annual financial report 2007
Abacus Property Group
At 30 June 2007, the Abacus Property Group (APG) comprised the Abacus Trust (AT), the Abacus Income Trust
(AIT), Abacus Group Holdings Limited (AHL) and Abacus Group Projects Limited (AGPL). A summary of the
corporate structure is illustrated below.
AGHL has been identified as the parent entity for the purpose of producing a consolidated financial report for the
APG. That is, The concise financial report of AGHL services as a summary of the financial performance and position
of APG as a whole. It consolidates the financial reports of AGHL, AT, AIT and AGPL and their controlled entities.
To comply with Australian reporting requirements, the concise financial reports of AT, AIT and AGPL are
also provided.
Abacus Group Holdings Limited
Abacus Trust
Abacus Income Trust
Abacus Group Projects Limited
Contents
01 Abacus Property Group
39 Abacus Trust
61 Abacus Income Trust
85 Abacus Group Projects Limited
101 Corporate Governance
103 ASX additional information
Glossary
Abacus Abacus Funds Management Limited,
the responsible entity of the trusts
AGHL
Abacus Group Holdings Limited
AGPL
Abacus Group Projects Limited
AIT
Abacus Income Trust
APG
Abacus Property Group
AT
Abacus Trust
abacus property group
Directory
Abacus
Abacus Funds Management Limited
Level 34, Australia Square
264-278 George Street
SYDNEY NSW 2000
Tel (02) 9253 8600
Fax (02) 9253 8616
Website www.abacusproperty.com.au
Directors of Abacus and
Abacus Group Holdings Limited
John Thame, Chairman
Frank Wolf, Managing Director
David Bastian* (appointed 14/11/06)
Dennis Bluth
Malcolm Irving
Len Lloyd
William Bartlett (appointed 14/02/07)
Phillip Green (resigned 1/9/06)
*Resigned as Managing Director on 30/09/06
Company secretary
Ellis Varejes
Custodian
Perpetual Trustee Company Limited
Level 12, Angel Place
123 Pitt Street
SYDNEY NSW 2000
Auditor
Ernst & Young
Ernst & Young Centre
680 George Street
SYDNEY NSW 2000
Compliance Plan Auditor
Ernst & Young
Ernst & Young Centre
680 George Street
SYDNEY NSW 2000
Registry
Computershare Investor Services Pty Ltd
Level 3, 60 Carrington Street
SYDNEY NSW 2000
Tel (02) 1800 635 323 Toll free
Fax (02) 8234 5050
Contents
02
Directors’ Report
16
Auditor’s Independence Declaration
17
18
20
Consolidated Income and Distribution
Statements
Consolidated Balance Sheet
Consolidated Statement of Changes
in Equity
21
Consolidated Cash Flow Statement
22 Notes to the Concise Financial
Statements
Directors’ Declaration
Independent Auditor’s Report
36
37
It is recommended that this Annual Financial Report should be read in conjunction with the Annual Financial Reports of Abacus Trust, Abacus
Income Trust and Abacus Group Projects Limited for the year ended 30 June 2007. It is also recommended that the report be considered
together with any public announcements made by the Abacus Property Group in accordance with its continuous disclosure obligations arising
under the Corporations Act 2001.
1
annual financial report / continued
CoRPoRATe sTRuCTuRe
The Group is comprised of AGHL, AT, AIT and AGPL. shares
in AGHL and AGPL and units in AT and AIT have been stapled
together so that none can be dealt with without the others.
An APG security consists of one share in AGHL, one unit in
AT, one share in AGPL and one unit in AIT. A transfer, issue
or reorganisation of a share or unit in any of the component
parts is accompanied by a transfer, issue or reorganisation of a
share or unit in each of the other component parts.
AGHL and AGPL are companies that are incorporated and
domiciled in Australia. AT and AIT are Australian registered
managed investment schemes. Abacus Funds Management
Limited (AFML), the responsible entity of AT and AIT, is
incorporated and domiciled in Australia and is a wholly-owned
subsidiary of AGHL.
oPeRATInG PRoFIT
The Group earned a net profit attributable to members of
$118.8 million for the year ended 30 June 2007 (June 2006:
$101.2 million).
The Group earned a net ‘normalised’ profit attributable to
members (excluding net property, investments, derivative and
employee entitlement fair value revaluations) of $79.8 million
(June 2006: $53.6 million).
directors’ report
The Directors present their report together with the
consolidated financial report of Abacus Group Holdings
Limited (AGHL) and the auditor’s report thereon.
AGHL has been identified as the parent entity of the group
referred to as the Abacus Property Group (APG or the Group).
The consolidated financial reports of AGHL for the year ended
30 June 2007 comprises the consolidated financial reports
of AGHL and its controlled entities, Abacus Trust (AT) and
its controlled entities, Abacus Income Trust (AIT) and its
controlled entities and Abacus Group Projects Limited (AGPL)
and its controlled entities.
DIReCToRs
The Directors of AGHL in office during the financial year and
until the date of this report are as follows. Directors were in
office for this entire period unless otherwise stated.
John Thame
Chairman (non-executive)
Frank Wolf
Managing Director (executive)
William bartlett
David bastian*
non-executive director
(appointed 14/02/07)
non-executive director
(appointed 14/11/06)
Dennis bluth
non-executive director
Phillip Green
non-executive director
(resigned 1/09/06)
Malcolm Irving
non-executive director
Len Lloyd
executive director
* Resigned as Managing Director on 30 september 2006
PRInCIPAL ACTIVITIes
The principal activities of the Group during the course of the
year ended 30 June 2007 include:
• investment in commercial, retail and industrial properties;
• property funds management and investment;
• property finance; and
• participation in property joint ventures and developments.
2
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
DIsTRIbuTIons
Group distributions in respect of the year ended 30 June 2007 were $68.8 million (June 2006: $50.9 million), which is equivalent
to 12.5 cents per stapled security (June 2006: 11.8 cents) paid as follows:
Interim distribution paid 10 november 2006
Interim distribution paid 8 February 2007
Interim distribution paid 10 May 2007
Final distribution paid 9 August 2007
Total
ReVIeW oF oPeRATIons
CenTs
3.00
3.00
3.25
3.25
$’000
15,926
16,013
18,496
18,419
12.50
68,854
GRouP oVeRVIeW
The Group principally operates within Australia. It holds an investment portfolio of commercial, retail and industrial properties,
operates property funds management businesses, provides property finance and participates in property joint ventures and
developments.
oPeRATInG ResuLTs FoR THe PeRIoD
Group revenues, net profit, normalised earnings per security and distributions per security all grew strongly in the year ended
30 June 2007:
Total income *
Pre-tax profit
net profit
earnings per security (cents)
‘normalised’ earnings per security (cents) **
Distributions per security (cents)
30 June 2007
$’000
30 June 2006
$’000
%
CHAnGe
187,983
124,923
118,811
21.48
14.43
12.50
131,848
102,604
101,236
24.22
12.92
11.80
43
22
17
(11)
12
6
* Total revenue plus realised gains on sale of investments and unrealised revaluation gains on properties/investments
** normalised’ earnings is net profit excluding AIFRs fair value adjustments (namely property revaluations, revaluations of derivatives and other
financial instruments and share based payments)
The Group’s financial condition also strengthened during the year:
30 June 2007
$’000
30 June 2006
$’000
%
CHAnGe
Total assets ($million)
Gearing (%)
net assets ($million)
net tangible assets ($million)
nTA per security ($)
securities on issue (million)
Weighted average securities on issue (million)
1,270
29.5
803.2
760.2
1.31
578.6
553.2
1,163
35.6
673.1
632.5
1.22
516.4
418.1
9
(17)
19
20
7
12
32
3
annual financial report / continued
directors’ report
business activities which contributed to the Group’s operating
performance and financial condition for the half year were as
follows:
Property Finance
Total property finance assets at 30 June 2007 were
$120 million (30 June 2006: $243 million).
Property
Total property assets at 30 June 2007 were $834 million
(30 June 2006: $787 million). During the year the Group
acquired four additional properties for approximately
$47.2 million, including a five level retail/commercial building
in butler Road, Hurstville and a commercial building in the
Macquarie business Park, Port Macquarie.
During the year the Group sold properties situated at
Tattersall Road, Kings Park, Howick street, bathurst,
Pitt street, sydney and Miller street, north sydney.
The revaluation of 16 existing properties in the portfolio
totalling $265 million (or 39% of the total investment portfolio)
resulted in a net increase of $33 million in the carrying value of
investment properties.
Rental income increased from $42 million (2006) to $63 million
for the year.
Funds Management
The Funds Management division launched the $135 million
Abacus Hospitality Fund to wholesale investors in December
2006 and to retail investors in March 2007 (comprising the
Tradewinds, Twin Waters and Chateau on the Park hotels).
Additionally, the sale of the Rendezvous Hotel was settled in
December 2006 for $99.9 million.
net gains on the launch of the Abacus Hospitality Fund
and the sale of Rendezvous contributed $21.2 million to the
operating profits. These gains plus fees and other income
from ongoing funds management activities drove a record
operating revenue for the Funds Management division of
$38.2 million (June 2006: $20.2 million).
both the launch of the Abacus Hospitality Fund and the sale
of the Rendezvous Hotel also impacted the Group’s asset
footings and gearing with $135 million of assets and $76.8
million debt coming off the Group’s balance sheet.
The $190 million Abacus Diversified Income Fund II was
launched to retail investors in July 2007. The Fund is an open-
ended property fund investing in a diversified portfolio of
investment properties and other property based assets.
The Abacus storage Fund is fully subscribed and its assets
under management totalled $202 million at 30 June 2007 with
30 sites in Australia and new Zealand.
Gross assets under management (including APG assets) grew
to $2 billion at 30 June 2007 (June 2006: $1.4 billion).
4
AbACus AnnuAL FInAnCIAL RePoRT 2007
Revenue earned from interest and fees totalled $14.2 million
for the year (30 June 2006: $16.4 million).
Joint Ventures and Developments
Investments managed within the Joint Ventures &
Developments division comprise direct and indirect property
investments as at 30 June 2007 totalled $70.1 million (30 June
2006: $90.5 million).
The joint venture investments are with experienced property
investors and developers in new south Wales, Queensland
and Victoria which enables the Group to participate in a range
of property-related opportunities with industry leaders who
have local knowledge and specialist property expertise.
Revenue in the form of equity accounted income and
distributions contributed $3.9 million to the operating profit
(30 June 2006: $4.1 million).
Other
To sustain performance the Group has in place remuneration
arrangements to retain and incentivise staff. During the year
the executive security Loan and executive Performance
Award Plans, which were approved by securityholders at the
2006 annual general meeting, were introduced. The operation
of these plans is discussed in the remuneration report.
The fair value expense of the security based payments made
under the Plans was $2.8 million.
ReVIeW oF FInAnCIAL ConDITIon
During the year ended 30 June 2007, the contributed equity of
the Group increased $75.9 million to $648.4 million compared
to $572.5 million at 30 June 2006.
on 25 october 2006 the Group completed a $60 million
capital raising through the placement of 36.6 million
securities at an issue price of $1.64. securities placed under
the issue were eligible for distributions from 1 January 2007
onwards. As a result of the capital raising and the distribution
reinvestment plan, both total and weighted average securities
on issue increased.
Total equity increased by $130.1 million to $803.2 million at 30
June 2007 compared to $673.1 million at 30 June 2006. net
tangible assets per security increased 7% to $1.31 at 30 June
2007 compared to $1.22 at 30 June 2006.
At 30 June 2007, existing bank loan facilities totalled
approximately $371 million, of which $341 million was drawn.
The Group manages interest rate exposure on debt facilities
through the use of interest rate swap contracts. At 30 June
abacus property group
2007, 71% of total debt facilities were covered by interest rate
swap arrangements at an average interest rate (including bank
margin) of 7.03% and an average term to maturity of
5.02 years.
