Qualitas : Aggregated Special Purpose Interim Financial Statements

For personal use only

Qualitas Group

Aggregated special purpose interim financial

statements

For the half-year ended 31 December 2021

Qualitas Group

For personal use only

Aggregated special purpose interim financial statements

For the half-year ended 31 December 2021

Contents	Page
Directors report	2
Aggregated interim statement of comprehensive income	5
Aggregated interim statement of financial position	6
Aggregated interim statement of changes in equity	7
Aggregated interim statement of cash flows	9
Notes to the aggregated interim financial statements	10
Management declaration	30
Independent auditor's review report	31

The aggregated interim financial statements cover the aggregated group of Qualitas Limited, Qualitas Property Partners Pty Ltd and Qualitas Investments Unit Trust and their controlled entities (together referred to as the "Group" or "aggregated Group").

The Group's registered office is:

Level 38, 120 Collins Street

Melbourne, VIC 3000

The Group's principal place of business is:

Level 38, 120 Collins Street

Melbourne, VIC 3000

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For personal use only

Qualitas Group

Directors' report

For the half-year ended 31 December 2021

Directors' report

The directors of the aggregated Group present their report together with the aggregated special purpose interim financial statements of the aggregated Group for the half-year ended 31 December 2021 and the auditor's review report thereon.

Directors

The following persons were Directors of the aggregated Group during the half year and up to the date of this report unless otherwise stated:

Andrew Fairley AM	Appointed 4 November 20211
Andrew Schwartz	Appointed 4 November 20211
Mary Ploughman	Appointed 4 November 2021
Michael Schoenfeld	Appointed 4 November 20211
Jo-Anne Stephenson	Appointed 4 November 2021
Brian Delaney	Appointed 4 November 20211

Company Secretary

The Company Secretary of the Group is:

Daniel Mote

Appointed 4 November 2021

Operating result

The net profit after tax of the aggregated Group for the half year amounted to $4,920,117 (2020: $5,236,632)

Review of operations

A review of the Group's operations during the half year, and the results of those operations, is as follows:

• Total committed funds under management (FUM) of $4.2 billion as at 31 December 2021.
• Total head count increased by four employees for the half year ended 31 December 2021.
• As disclosed in the prospectus of Qualitas Limited dated 29 November 2021, a pre-IPO distribution and dividend was paid of $20 million to previous shareholders of Qualitas Property Partners Pty Ltd and previous unitholders of Qualitas Investments Unit Trust from retained earnings. This $20 million comprised $17.6 million declared and paid on 21 December 2021 and $2.4 million relating to a prior year distribution declared at 30 June 2021. No other dividends were declared for the half-year ended 31 December 2021.

Key financial highlights and operating achievements for the half year included:

• Qualitas Real Estate Opportunity Fund II achieved an additional raise of $72.2 million in August 2021.
• Qualitas Real Estate Income Fund successfully completed an additional raise of $171 million in November 2021. The additional capital has allowed the Group (as Investment Manager) to further grow and diversify the Trust's portfolio. The raise resulted in capital raise costs totaling $5.2 million which have been expensed through the profit & loss.
• On 16 December 2021, Qualitas successfully listed on the Australian Securities Exchange with 134 million new shares on issue at a total raise of $335 million. Listing costs of $16.2 million were incurred with $12.4 million reflected through equity (net of tax effect) and the balance of $3.8 million expensed through the profit and loss statement.

1 Andrew Schwartz was also a director of various companies in the Group during the half year. Andrew Fairley AM, Brian Delaney and Michael Schoenfeld were members of an advisory board of the Group prior to the incorporation of the Company on 4 November 2021. Andrew Fairley AM was a director of Qualitas Securities Pty Ltd and certain other companies in the Group during the half year up until 1 November 2021.

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Qualitas Group Directors' report (continued)

For the half-year ended 31 December 2021

For personal use only

Directors' report (continued)

Summary and outlook

The Group acts as an investment manager with access to diversified investment opportunities across commercial real estate markets, capital structures, fund types and real estate sub-asset classes. The Group will continue to focus on funds growth and performance by taking advantage of real estate private equity and real estate private credit opportunities and its diverse investor base of wholesale and retail investors.

