100 Oct-02 May NSW Chatswood Chase Sydney, Chatswood 100 Oct-03 & Aug-07 May DFO Homebush, Homebush 100 Oct-10 Dec Lake Haven Shopping Centre, Wyong 100 Apr-97 & Jul-98 Nov QLD Clifford Gardens Shopping Centre, Toowoomba 100 Oct-02 Jun Grand Plaza Shopping Centre, Browns Plains 50 Oct-02 Jun The Myer Centre Brisbane, Brisbane 50 Nov-98 Nov Post Office Square, Brisbane 100 Dec-05 Nov QueensPlaza, Brisbane 100 Jul-01 May Runaway Bay Shopping Village, Runaway Bay 50 Oct-02 Jun SA Castle Plaza Shopping Centre, Edwardstown 100 Oct-02 Nov Elizabeth Shopping Centre, Elizabeth 100 Jul-98 & Jan-03 Jun TAS Eastlands Shopping Centre, Rosny Park 100 Mar-94 Nov Northgate Shopping Centre, Glenorchy 100 Sep-09 May VIC Altona Gate Shopping Centre, Altona 100 Mar-94 Nov Bayside Shopping Centre, Frankston 100 Mar-94 & Feb-97 Jun Brimbank Shopping Centre, Deer Park 100 Oct-02 Jun Broadmeadows Shopping Centre, Broadmeadows 100 Mar-94 & Dec-04 Jun Chadstone Shopping Centre, Chadstone 50 Mar-94 Dec-12 1, , ,606.4 Corio Shopping Centre, Corio 100 Oct-02 Nov DFO Essendon, Essendon (3) 100 Oct-10 Jun DFO Moorabbin, Moorabbin (4) 100 Oct-10 Jun DFO South Wharf, Melbourne (5) 50 Dec-10 Jun Forest Hill Chase, Forest Hill 100 Jan-05 May Myer Melbourne Department Store, Melbourne (6) Aug-07 Dec Myer Melbourne Emporium Melbourne, Melbourne (6) 50 Aug-07 Jun Northland Shopping Centre, Preston 50 Mar-94 Dec Rosebud Plaza Shopping Centre, Rosebud 100 Jul-98 Nov Roxburgh Park Shopping Centre, Roxburgh Park 100 Dec-97 Jun WA Rockingham Shopping Centre, Rockingham 50 Oct-02, May-05 & Dec-07 Jun Investment properties (excluding capital works in progress) 8, ,275.9 (1) Valuation excludes additions and disposals subsequent to the last independent valuation. Additions/(Disposals) since valuation includes the cost of properties purchased and the carrying amount of properties sold. It also includes capital expenditure and payments for incentives and leasing fees, net of amortisation since valuation. (2) The title to this property is leasehold with 84 years remaining on the ground lease. (3) The title to this property is leasehold with 35 years remaining on the ground lease. (4) The title to this property is leasehold with 21 years remaining on the ground lease. (5) The title to this property is leasehold with 98 years remaining on the ground lease. (6) The titles to these properties are leasehold with 293 years remaining on the ground leases. 31

69 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Investment properties (continued) Book value 30 Jun 13 Book value 30 Jun 12 Investment properties (excluding capital works in progress) brought forward 8, ,275.9 Capital works in progress (7) NSW DFO Homebush, Homebush Lake Haven Shopping Centre, Wyong QLD Grand Plaza Shopping Centre, Browns Plains SA Castle Plaza Shopping Centre, Edwardstown TAS Eastlands Shopping Centre, Rosny Park VIC Chadstone Shopping Centre, Chadstone DFO South Wharf, Melbourne Myer Melbourne Emporium Melbourne, Melbourne Northland Shopping Centre, Preston Total capital works in progress Sundry properties Total investment properties 8, ,327.9 (7) Capital works in progress, where excluded from investment property valuations, are carried at cost where the Responsible Entity is satisfied that cost is a reasonable approximation of fair value. On completion, the cost of capital works in progress is transferred to the book value of the specific property and subsequently considered as part of the valuation process. 32

70 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Investment properties (continued) (a) Details of valuers Property Valuer Qualifications Company Altona Gate Shopping Centre, Vic S O Sullivan AAPI m3property Bayside Shopping Centre, Vic M Schuh AAPI Knight Frank 15 Bowes Street, Woden, ACT S Celica AAPI Jones Lang LaSalle Brimbank Shopping Centre, Vic M Schuh AAPI Knight Frank Broadmeadows Shopping Centre, Vic B Sweeney FAPI Jones Lang LaSalle Castle Plaza Shopping Centre, SA S Fox AAPI Savills Chadstone Shopping Centre, Vic S Thomas AAPI CBRE Chatswood Chase Sydney, NSW J Burdekin AAPI Jones Lang LaSalle Clifford Gardens Shopping Centre, Qld I Hill AAPI Urbis Corio Shopping Centre, Vic S O Sullivan AAPI m3property DFO Essendon, Vic S Fox AAPI Savills DFO Homebush, NSW P Satara AAPI CBRE DFO Moorabbin, Vic S Fox AAPI Savills DFO South Wharf, Vic S Fox AAPI Savills Eastlands Shopping Centre, Tas M Cleary AAPI Urbis Elizabeth Shopping Centre, SA C Gurney AAPI CBRE Forest Hill Chase, Vic B Sweeney FAPI Jones Lang LaSalle Grand Plaza Shopping Centre, Qld L Devine AAPI Savills Lake Haven Shopping Centre, NSW A Johnston AAPI Savills The Myer Centre Brisbane, Qld T Irving AAPI CBRE Myer Melbourne Department Store, Vic M Schuh AAPI Knight Frank Myer Melbourne Emporium Melbourne, Vic B Sweeney FAPI Jones Lang LaSalle Northgate Shopping Centre, Tas S Andrew FAPI Colliers International Northland Shopping Centre, Vic B Sweeney FAPI Jones Lang LaSalle Post Office Square, Qld L Devine AAPI Savills QueensPlaza, Qld P Kwan AAPI Knight Frank Rockingham Shopping Centre, WA D Ivey AAPI Jones Lang LaSalle Rosebud Plaza Shopping Centre, Vic M Cleary AAPI Urbis Roxburgh Park Shopping Centre, Vic M Cleary AAPI Urbis Runaway Bay Shopping Village, Qld T Irving AAPI CBRE 33

71 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Investment properties (continued) (b) Reconciliations i. Investment properties A reconciliation of the carrying amount of investment properties at the beginning and end of the financial year is as follows: Note Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Opening balance 8, ,276.3 Additions - capital expenditure Additions - interest capitalised (1) Disposals - (366.4) Investment property held for sale reclassified as investment property 7(b)(ii) (Devaluations)/Revaluations (61.2) Leasing fees and incentives deferred, net of amortisation expense Movement in straight-lined rental income asset Closing balance 8, ,327.9 (1) Borrowing costs incurred in the construction of qualifying assets have been capitalised at a weighted average rate of 5.56% (Jun 2012: 5.87%). ii. Non-current assets held for sale investment property Opening balance Reclassification to investment properties - (92.2) Closing balance - - (c) Capital commitments Estimated capital expenditure contracted for at reporting date, but not provided for: Not later than one year Later than one year and not later than five years Total capital commitments (1) (1) Capital commitments relating to jointly controlled assets are $57.7 million (Jun 2012: $112.2 million). (d) Operating lease commitments Estimated operating lease expenditure contracted for at reporting date, but not provided for in the financial statements: Not later than one year Later than one year and not later than five years Later than five years Total operating lease commitments (e) Operating lease receivables The investment properties are leased to tenants under operating leases with rentals payable monthly. Future minimum rental revenue receivables under non-cancellable operating leases of investment properties are as follows: Not later than one year Later than one year and not later than five years 1, ,329.1 Later than five years Total operating lease receivables 2, ,