The Group’s net debt gearing ratio (calculated as total interest
bearing liabilities less cash assets divided by total assets) was
29.5% at 30 June 2007 compared to 35.6% at 30 June 2006.
sIGnIFICAnT CHAnGes In THe sTATe oF AFFAIRs
The following significant changes in the state of affairs of the
Group occurred during the financial year:
• Retained earnings (including the impact of revaluations of
investment properties and derivative financial instruments)
increased $51.7 million to $148.3 million at 30 June 2007
compared to $96.6 million at 30 June 2006;
• Total equity increased by 19% from $673.1 million to
$803.2 million at 30 June 2007 reflecting the additional
capital raised, growth in retained earnings and net positive
revaluations during the year;
sIGnIFICAnT eVenTs AFTeR bALAnCe DATe
on 26 July 2007, the Group completed a capital raising via an
institutional placement for $100 million and issued 52.6 million
stapled securities at $1.90 per stapled security.
In July 2007, the Group exchanged contracts to acquire two
commercial office buildings for $23 million in the Varsity Lakes
business district on the Gold Coast, Queensland.
other than as disclosed in this report, to the knowledge of the
Directors, there has been no matter or circumstance that has
arisen since the end of the financial year that has or may affect
the Group’s operations in future financial years, the results
of those operations or the Group’s state of affairs in future
financial years.
LIKeLY DeVeLoPMenTs AnD eXPeCTeD ResuLTs
The Directors have excluded from this report any other
information on the likely developments in the operations
of the Group and the expected results of those operations
in future financial years which are not of a material nature
and would not, in the Directors’ view, be likely to result in
unreasonable prejudice to the operation of the Group.
ReMuneRATIon RePoRT (AuDITeD)
This Remuneration Report outlines the director and executive
remuneration arrangements of the company and the Group
in accordance with the requirements of the Corporations Act
2001 and its Regulations. It also provides the remuneration
disclosures required by paragraphs Aus 25.4 to Aus 25.7.2
of AAsb 124 Related Party Disclosures, which have been
transferred to the Remuneration Report in accordance with
Corporations Regulation 2M.6.04. For the purposes of this
report Key Management Personnel (KMP) of the group are
defined as those persons having authority and responsibility
for planning, directing and controlling the major activities of
the company and the group, directly or indirectly, including
any director (whether executive or otherwise) of the parent
company, and includes the five executives in the parent and
the Group receiving the highest remuneration.
For the purposes of this report, the term ‘executive’
encompasses the Managing Director, senior executives,
general managers and secretaries of the parent and
the Group.
ReMuneRATIon & noMInATIon CoMMITTee
The Remuneration & nomination Committee of the board
of Directors is responsible for determining and reviewing
remuneration arrangements for the board and executives.
The Remuneration & nomination Committee assesses the
appropriateness of the nature and amount of remuneration
of executives on a periodic basis by reference to relevant
employment market conditions with the overall objective of
ensuring maximum stakeholder benefit from the retention
of a high quality, high performing board and executive team.
ReMuneRATIon PHILosoPHY
The performance of the Group depends upon the quality
of its directors and executives. To prosper, the Group must
attract, motivate and retain highly skilled directors and
executives.
To this end, the Group embodies the following principles in its
remuneration framework:
• provide competitive rewards to attract high calibre
executives;
• link executive rewards to securityholder value;
• have a reasonable portion of executive remuneration at
risk; and
• establish performance hurdles for variable executive
remuneration.
ReMuneRATIon sTRuCTuRe
In accordance with best practice corporate governance,
the structure of non-executive director and executive
remuneration is separate and distinct.
5
annual financial report / continued
directors’ report
non-eXeCuTIVe DIReCToR ReMuneRATIon
eXeCuTIVe ReMuneRATIon
Objective
The board seeks to set aggregate remuneration at a level
that provides the Group with the ability to attract and retain
directors of the highest calibre, while incurring a cost that is
acceptable to securityholders.
Structure
The Constitution and the AsX Listing Rules specify that the
aggregate remuneration of non-executive directors shall be
determined from time to time by a general meeting. The
latest determination was at the Annual General Meeting held
on 14 november 2006 when securityholders approved an
aggregate remuneration of $550,000 per year.
The amount of aggregate remuneration sought to be
approved by securityholders and the fee structure is reviewed
annually. The board considers advice from an external
consultant as well as the fees paid to non-executive directors
of comparable companies when undertaking the annual
review process.
Fees payable to non-executive directors are as follows:
Board/Committee
board
board
Audit Committee
Audit Committee
Credit Committee
Due Diligence Committee
Remuneration Committee
RoLe
Fee
Chairman
$152,500
Member
Chairman
Member
Member
Member
Member
$57,500
$10,000
$5,000
$4,800
$10,000
$5,000
Objective
The Group aims to reward executives with a level and mix
of remuneration commensurate with their position and
responsibilities within the Group so as to:
• reward executives for Group, business unit and individual
performance against targets set by reference to
appropriate benchmarks;
• align the interests of executives with those of
securityholders; and
• ensure total remuneration is competitive by market
standards.
sTRuCTuRe
In determining the level and make-up of executive
remuneration, the Remuneration Committee engages external
consultants as needed to provide independent advice.
The Remuneration Committee has entered into a detailed
contract of employment with the Managing Director. Details
of this contract are provided below.
Remuneration consists of the following key elements:
• fixed remuneration (base salary, superannuation and non-
monetary benefits).
• variable remuneration
- short term incentive (STI); and
- long term incentive (LTI).
The proportion of fixed remuneration and variable
remuneration (potential short term and long term incentives)
for each executive is set out in table 1.
Abacus storage Funds Management
Limited board
Member
$7,500
FIXeD ReMuneRATIon
The payment of additional fees for serving on a committee
recognises the additional time commitment required by
directors who serve on one or more sub-committees.
The non-executive directors do not receive retirement
benefits, nor do they participate in any incentive programs.
The remuneration of non-executive directors for the years
ended 30 June 2007 and 30 June 2006 is detailed in Table 1
of this report.
Objective
Fixed remuneration is reviewed annually by the Remuneration
Committee. The process consists of a review of Group,
business unit and individual performance, relevant
comparative remuneration in the market and internally and,
where appropriate, external advice on policies and practices.
As noted above, the Committee has access to external advice
independent of management.
Structure
executives are given the opportunity to receive their fixed
(primary) remuneration in a variety of forms including cash and
fringe benefits such as motor vehicles. It is intended that the
manner of payment chosen will be optimal for the recipient
without creating undue cost for the Group.
6
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
The fixed remuneration component of executives is detailed
in Table 1.
VARIAbLe ReMuneRATIon – sHoRT TeRM InCenTIVe (sTI)
Objective
The objective of the sTI program is to link the achievement of
the Group’s operational targets with the remuneration received
by the executives charged with meeting those targets.
Structure
Actual sTI payments granted to the Managing Director
depend on the extent to which the specific target for Group
financial performance set at the beginning of the financial year
is met.
At the discretion of the board, executives and senior
managers may receive sTI payments based on reference to
a variety of measures, both financial and non-financial. These
measures primarily include Group profitability targets, returns
to securityholders and certain key performance indicators
such as assets under management.
The board considers that performance linked objectives that
have an operational and financial impact focus are best suited
to the outcomes desired by securityholders. non-financial
measures are also taken into account.
The aggregate of annual sTI payments available for
executives across the Group is subject to the approval of the
Remuneration Committee. Payments made are delivered as a
cash bonus in the following reporting period.
VARIAbLe ReMuneRATIon – LonG TeRM InCenTIVe (LTI)
Objective
The objective of the LTI plans is to reward executives in
a manner that aligns remuneration with the creation of
securityholder wealth. As such, LTI grants are only made
to executives who are able to influence the generation of
securityholder wealth and thus have an impact on the
Group’s performance against the relevant long term
performance hurdle.
The LTI plans in operation are described below:
(a) Executive Performance Award Plan (EPAP)
LTI grants to executives are delivered in the form of security
options under the ePAP. security options are granted to
executives employed on or before the first day of the relevant
financial year. The security options will vest over a period
of 3 years subject to meeting performance hurdles, with no
opportunity to retest. executives are able to exercise the
security options for up to 7 years after vesting before the
options lapse.
Performance hurdle
The Group uses a relative Total securityholder Return (TsR)
as the performance hurdle for the LTI plan. Relative TsR
was selected as the LTI performance hurdle as it ensures an
alignment between comparative securityholder return and
reward for executives.
In assessing whether the performance hurdles for each grant
have been met, the Group compares its TsR growth from the
commencement of each grant and that of the pre-selected
peer group.
The peer group chosen for comparison is the s&P AsX 200
Index Property Trust sector at the date of grant. This peer
group reflects the Group’s competitors for capital transactions
and talent.
The Group’s performance against the hurdle is determined
according to Abacus Property Group’s ranking against the
peer group TsR growth over the performance period.
The security options will vest in accordance with the table
below:
TSR target Percentage of security
options that vest
below the 50th percentile
50th percentile
50th to 75th percentile
75th percentile
nil
50%
Progressive scale
of an additional 2% for
each percentile increase
100%
Where a participant ceases employment prior to the vesting of
their security options, the security options are forfeited unless
cessation of employment is due to redundancy by the Group,
total and permanent disablement or death. In the event of
a change of control, the performance period end date will
be brought forward to the date of the change of control and
awards will vest immediately subject to performance over
this shortened period. The Group prohibits executives from
entering into arrangements to protect the value of unvested
LTI awards.
Tables 2 and 3 provides details of LTI options granted and the
value of options granted during the year. no LTI options were
exercised or lapsed during the year.
(b) Executive Security Loan Plan (ESLP)
executives were offered limited recourse loans to acquire
Group securities on market. The executive entered into a
salary sacrifice arrangement under which base remuneration
7
annual financial report / continued
directors’ report
approximately equal to a notional interest amount on the loan
is foregone by the executive. The interest rate for a financial
year is equivalent to the Group distribution rate for that year.
model calculation (binominal Tree American put option
model) and this amount is treated as an employee expense
with a corresponding increase in reserves.
The loans are repayable on the earlier of the executive ceasing
to be employed by the Group, the sale of the Group securities
purchased under the Plan or the repayment date (30 June
2010). If the loans are not repaid or interest if payable is not
paid, the Group securities may be sold and the funds received
applied to repay the loan and interest on the loan.
The securities acquired under the esLP were purchased on
market and are fully vested.
Loans totalling $20,000,000 were provided under the esLP to
twelve executives in the year ended 30 June 2007.
In addition, in the year ended 30 June 2006 a limited recourse
loan of $2,496,822 was provided (as a pre-conditional key term
of employment) to one executive to acquire Group securities
on market. The executive entered into a salary sacrifice
arrangement under which remuneration approximately equal
to a notional interest amount on the loan is foregone by the
executive. The interest rate for the financial year is 7.5%.
This loan is repayable on the same basis as applies under the
esLP.
The loans are accounted for in accordance with AAsb 2 share
based Payments, as follows:
• The loans are not recorded on the balance sheet, as they
are regarded as options.
• The value of a loan is determined by an option valuation
• A repayment of the loan is treated as an increase to
Contributed equity.
LInK beTWeen ReMuneRATIon PoLICY AnD THe
GRouP’s PeRFoRMAnCe
The graph below shows the performance of the Group (as
measured by the Group’s TsR) and the comparison of the
Group’s TsR to the median of the TsR for the peer group as
detailed above.
APG and S&P/ASX 200 Property Trusts
Accumulation Index Total Return
160%
140%
120%
100%
80%
60%
40%
20%
0%
S&P ASX200
ABP
30/06/2002
30/12/2002
30/06/2003
30/12/2003
30/06/2004
30/12/2004
30/06/2005
30/12/2005
30/06/2006
30/12/2006
30/06/2007
In addition to TsR, the Group’s performance is reflected in the
following table:
Closing share price
Distributions paid and proposed (cents)
earnings per security (cents)
net tangible assets per security
30 June 2003
30 June 2004
30 June 2005
30 June 2006
30 June 2007
$1.22
10.50
13.90
$0.95
$1.17
11.23
12.84
$1.00
$1.36
11.40
12.42
$1.09
$1.57
11.80
12.92
$1.22
$1.98
12.50
14.43
$1.31
8
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
eMPLoYMenT ConTRACTs
Managing Director
The Managing Director, Dr Wolf, is employed under a rolling
contract. The current employment contract commenced on 10
october 2002. under the terms of the present contract:
Dr Wolf receives a base salary which is reviewed annually. He is
entitled to participate in the LTI plans that are made available
and to receive short-term incentive payments.