The Group's operations performed well during the half year, in line with the expected performance as contained in the prospectus dated 9 November 2021.

Significant changes in state of affairs

Other than set out below, in the opinion of the Directors, there were no other significant changes in the state of affairs of the Group that occurred during the financial half-year.

Previously the Qualitas business was controlled and operated through a private owned corporate structure consisting of a number of unit trusts and companies. The Group was restructured on 21 December 2021 so that Qualitas Limited is the listed ultimate holding company of the Qualitas historical group and related subsidiary entities comprising the two head operating entities of the Qualitas historical group, Qualitas Property Partners Pty Ltd and Qualitas Investments Unit Trust and their controlled entities.

Qualitas Limited listed on the Australian Securities Exchange ("ASX") on 16 December 2021 on a conditional and deferred basis and commenced normal trading on 21 December 2021. The ASX ticker is QAL.

Principal activities

Qualitas Limited is an Australian alternative real estate investment manager with committed funds under management (FUM) of $4.2 billion as at 31 December 2021 across debt and equity Funds and other mandates. Qualitas Limited specialises in managing funds focused on the real estate private credit and real estate private equity sectors.

Qualitas Limited funds platform consists of 14 active funds, comprising 5 specialist commercial real estate (CRE) credit funds, and 9 specialist real estate private equity funds, which, together with other investor and non-fund mandates (Funds), manage a total $4.2 billion of FUM. Additionally, Qualitas holds interests in its Funds alongside wholesale and retail investors (Fund Investors), totaling $24.4 million (Co-Investments).

Arch Finance is a wholly owned entity of Qualitas. Arch Finance is a non-bank commercial real estate mortgage originator and lender. Arch Finance manages and originates these loans via the Arch Finance Warehouse Trust, which provides first mortgage loans secured against predominantly established income producing or owner-occupied commercial real estate.

Qualitas Limited was incorporated with the Australian Securities and Investments Commission on 4 November 2021, it listed on the Australian Securities Exchange ("ASX") on 16 December 2021 on a conditional and deferred basis and its shares commenced trading on the Australian Securities Exchange (ASX: QAL) on 21 December 2021.

After balance date events

No matter or circumstance has arisen since 31 December 2021 that has significantly affected, or may significantly affect:

1. the operations of the Group in future financial period, or
2. the results of those operations in future financial period, or
3. the state of affairs of the Group in future financial period.

Likely developments in the operations of the Group, and the expected results of those operations in future financial years, have not been included in this report as the inclusion of such information is likely to result in unreasonable prejudice to the Group.

Environmental regulation

The operations of the Group are not subject to any particular or significant environmental regulations under Commonwealth, State or Territory law.

Dividends

As disclosed in the prospectus of Qualitas Limited dated 29 November 2021, a pre-IPO distribution and dividend was paid of $20 million to previous shareholders of Qualitas Property Partners Pty Ltd and previous unitholders of Qualitas Investments Unit Trust from retained earnings. This $20 million comprised $17.6 million declared and paid on 21 December 2021 and $2.4 million relating to a prior year distribution declared at 30 June 2021. No other dividends were declared for the half-year ended 31 December 2021.

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Qualitas group

Directors' report (continued)

For the half-year ended 31 December 2021

Directors' report (continued)
only	Rounding of amounts to the nearest thousand dollars
	The Group is a Group of the kind referred to in ASIC Corporations (Rounding in Financial/Directors' Reports) Instrument 2016/191
	issued by the Australian Securities and Investments Commission (ASIC) relating to the "rounding off" of amounts in the Directors'
	report. Amounts in the Directors' report have been rounded to the nearest thousand dollars in accordance with that ASIC Corporations
	Instrument, unless otherwise indicated.
	This report is made in accordance with a resolution of the Directors of the Group.
For personal use	Andrew Fairley AM
Chairman
Melbourne
25 February 2022

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