72 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Investments CFX holds an ordinary share and redeemable property preference shares in an unlisted company, CFSP Asset Management Pty Ltd. Consolidated Consolidated 30 Jun Jun 2012 $ $ Unlisted company - ordinary share redeemable property preference shares Total investments Investment in associate Ownership Consolidated Consolidated Jun Jun 2012 % % Non-current Bent Street Trust (1) Total investment in associate (1) CFX owns 50% of the units in the Bent Street Trust, which in turn owns 100% of leasehold of The Entertainment Quarter, Sydney, NSW. CFX therefore indirectly owns 50% of the property. At 30 June 2013, the property was independently valued at $66.3 million (100%) (Jun 2012: $68.8 million) excluding capital works in progress. The valuation was performed by P Satara (AAPI) of CBRE. It has been determined that CFX s 50% interest in the Bent Street Trust does not represent control and CFX s equity accounted investment includes its share of the non-property assets and liabilities of the Bent Street Trust. The remaining term on the ground lease is 33 years. The associate is domiciled in Australia, and its principal activity is investment in retail property. (a) Equity accounting information CFX s share of its associate s financial information is: Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Assets Liabilities Revenue Net profit/(loss) 1.5 (0.7) (b) Share of associate s commitments and contingencies CFX s share of its associate s capital expenditure commitments which have been approved but not provided for at reporting date, operating lease commitments and contingencies are set out below: Lease commitments payable Lease commitments receivable Capital commitments - - Contingent liabilities Payables Rents received in advance Accrued interest expense Accrued capital expenditure Security deposits Other Total payables

73 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Interest bearing liabilities Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Current unsecured Medium-term notes US medium-term notes Short-term notes Convertible notes issued 21 August 2007 (a) Total current interest bearing liabilities Non-current unsecured Cash advance facilities Medium-term notes US medium-term notes Convertible notes issued 21 August 2007 (a) Convertible notes issued 4 July 2011 (b) Total non-current interest bearing liabilities 2, ,588.9 Total interest bearing liabilities 2, ,202.6 (a) Convertible notes issued 21 August 2007 On 21 August 2007, CFX executed a $600 million issuance of senior, unsecured convertible notes, redeemable at the option of the noteholder on 21 August The noteholder has the right to convert notes into stapled securities at the conversion price of $ at any time prior to 12 August On 21 August 2012, notes with a face value of $198.5 million were redeemed and cancelled, following the exercise of put options by noteholders. CFX drew upon its cash advance facilities to fund this redemption. After accounting for redemptions and buy-backs in earlier years, the face value of remaining notes on issue, for which the put option was not exercised, is $92.3 million. Unless converted to stapled securities at the noteholder s option, they will be redeemed on the final maturity date of 21 August The notes are listed on the Singapore Exchange. A reconciliation of the carrying amounts of the convertible notes issued on 21 August 2007 at the beginning and end of the financial year is set out below: Opening balance Less: Liability component of notes bought back (198.5) (297.1) Change in unamortised issue costs Interest expense at market rate (1) Less: Accumulated coupon paid and payable (1) (2.1) (14.8) Closing balance of convertible notes issued 21 August (1) For the current year, this is the interest for the period ended 21 August 2012, being the noteholder put option date. The difference of $0.8 million (Jun 2012: $6.0 million) between interest expense calculated at the market interest rate at date of issue for an equivalent non-convertible bond and the coupon rate paid is included in borrowing costs expense in the statement of comprehensive income and added to the carrying amount of the convertible notes liability in the statement of financial position. 36

74 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Interest bearing liabilities (continued) (b) Convertible notes issued 4 July 2011 On 4 July 2011, CFX completed a $300 million issuance of senior, unsecured convertible notes, with a fixed coupon rate of 5.75% and a final maturity date of 4 July The noteholder has the right to convert notes into stapled securities at the conversion price of $2.40 at any time prior to 23 June The notes, which are listed on the Singapore Exchange, are redeemable at the option of the noteholder on 4 July A reconciliation of the carrying amounts of the convertible notes issued on 4 July 2011 at the beginning and end of the financial year is set out below: Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Opening balance Liability value of convertible notes issued Change in unamortised issue costs 1.0 (4.2) Interest expense at market rate (1) Less: Accumulated coupon paid and payable (17.2) (17.2) Closing balance of convertible notes issued 4 July (1) The difference of $1.2 million (Jun 2012: $1.0 million) between interest expense calculated at the market rate for an equivalent non-convertible bond and the coupon rate paid is included in borrowing costs expense in the statement of comprehensive income and added to the carrying amount of the convertible notes liability in the statement of financial position. 37

75 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Interest bearing liabilities (continued) (c) Financing facilities CFX has the following facilities available: Expiry Drawn (1) limit Facility 30 Jun Jun 2012 Undrawn line of Facility credit Drawn (1) limit Undrawn line of credit Short-term notes (2) Medium-term notes (MTNs) 2 Sep May Dec May Dec US medium-term notes (US MTNs) 7 Feb Feb Feb Jul Jul Jul Cash advance Facilities 10 Feb Jul 13 (2) Sep Nov Jan 15 (2) Feb Aug Oct Jun Nov Sep Jun Jul 18 (2) Convertible notes 4 Jul 14 (3) Aug 14 (4) Total 2, , , , (1) In accordance with AASB 139 Financial Instruments: Recognition and Measurement, interest bearing liabilities are carried net of deferred borrowing costs of $10.2 million (Jun 2012: $12.6 million) and other adjustments to convertible notes of $1.2 million (Jun 2012: $3.1 million). However, for the purpose of this reconciliation, the actual drawn amounts are used. (2) The short-term notes programs are backed by the cash advance facilities expiring 7 January 2015 and 31 July 2018 (Jun 2012: 31 Jul 2013 and 31 Jul 2018). The undrawn amounts for these facilities are therefore adjusted to reflect this. (3) This is the noteholder put option date. The final maturity date is 4 July (4) This is the final maturity date. These notes had a noteholder put option date of 21 August CFX completed the following key capital management activities during the year: On 12 July 2012, CFX issued $120.2 million of new long-dated debt through a private placement of notes to US debt investors (USPP). On 21 August 2012, following the exercise of put options by noteholders, CFX funded the redemption and cancellation of convertible notes with a face value of $198.5 million. The $125 million five-year forward-start cash advance facility, obtained in May 2012, became available for use on 2 September In December 2012, CFX successfully negotiated a $100 million 5-year forward-start cash advance facility and cancelled a $50 million cash advance facility which was due to expire in February The new facility was available from 19 June