Dr Wolf may resign from his position and thus terminate this
contract by giving 6 months written notice. on termination
any unvested options will be forfeited and the loan under the
security Loan Plan will be repayable.
The Group may terminate this employment agreement by
providing 12 months written notice or providing payment in
lieu of the notice period (based on the fixed component of
Dr Wolf’s remuneration). on termination on notice by the
Group, any LTI options that have vested or that will vest during
the notice period will be released. LTI options that have not
yet vested will be forfeited.
Other executives
There are no formal service agreements with other executives.
on termination on notice by the Group, any LTI options
that have vested or that will vest during the notice period
will be released. LTI options that have not yet vested will
be forfeited and any loan under the esLP will be repayable.
The Group may terminate an executive’s service at any time
without notice if serious misconduct has occurred. Where
termination with cause occurs the executive is only entitled to
remuneration up to the date of termination. on termination
with cause, any unvested options will immediately be
forfeited.
TAbLe 1: ReMuneRATIon oF KeY MAnAGeMenT PeRsonneL
2007
sHoRT-TeRM
PosT eMPLoYMenT
non-
CAsH MoneTARY
ACCRueD
LeAVe
beneFITs AnnuATIon enTITLeMenT
suPeR-
seCuRITY-
bAseD
PAYMenT
%
PeRFoRMAnCe
ReLATeD
ToTAL
oPTIons
Non-executive directors
J Thame – Chairman
M Irving
D bluth
P Green (1)
W bartlett (2)
D bastian (3)
sALARY &
Fees
160,000
80,000
87,613
16,250
25,274
53,300
Sub-total non-executive directors
422,437
bonus
-
-
-
-
-
-
-
Executive directors
F Wolf – Managing Director
D bastian (4)
L Lloyd – Managing Director,
Property services
894,887 650,000
60,000
-
132,549 125,000
Other key management personnel
R de Aboitiz – Chief Financial officer (5)
s o’Donoghue – Chief Financial officer (6)
305,382 100,000
63,461
-
T Hardwick – Director Funds Management
387,313 150,000
J L’estrange – General Manager Property
319,314 150,000
e Varejes – Chief operating officer
327,500 150,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
- 160,000
-
-
-
-
-
80,000
87,613
16,250
25,274
53,300
- 422,437
-
-
-
-
-
-
-
105,113
- 812,304 2,462,304
90,000
295,026
-
445,026
59%
-
127,451
- 230,628
615,628
58%
10,003
15,289
12,687
30,686
72,500
- 150,524
565,909
-
-
-
-
-
78,750
50,000 600,000
351,047
851,047
351,047
901,047
44%
-
33%
59%
56%
Sub-total executive KMP
Total KMP compensation
Other Group executives
2,490,406 1,325,000
- 463,729
295,026 1,945,550 6,519,711
2,912,843 1,325,000
- 463,729
295,026 1,945,550 6,942,148
P strain
(1) Resigned on 1/09/06 (2) Appointed on 14/02/07 (3) Appointed as non-executive director on 14/11/06 (4) Resigned as Managing Director on 30/09/06
(5) Appointed on 18/09/06 (6) Resigned on 18/09/06
- 183,857 563,857
217,314 150,000
12,686
-
59%
9
annual financial report / continued
directors’ report
TAbLe 1: ReMuneRATIon oF KeY MAnAGeMenT PeRsonneL / ConTInueD
2006
sHoRT-TeRM
Non-executive directors
J Thame – Chairman
M Irving
D bluth
P Green
Sub-total non-executive directors
Executive directors
sALARY &
Fees
162,120
80,000
89,800
65,000
396,920
-
-
-
-
-
D bastian – Managing Director
F Wolf – Deputy Chairman
501,907
275,000
779,167
440,000
L Lloyd – Managing Director, Property services
224,220
120,000
Other key management personnel
s o’Donoghue – Chief Financial officer
T Hardwick – Director Funds Management (1)
J L’estrange – General Manager Property
e Varejes – Chief operating officer (2)
K Kitchen – General Manager Distribution (3)
P strain – General Manager Leasing
& Administration (3)
Sub-total executive KMP
245,000
100,000
59,050
219,861
140,775
187,861
-
150,000
-
100,000
187,861
100,000
2,545,702
1,285,000
PosT
eMPLoYMenT
seCuRITY-
bAseD
PAYMenT
%
PeRFoRMAnCe
ReLATeD
ToTAL
non-
CAsH MoneTARY
beneFITs
bonus
suPeR-
AnnuATIon
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
98,093
70,833
30,780
15,000
2,023
30,139
5,058
12,139
-
-
-
-
162,120
80,000
89,800
65,000
- 396,920
-
875,000
- 1,290,000
-
375,000
- 360,000
5,594
66,667
- 400,000
-
145,833
- 300,000
-
-
-
-
-
31%
34%
32%
28%
8%
38%
-
33%
12,139
- 300,000
33%
276,204
5,594 4,112,500
Total
(1) Appointed on 1/05/06
(2) Appointed on 1/02/06
(3) Ms Kitchen and Mr strain do not meet the definition of Key Management Personnel for the 2007 financial year.
1,285,000
2,942,622
276,204
-
5,594 4,509,420
10
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
TAbLe 2: CoMPensATIon oPTIons: GRAnTeD AnD VesTeD DuRInG THe YeAR
Executive Performance Award Plan
The following options were issued under the executive Performance Award Plan:
30 June 2007
Executive directors
F Wolf
L Lloyd
Other key management personnel
T Hardwick
J L’estrange
e Varejes
Other Group executives
P strain
GRAnTeD
TeRMs & ConDITIons FoR eACH GRAnT
FAIR VALue
PeR oPTIon
AT GRAnT
DATe ($)
GRAnT
DATe
no.
eXeRCIse
PRICe PeR
oPTIon ($)
eXPIRY
DATe
FIRsT
eXCeRCIse
DATe
LAsT
eXCeRCIse
DATe
1,343,284 12/04/07
447,761 12/04/07
447,761 12/04/07
447,761 12/04/07
447,761 12/04/07
0.335
0.335
0.335
0.335
0.335
1.485 11/04/17 30/09/09 11/04/17
1.485 11/04/17 30/09/09 11/04/17
1.485 11/04/17 30/09/09 11/04/17
1.485 11/04/17 30/09/09 11/04/17
1.485 11/04/17 30/09/09 11/04/17
298,507 12/04/07
0.335
1.485 11/04/17 30/09/09 11/04/17
The Plan was approved by securityholders on 14 november 2006 so no options were issued in the year ended 30 June 2006 and
no options have vested.
Executive Security Loan Plan
The following options were issued under the executive security Loan Plan:
GRAnTeD
TeRMs & ConDITIons FoR eACH GRAnT
VesTeD
no.
GRAnT
DATe
FAIR VALue
eXeRCIse
PeR oPTIon
AT GRAnT
PRICe PeR
oPTIon ($) oPTIon ($)
noTe 24
noTe 24
eXPIRY
DATe
FIRsT
eXCeRCIse
DATe
LAsT
eXCeRCIse
DATe
no.
%
2,881,728
31/01/07
785,925
31/01/07
1,309,875
31/01/07
1,309,875
31/01/07
654,938
31/01/07
0.23
0.23
0.23
0.23
0.23
1.91 30/06/10
31/01/07
30/06/10
2,881,725
1.91 30/06/10
31/01/07
30/06/10
785,925
1.91 30/06/10
31/01/07
30/06/10
1,309,875
1.91 30/06/10
31/01/07
30/06/10
1,309,875
1.91 30/06/10
31/01/07
30/06/10
654,938
100
100
100
100
100
30 June 2007
Executive directors
F Wolf
L Lloyd
Other key management
personnel
J L’estrange
e Varejes
R deAboitiz
Other Group Executives
P strain
654,938
31/01/07
0.23
1.91 30/06/10
31/01/07
30/06/10
654,938
100
The Plan was approved by securityholders on 14 november 2006 so no options were issued in the year ended 30 June 2006 and
no options have vested.
11
annual financial report / continued
directors’ report
TAbLe 3: oPTIons GRAnTeD As PART oF ReMuneRATIon:
F Wolf
L Lloyd
T Hardwick
J L’estrange
e Varejes
R deAboitiz
P strain
VALue oF oPTIons
GRAnTeD DuRInG THe YeAR
eXeCuTIVe
PeRFoRMAnCe
AWARD PLAn
450,000
150,000
150,000
150,000
150,000
-
100,000
eXeCuTIVe
seCuRITY
LoAn PLAn
662,304
180,628
-
301,047
301,047
150,524
150,524
VALue oF
oPTIons
eXeRCIseD
DuRInG THe
YeAR
VALue oF
oPTIons
LAPseD
DuRInG THe
YeAR
ToTAL VALue
oF oPTIons
GRAnTeD,
eXeRCIseD
%
ReMuneRATIon
AnD LAPseD ConsIsTInG oF
DuRInG THe
oPTIons FoR
YeAR
THe YeAR
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,112,304
330,628
150,000
451,047
451,047
150,524
250,524
33
37
8
41
39
27
33
There were no alterations to the terms and conditions of options granted as remuneration since their grant date. There were
no forfeitures during the period. The maximum grant, which will be payable assuming that all services and performance criteria
are met, is equal to the number of options granted multiplied by the fair value at the grant date. The minimum grant payable
assuming that service and performance criteria are not met is zero.
no options have been exercised.
12
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
InFoRMATIon on DIReCToRs AnD oFFICeRs
The Directors and Company secretary of Abacus Group Holdings Limited, Abacus Funds Management Limited (the responsible
entity of the Abacus Trust and Abacus Income Trust) and Abacus Group Projects Limited, in office during the financial year and
until the date of this report are as set out below, with qualifications, experience and special responsibilities.
JoHn THAMe AIbF, FCPA
Chairman (non-executive)
Member of Remuneration & nomination Committee
Member of Audit Committee
Mr Thame has over 30 years’ experience in the retail financial services
industry in senior management positions. His 26-year career with
Advance bank included 10 years as Managing Director until the bank’s
merger with st George bank Limited in 1997. Mr Thame is Chairman of
st George bank Limited and st George Life Limited. Mr Thame was a
director of AWb Limited (1999 to 2005). He is also a director of Reckon
Limited and The Village building Co Limited (Group).
FRAnK WoLF PhD, bA Hons
Managing Director
Member of Credit Committee
DAVID bAsTIAn CPA
non-executive director
Member of Credit Committee
Member of Due Diligence Committee
Member of Remuneration & nomination Committee
MALCoLM IRVInG AM, FCPA, sF Fin, bCom, Hon DLitt
non-executive director
Chairman of Audit Committee
Member of Remuneration & nomination Committee
PHILLIP GReen LLb, bCom
non-executive director
Dr Wolf has over 20 years’ experience in the property and financial
services industries, including involvement in retail, commercial,
industrial and hospitality-related assets in Australia, new Zealand
and the united states. Dr Wolf has been instrumental in over $2
billion worth of property related transactions, corporate acquisitions
and divestments and has financed specialist property-based assets
in retirement and hospitality sectors. Dr Wolf is the Chairman of
FsP Group Pty Limited and a director of financial planning groups
Financial services Partners Pty Limited and Kingston Capital Limited.
He is also a director of HGL Limited, a diversified publicly listed
investment company.
