Astro Japan Property : Stapled Company Financial Report to 30 June 2016

ASX/Media Release‌‌

24 August 2016

FINANCIAL REPORT OF STAPLED COMPANY, ASTRO JAPAN PROPERTY GROUP LIMITED

Astro Japan Property Group (ASX: AJA) earlier today announced its full year results to 30 June 2016 and released the Appendix 4E (Preliminary Final Report) and the Annual Financial Report covering the operations of the Astro Group as a whole.

In accordance with the Corporations Act 2001 (Cth), the Astro Group prepares two annual financial reports for release to the ASX: one report covers the operations of the Astro Group as a whole (released earlier today); and another smaller report covers only the stapled company, Astro Japan Property Group Limited and its controlled entity.

Please find attached the Financial Report for Astro Japan Property Group Limited for the period ended 30 June 2016 covering the operations of only the stapled company. This Report should be read together with the Annual Financial Report of the Astro Group released earlier today.

ENDS

Investor & Media Enquiries:

Eric Lucas John Pettigrew

Senior Advisor Chief Financial Officer

Phone: +81 3 3238 1671 (Japan) Phone: +61 2 8987 3902

About Astro Japan Property Group (AJA)

Astro Japan Property Group is a listed property group which invests in the Japan real estate market. It currently holds interests in a portfolio comprising 29 retail, office, residential and hotel properties. Asset management services in Japan are generally undertaken by Spring Investment Co., Ltd.

AJA is a stapled entity comprising Astro Japan Property Trust (ARSN 112 799 854) and Astro Japan Property Group Limited (ABN 25 135 381 663). For further information please visit our website: www.astrojapanproperty.com.

(ABN 25 135 381 663)

The consolidated financial statements of AJCo Group comprise Astro Japan Property Group Limited (ABN 25 135 381 663) (AJCo) and its controlled entity.

Through our website, we have ensured that our corporate reporting is timely, complete and available globally at minimum cost to the Astro Group. All press releases, financial reports and other information are available on our website: www.astrojapanproperty.com

Directors' Report 1

Auditor's Independence Declaration 8

Consolidated Statement of Profit or Loss and Other Comprehensive Income 9

Consolidated Statement of Financial Position 10

Consolidated Statement of Cash Flows 11

Consolidated Statement of Changes in Equity 12

Notes to the Financial Statements 13

1. Statement of significant accounting policies 13

2. Revenue 17

3. Expenses 17

4. Income tax expense 17

5. Earnings per stapled security 18

6. Cash and cash equivalents 18

7. Other receivables 18

8. Intangible assets 19

9. Financial assets carried at fair value through the profit or loss (FVTPL) 19

10. Remuneration of auditors 19

11. Contributed equity 20

12. Accumulated losses 20

13. Dividends 20

14. Notes to the consolidated statement of cash flows 21

15. Financial Risk Management 21

16. Fair value measurement of financial instruments 23

17. Director and executive disclosures 24

18. Related parties 24

19. Contingent asset and liabilities 25

20. Segment note 25

21. Lease commitments 25

22. Parent entity financial information 25

23. Events occurring after the end of the reporting period 26

Directors' Declaration 27

Independent Auditor's Report 28

DIRECTORS' REPORT

for the year ended 30 June 2016

The Directors of Astro Japan Property Group Limited (ABN 25 135 381 663) ("AJCo") present their report together with the consolidated financial statements of AJCo and its controlled entity ("AJCo Group" or "Group") for the year ended 30 June 2016.

The Astro Japan Property Group

The Astro Japan Property Group ("Astro Group") comprises Astro Japan Property Trust (ARSN 112 799 854) ("AJT") and AJCo and its controlled entity. The shares in AJCo are stapled to the units in AJT on a 'one for one' basis and together are referred to as 'stapled securities'. AJCo and AJT are separate legal entities under the Corporations Act 2001 (Cth) so are therefore required to separately comply with the reporting and disclosure requirements under the Corporations Act 2001 (Cth), Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board and Urgent Issues Group Interpretations (UIG). This report is in respect of the AJCo Group.

The registered office and principal place of business of AJCo is Suite 4, Level 10, 56 Pitt Street, Sydney NSW 2000.

Principal activities

The principal activities of AJCo remain unchanged from 30 June 2015 and are:

• holding 100% of the issued share capital of Astro Japan Property Management Limited ("Responsible Entity"), the Responsible Entity of

  AJT; and

• holding a 25% economic interest in Spring Investment Co. Ltd ("Spring" or "Japan Asset Manager"), which is the manager of the Astro Group's Japanese property interests.

Financial and operating review

AJCo Group made a profit after income tax of $912,955 for the year ended 30 June 2016 (2015: $669,141).

Change to the AJCo/Spring profit share arrangement

The success of the Astro Group is closely linked to the performance of the asset manager, Spring Investment Co. Ltd., founded, majority- owned and headed by Mr Eric Lucas who has more than 30 years' experience doing business in Japan. For some time the Board has been focused on key-man risk concerning Mr Lucas, who also acts as Senior Advisor to the Astro Group and is its largest individual shareholder, and has been in a constructive dialogue with Mr Lucas as to how best to ameliorate this risk.

The Board is therefore pleased that earlier this year a new CEO, Mr Osamu Ebinuma, was appointed to Spring, with Mr Lucas remaining engaged as Spring's Executive Chairman and Senior Advisor to the Astro Group. The appointment of the new CEO is not only intended to alleviate the key-man risk concerning Mr Lucas, but also to bolster prospects for expansion of the activities of Spring.

After careful consideration, on 23 February 2016 the Board agreed to changes to the terms under which AJCo holds the 25% economic interest in Spring, which entitles it to a share of the profit of Spring.

The changes recognise increased employee remuneration costs in Spring arising from the appointment of the new Spring CEO and an increased allowance for bonuses payable to Spring employees. These changes will, all other things being equal, result in a reduction in the six monthly cash distribution which AJCo receives from Spring under its 25% economic interest.

The effect of these changes if applied to Spring's budgeted profit for 2016 would be a reduction in AJCo's share in the profit of Spring by approximately $245,000. In addition, the changes have impacted the value of AJCo's 25% economic interest in Spring as at 30 June 2016 by reducing the value by $1.55 million.

The Board believes that it is in the best interests of all parties for AJCo to contribute to the increased remuneration costs in Spring as growth in business for Spring will benefit AJCo as a holder of a 25% economic interest in Spring.

Likely developments and expected results of operations

In the year ended 30 June 2016, the primary source of the AJCo Group's revenue was obtained from its deemed parent AJT. As such, the future developments of the AJCo Group are reliant on the future developments of AJT.

Dividends

The Directors have not declared any dividends for the year ended 30 June 2016 (2015: nil).

Significant changes in the state of affairs

In the opinion of the Directors, other than the items already noted in the Directors' Report, there were no changes in the state of affairs of

AJCo that occurred during the period under review.

Environmental regulation

To the best of their knowledge and belief after making due enquiry, the Directors have determined that AJCo has complied with all significant environmental regulations applicable to its operations in the jurisdictions in which it operates.

Page 1 ASTRO JAPAN PROPERTY GROUP LIMITED