76 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Interest bearing liabilities (continued) (c) Financing facilities (continued) In December 2012, CFX also issued $100 million of medium-term notes (MTNs) with expiry in December In April 2013, the December 2019 MTNs were tapped for a further $50 million. In conjunction with the tap, a $50 million cash advance facility which was due to expire in February 2015 was cancelled. In April 2013, the $150 million cash advance facility due to expire in July 2013 was renegotiated. The cash advance facility is now due to expire in July All facilities are senior unsecured. CFX has maintained its long-term credit rating of A from Standard & Poor s. Refer to note 19 for details of CFX s debt covenants and the fair value of the liabilities. 12. Contributed equity Number of stapled securities 000 CFX1 CFX2 Total Opening balance 1 July ,839,592 3, ,812.4 Value of conversion rights on convertible notes - issue Value of conversion rights on convertible notes - repurchase - (2.1) - (2.1) Capital distribution and issue of stapled securities in CFX2 (b) - (5.7) On-market buy-back and cancellation (c) (10,630) (19.8) - (19.8) Costs for issue of stapled securities - - (0.1) (0.1) Total contributed equity at 30 June ,828,962 3, ,793.8 Opening balance 1 July ,828,962 3, ,793.8 On-market buy-back and cancellation (c) (466) (0.9) - (0.9) Total contributed equity at 30 June ,828,496 3, ,792.9 (a) Rights and restrictions over stapled securities Each stapled security ranks equally with all other securities for the purpose of distributions and on termination of CFX. (b) Placement of stapled securities In the comparative year, the unitholders of CFS Retail Property Trust 1 approved the stapling of CFX1 units to units in CFX2 to form CFS Retail Property Trust Group and on 6 June 2012 CFX1 unitholders were issued one unit in CFX2 for every CFX1 unit held as at the record date of 5 June The issue price for CFX2 units was satisfied by a capital distribution to CFX1 unitholders of $5.7 million, representing 0.2 cents per unit. (c) Stapled securities buy-back On 10 April 2012, CFX commenced an on-market buy-back program of up to $150 million of CFX stapled securities. During the year, CFX bought back and cancelled 0.5 million stapled securities at a total cost of $0.9 million. The buy-back program ceased on 25 March The total number of stapled securities bought back and cancelled was 11.1 million. (d) Distribution reinvestment plan (DRP) The distribution reinvestment plan is available for the period ended 30 June There was no distribution reinvestment plan available for the distribution period ended 31 December

77 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Reserves (a) Reserves attributable to securityholders of CFX1 Note 30 Jun Jun 2012 Undistributed reserves 1, ,061.1 Total reserves 1, ,061.1 Reconciliations of the movements in the reserves at the beginning and end of the year: Undistributed reserves Opening balance 2, ,023.4 Net profit for the financial year Less: Distributions paid and payable 5 (384.6) (371.5) Closing balance of undistributed reserves 1, ,061.1 Undistributed reserves This is used to record any movements in undistributed reserves taking into account the net profit generated and the distributions paid and provided for during the year. (b) Reserves attributable to securityholders of CFX2 Undistributed reserves (0.2) - Total reserves (0.2) - Reconciliations of the movements in the reserve at the beginning and end of the year: Undistributed reserves Opening balance - - Net loss for the financial year (0.2) - Less: Distributions paid and payable - - Closing balance of undistributed reserves (0.2) - Undistributed reserves This is used to record any movements in the undistributed reserves taking into account the net loss/profit generated and the distributions paid and provided for during the year. 40

78 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Related parties (a) Responsible Entity and Manager Commonwealth Managed Investments Limited (CMIL), the Responsible Entity, has appointed Colonial First State Property Retail Pty Ltd (CFSPRPL) as the Manager of the Trust. CMIL is a wholly owned subsidiary of Colonial First State Group Limited (CFSG). CFSG and CFSPRPL are wholly owned subsidiaries of Commonwealth Bank of Australia (the Bank ), the ultimate parent of the Responsible Entity, and are considered to be related parties of CFX. (b) Trustee of CFX s sub-trusts CFS Managed Property Limited, the Trustee of CFX s sub-trusts, is a wholly owned subsidiary of the Bank and is considered to be a related party of CFX. CFS Managed Property Limited has not received a fee for acting as Trustee of the sub-trusts. (c) Details of Key Management Personnel i. Directors The Directors of CMIL, the Responsible Entity of CFS Retail Property Trust 1, are considered to be Key Management Personnel. Chairman Non-executive Director R M Haddock AM (independent) Non-executive Directors J F Kropp (independent) N J Milne OAM (independent) R E Griffiths Executive Director M J Venter ii. Other Key Management Personnel In addition to the Directors noted above, the following persons were Key Management Personnel with the authority for the strategic direction and management of CFX: Name Position Employer Angus McNaughton Managing Director, Property Commonwealth Bank of Australia Michael Gorman Fund Manager Commonwealth Bank of Australia 41

79 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Related parties (continued) (c) iii. Details of Key Management Personnel (continued) Remuneration of Key Management Personnel Compensation is paid to the Responsible Entity in the form of fees and is disclosed in note 14(d). No other amounts are paid by CFX directly or indirectly to the Key Management Personnel for services provided to CFX. The independent Non-executive Directors of the Responsible Entity receive remuneration in their capacity as Directors of the Responsible Entity. Remuneration of independent Non-executive Directors is paid directly by the Responsible Entity or related party. Mr Venter and Mr Griffiths are employed as executives of the Bank, and in that capacity, part of their role is to act as a Director of the Responsible Entity. Other Key Management Personnel are employed and paid by the Bank. Consequently, no compensation as defined in AASB 124 Related Parties is paid by CFX to its Key Management Personnel, other than that paid to the Responsible Entity. (d) Responsible Entity fees i. Base fees CFX1 In accordance with the CFX1 Constitution, CMIL is entitled to receive a base fee of 0.45% per annum of the gross asset value of CFX1 less any derivative assets, calculated and payable half-yearly in arrears. The Responsible Entity s base fee for the financial year ended 30 June 2013 is $38,532,000 (Jun 2012: $38,469,000). As at 30 June 2013, the total amount owed to the Responsible Entity in relation to base fees is $19,210,000 (Jun 2012: $18,784,000). CFX2 In accordance with the Constitution, CMIL is entitled to receive a base fee of 0.45% per annum of the gross asset value of CFX2 less any derivative assets, calculated and payable half-yearly in arrears. CMIL has waived its rights to receive fees for the first five years after the date of stapling. ii. Performance fees The Responsible Entity is entitled to a performance fee if CFX s total return (distributions and stapled security price performance) exceeds the benchmark provided by Standard & Poor s (S&P). The benchmark is the UBS Retail 200 Property Accumulation Index, customised to remove the effect of CFX on the index. The 20-day volume weighted average price (VWAP) is used in both CFX s price and in the customised index. The performance fee entitlement is determined on CFX s cumulative performance since the last period in which a performance fee was accrued (the date of last reset). Maximum fee entitlement for a six-month performance period absorbs 1.167% of outperformance. The performance fee is calculated and payable, if entitled, each half-year at December and June. The performance fee rate is calculated as 5% of the first 1% of outperformance and 15% of outperformance in excess of 1%. This rate is multiplied by CFX1 s gross asset value. The fee is capped at 0.15% per annum of CFX1 s gross asset value up to $3.5 billion and 0.1% per annum of gross asset value above $3.5 billion. Although the amount of the performance fee to be paid each period is capped, the carry-over outperformance may be used to generate performance fee entitlement in future periods. The fair value of the outperformance has been calculated by assigning probabilities to the likelihood of paying capped performance fees in future periods, and discounting these estimated cash flows to the reporting date. The performance fee for the financial year ended 30 June 2013 was $4,813,000 (Jun 2012: $13,651,000). This includes capped performance fees of $10,313,000 (Jun 2012: $10,298,000) and a decrease in the fair value of carry-over outperformance of $5,500,000 (Jun 2012: $3,353,000 increase). As at 30 June 2013, the amount owed to the Responsible Entity in respect of capped performance fees is $5,137,000 (Jun 2012: $5,042,000). CFX has recognised the fair value of carryover outperformance as $29,200,000 (Jun 2012: $34,700,000) of which $4,843,000 (Jun 2012: $4,734,000) is classified as a current liability. 42