Mr bastian has almost 40 years’ experience in the financial services
industry, in particular in the packaging of commercial, retail and
residential property projects and was the Managing Director of the
Group until 30 september 2006. He was Managing Director of the
Canberra building society for 20 years and an executive Director of
Godfrey Pembroke Financial services Pty Limited for 7 years.
Mr bastian is also a director of financial planning groups FsP Group
Pty Limited and Kingston Capital Limited.
Mr Irving has over 40 years’ experience in company management,
including 12 years as Managing Director of CIbC Australia Limited.
Mr Irving is Chairman of Australian Industry Development Corporation
and the Australian River Company Limited. He was a director of
Keycorp Limited (2001 to 2007). He is also a director of o’Connell
street Associates Pty Ltd, Thales Australia Limited and Resimac
Limited.
Mr Green is Managing Director of babcock & brown Limited.
Mr Green has over 25 years’ experience in corporate finance specialising
in taxation and structured domestic and international corporate
acquisitions. Mr Green resigned effective from 1 september 2006.
13
annual financial report / continued
directors’ report
InFoRMATIon on DIReCToRs AnD oFFICeRs /ConTInueD
DennIs bLuTH LLM, LLb, bA, FAPI
non-executive director
Chairman of Credit Committee
Chairman of Due Diligence Committee
Mr bluth holds bachelor of Arts, bachelor of Law and Masters of Law
degrees and has practised as a solicitor for over 25 years, principally
in the area of property law. Mr bluth is a partner of Home Wilkinson
Lowry, solicitors and is a member of a number of Law society and Law
Council Committees.
WILLIAM J bARTLeTT FCA, CPA, FCMA, CA(sA)
non-executive director
Chairman of Remuneration & nomination Committee
Member of Audit Committee
Len LLoYD FAPI, WDA
executive director
Mr bartlett has strong accounting, financial and corporate credentials.
During his 23 year career with ernst & Young, he held the roles of
Chairman of Worldwide Insurance Practice, national Director of
Australian Financial services Practice and Chairman of the Client
service board. Mr bartlett is a director of suncorp-Metway Limited,
Peptech Limited, GWA Limited, Moneyswitch Limited, Reinsurance
Group of America Inc and RGA Reinsurance Company of Australia
Limited. Mr bartlett was a director of Retail Cube Limited (2004 to
2006). He is also a director of the bradman Foundation and Museum.
Mr Lloyd is a licensed real estate agent and a registered real estate
valuer. He has 40 years experience in the development, management
and funding of commercial, retail and residential property. Mr Lloyd
joined the Abacus Group in october 2000 and now holds the
position of Managing Director of Abacus Property services Pty
Limited responsible for property administration and development
opportunities in the Abacus portfolio. In previous positions, Mr Lloyd
held responsibility for the property portfolios of the Advance bank
and st George bank and provided valuation and lending advice while
with the Commonwealth Development bank for 21 years.
eLLIs VAReJes bCom, LLb
Company secretary and Chief operating officer
Mr Varejes has been the Company secretary since 15 september 2006
and he has over 25 years’ experience as a corporate lawyer.
The Directors and officers were in office from the beginning of the financial year until the date of this report unless otherwise stated.
As at the date of this report, the relevant interests of the directors and specified executives in Abacus Property Group securities
were as follows:
Directors
J Thame
F Wolf
D bastian
M Irving
L Lloyd
APG seCuRITIes
HeLD
50,000
nuMbeR oF
oPTIons oVeR
APG seCuRITIes
-
9,710,274*
1,343,284
4,486,352
30,014
785,925*
-
-
447,761
* The holdings of Dr Wolf and Mr Lloyd include securities acquired under the executive share Loan Plan that are treated as options.
14
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
DIReCToRs’ MeeTInGs
The number of meetings of directors (including meetings of committees of directors) of AGHL and Abacus, the manager of the
Group, held during the year and the number of meetings attended by each director were as follows:
J Thame
F Wolf
D bastian
D bluth
P Green
M Irving
L Lloyd
W bartlett
boARD
AuDIT
CoMMITTee
Due
DILIGenCe
CoMMITTee
noMInATIon &
ReMuneRATIon
CoMMITTee
CReDIT
CoMMITTee
HeLD ATTenDeD
HeLD ATTenDeD
HeLD ATTenDeD
HeLD ATTenDeD
HeLD
ATTenDeD
14
14
11
14
2
14
14
5
14
14
8
12
1
10
12
5
3
3
4
1
3
3
4
1
4
7
11
4
4
10
17
17
17
17
17
17
3
2
1
3
2
3
2
1
3
2
InDeMnIFICATIon AnD InsuRAnCe oF DIReCToRs
AnD oFFICeRs
The Group has paid an insurance premium in respect of a
contract insuring all directors, full time executive officers and
secretary. The terms of this policy prohibit disclosure of the
nature of the risks insured or the premium paid.
enVIRonMenTAL ReGuLATIon AnD PeRFoRMAnCe
The Group’s environmental responsibilities, such as waste
removal and water treatment, have been managed in
compliance with all applicable regulations and licence
requirements and in accordance with industry standards. no
breaches of requirements or any environmental issues have
been discovered and brought to the board’s attention. There
has been no known significant breaches of any environmental
requirements applicable to the Group.
sTAPLeD seCuRITY oPTIons
As at the date of this report, there were 4,119,403 unissued
stapled securities under options issued under the executive
Performance Award Plan and 10,479,003 options arising
from the purchase of stapled securities under the executive
security Loan Plan. Refer to the remuneration report for
further details of the options outstanding.
AuDIToRs InDePenDenCe DeCLARATIon
We have obtained an independence declaration from our
auditor, ernst & Young, and such declaration is shown on
page 16.
non-AuDIT seRVICes
The following non-audit services were provided by the
Group’s auditor, ernst & Young. The Directors are satisfied
that the provision of non-audit services is compatible with
the general standard of independence for auditors imposed
by the Corporations Act 2001. The nature and scope of
each type of non-audit service provided means that auditor
independence was not compromised.
ernst & Young received or are due to receive the following
amounts for the provision of non-audit services:
Tax related services
other assurance and compliance services
$65,000
$46,800
$111,800
RounDInG
The amounts contained in this report and in the annual
financial report have been rounded to the nearest $1,000
(where rounding is applicable) under the option available to
the group under AsIC Class order 98/100. The group is an
entity to which the Class order applies.
signed in accordance with a resolution of the directors.
JoHn THAMe
Chairman
sydney, 12 september 2007
FRAnK WoLF
Managing Director
15
n Ernst & Young Centre
680 George Street
Sydney NSW 2000
Australia
GPO Box 2646
Sydney NSW 2001
n Tel 61 2 9248 5555
Fax 61 2 9248 5959
DX Sydney Stock
Exchange 10172
auditor’s independence declaration
to the directors of abacus group holdings limited
In relation to our audit of the financial report of Abacus Group Holdings Limited for the financial year ended
30 June 2007, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
eRnsT & YounG
eD PsALTIs
Partner
sydney, 30 August 2007
16
AbACus AnnuAL FInAnCIAL RePoRT 2007
Liability limited by a scheme approved under
Professional Standards Legislation.
abacus property group
consolidated income and distribution statements
YeAR enDeD 30 June 2007
Revenue
Rental income
Hotel-related income
Finance income
Funds management income
share of profit from equity accounted investments
Income from distributions
other income
net realised gains on investments
net unrealised gains/(losses) on investments
Total revenue
employee benefits expense
Depreciation and amortisation expense
Finance costs
other expenses
Profit before income tax
Income tax expense
Net profit for the period
net (profit)/loss attributable to external minority interests
Net profit attributable to Group securityholders
Represented by:
Abacus Group Holdings Limited
Internal minority interests:
- Abacus Trust
- Abacus Group Projects Limited
- Abacus Income Trust
Basic earnings per security (cents)
Diluted earnings per security (cents)
basic earnings per security ex fair value adjustments*
Diluted earnings per security ex fair value adjustments*
sTATeMenT oF DIsTRIbuTIon
net profit/(loss) attributable to
net transfer of undistributed income to securityholders’ funds
Distributions paid and payable
Distribution per security (cents per security)
Weighted average number of securities (‘000)
noTes
ConsoLIDATeD
2007
$’000
2006
$’000
63,913
9,272
4a 15,372
4b 38,230
1,444
1,170
840
4c 23,107
4d 34,635
42,145
2,831
17,413
20,237
2,392
1,070
-
4,603
41,157
187,983
131,848
5a (11,606)
5b (5,010)
5c (21,909)
5d (24,535)
(7,895)
(1,346)
(7,832)
(12,171)
124,923 102,604
(4,521)
(744)
120,402
101,860
(1,591)
(624)
118,811
101,236
629
(216)
89,122
(415)
29,475
82,172
(72)
19,352
7 21.48
24.22
7
21.33
24.22
7
7
6
14.43
12.92
14.33
12.92
118,811
(49,957)
68,854
12.50
101,236
(50,275)
50,961
11.80
7 553,184
418,056
*based on net profit excluding AIFRs fair value adjustments (namely property revaluations, revaluations of derivatives and other financial instruments
and share based payments)
1717
consolidated balance sheet
As AT 30 June 2007
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Investment properties
Property loans and other financial assets
other
Total current assets
Non-current assets
Property, plant and equipment
Investment properties
Property loans & other financial assets
Investments accounted for using the equity method
other
Deferred tax assets
Intangible assets and goodwill
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
other
Income tax payable
Total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Deferred tax liabilities
other
Total non-current liabilities
Total liabilities
Net assets
18
AbACus AnnuAL FInAnCIAL RePoRT 2007
noTes
ConsoLIDATeD
2007
$’000
2006
$’000
19,068
65,914
13,359
8a 12,524
256,236
1,764
20,107
19,565
340
18,255
196,746
2,209
368,865 257,222
30,553
8b 660,536
161,299
582,312
70,945 48,442
89,299 67,874
4,510 3,700
4,569 1,335
40,977 41,096
901,389
906,058
1,270,254
1,163,280
53,948 52,190
171,473
417
7,139
51,142
939
(208)
232,977
104,063
222,751
383,387
2,579
8,742
234,072
467,049
803,205
1,811
908
386,106
490,169
673,111
abacus property group
consolidated balance sheet
As AT 30 June 2007
Total equity attributable to members of AGHL:
Contributed equity
Reserves
Retained earnings
Internal minority interest:
Total equity attributable to unitholders of AT:
Contributed equity
Retained earnings
Total equity attributable to members of AGPL:
Contributed equity
Retained earnings
Total equity attributable to unitholders of AIT:
Contributed equity
Reserves
Retained earnings
Total equity attributable to external minority interest:
Contributed equity
Retained earnings
Total minority interest
Total equity
Equity
Contributed equity
Reserves
Retained earnings/(accumulated losses)
Total members interest in equity
Total external minority interest
Total equity
noTes
ConsoLIDATeD
2007
$’000
2006
$’000
24,684
2,703
10,532
37,919
20,725
(230)
9,700
30,195
504,561
98,260
602,821
446,550
67,357
513,907
6,240
(1,043)
5,197
112,956
-
40,615
153,571
1,321
2,376
3,697
5,557
(628)
4,929
99,671
1,908
20,197
121,776
1,321
983
2,304
765,286
642,916
803,205
673,111
9 648,440
572,503
2,703
148,365
799,508
3,697
1,678
96,626
670,807
2,304
803,205
673,111
19
consolidated statement of changes in equity
YeAR enDeD 30 June 2007
Consolidated
Total equity
At 1 July 2006
IssueD
CAPITAL
$’000
AsseT
ReVALuATIon
ReseRVe
$’000
FoReIGn
CuRRenCY
TRAnsLATIon
$’000
eMPLoYee
eQuITY
beneFITs
$’000
ReTAIneD
eARnInGs
$’000
MInoRITY
InTeResT
$’000
803,205
572,503 1,907
(229) - 96,626
2,304
ToTAL
eQuITY
$’000
673,111
673,111
- (1,907) - -
1,907
- -
- - - -
(821)
(198)
(1,019)
Foreign currency translation
- -
64 -
-
-
- - - -
337
-
- - - -
359
-
337
64
359
sale of property, plant
and equipment
Tax on options taken directly
to equity
share of associate’s
retained earnings
Adjustment resulting from
changes in associated entities
Total income and expense for
the year recognised directly
in equity
-
(1,907)
64
-
1,782
(198)
(259)
net income for the year
- - - -
118,811
1,591 120,402
Total income for the year
- (1,907)
64
-
120,593
1,393
120,143
equity raisings (net of issue costs)
98,434
- - - -
- 98,434
Distribution to securityholders
- - - - (68,854)
-
Treasury shares
(22,497)
- - - -
-
(68,854)
(22,497)
share based payments
- - - 2,868 -
- 2,868
At 30 June 2007
648,440
-
(165)
2,868
148,365
3,697
803,205
At 1 July 2005
351,825 -
(210) - 51,145 1,944
404,704
Fair value adjustment of loans
hedged by interest rate swaps
Revaluation of property,
plant & equipment
-
-
-
-
(4,869)
-
(4,869)
-
1,907
-
-
(858)
-
1,049
Disposal of a subsidiary
- - - - 165
- 165
Foreign currency translation
reserve
- -
(19) - -
-
(19)
Recognition of unearned revenue
for amortisation
- -
Total income and expense for
the year recognised directly in equity - 1,907
-
-
(380)
-
(380)
(19) - (5,942) -
(4,054)
net income for the year - - - - 101,236
360 101,596
Total income and expense
for the year
-
1,907
(19)
- 95,294
360 97,542
equity raisings (net of issue costs) 124,480
- - - -
- 124,480
net impact of merger with ADIF 96,198 - - - 1,148
- 97,346
Distribution to securityholders
- -
- -
(50,961)
-
(50,961)
At 30 June 2006
572,503 1,907 229) -
96,626 2,304
673,111
20
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
consolidated cash flow statement
YeAR enDeD 30 June 2007
Cash flows from operating activities
Income receipts
Interest received
Distributions received
Income tax (paid)/received
borrowing costs paid
operating payments
Net cash flows from operating activities
Cash flows from investing activities
Payments for investments and funds advanced
Proceeds from sale and settlement of investments and funds repaid
Cash acquired on ADIF merger
Advances to related entities
Purchase of a controlled entity
Purchase of plant and equipment
Disposal of property, plant and equipment
Purchase of investment properties
Disposal of investment properties
Payment for other investments
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from issue of stapled securities
Payment of finance costs
Repayment of borrowings
Proceeds from borrowings
Distributions paid
Net cash flows from financing activities
Net increase/(decrease) in cash and cash equivalents
net foreign exchange differences
Cash and cash equivalents at beginning of year
Cash and cash equivalents at end of year
ConsoLIDATeD
2007
$’000
2006
$’000
101,918 55,146
16,627 21,629
1,139 867
806
(28,306)
(16,914)
75,270
(156)
(12,431)
(14,680)
50,375
(333,953)
(162,458)
298,279
90,724
- 3,082
(141,458) 828
- -
(2,302)
(9,516)
23,056 -
(68,924)
(171,387)
134,664 29,202
(8,849) -
(99,487)
(219,525)
64,197 144,017
(49)
-
(190,801)
(86,061)
215,906 174,523
(66,075)
(47,730)
23,178
184,749
(1,039)
15,599
-
91
20,107 4,417
19,068
20,107
21
annual financial report / continued
notes to the concise financial statements
30 June 2007
1. CoRPoRATe InFoRMATIon
Abacus Property Group (APG or the Group) is comprised of
Abacus Group Holdings Limited (AGHL), Abacus Trust (AT),
Abacus Income Trust (AIT) and Abacus Group Projects Limited
(AGPL). shares in AGHL and AGPL and units in AT and AIT
have been stapled together so that neither can be dealt with
without the other. The securities trade as one security on the
Australian stock exchange under the code AbP.
The financial report of the Group for the year ended 30 June
2007 was authorised for issue in accordance with a resolution
of the directors on 30 August 2007.
The nature of the operations and principal activities of the
Group are described in the Directors’ Report.
is also recommended that the annual financial report be
considered together with any public announcements made by
the Group during the year ended 30 June 2007 in accordance
with the continuous disclosure obligations arising under the
Corporations Act 2001.
The financial report has also been prepared on a historical
cost basis, except for investment properties and derivative
financial instruments which have been measured at fair value,
interests in joint ventures which are accounted for using the
equity method, and certain investments measured at net
market value. The carrying values of recognised assets and
liabilities that are covered by interest rate swap arrangements,
are adjusted to record changes in the fair values attributable
to the risks that are being covered by derivative financial
instruments.
2. suMMARY oF sIGnIFICAnT ACCounTInG PoLICIes
bAsIs oF PRePARATIon
The concise financial report has been prepared in accordance
with the requirements of the Corporations Act 2001 and
Australian Accounting standards.
The financial report is presented in Australian dollars and all
values are rounded to the nearest thousand dollars ($’000)
unless otherwise stated under the option available to the
Group under AsIC Class order 98/100. The Group is an entity
to which the class order applies.
The concise financial report has been derived from the
Annual Financial Report but does not include all notes of
the type normally included within the annual financial report
and therefore cannot be expected to provide as full an
understanding of the financial performance, financial position
and financing and investing activities of the Group as the full
financial report.
The concise financial report should be read in conjunction
with the Annual Financial Report of AT, AIT and AGPL. It
sTATeMenT oF CoMPLIAnCe
except for the amendments of AAsb 101 Presentation of
Financial statements and AAsb 2007-4 amendments to
Australian Accounting standards arising from eD 151 and
other Amendments, which the Group has early adopted,
Australian Accounting standards and Interpretations that have
recently been issued or amended but are not yet effective
have not been adopted by the Group for the annual reporting
period ending 30 June 2007. These are outlined in the
following table.
22
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
ReFeRenCe
suMMARY
AAsb 2005-10 Amending standard issued as a
consequence of AAsb 7 Financial
Instruments: Disclosures.
APPLICATIon
DATe oF
sTAnDARD*
1 January
2007
AAsb 2007-1
Amending standard issued
as a consequence of AAsb
Interpretation 11 AAsb 2 – Group
and Treasury Share Transactions.
1 March
2007
AAsb 2007-3
Amending standard issued as a
consequence of AAsb 8 Operating
Segments.
1 January
2009
AAsb 2007-7
Amending standards for wording
errors, discrepancies and
inconsistencies.
1 July 2007
IMPACT on GRouP FInAnCIAL RePoRT
AAsb 7 is a disclosure standard so will have
no direct impact on the amounts included in
the Group’s financial statements. However,
the amendments will result in changes to the
financial instrument disclosures included in
the Group’s financial report.
This is consistent with the Group’s existing
accounting policies for share-based
payments, so the standard is not expected
to have any impact on the Group’s financial
report.
AAsb 8 is a disclosure standard so will have
no direct impact on the amounts included in
the Group’s financial statements. However,
the standard is expected to have an impact
on the Group’s segment disclosures as
segment information included in internal
management reports is more detailed than
that currently reported under AAsb 114
Segment Reporting.
The amendments are minor and do not
affect the recognition, measurement or
disclosure requirements of the standards.
Therefore the amendments are not
expected to have any impact on the Group’s
financial report.
APPLICATIon
DATe FoR
GRouP*
1 July 2007
1 July 2007
1 July 2009
1 July 2007
1 January
2007
Refer to AAsb 2005-10 above.
1 July 2007
1 January
2009
1
november
2006
Refer to AAsb 2007-3 above.
1 July 2009
The prohibitions on reversing impairment
losses in AAsb 136 and AAsb 139, which are
to take precedence over the more general
statement in AAsb 134, are not expected
to have any impact on the Group’s financial
report.
1 July 2007
1 March
2007
Refer to AAsb 2007-1 above
1 July 2007
AAsb 7
AAsb 8
AAsb
Interpretation
10
AAsb
Interpretation
11
new standard replacing disclosure
requirements of AAsb 130
Disclosures in the Financial
Statements of Banks and Similar
Financial Institutions and AAsb 132
Financial Instruments: Disclosure
and Presentation.
new standard replacing AAsb
114 Segment Reporting, which
adopts a management approach
to segment reporting.
Addresses an inconsistency
between AAsb 134-interim
Financial Reporting and the
impairment requirements relating
to goodwill in AAsb 136 Impairment
of Assets and equity instruments
classified as available for sale in
AAsb 139 Financial Instruments:
Recognition and Measurement
Addresses whether certain types of
share-based payment transactions
with employees (or other suppliers
of goods and services) should be
accounted for as equity-settled or
as cash-settled transactions under
AAsb 2 share-based-Payment. It
also specifies the accounting in a
subsidiary’s financial statements
for share-based payment
arrangements involving equity
instruments of the parent.
*designates the beginning of the applicable annual reporting period
23
annual financial report / continued
notes
AAsb 2007-2, AAsb 2007-5, AAsb 2007-6, AAsb 123 and
AAsb Interpretation 12 will have no application to the Group.
The financial report complies with Australian Accounting
standards, which include Australian equivalents to
International Financial Reporting standards (AIFRs). The
financial report also complies with International Financial
Reporting standards (IFRs).
bAsIs oF ConsoLIDATIon
The consolidated financial statements comprise the
financial statements of AGHL and its subsidiaries, AT and
its subsidiaries, AGPL and its subsidiaries, and AIT and its
subsidiaries collectively referred to as the Group.
The financial statements of subsidiaries are prepared for
the same reporting period as the parent company, using
consistent accounting policies with adjustments made to
bring into line any dissimilar accounting policies that
may exist.
All inter-Group balances and transactions, including
unrealised profits from intra-group transactions, have been
eliminated in full and subsidiaries are consolidated from the
date on which control is obtained by the Group and cease to
be consolidated from the date on which control is transferred
out of the Group.
The acquisition of subsidiaries is accounted for using the
purchase method of accounting. The purchase method
of accounting involves allocating the cost of the business
combination to the fair value of the assets acquired and the
liabilities and contingent liabilities assumed at the date of
acquisition.
Minority interests represent those equity interests in Abacus
Hobart Growth Trust, The Wollongong Property Trust, Abacus
Independent Retail Property Trust and Abacus Matson
Holdings Limited that are not held by the Group and are
presented separately in the income statement and within
equity in the consolidated balance sheet.
24
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
3. seGMenT InFoRMATIon
The Group’s primary business segments are Property, Funds Management, Property Finance and Joint Ventures and
Developments. The Property division comprises the ownership of commercial, retail and industrial properties. The Funds
Management division develops, originates and manages off balance sheet funds in addition to discharging the Group’s responsible
entity obligations. Property Finance comprises mortgage lending and related property financing solutions. Joint Ventures &
Developments comprise investments in joint venture activities and in securities of other listed and unlisted property trusts.
busIness seGMenTs
Year ended 30 June 2007
Revenue
PRoPeRTY
$’000
FunDs
MAnAGeMenT
$’000
PRoPeRTY
JoInT VenTuRes
FInAnCe & DeVeLoPMenTs
$’000
$’000
ToTAL
$’000
Revenue from external customers
73,185
38,230
14,226
2,614
128,255
Realised gains on investments
unrealised gains on investments
unallocated revenue
Total consolidated revenue
Result
segment result
unallocated revenue
Profit/(loss) before tax and finance costs
Finance costs
Profit/(loss) before income tax and minority interest
Income tax expense
Net profit for the year
Assets
segment assets
unallocated assets (a)
Total assets
Liabilities
segment liabilities
unallocated liabilities (b)
Total liabilities
Other segment information
Depreciation and amortisation
Increase in fair value of investments
Cash flow information
net cash flow from operating activities
net cash flow from investing activities
net cash flow from financing activities
23,107
33,270
-
-
-
-
-
- -
-
1,365
-
23,107
34,635
1,986
129,562
38,230
14,226
3,979
187,983
100,918
29,605
12,285
2,038
144,846
1,986
146,832
(21,909)
124,923
(4,521)
120,402
834,474
133,149
120,491
70,165
1,158,279
33,881
5,962
672
41
111,975
1,270,254
40,556
426,493
467,049
4,549
33,270
29,244
88,654
(5,475)
461
-
-
5,010
- -
1,365
34,635
9,779
(98,633)
-
29,730
(61,605)
24,154
6,517
(27,904)
4,500
75,270
(99,488)
23,179
(a) unallocated assets include goodwill, cash and other assets.