80 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Related parties (continued) (d) ii. Responsible Entity fees (continued) Performance fees (continued) Determination of performance fee for the six months to 31 December Performance since date of last reset (1) : 2013 financial year Total return 2012 financial year Total return CFS Retail Property Trust Group (1) (%) Retail Property Accumulation Index (1) (%) 12.8 (2.9) Relative (under)/out performance (percentage points) (12.0) 4.5 Opening carry-over outperformance (percentage points) Current (under)/out performance (percentage points) (12.0) 4.5 Carry-over outperformance (percentage points) Carry-over absorbed to fund maximum performance fee for the half-year (percentage points) (1.2) (1.2) Closing carry-over outperformance (percentage points) Performance fee for the six months to 31 December Determination of performance fee for the six months to 30 June Performance since date of last reset (1) : CFS Retail Property Trust Group (1) (%) Retail Property Accumulation Index (1) (%) Relative underperformance (percentage points) (2.5) (9.7) Opening carry-over outperformance (percentage points) Current underperformance (percentage points) (2.5) (9.7) Carry-over outperformance (percentage points) Carry-over absorbed to fund maximum performance fee for the half-year (percentage points) (1.2) (1.2) Closing carry-over outperformance (percentage points) Performance fee for the six months to 30 June Total capped performance fees for the year (2) Movement in fair value of carry-over outperformance (3) (5.5) 3.4 Total performance fee recognised in the statement of comprehensive income (3) (1) Calculated in accordance with the customised index provided by Standard & Poor s. The 20-day volume weighted average price (VWAP) is used in both the CFX price and in the UBS Retail 200 Property Accumulation Index (which excludes CFX). In accordance with the performance fee methodology, the performance fee is determined on CFX s performance since the last period in which a performance fee was accrued (the date of the last reset). (2) Performance fee is capped at 0.15% of CFX1 s gross asset value per six-month period, based on performance since the date of last reset and up to $3.5 billion and capped at 0.1% of CFX1 s gross asset value above $3.5 billion. (3) Although the amount of the performance fee to be paid each period is capped, the carry-over outperformance may be used to absorb performance fee entitlement in future periods. The fair value of the outperformance has been calculated by assigning probabilities to the likelihood of paying capped performance fees in future periods, and discounting these estimated cash flows to reporting date. 43

81 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Related parties (continued) (e) Investment in unlisted company CFX holds an ordinary share and redeemable property preference shares in an unlisted company, CFSP Asset Management Pty Ltd (CFSPAM), as disclosed in note 8. Other listed and unlisted property trusts, for which CMIL is the Responsible Entity, also hold an investment in CFSPAM. For the financial year ended 30 June 2013, rent and outgoings paid/payable by CFSPAM as tenant of centres to CFX was $16,405,000 (Jun 2012: $18,035,000). Dividends declared by CFSPAM for the financial year were $1,502,000 (Jun 2012: $971,000). The amount of dividends receivable by CFX at 30 June 2013 was nil (Jun 2012: nil). (f) Rental income The Bank occupies 0.5% (Jun 2012: 0.4%) of CFX s lettable area. Rents received during the financial year amounted to $5,696,000 (Jun 2012: $5,245,000). The amount outstanding at reporting date is $34,000 (Jun 2012: $16,000) and amount prepaid is $37,000 (Jun 2012: $33,000). There was no doubtful debt expense recognised from rents due from the Bank (Jun 2012: nil). All leases are based on normal commercial terms and conditions. (g) Bank accounts As at 30 June 2013, CFX has $12,436,000 cash deposited in bank accounts operated by the Bank (Jun 2012: $7,355,000). Interest received during the financial year in relation to these accounts amounted to $806,000 (Jun 2012: $882,000) with $35,000 receivable at reporting date (Jun 2012: $41,000). These accounts are provided on normal commercial terms and conditions. (h) Interest bearing liabilities CFX has borrowing facilities with the Bank. These facilities are provided on normal commercial terms and conditions. Borrowings outstanding at reporting date with the Bank are $325,000,000 (Jun 2012: $125,000,000). Interest paid and payable in respect of the borrowings for the financial year are $11,895,000 (Jun 2012: $11,102,000). No amount was prepaid by CFX to the Bank in respect of these borrowings as at 30 June 2013 (Jun 2012: nil). CFX has entered into an interest rate swap with the Bank to fix interest payable on $100,000,000 of CFX s borrowings as at 30 June 2013 (Jun 2012: $100,000,000). The interest rate payable for this swap is 4.06% (Jun 2012: 4.06%) and maturity is 7 April 2015 (Jun 2012: 7 April 2015). CFX has entered into an interest rate swap with the Bank through which fixed rates are swapped to floating rates for $33,000,000 (Jun 2012: $53,000,000) of CFX s borrowings. The swaps maturity date is 22 December 2014 (Jun 2012: 3 September 2012 to 22 December 2014). Interest of $512,000 (Jun 2012: $1,889,000) was paid during the financial year in relation to this swap. CFX has also entered into a number of forward dated interest rate swaps with the Bank to fix interest payable on $225,000,000 (Jun 2012: $225,000,000) of CFX s future borrowings. The weighted average interest rate payable for these swaps is 5.26% (Jun 2012: 5.26%) and maturity ranges from 22 January 2018 to 2 December 2019 (Jun 2012: 22 January 2018 to 2 December 2019). CFX hedged US$100,000,000 (Jun 2012: US$100,000,000) of its exposure to foreign exchange risk via cross-currency swaps with the Bank. Maturity ranges from 7 February 2017 to 7 February 2019 (Jun 2012: 7 February 2017 to 7 February 2019). All swaps are on normal commercial terms and conditions. (i) Alignment fee income Colonial First State Property Management Pty Ltd (CFSPM), a wholly owned subsidiary of the Bank, derives revenue from its management of retail assets, including those of CFX (refer to note 14(k)). CFX is entitled to an alignment fee, being a share of its assets contribution towards CFSPM s distributable income. Total alignment fee income of CFX for the financial year ended 30 June 2013 was $11,053,000 (Jun 2012: $10,245,000) and the amount receivable at reporting date is $5,526,000 (Jun 2012: $5,049,000). (j) Related party stapled security holdings Directors, employees and associates of CMIL and entities controlled by the Bank may hold investments in CFX. Such investments are purchased on normal commercial terms and are at arm s length. The number of stapled securities held by Directors of CMIL and CFSPRPL (including entities controlled, jointly controlled or significantly influenced by them), the Bank and other funds managed by Bank-related entities are as follows: 44

82 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Related parties (continued) (j) Related party stapled security holdings (continued) Number of fully paid stapled securities 30 Jun 2013 Number of fully paid stapled securities 30 Jun 2012 Commonwealth Bank of Australia and related entities 390,587, ,083,082 (k) Other related party transactions Identity of related party Nature of relationship Type of transaction Terms and conditions 12 months to 30 Jun 2013 $ months to 30 Jun 2012 $ 000 Colonial First State Property Management Pty Ltd Property, leasing and development manager of CFX Centre management, leasing and development fees paid/payable by CFX to Colonial First State Property Management Pty Ltd Arm s length in accordance with the Explanatory Memorandum dated 30 July ,218 59,352 Colonial First State Property Management Pty Ltd Property Manager of CFX Rent and outgoings paid/payable by Colonial First State Property Management Pty Ltd to CFX as a tenant of offices at Chadstone Shopping Centre Arm s length in accordance with executed leases and independent valuations 1,725 1,691 Colonial First State Property Management Pty Ltd Centre Manager of CFX Rent outgoings paid/payable by Colonial First State Property Management Pty Ltd as tenant of centres to CFX Arm s length in accordance with executed leases and independent valuations 3,411 3,051 Colonial First State Property Management Pty Ltd Property Manager of CFX Centre management expenses paid/payable by CFX to Colonial First State Property Management Pty Ltd Reimbursement of expenses incurred by Colonial First State Property Management Pty Ltd for centre management expenses incurred; the majority of these expenses are recovered in outgoings from tenants 15,855 15,200 45