(b) unallocated liabilities include interest-bearing liabilities, tax liabilities and other liabilities.
25
annual financial report / continued
notes
busIness seGMenTs
Year ended 30 June 2006
Revenue
PRoPeRTY
$’000
FunDs
MAnAGeMenT
$’000
PRoPeRTY
JoInT VenTuRes
FInAnCe & DeVeLoPMenTs
$’000
$’000
ToTAL
$’000
Revenue from external customers
Realised and unrealised gains on investments
unallocated revenue
Total consolidated revenue
44,976
45,110
-
20,237
16,452
-
-
-
-
3,462
650
-
85,127
45,760
961
90,086
20,237
16,452
4,112
131,848
Result
segment result
unallocated revenue
Profit/(loss) before tax and finance costs
Finance costs
Profit/(loss) before income tax and minority interest
Income tax expense
Net profit for the year
Assets
segment assets
unallocated assets
Total assets
Liabilities
segment liabilities
unallocated liabilities
Total liabilities
Other segment information
Depreciation and amortisation
Increase in fair value of investments
Cash flow information
net cash flow from operating activities
net cash flow from investing activities
net cash flow from financing activities
75,033
16,190
15,296
2,956
109,475
961
110,436
(7,832)
102,604
(744)
101,860
786,945
40,629
243,251
90,509
1,161,334
31,337
3,058
3,663
-
1,946
1,163,280
38,058
452,111
490,169
1,306
40,507
40
-
-
-
-
650
1,346
41,157
9,096
15,369
(156,495)
140,345
-
-
20,949
(45,017)
40,750
4,961
50,375
(18,013)
(219,525)
3,654
184,749
26
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
4. ReVenue
(a) Finance income
Interest on mortgage loans
bank interest
Total finance income
(b) Funds management income
Asset management fee
Property management fee
Interest on loans to related entities
Consulting and other income
sale of units in AHF*
sale of the Rendezvous Hotel
Total funds management income
(c) Net realised gains on disposal of:
Investment properties and property-related investments
units in Abacus Miller street Trust*
Total net realised gains on investments
(d) Unrealised gains on investments
Change in fair value of options - unlisted
Change in fair value of securities - listed
Change in fair value of investment properties
Total unrealised gains on investments
* sale was to new fund managed by AFML
ConsoLIDATeD
2007
$’000
2006
$’000
13,386 16,452
1,986
961
15,372
17,413
3,253
3,075
438
580
7,803
7,400
5,548
9,182
8,672
-
12,516
-
38,230 20,237
13,284
4,603
9,823
-
23,107
4,603
943
422
748
(98)
33,270
40,507
34,635 41,157
27
annual financial report / continued
notes
5. eXPenses
(a) Employee benefits expense
Wages and salaries
share based payments
other
Total employee benefits expense
(b) Depreciation and amortisation expense
Depreciation of property, plant and equipment - hotels
Depreciation of property, plant and equipment - other
Amortisation of software
Amortisation of intangible assets
Amortisation - other
Total depreciation and amortisation expense
(c) Finance costs
Interest on loans
Holding costs - AHF and Rendezvous Hotel
Amortisation of finance costs
Total finance costs (on historical basis)
unrealised gains on interest rate swaps
Total finance costs
(d) Other expenses
Property outgoings
Custody fees
Registry maintenance costs
Rental expenses
other
Total other expenses
28
AbACus AnnuAL FInAnCIAL RePoRT 2007
ConsoLIDATeD
2007
$’000
8,465
2,868
273
2006
$’000
7,506
-
389
11,606
7,895
3,268
429
32
119
1,162
5,010
583
16
24
30
693
1,346
23,839
13,696
4,671
634
29,144
(7,235)
21,909
963
342
15,001
(7,169)
7,832
14,931
8,462
170
405
420
124
338
332
8,609
2,915
24,535
12,171
abacus property group
6. DIsTRIbuTIons PAID AnD PRoPoseD
(a) Distributions paid during the year
Final distribution for financial year 30 June:
3.00 cents per unit (2005: 2.90 cents)
Interim distributions paid during the year:
september: 3.00 cents per unit (2006: 2.90 cents)
December: 3.00 cents per unit (2006: 2.90 cents)
March: 3.25 cents per unit (2006: 3.00 cents)
(b) Distributions proposed and recognised as a liability
Final distribution payable for the June quarter:
3.25 cents per unit (2006: 3.00 cents)
The distributions were paid from the Abacus Trust and
Abacus Income Trust (which do not pay tax provided
they distribute all their taxable income) hence, there
were no franking credits attached.
(c) Franking credit balance
The amount of franking credits available for the
subsequent financial year are:
- franking account balance as at the end of the
financial year at 30% (2006: 30%)
- franking credits that will arise from the receipt of dividends
recognised as receivables at the reporting date
- franking credits that will arise from the payment of income tax
payable as at the end of the financial year
ConsoLIDATeD
2007
$’000
2006
$’000
15,491
9,942
15,926
16,013
18,496
65,926
11,179
11,179
13,112
45,412
18,419
15,491
6,510
5,590
52
28
13,701
7,139
121
5,739
29
annual financial report / continued
notes
7. eARnInGs PeR sTAPLeD seCuRITY
Attributable to Group securityholders
basic earnings per stapled security are calculated by dividing net profit for the year attributable to securityholders by the
weighted average number of stapled securities outstanding during the year.
noTes
ConsoLIDATeD
basic earnings per stapled security
Diluted earnings per stapled security
basic earnings per stapled security excluding fair value adjustments 1
2007
CenTs
21.48
21.33
14.43
Diluted earnings per stapled security excluding fair value adjustments 1
14.33
2007
$‘000
2006
CenTs
24.22
24.22
12.92
12.92
2006
$‘000
Earnings used in calculating earnings per security:
net profit attributable to securityholders
net profit attributable to stapled securityholders excluding fair value adjustments 1
118,811
101,236
79,810
53,560
2007
‘000
2007
‘000
Weighted average number of stapled securities:
Weighted average number of stapled securities for basic earnings per share
553,184
418,056
effect of dilution:
stapled security options
Weighted average number of stapled securities adjusted for the effect of dilution
3,703
-
556,887
418,056
options granted to employees (including key management personnel) are considered to be potential stapled securities and
have been included in the determination of diluted earnings per stapled security to the extent they are dilutive. These options
have not been included in the determination of basic earnings per stapled security.
(1) Fair value adjustments include property revaluations, revaluations of derivatives and other financial instruments and share based payments.
30
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
8. InVesTMenT PRoPeRTIes
Investment properties are carried at the Directors’ determination of fair value and are based on independent valuations where
appropriate. The determination of fair value includes reference to the original acquisition cost together with capital expenditure
since acquisition and either the latest full independent valuation or latest independent update. Total acquisition costs include
incidental costs of acquisition such as property taxes on acquisition, legal and professional fees and other acquisition related costs.
Independent valuation of each investment property is conducted annually either in December or June of each year. This
schedule was adopted in the current financial year. Independent valuations are prepared using both the capitalisation of net
income method and the discounting of future cashflows to their present value method. Capital expenditure since valuation may
include purchases of sundry properties (and associated expenses of stamp duty, legal fees etc) and other capital refurbishment
and repair expenditure.
PRoPeRTY
(a) Current asset
109 Pitt street, sydney, nsW (i)
(b) Non-current assets
66 Christina Road, Villawood, nsW (i)
CsIRo, Limestone Ave., Campbell, ACT (iv)
4 Ray Road, epping, nsW (ii)
Ashfield Mall, Ashfield, nsW (iv)
10-12 Pike street, Rydalmere, nsW (v)
Liverpool Plaza, Liverpool, nsW (iv)
Macquarie street, Liverpool, nsW (iii)
Moore street, Liverpool, nsW (iii)
Aspley Village shopping Centre (iii)
Westpac (formerly santos) House, Adelaide sA (i)
50 Miller street, north sydney, nsW (ii)
Homemaker City, Moorabbin, nsW
12-14 butler Road, Hurstville, nsW
27 Grant street, Port Macquarie, nsW
ACQuIsITIon
DATe
CosT InCLuDInG
ALL ADDITIons
$’000
InDePenDenT
VALuATIon
DATe
ConsoLIDATeD VALue
2007
$’000
2006
$’000
22-Jun-99
9,924
30-Jun-06
12,524
18,255
28-May-02
8,213
30-Jun-06
12,426
12,400
21-Jun-02
12,686
30-Jun-07 20,000
18,000
30-Apr-97
27,043
30-Jun-07
54,500
51,000
15-sep-97
86,806
30-Jun-06 116,843 113,000
1-oct-98
14,262
30-Jun-07
22,400
19,300
16-Aug-04
32,860
30-Jun-06
37,020
37,000
21-sep-05
5,451
30-Jun-06
5,503
5,503
14-oct-05
2,265
30-Jun-06
2,297
2,297
15-Feb-06
16,374
1-Feb-06
18,607
16,579
5-oct-04
54,327
30-Jun-07
68,850
51,000
17-Dec-04
38,349
30-Jun-06
-
40,000
11-Aug-06
38,690
6-Jul-06
38,690
-
31-May-07
18,714
18-May-07
26-Jun-07
16,021
6-Jun-07
18,714
16,021
-
-
Properties owned by AT and its controlled entities
431,871
366,079
1-5 Lake Dingley, Melbourne
8 station street, Wollongong, nsW (ii)
367 Peel street, Tamworth, nsW (iii)
500 Princes Highway, noble Park, VIC (ii)
31-33 Windorah Avenue, stafford, QLD (iv)
Lennons Plaza, 66 Queen st., QLD (iv)
23-43 Tattersall Rd, Kings Park, nsW (v)
28-May-03
30-Jun-03
22-Feb-04
27-nov-03
3-nov-03
19-Dec-03
16-Feb-04
11,956
7,866
11,961
19,222
5,109
32,272
15,937
30-Jun-06
13,300 13,300
30-Jun-06
12,000 12,000
30-Jun-06
12,700 12,700
30-Jun-07
21,000 19,920
30-Jun-07
6,500 5,740
30-Jun-06
39,000 39,000
30-Jun-06
- 17,100
31
annual financial report / continued
notes
8. InVesTMenT PRoPeRTIes / ConTInueD
PRoPeRTY
26 savage street & 681 Curtin Avenue,
Pinkenba, QLD (iv)
671 Gympie Rd, Chermside, QLD (i)
9-14 Yates street, Mawson Lakes, sA (viii)
36-52 national blvd, Campbellfield, VIC (iv)
Gympie Market Place, Gympie (ii)
29-47 & 18-20 becker st, Cobar nsW (iv)
208 Howick street, bathurst, nsW (iv)
50 Mostyn street, Castlemaine, VIC (iv)
29 Queen street, north bundaberg, QLD (v)
93 Victoria street, eaglehawk, VIC (iv)
12 Docker street, Wangaratta, QLD (iv)
Kingscote Kangaroo Island, sA (iv)
96-98 Victoria street, st.George, QLD (ii)
293-295 Grt eastern Highway, Midland WA (iv)
50 bamford Lane, Mt View Plaza, Kirwan, QLD
Mid City Plaza, Maryborough, VIC
Properties owned by AIT’s controlled entities
244 Liverpool Road, Ashfield, nsW (iv)
252 Liverpool Road, Ashfield, nsW (iv)
254 Liverpool Road, Ashfield, nsW (iv)
256 Liverpool Road, Ashfield, nsW (iv)
Project development costs
ACQuIsITIon
DATe
CosT InCLuDInG
ALL ADDITIons
$’000
InDePenDenT
VALuATIon
DATe
ConsoLIDATeD VALue
2007
$’000
2006
$’000
23-Jan-04
17-Dec-04
7-Jun-05
18-Jul-05
7-Jun-04
5-Aug-04
11-May-05
11-May-05
18-Jul-05
29-sep-05
31-oct-05
21-Dec-05
18-Aug-05
21-Jun-06
31-Aug-06
29-Jun-07
26-Mar-98
2-Mar-00
31-Aug-01
29-sep-98
5,040
4,722
6,857
8,832
7,340
1,174
3,490
8,092
30-Jun-07
12,000 8,970
30-Jun-06
5,877 5,900
30-Jun-06
5,700 5,700
30-Jun-07
10,300 9,000
30-Jun-07
9,000 7,450
30-Jun-07
30-Jun-05
1,950 1,650
- 3,490
30-Jun-07
10,200 9,342
15,536
11-Aug-05
15,536 9,201
6,150
2,965
4,337
3,029
7,228
7,743
4,802
30-Jun-07
6,900 6,580
30-Jun-07
3,100 2,700
30-Jun-07
4,500 4,337
30-Jun-07
3,200 2,830
30-Jun-07
10,250 7,223
25-May-06
7,743
-
23-Apr-07
4,802
-
215,558 204,133
2,507
1,107
2,662
820
1,099
Independent valuation, 244-256 Liverpool Road
30-Jun-06
6,900
6,900
Woodlands Drive, braeside, VIC
4-8 Jacobs street, bankstown (vi)
20-Dec-06 1,007
1,007 -
2-Dec-02 5,161
30-Jun-06 5,200 5,200
13,107 12,100
660,536
582,312
673,060 600,567
Properties owned by AGHL and its controlled entities
Non-current - investment properties
Total investment properties
(i) As valued by Knight Frank Pty Limited
(ii) As valued by Colliers International Consultancy and Valuation Pty Ltd
(iii) As valued by urbis Property Consultants
(iv) As valued by Cb Richard ellis Pty Ltd
(v) As valued by FPD savills (nsW) Pty Limited
(vi) As valued by DTZ Australia
32
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
Notes:
(a) The aggregated value at 30 June 2007 includes capital expenditures after the last valuation date.
(b) The property at 109 Pitt street is currently under refurbishment and has been subdivided into strata
units. The retail component and the leasehold interest in the car park were sold in prior financial
years while the sale of the commercial units continues at 30 June 2007.
(c) The Abacus Income Trust owns 98.4% of the units in the Wollongong Property Trust which owns 8 station street, Wollongong.
(d) The Abacus Income Trust owns 100% of the units in the Abacus Matson Resort Trust which owns
75% of interest in 209-217 Abbot street, Cairns, QLD.
(e) The Abacus Income Trust owns 100% of the units in Abacus Retail Property Trust which owns 75%
of the units in Abacus Independent Retail Property Trust which owns:
Gympie Market Place, Gympie , QLD;
29-47 & 18-20 Becker St, Cobar, NSW;
50 Mostyn street, Castlemaine, VIC.
93 Victoria street, eaglehawk, VIC
96-98 Victoria street, st George, QLD
Mid city Plaza, Maryborough, VIC
(f) The investment properties are used as security over the bank loans.
29 Queen Street, North Bundaberg, QLD
12 Docker Street, Wangaratta, QLD
Kingscote Kangaroo Island, sA
293-295 Great eastern Highway, Midland, WA
50 bamford Lane, Mt View Plaza, Kirwan, QLD
ReConCILIATIons
Reconciliation of the carrying amounts of investment properties at the beginning
and end of the current and previous financial year:
Investment properties
Carrying amount at beginning of the financial year
Additions and capital expenditures
Acquisition through business combinations
net revaluation increments
Disposals / transfer
Carrying amount at end of the financial year
ConsoLIDATeD VALue
2007
$’000
2006
$’000
600,567
352,744
105,890
47,788
-
179,596
33,270 40,507
(66,667)
(20,068)
673,060 600,567
33
annual financial report / continued
notes
9. ConTRIbuTeD eQuITY
(a) Issued stapled securities
stapled securities
securities financed by APG under the esLP
Total contributed equity
(b) Movements in contributed equity for the year
At 1 July 2005
- institutional equity raising
- distribution reinvestment plan
- net impact of merger with ADIF (1)
- less transaction costs
At 30 June 2006
- security purchase plan
- institutional equity raising
- distribution reinvestment plan
- less transaction costs
At 30 June 2007
- securities financed by APG under the esLP
ConsoLIDATeD
2007
$’000
2006
$’000
670,937
572,503
(22,497)
-
648,440
572,503
sTAPLeD seCuRITIes
nuMbeR
‘000
VALue
$’0000
342,836 351,825
92,636 125,500
1,600 2,256
79,310 96,199
-
(3,277)
516,382 572,503
13,842 19,518
36,585 60,000
11,824 20,416
-
(1,500)
578,633 670,937
-
(22,497)
578,633 648,440
(1) net impact of merger with ADIF represents the aggregation of outstanding contributed equity (net of issue costs) as at 31 March 2006 (merger
implementation date).
securityholders have the right to receive dividends from AGHL and AGPL, as declared, and distributions from AT and AIT, and
in the event of winding up of the Group entities, to participate in the proceeds from sale of all surplus assets in proportion to
the number of stapled securities held.
securityholders can vote their shares and units in accordance with the Corporations Act, either in person or by proxy, at a
meeting of either AGHL, AGPL, AT and AIT (as the case maybe).
34
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
10. eVenTs AFTeR THe bALAnCe sHeeT DATe
on 26 July 2007, the Group completed a capital raising via an institutional placement for $100 million and issued 52.6 million
stapled securities at $1.90 per stapled security.
In July 2007, the Group exchanged contracts to acquire two commercial office buildings for $23 million in the Varsity Lakes
business district on the Gold Coast, Queensland.
other than as disclosed in this report and to the knowledge of directors, there has been no other matter or circumstance that
has arisen since the end of the financial year that has or may affect the Group’s operations in future financial years, the results of
those operations or the Group’s state of affairs in future financial years
35
annual financial report / continued
directors’ declaration
In accordance with a resolution of the Directors, we state that:
(1) in the opinion of the Directors:
(a) the concise financial statements, notes and the additional disclosures included in the Directors’ report designated as
audited, of the company and of the consolidated entity are in accordance with the Corporations Act 2001, including
(i) giving a true and fair view of the company’s and consolidated entity’s financial position as at 30 June 2007 and of their
performance for the year ended on that date; and
(ii) complying with Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the company will be able to pay its debts as and when they become due
and payable.
(2) This declaration has been made after receiving the declarations required to be made to the directors in accordance with
sections 295A of the Corporations Act 2001 for the financial year ending 30 June 2007.
on behalf of the board
JoHn THAMe
Chairman
FRAnK WoLF
Managing Director
sydney, 12 september 2007
36
AbACus AnnuAL FInAnCIAL RePoRT 2007
n Ernst & Young Centre
680 George Street
Sydney NSW 2000
Australia
GPO Box 2646
Sydney NSW 2001
n Tel 61 2 9248 5555
Fax 61 2 9248 5959
DX Sydney Stock
Exchange 10172
independent auditor’s report
to members of abacus group holdings limited
The accompanying concise financial report of Abacus Group Holdings Limited comprises the balance sheet as at 30 June 2007,
the income statement, statement of changes in equity and cash flow statement for the year then ended and related notes,
derived from the audited financial report of Abacus Group Holdings Limited for the year ended 30 June 2007. The concise
financial report also includes the director’s declaration. The concise financial report does not contain all the disclosures
required by the Australian Accounting standards.
Director’s Responsibility for the Concise Financial Report
The Directors are responsible for the preparation and presentation of the concise financial report in accordance with
Accounting standard AAsb 1039 Concise Financial Reports, and the Corporations Act 2001. This responsibility includes
establishing and maintaining internal controls relevant to the preparation of the concise financial report; selecting and applying
appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.
Autitor’s Responsibility
our responsibility is to express an opinion on the concise financial report based on our audit procedures. We have conducted
an independent audit, in accordance with Australian Auditing standards, of the financial report of Abacus Group Holdings
Limited for the year ended 30 June 2007. our audit report on the financial report for the year was signed on 30 August 2007
and was not subject to any modification. The Australian 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 for the year is free from material misstatement.
our procedures in respect of the concise financial report included testing that the information in the concise financial report is
derived from, and is consistent with, the financial report for the year, and examination on a test basis, of evidence supporting
the amounts and other disclosures which were not directly derived from the financial report for the year. These procedures have
been undertaken to form an opinion whether, in all material respects, the concise financial report complies with Accounting
standard AAsb 1039 Concise Financial Reports.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We confirm
that the independence declaration required by the Corporations Act 2001 provided to the directors of Abacus Group Holdings
Limited on 30 August 2007.
Liability limited by a scheme approved under
Professional Standards Legislation.
37
independent auditor’s report
to members of abacus group holdings limited
Auditor’s Opinion
In our opinion, the concise financial report and the directors’ declaration of Abacus Group Holdings Limited
for the year ended 30 June 2007 complies with Accounting standard AAsb 1039 Concise Financial Reports.
eRnsT & YounG
eD PsALTIs
Partner
sydney, 12 september 2007
38
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus trust
Directory
Responsible entity
Abacus Funds Management Limited
Level 34, Australia Square
264-278 George Street
SYDNEY NSW 2000
Tel (02) 9253 8600
Fax (02) 9253 8616
Website www.abacusproperty.com.au
Directors of responsible entity
John Thame, Chairman
Frank Wolf, Managing Director
David Bastian* (appointed 14/11/06)
Dennis Bluth
Malcolm Irving
Len Lloyd
William Bartlett (appointed 14/02/07)
Phillip Green (resigned 1/9/06)
*Resigned as Managing Director on 30/09/06
Company secretary
Ellis Varejes
Custodian
Perpetual Trustee Company Limited
Level 12, Angel Place
123 Pitt Street
SYDNEY NSW 2000
Auditor
Ernst & Young
Ernst & Young Centre
680 George Street
SYDNEY NSW 2000
Compliance Plan Auditor
Ernst & Young
Ernst & Young Centre
680 George Street
SYDNEY NSW 2000
Registry
Computershare Investor Services Pty Ltd
Level 3, 60 Carrington Street
SYDNEY NSW 2000
Tel (02) 1800 635 323 Toll free
Fax (02) 8234 5050
Contents
40
Directors’ Report
44
Auditor’s Independence Declaration
45
46
47
Consolidated Income and Distribution
Statements
Consolidated Balance Sheet
Consolidated Statement of Changes
in Equity
48
Consolidated Cash Flow Statement
49 Notes to the Concise Financial
Statements
Directors’ Declaration
Independent Auditor’s Report
58
59
It is recommended that this Annual Financial Report should be read in conjunction with the Annual Financial Reports of Abacus Income Trust,
Abacus Group Holding Limited and Abacus Group Projects Limited for the year ended 30 June 2007. It is also recommended that the report
be considered together with any public announcements made by the Abacus Property Group in accordance with its continuous disclosure
obligations arising under the Corporations Act 2001.
39
annual financial report / continued
directors’ report
DIReCToRs RePoRT
The directors of Abacus, the responsible entity of the Abacus
Trust (AT or the Trust) submit their report for the Trust for the
year ended 30 June 2007 and the auditor’s report thereon.