83 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Related parties (continued) (k) Other related party transactions (continued) As Property Manager, CFSPM retains an amount of CFX s net rental income in a trust account, in order to meet the operating needs of each of CFX s investment properties. The total of these balances at 30 June 2013 was $16,167,000 (Jun 2012: $17,117,000) as disclosed in note 6. (l) Property jointly owned by trusts Direct Property Investment Fund B (DPIF-B), whose Responsible Entity is CMIL, has a 50% interest in Runaway Bay Shopping Village, Rockingham Shopping Centre and Grand Plaza Shopping Centre. DPIF-B has a 50% interest in the units of Bent Street Trust, which holds 100% of the leasehold of The Entertainment Quarter. CFX and DPIF-B, therefore, acquired The Entertainment Quarter jointly on 30 June 2004 via Bent Street Trust. These properties are governed according to joint owner agreements on commercial terms. 15. Notes to the statement of cash flows Reconciliation of net profit for the financial year to net cash provided by operating activities: Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Net profit for the financial year Straight-lining revenue (2.4) (2.8) Decrease in payables (3.4) (11.9) Decrease in receivables and other assets Charge to provision for doubtful debts Interest capitalised (30.0) (24.6) Fair value adjustments to investment properties and associate 63.1 (164.3) Other fair value adjustments to derivatives Amortisation of leasing fees and incentives Non-cash convertible notes interest expense Distribution income from associate reinvested - (0.6) Net cash provided by operating activities (a) Reconciliation of cash Cash and cash equivalents at reporting date comprises cash at bank. (b) Financing arrangements Refer to note 11(c) for details of CFX s financing facilities. CFX has no other lines of credit. 16. Non-cash financing and investing activities Distribution income reinvested in associate

84 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Earnings per security 30 Jun Jun 2012 Basic earnings per security of CFX1 (1) Basic earnings in cents per security of CFX Alternative basic earnings in cents per security of CFX The weighted average number of securities of CFX1 used in the calculation of basic earnings per security ( 000) 2,828,515 2,838,424 Diluted earnings per security of CFX1 (1) Diluted earnings in cents per security of CFX Alternative diluted earnings in cents per security of CFX The weighted average number of securities of CFX1 used in the calculation of diluted earnings per security ( 000) 2,998,517 3,073,056 (1) Refer to note 1(y) for further details regarding the calculation of basic and diluted earnings per security of CFX1. (a) Weighted average number of securities Number of securities Jun 2013 Number of securities Jun 2012 Weighted average number of securities of CFX1 used as the denominator in calculating basic earnings per security 2,828,515 2,838,424 Adjustments for calculation of diluted earnings per security of CFX1: Convertible notes (1) 170, ,632 Weighted average number of securities and potential securities used as the denominator in calculating the diluted earnings per security 2,998,517 3,073,056 (1) The number of securities to be issued upon conversion is calculated based on the assumption that $92.3 million (Jun 2012: $290.8 million) of convertible notes issued on 21 August 2007 will be converted into securities at the price of $ and $300 million (Jun 2012: $300 million) of convertible notes issued on 4 July 2012 will be converted into securities at the price of $2.40. (b) Reconciliation of earnings used in calculating earnings per security of CFX1 The earnings used in the calculations of basic and alternative basic earnings per security of CFX1 are as follows: 30 Jun Jun 2012 Net profit attributable to securityholders of securities of CFX Earnings used in calculating basic earnings per security of CFX Adjusted for: Fair value adjustments to investment properties and associate 63.1 (164.3) Other fair value adjustments to derivatives Movement in performance fee liability (5.5) 3.4 Straight-lining revenue (2.4) (2.8) Non-cash convertible notes interest expense Convertible notes buy-back expense Amortisation of project items Other items Earnings used in calculating alternative basic earnings per security of CFX

85 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Earnings per security (continued) (b) Reconciliation of earnings used in calculating earnings per security of CFX1 (continued) The earnings used in the calculations of diluted and alternative diluted earnings per security are as follows: 30 Jun Jun 2012 Earnings used in calculating basic earnings per security Adjusted for: Borrowing costs attributable to convertible notes Less: Amount capitalised in qualifying assets (14.9) (19.8) Earnings used in calculating diluted earnings per security Adjusted for: Fair value adjustments to investment properties and associate 63.1 (164.3) Other fair value adjustments to derivatives Movement in performance fee liability (5.5) 3.4 Straight-lining revenue (2.4) (2.8) Amortisation of project items Other items Earnings used in calculating alternative diluted earnings per security Auditor s remuneration Amounts received or due and receivable by the auditor of CFX, PricewaterhouseCoopers: Consolidated 30 Jun 2013 $ 000 Consolidated 30 Jun 2012 $ 000 Audit services Statutory audit and review of financial reports Regulatory required audits Other assurance services Total auditor s remuneration Capital and financial risk management CFX s overall risk management program focuses on ensuring compliance with the CFX1 and CFX2 Constitutions. Capital and financial risk management is carried out by the Manager through the Capital Strategy and Risk Management team (CSRM). CSRM identifies, evaluates and hedges financial risks in consultation with the Fund Manager and reports directly to the Capital Management Committee (CMC). The CMC is charged with overseeing the capital and financial risk management function under policies approved by the Manager and Responsible Entity s Board of Directors (Board) and in accordance with the trusts Constitutions and compliance plans. On an annual basis, CFX s capital management strategy is reviewed and adjusted where necessary by CSRM in conjunction with the Fund Manager and presented to the CMC and the Board for approval. This strategy includes the debt and hedging strategy overview for CFX. CFX s objective when managing its capital requirements is to maintain an optimal capital structure to reduce the cost of capital, considering the balance between risks and returns to investors, while ensuring that CFX: complies with capital requirements of the Constitution, regulatory authorities and lenders maintains a strong credit rating, and continues to operate as a going concern. 48

86 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Capital and financial risk management (continued) (a) Debt covenants Throughout the capital management process, CFX considers any likely impact its actions may have on the financial strength ratings determined by independent ratings agencies. CFX aims to retain the financial strength rating of A from Standard & Poor s (S&P). Any change to these ratings may have an impact on CFX s ability to access funding and the cost at which it can be secured. CFX performed a review of debt covenants as at 30 June 2013, and no breaches were identified. As at 30 June 2013, CFX s most restrictive debt covenants are: Covenant Actual 30 Jun 2013 Actual 30 Jun 2012 Loan to value ratio LVR (1) 50% or less 33% 31% Interest cover ratio ICR (2) 1.8 times or greater 3.3 times 3.2 times (1) LVR is calculated for CFX1 as total liabilities divided by total assets. This calculation excludes the liabilities and assets pertaining to CFX2. (2) ICR is calculated as earnings before interest divided by net interest expense for CFX1. For the purposes of this calculation, earnings represents net profit excluding all fair value adjustments, straight-lining revenue, borrowing costs and net interest expense on interest rate swaps. Interest expense is the sum of borrowing costs, net interest expense on interest rate swaps, and capitalised interest, less non-cash convertible notes interest and adjustments for convertible notes buy-back expense. CFX may alter its capital mix by drawing upon existing credit facilities, issuing new securities, offering a distribution reinvestment plan, underwriting the distribution reinvestment plan, divesting assets to repay borrowings, or undertaking security buy-back programs. (b) Financial risk management The financial risks arising from CFX s activities are credit risk, liquidity risk, foreign exchange risk, interest rate risk and other price risk. The Manager uses different risk management methods to measure exposure to these risks including ageing analysis and selection of appropriately rated counterparties to manage credit risk, financial modelling of future rolling cash flow forecasts for liquidity risk, and sensitivity analysis in the case of interest rate and other price risks (refer to note 19(h)). CFX uses derivatives such as interest rate swaps and foreign exchange contracts to hedge interest rate and foreign exchange risks. It is, and has been throughout the financial year under review, CFX s policy that derivatives are used for hedging purposes only and not as speculative or trading instruments. CFX s principal financial instruments, other than derivatives, comprise short-term notes, medium-term notes, US senior fixed notes, convertible notes and cash advance facilities with varying terms. The main purpose of these financial instruments is to raise finance for CFX s operations. (c) Credit risk Credit risk represents the financial loss that would be recognised if counterparties failed to perform as contracted. Credit risk primarily arises from trade and other receivables and derivatives. The maximum exposure to credit risk at 30 June 2013 is the carrying amount of financial assets recognised in the statement of financial position. CFX manages this risk by: investing and transacting derivatives with: o multiple counterparties that have an S&P long-term corporate credit rating of A- or higher or Moody s equivalent A3 rating (where ratings agencies assign different ratings to an entity, the lower rating will be applied to the counterparty), and o counterparties holding an Australian Financial Services Licence (AFSL) and $10 million of tier one capital or which are an Authorised Deposit-taking Institution (ADI) an annual review by the CMC of the approved panel of counterparties with any addition to the panel receiving CMC endorsement regularly reviewing the allocation of counterparty credit limits between counterparties by the CMC 49

87 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Capital and financial risk management (continued) (c) Credit risk (continued) analysing the creditworthiness of individual tenants when providing leases and transacting with high quality tenants predominantly with a stable credit history obtaining security in the form of rent deposits or bank guarantees (where appropriate). This can be called upon in the event of default under the terms of the lease regularly monitoring receivables on an ongoing basis. CFX s ageing analysis of rent debtors is as follows: Consolidated 30 Jun 2013 Rent debtors Consolidated 30 Jun 2013 Provision for doubtful debts Consolidated 30 Jun 2012 Rent debtors Consolidated 30 Jun 2012 Provision for doubtful debts 0-30 days days days days Total Total bad debts written off for the financial year were $0.4 million (Jun 2012: $1.1 million), being 0.06% of rental and other property income (Jun 2012: 0.15%). As rent is payable in advance on the first day of each calendar month, all rent debtors are past due. There are no rent debtors that would have otherwise been impaired if terms had not been renegotiated. As at reporting date, credit risk on rent debtors is considered low, as there is no concentration of material risk from any individual tenant. All other receivables are considered neither past due, nor impaired. (d) Liquidity risk Liquidity risk refers to the risk that CFX will not have sufficient funds to settle a transaction on the due date. CFX manages liquidity risk by: prudent monitoring of cash levels the use of a detailed fund model which allows for continuous monitoring of forecast and actual cash flows and matching the maturity profiles of financial assets and liabilities maintaining access to funding through committed credit facilities (refer to note 11(c)) raising funds through the issue of new securities. CFX had access to the following undrawn facilities at reporting date: Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Note Floating rate Expiring within one year Expiring beyond one year Total undrawn facilities 11(c) A key component of liquidity risk is refinancing risk, which arises when CFX is required to refinance existing debt positions or undertake new debt. A change in CFX s credit rating or unfavourable credit market conditions, including increased interest rate and credit margins, may impact the availability and acceptable pricing of required finance for CFX s operations. Refinancing risk is managed by CFX by diversifying the sources of debt, spreading the maturities of borrowings and undertaking interest rate swap arrangements. The impact on CFX s credit rating is considered when analysing potential transactions. 50

88 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Capital and financial risk management (continued) (d) Liquidity risk (continued) For details of the Manager s active management of CFX s liquidity risk over the financial year, refer to note 11(c). CFX has successfully managed its exposure to all facilities that are due to expire in the short-to-medium term. CFX classifies its short-term notes as a current liability. The short-term notes programs are backed by the cash advance facilities expiring 7 January 2015 and 31 July Therefore, CFX is able to draw upon these facilities in the event that short-term notes cannot be reissued. Although CFX (and the parent entity) has a net current deficit (current liabilities exceed current assets) at reporting date, CFX has sufficient non-current undrawn cash advance facilities (refer to note 11) and operating cash flows to meet this deficit. The financial report is therefore prepared on a going concern basis. As part of CFX s risk monitoring process with regard to debt covenant requirements, quarterly stress testing is carried out by the Fund Manager and CSRM. The basis of this testing is to determine the impact against the base case used in the fund model on CFX s LVR when subjected to certain market shock scenarios, such as a 10%-30% decrease in asset values, or the impact on CFX s ICR as a result of a similar 10%-30% decrease in market rental income levels. The results of the stress testing are used to evaluate and manage the risk profile of CFX with regard to its debt covenant obligations. In each scenario, the tests have not resulted in any breaches of CFX s debt covenant obligations. i. Maturities of financial liabilities The following table shows CFX s financial liabilities and net and gross settled derivative financial liabilities in relevant maturity groupings based on the remaining period at reporting date to the contractual maturity date. Derivatives that are held at fair value as financial assets at balance date are not included as an offset to the financial liabilities in this analysis. The amounts in the table are the contractual undiscounted cash flows including interest payments for the remaining period of the contract. Drawn debt amounts are assumed to be paid at the expiry date of the facility. Future cash flows on floating rate debt and interest rate swaps have been estimated assuming interest rates and, where applicable, inflation rates prevailing at reporting date remain constant for each instrument. Future payments on USD denominated debt and the offsetting receipts from cross-currency swaps are estimated assuming the exchange rate at reporting date remains constant for the remaining periods of the instruments. The convertible notes issued 4 July 2011 are assumed to be redeemed at face value of $300 million on 4 July 2014, rather than being held to final maturity date or converted to stapled securities. Capped performance fees that are recognised in accordance with the performance fee methodology are assumed to be payable within 12 months of reporting date. Future payments of performance fees relating to carry-over outperformance at reporting date are estimated based upon the probabilities assigned to the likelihood of paying capped performance fees in future periods (refer to note 14(d)(ii)). Funding obligations will be met either by drawing upon existing undrawn facilities, issuing new securities, or by establishing new lines of credit as required. Additionally, cash flow will be generated from derivative assets with a carrying amount of $4.2 million (Jun 2012: $9.2 million). The weighted average debt maturity is 3.1 years (Jun 2012: 2.8 years). The weighted average maturity on floating to fixed interest rate swaps is 3.1 years (Jun 2012: 3.3 years). 51

89 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Capital and financial risk management (continued) (d) Liquidity risk (continued) i. Maturities of financial liabilities (continued) 1 year or less 1 to 2 years 2 to 5 years Over 5 years Total contractual cash flows Carrying amount (1) As at 30 June 2013 Non-derivatives Non-interest bearing Payables (excluding accrued interest) Responsible Entity s base fees payable Responsible Entity s performance fees payable Distribution payable Fair value performance fees Variable rate Short-term notes Medium-term notes Cash advance facilities Fixed rate Medium-term notes US medium-term notes Convertible notes Total non-derivatives , ,831.4 Derivatives (2) Net settled (interest rate swaps) Gross settled - inflow (40.5) (11.2) (156.5) (122.2) (330.4) - - outflow Total derivatives As at 30 June 2012 Non-derivatives Non-interest bearing Payables (excluding accrued interest) Responsible Entity s base fees payable Responsible Entity s performance fees payable Distribution payable Fair value performance fees Variable rate Short-term notes Medium-term notes Cash advance facilities Fixed rate Medium-term notes US medium-term notes Convertible notes Total non-derivatives , , ,531.8 Derivatives (2) Net settled (interest rate swaps) Gross settled - inflow (10.5) (40.0) (164.4) (32.7) (247.6) - - outflow Total derivatives (1) The carrying amount of borrowings includes accrued interest. (2) This analysis includes cash flows from derivatives that are in a mark-to-market liability position on the statement of financial position. Additionally, net cash inflows will be generated from derivatives that are in a mark-to-market asset position on the statement of financial position. 52

90 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Capital and financial risk management (continued) (e) Interest rate risk Interest rate risk is the risk that earnings are adversely affected by changes in market interest rates. CFX s exposure to market risk for changes in interest rates relates primarily to debt obligations. CFX manages its interest cost using a mix of fixed and variable rate debt. To limit exposure to interest rate fluctuations in order to establish certainty over long-term cash flows, CFX has adopted guidelines to keep between 65% and 85% of its borrowings at fixed rates of interest. Positions are monitored regularly and hedging strategies are used to ensure that positions are maintained within the established guidelines unless otherwise endorsed by the CMC. To manage exposure to interest rate risk, CFX enters into interest rate swaps, in which CFX agrees to exchange, at specified intervals, the difference between fixed and variable interest amounts calculated by reference to an agreed-upon notional principal amount. Refer to note 19(h) for an interest rate sensitivity analysis. As at 30 June 2013, 81.3% (Jun 2012: 87.4%) of CFX s exposure to floating interest rates on Australian dollar debt has been hedged with fixed rate debt and interest rate swap agreements that are used to convert certain variable interest rate borrowings to fixed interest rates or vice versa. While the Responsible Entity has determined that these arrangements are economically effective, they have not satisfied the documentation, designation and effectiveness tests required by accounting standards. As a result, they do not qualify for hedge accounting, and gains or losses arising from changes in fair value are recognised immediately in the statement of comprehensive income. As at 30 June 2013, CFX had the following variable rate borrowings and interest rate swap contracts outstanding: Consolidated Consolidated 30 Jun Jun 2012 Total drawn debt (1) 2, ,237.4 Fixed rate debt (2) (1,022.3) (1,155.8) Interest rate swaps (1,000.0) (800.0) Net exposure to cash flow interest rate risk (1) Equal to drawn debt disclosed in note 11(c), adjusted for the fair value of cross-currency swaps of $3.1 million liability (Jun 2012: $19.1 million liability). (2) Face value of convertible notes and fixed-rate medium-term notes. (f) Foreign exchange risk Foreign exchange risk is the risk that the value and cash flows of a financial commitment, asset or liability will fluctuate due to changes in foreign exchange rates. As CFX holds borrowings denominated in a foreign currency, namely USD, it is therefore exposed to this risk in the absence of effective hedging. This risk is managed through the use of cross-currency swaps which hedge the changes in the fair value of the USD denominated debt relating to changes in foreign currency exchange rates and the benchmark USD interest rate, in accordance with the hedging objectives set out by CFX. The hedge relationship is highly effective, as all key terms of the hedge instruments, being the consolidated notional principal of the cross-currency swaps and the consolidated underlying cash flows, coincide with the hedged item. As a result, no portion of the change in fair value of the cross-currency swap is ineffective. At 30 June 2013, CFX has hedged 100% of the US$279 million senior unsecured fixed-rate notes with cross-currency swaps (Jun 2012: 100%). CFX made a gain of $15.9 million through fair value adjustments to its cross-currency swaps, offset by a corresponding loss on the underlying USD denominated debt (Jun 2012: a gain of $19.6 million on cross-currency swaps was offset by a corresponding loss on the underlying USD denominated debt). 53

91 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Capital and financial risk management (continued) (g) Other price risk CFX s financial instruments include performance fees payable which are determined by reference to the performance of CFX s security price relative to the customised retail property index provided by Standard & Poor s (refer to note 14(d)(ii)). This index is influenced by a range of factors which are outside of the control of CFX. Due to the nature of this risk, financial instruments are not used to manage CFX s exposure. Sensitivity analysis (per note 19(h)) measures the impact of movement in the index on CFX s profit and equity. (h) Summarised sensitivity analysis The following table summarises the impact on CFX s profit and equity of a reasonably possible upwards or downwards movement in each of the risk variables below, assuming that all other variables remain constant. These movements are based on management s best estimate, having regard to a number of factors, including historical levels of changes in interest rates and volatility of the retail property index. Due to unexpected market conditions, actual movements may be greater than anticipated, and therefore these ranges should not be used as a definitive indicator of future movements in the stated risk variables. Interest rate risk represents the effect of a change in interest rates applied to the interest rate risk exposures at reporting date, including the estimated change in the value of financial instruments that are carried at fair value. Cash and floating rate debt at reporting date are multiplied by the reasonably possible change in interest rates to determine the effect on profit for the year. CFX s financial instruments whose carrying values are affected by changes in interest rates are interest rate swaps and performance fees carried at fair value. In calculating the change in value of interest rate swaps, a change in interest rates at reporting date is assumed to result in a parallel shift in the forward yield curve. A change in interest rates of up to 100 basis points (1%) is considered to be reasonably possible in the current economic environment. Other price risk represents the estimated change in the value of performance fees payable resulting from a change in CFX s benchmark retail property index provided by Standard & Poor s. While the index may be volatile from one six-month period to the next, for the purpose of this analysis a 10% change in the index at balance date has been assumed to be reasonably possible. The analysis assumes all other variables at balance date, including CFX s security price, are unchanged. Interest rate risk Other price risk Impact on profit Increase/(Decrease) Impact on equity Increase/(Decrease) Impact on profit Increase/(Decrease) Impact on equity Increase/(Decrease) +100bps -100bps +100bps -100bps +10% - 10% + 10% - 10% 30 Jun 2013 Cash and cash equivalents 0.1 (0.1) Borrowings (4.6) Derivatives (1) 28.2 (29.5) Payables 0.3 (0.4) (3.2) (25.4) (3.2) Jun 2012 Cash and cash equivalents 0.1 (0.1) Borrowings (2.8) Derivatives (1) 30.2 (32.0) Payables 0.4 (0.4) (1.7) (29.7) (1.7) - - (1) The unrealised fair value movement of derivatives does not have any impact on distributable income. 54

92 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Capital and financial risk management (continued) (i) Fair value of financial assets and liabilities CFX has adopted the classification of fair value measurements into the following hierarchy as required by AASB 7: Financial Instruments: Disclosures: Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices) or indirectly (derived from prices) Level 3: inputs for the asset or liability that are not based on observable market data (unobservable prices). CFX s financial assets and liabilities measured and recognised at fair value at reporting date are: Level 1 Level 2 Level 3 Total 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun 30 Jun Assets Derivative assets - interest rate swaps Total assets Liabilities Derivative liabilities - interest rate swaps - cross-currency swaps (30.2) (3.1) (28.3) (19.1) (30.2) (3.1) (28.3) (19.1) US MTNs - - (330.7) (1) (234.5) - - (330.7) (1) (234.5) Fair value of Responsible Entity s performance fee liability (29.2) (34.7) (29.2) (34.7) Total liabilities - - (364.0) (281.9) (29.2) (34.7) (393.2) (316.6) (1) This is the carrying value of the US-denominated MTNs. At reporting date, CFX has $40 million of $A-denominated, fixedrate US MTNs. These MTNs are carried at amortised cost. The level 2 derivatives that CFX has at 30 June 2013 include interest rate swaps and cross-currency swaps. The fair values of these derivatives are calculated as the present value of the estimated future cash flows based on the forward price curve of interest rates and compared to the counterparties valuation for the derivative. The fair values of all derivative contracts have also been confirmed with the counterparties. The fair value of USD denominated debt is calculated as the present value of the estimated future cash flows based on the observable yield curve. Refer to note 19(f) for details of hedge accounting. The level 3 liability that CFX has at 30 June 2013 is the fair value of the Responsible Entity s performance fee liability. The fair value of this liability is the present value of the estimated future cash flows. The cash flows are estimated based upon significant unobservable inputs, such as probabilities assigned to the likelihood of paying capped performance fees in future periods (refer to note 1(u)). The fair value adjustment to the performance fee liability relating to the carry-over outperformance of $5.5 million decrease (Jun 2012: $3.4 million increase) has been recognised in the statement of comprehensive income. The fair value of financial assets and liabilities included in the statement of financial position approximates their carrying value except for interest bearing borrowings. The fair values of interest bearing borrowings have been calculated by discounting the expected future cash flows by market swap rates applicable to the relevant term of the borrowing (for floating rate borrowings), and appropriate margins for borrowings with similar risk profiles. The carrying amounts and fair values of interest bearing borrowings for CFX are: 55

93 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Capital and financial risk management (continued) (i) Fair value of financial assets and liabilities (continued) Carrying amount 30 Jun 2013 Fair value 30 Jun 2013 Carrying amount 30 Jun 2012 Fair value 30 Jun 2012 Medium-term notes 1, , , ,299.6 Convertible notes Cash advance facilities Short-term notes Total interest bearing borrowings 2, , , ,271.0 Refer to note 1(c)(ii) for valuation of investments in associates, note 1(r) for derivatives, note 1(u) and 14(d)(ii) for performance fee liabilities, note 1(k) for receivables, note 1(t) for payables and note 1(v) for interest bearing liabilities. 20. Events occurring after the reporting date On 24 July 2013, the CMIL Board announced it had received a highly conditional, indicative and incomplete proposal from Commonwealth Bank of Australia (the Bank) to internalise the management of CFX and for CFX to acquire the wholesale funds management and integrated retail property management and development business from the Bank. The CMIL Board has established a sub-committee of Independent Directors being Richard Haddock AM, Nancy Milne OAM and James Kropp to consider the proposal. The CMIL Board can give no assurance that the proposal or any other transaction will proceed. It is also noted that the approval of CFX securityholders would be required for the proposal to proceed. In August 2013, CFX renegotiated a $300.0 million cash advance facility, extending expiry from January 2015 to August 2018, and a $100.0 million cash advance facility, extending expiry from November 2014 to August As a consequence, CFX s weighted average duration of debt has significantly increased from 3.1 years to 3.6 years. Since the end of the financial year, the Directors are not aware of any other matter or circumstance not otherwise dealt with in this financial report that has significantly affected or may significantly affect CFX s operations, the results of those operations or CFX s state of affairs in future financial years. 21. Contingencies (a) Contingent assets In January 2011, severe flooding caused extensive damage to parts of south-east Queensland, including Brisbane and Toowoomba. CFX had three assets in the Brisbane CBD that were flood affected: The Myer Centre Brisbane, QueensPlaza and Post Office Square. CFX has lodged claims with its insurers for $4.2 million (Jun 2012: $4.2 million) covering business interruption and for costs incurred to repair damage to the affected properties. At 30 June 2013, CFX has received $2.5 million (Jun 2012: $2.5 million) as a partial payment of the insurance claims. The remaining $1.7 million (Jun 2012: $1.7 million) of the lodged claims continues to be assessed by the insurers and represents a contingent asset as at 30 June (b) Contingent liabilities As at reporting date, CFX has contingent liabilities of $nil (Jun 2012: $3.2 million) relating to potential litigation claims. The contingent liabilities relating to jointly controlled assets are $nil (Jun 2012: $0.5 million). 56

94 NOTES TO THE FINANCIAL STATEMENTS For the year ended 30 June Parent entity financial information (a) Summary information The individual financial statements for the parent entity show the following aggregate amounts: Statement of financial position 30 Jun Jun 2012 Current assets Total assets 8, ,405.1 Current liabilities Total liabilities 2, ,555.8 Equity Contributed equity 3, ,788.2 Undistributed reserves 1, ,704.6 Available-for-sale investment revaluation reserve Total equity 5, ,849.3 Net profit for the financial year Total comprehensive income (b) Commitments and contingent liabilities of the parent entity The parent entity s capital expenditure commitments which have been contracted but not provided for at reporting date, operating lease commitments and contingencies are set out below: Capital commitments Lease commitments payable Lease commitments receivable 1, ,902.6 Contingent liabilities Net tangible asset backing per stapled security Consolidated 30 Jun 2013 Consolidated 30 Jun 2012 Net tangible assets () 5, ,854.9 Net tangible asset backing per stapled security ($) Net tangible asset backing per stapled security is calculated by dividing the total equity attributable to stapled securityholders of CFX by the number of stapled securities on issue. The number of stapled securities used in the calculation can be found at note

95 DIRECTORS DECLARATION In accordance with a resolution of the Directors of Commonwealth Managed Investments Limited, the Responsible Entity for CFS Retail Property Trust 1, we declare that: (a) (b) (c) in the opinion of the Directors, the financial statements and notes set out on pages 10 to 57 are in accordance with the Corporations Act 2001, including: (i) (ii) giving a true and fair view of CFX and its controlled entities financial position as at 30 June 2013 and of the performance for the financial year ended on that date, and complying with Australian Accounting Standards, the Corporations Regulations 2001 and the Trust Constitution, and in the opinion of the Directors, there are reasonable grounds to believe that CFX and its controlled entities will be able to pay their debts as and when they become due and payable, and the Directors have been given the Declarations required to be made to the Directors in accordance with section 295A of the Corporations Act 2001 for the financial year ended 30 June Note 1(a) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the International Accounting Standards Board. Signed in accordance with the resolution of the Directors of Commonwealth Managed Investments Limited. R M Haddock AM Director Sydney 20 August

96 Independent auditor s report to the securityholders of CFS Retail Property Trust 1 Report on the financial report We have audited the accompanying financial report of CFS Retail Property Trust 1 (the registered scheme), which comprises the consolidated statement of financial position as at 30 June 2013, and the consolidated statement of comprehensive income, consolidated statement of changes in equity and consolidated statement of cash flows for the year ended on that date, a summary of significant accounting policies, other explanatory notes and the directors declaration for the CFS Retail Property Trust Group (the consolidated stapled entity). The consolidated stapled entity comprises the registered scheme and the entities it controlled at the year's end or from time to time during the financial year, including CFS Retail Property Trust 2. Directors responsibility for the financial report The directors of Commonwealth Managed Investments Limited (the responsible entity) are responsible for the preparation of the financial report that gives a true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal control as the directors determine is necessary to enable the preparation of the financial report that is free from material misstatement, whether due to fraud or error. In note 1, the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial statements comply with International Financial Reporting Standards. Auditor s responsibility Our responsibility is to express an opinion on the financial report based on our audit. We conducted our audit in accordance with Australian Auditing Standards. These Auditing Standards require that we comply with relevant ethical requirements relating to audit engagements and plan and perform the audit to obtain reasonable assurance whether the financial report is free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial report. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial report, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial report 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 made by the directors, as well as evaluating the overall presentation of the financial report. Our procedures include reading the other information in the Annual Report to determine whether it contains any material inconsistencies with the financial report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. PricewaterhouseCoopers, ABN Darling Park Tower 2, 201 Sussex Street, GPO BOX 2650, SYDNEY NSW 1171 T: , F: , Liability limited by a scheme approved under Professional Standards Legislation.

97 Independence In conducting our audit, we have complied with the independence requirements of the Corporations Act Auditor s opinion In our opinion: (a) the financial report of CFS Retail Property Trust 1 is in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the consolidated stapled entity s financial position as at 30 June 2013 and of its performance for the year ended on that date; and (ii) complying with Australian Accounting Standards (including the Australian Accounting Interpretations) and the Corporations Regulations 2001; and (b) the financial report and notes also comply with International Financial Reporting Standards as disclosed in note 1. PricewaterhouseCoopers TJO Peel Partner 20 August 2013 Sydney