DIReCToRs
The directors of the responsible entity in office during the
financial year and until the date of this report are set out
below:
John Thame
Chairman (non-executive)
Frank Wolf
Managing Director (executive)
David bastian*
William bartlett
non-executive director
(appointed 14/11/06)
non-executive director
(appointed 14/02/07)
Dennis bluth
non-executive director
Phillip Green
non-executive director
(resigned 1/9/06)
Malcolm Irving
non-executive director
Len Lloyd
executive director
* Resigned as Managing Director on 30 september 2006
As at the date of this report, the relevant interests of the
directors and specified executives in the stapled securities
of Abacus Property Group were as follows:
DIReCToRs
J Thame
F Wolf
D bastian
M Irving
L Lloyd
APG seCuRITIes
HeLD
nuMbeR oF oPTIons
oVeR APG seCuRITIes
50,000
9,710,274*
4,486,352
30,014
785,925*
-
1,343,284
-
-
477,612
* The holdings of Dr Wolf and Mr Lloyd include securities acquired under
the executive share Loan Plan that are treated as options.
PRInCIPAL ACTIVITIes
The principal activities of the Trust during the course of the
year ended 30 June 2007 include:
• investment in commercial, retail and industrial properties;
• property finance; and
• participation in property joint ventures and developments
TRusT sTRuCTuRe
Abacus Property Group (APG) comprises Abacus Group
Holding Limited (AGHL), Abacus Trust (AT), Abacus Group
Project Limited (AGPL) and Abacus Income Trust (AIT). shares
in AGHL and AGPL and units in AT and AIT and have been
stapled together so that none can be dealt with without the
other. An APG security consists of one share in AGHL, one unit
in AT, one share in AGPL and one unit in AIT. A transfer, issue
or reorganisation of a share or unit in any of the component
parts is accompanied by a transfer, issue or reorganisation of
a share or unit in each of the other component parts.
AT is an Australian registered managed investment scheme.
Abacus, the responsible entity of AT, is incorporated and
domiciled in Australia and is a wholly owned subsidiary of
AGHL.
oPeRATInG PRoFIT
The Trust earned a net profit attributable to unitholders of
$89.12 million for the year ended 30 June 2007 (June 2006:
$82.17 million).
The Trust earned a net profit attributable to unitholders
(excluding net property and derivative financial instruments
revaluation movements) of $64.39 million (June 2006: $54.05
million).
DIsTRIbuTIons
AT has a distribution of $7.84 million (1.36 cents per unit)
declared and provided for in respect of the quarter ended
30 June 2007. AT funded all distributions to securityholders
for the year ended 30 June 2007.
40
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus trust
ReVIeW oF oPeRATIons
TRusT oVeRVIeW
The Trust operates within Australia and holds an investment portfolio of commercial, retail and industrial properties, and
mortgage loan investments.
AT’s revenues and net profit grew in the year ended 30 June 2007:
Revenue
net profit
earnings per unit ex fair value adjustments
Distributions per unit (cents)
similarly AT’s financial condition also strengthened during the year:
Total assets ($ million)
Gearing (%)
net assets ($ million)
net tangible assets ($ million)
nTA per security ($)
securities on issue ($ million)
Weighted average securities on issue ($ million)
30 June 2007
$’000
30 June 2006
$’000
%
CHAnGe
119,394
89,123
16.11
10.61
98,478
82,172
19.66
11.80
21%
8%
(18%)
(10%)
30 June 2007
$’000
30 June 2006
$’000
%
CHAnGe
966
28%
620
620
1.07
579
557
775
27%
514
514
1.00
516
418
25%
4%
21%
21%
7%
12%
33%
busIness ACTIVITIes
business activities which contributed to the Trust’s operating performance and financial condition for the year were:
Investment property portfolio
• The Trust acquired Moorabbin House and Home Centre for $ 38.7 million. The acquisition brought the value of the total
investment property portfolio to $414.2 million at 31 December 2006 from $366.1 million at 30 June 2006.
• The Trust acquired 12-14 Butler Road, Hurstville for $18.71 million.
• The Trust acquired 27 Grant Street, Port Macquarie for $16.02 million.
• On 30 June 2007, the Trust completed sale of 70% units in Miller Street Holding Trust, which is the parent entity of Miller
street Trust, realising a profit of $9.8 million.
Property finance
• AT increased the size of its lending portfolio (including accrued interest) by $8.7 million to $108.7 million at 30 June 2007
compared to $100 million at 30 June 2006.
• AT advanced approximately $19.6 million in loan funds to AFP and $18 million in loan funds to AGHL. At 30 June 2007, the
balance of the loan to associated Group entities was approximately $205 million.
41
annual financial report / continued
directors’ report
ReVIeW oF FInAnCIAL ConDITIon
During the year ended 30 June 2007, the contributed equity of
the Trust increased $74 million (17%) to $521 million compared
to $447 million at 30 June 2006.
• Total equity increased 21% or $106 million to $619.5 million
at 30 June 2007 compared to $513.9 million at 30 June 2006,
reflecting the additional capital raised, growth in retained
earnings and net positive revaluations during the year.
In early July 2006, the APG completed a $19.5 million capital
raising via a security Purchase Plan (13.8 million securities at
$1.41) and approximately $15.3 million has been allocated to AT.
In early December 2006, the APG completed a $60 million
capital raising via a security Purchase Plan (36.59 million
securities at $1.64) and approximately $45.59 million has been
allocated to AT.
Total equity increased net $105.62 million to $619.53 million
at 30 June 2007 compared to $513.91 million at 30 June
2006. net tangible assets per AT unit is $1.07 at 30 June 2007
compared to $1.00 at 30 June 2006.
At 30 June 2007, existing bank loan facilities totalled
approximately $262 million, of which approximately $232
million was drawn. The Trust manages interest rate exposure
on debt facilities through the use of interest rate swap
contracts. At 30 June 2007, approximately $165 million or 71%
of total bank debt facilities were covered by interest rate swap
arrangements at an average interest rate (including bank
margin) of 6.29% and an average term to maturity of 3.5 years.
The Trust’s net debt gearing ratio (calculated as total interest
bearing liabilities less cash assets divided by total assets) was
28% at 30 June 2007 compared to 27% at 30 June 2006.
unITs on Issue
At 30 June 2007, 578,633,460 units in AT were on issue (2006:
516,381,609). units on issue increased net 62,251,851 during
the year ended 30 June 2007.
Fees PAID To THe ResPonsIbLe enTITY AnD AssoCIATes
AT paid a management fee out of scheme property to
the responsible entity of $2 million for the year ended 30
June 2007 (2006: $2 million). In addition, AT paid property
management fees to an associate of the responsible entity,
Abacus Property services Pty Limited of $0.5 million (2006:
$0.4 million) for the year ended 30 June 2006.
sIGnIFICAnT CHAnGes In THe sTATe oF AFFAIRs
The following significant changes in the state of affairs of the
Trust occurred during the financial year:
• Retained earnings (including the impact of revaluations of
investment properties and derivative financial instruments)
increased $30.9 million to $98.3 at 30 June 2007 compared
to $67.4 million at 30 June 2006;
42
AbACus AnnuAL FInAnCIAL RePoRT 2007
sIGnIFICAnT eVenTs AFTeR bALAnCe DATe
on 26 July 2007, the APG completed a capital raising via an
institutional placement for $100 million (of which $74.45 million
was allocated to AT) and issued 52.6 million stapled securities
at $1.90 per stapled security.
In July 2007, AT exchanged contracts to acquire two
commercial office buildings for $23 million in the Varsity Lakes
business district on the Gold Coast, Queensland.
other than as disclosed in this report and to the knowledge of
directors, there has been no matter or circumstance that has
arisen since the end of the financial year that has significantly
affected, or may affect, the Trust’s operations in future
financial years, the results of those operations or the Trust’s
state of affairs in future financial years.
LIKeLY DeVeLoPMenTs AnD eXPeCTeD ResuLTs
The directors have excluded from this report any other
information on the likely developments in the operations
of the Trust and the expected results of those operations
in future financial years which are not of a material nature
and would not in the directors’ view be likely to result in
unreasonable prejudice to the operation of the Trust.
enVIRonMenTAL ReGuLATIon AnD PeRFoRMAnCe
The Trust’ environmental responsibilities, such as waste
removal and water treatment, have been managed in
compliance with all applicable regulations and licence
requirements and in accordance with industry standards.
no breaches of requirements or any environmental issues
have been discovered and brought to the board’s attention.
There has been no known significant breaches of any
environmental requirements applicable to the Trust.
InDeMnIFICATIon AnD InsuRAnCe oF DIReCToRs AnD
oFFICeRs
As responsible entity of the Trust, Abacus has paid an
insurance premium in respect of a contract insuring its
directors and full time executive officers and secretary. The
terms of this policy prohibit disclosure of the nature of the
risks insured or the premium paid.
abacus trust
AuDIToRs InDePenDenCe DeCLARATIon
We have obtained an independence declaration from our
auditor, ernst & Young, and such declaration is shown on the
following page.
RounDInG
The amounts contained in this report and in the annual
financial report have been rounded to the nearest $1,000
(where rounding is applicable) under the option available to
the Trust under AsIC Class order 98/100. The Trust is an entity
to which the Class order applies.
signed in accordance with a resolution of the directors.
Abacus Funds Management Limited (Abn 66 007 415 590)
John Thame
Chairman
Frank Wolf
Managing Director
sydney, 12 september 2007
43
n Ernst & Young Centre
680 George Street
Sydney NSW 2000
Australia
GPO Box 2646
Sydney NSW 2001
n Tel 61 2 9248 5555
Fax 61 2 9248 5959
DX Sydney Stock
Exchange 10172
auditor’s independence declaration
to the directors of abacus funds management limited as the
responsible entity for abacus trust
In relation to our audit of the financial report of Abacus Trust for the financial year ended 30 June 2007,
to the best of my knowledge and belief, there have been no contraventions of the auditor independence
requirements of the Corporations Act 2001 or any applicable code of professional conduct.
eRnsT & YounG
eD PsALTIs
Partner
sydney, 30 August 2007
44
AbACus AnnuAL FInAnCIAL RePoRT 2007
Liability limited by a scheme approved under
Professional Standards Legislation.
consolidated income and distribution statements
YeAR enDeD 30 June 2007
noTes
ConsoLIDATeD
2007
$’000
2006
$’000
Revenue
Rental income
Finance income
Profit from equity accounted investments
Income from distributions
net realised gains on investments
net unrealised gains on investments
Total revenue
Depreciation and amortisation expense
Finance costs
other expenses
Net profit attributable to unitholders of Abacus Trust
Basic earnings per unit
Diluted earnings per unit
basic earnings per unit excluding fair value adjustments*
Diluted earnings per unit excluding fair value adjustments*
* based on net profit adjusted for AIFRs fair value adjustments
(namely property revaluations, swap mark to market revaluations)
sTATeMenT oF DIsTRIbuTIon
net profit attributable to unitholders
net transfer of undistributed income to unitholders’ funds
Distributions paid and payable
Distributions paid and payable
Weighted average number of securities (‘000)
38,383
4(a)
49,570
1,462
-
9,823
20,156
35,959
37,770
255
-
1,767
22,727
4(b)
4(c)
4(e)
4(d)
4(f)
6
6
6
6
5
5
6
119,394
98,478
(1,067)
(10,432)
(18,772)
89,123
CenTs
16.11
16.00
11.64
11.56
(653)
(6,421)
(9,232)
82,172
CenTs
19.66
19.66
12.93
12.93
2007
$’000
2006
$’000
89,123
82,172
(30,566)
(31,211)
58,557
50,961
58,557
50,961
556,887
418,056
45
annual financial report / continued
consolidated balance sheet
As AT 30 June 2007
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
other financial assets
other
Total current assets
Non–current assets
Investment properties
Investments accounted for using the equity method
other financial assets
other
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Total current liabilities
Non-current liabilities
IInterest-bearing loans and borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
undistributed income
Total equity
46
AbACus AnnuAL FInAnCIAL RePoRT 2007
noTes
ConsoLIDATeD
2007
$’000
2006
$’000
884
11,843
50,169
6,789
2,728
-
392,382
316,890
937
1,102
447,100
336,624
7
431,870
366,079
59,201
52,411
23,245
16,725
4,174
3,410
518,490
438,625
965,590
775,249
76,996
43,559
169,575
8,250
246,571
51,809
99,493
209,533
99,493
209,533
346,064
261,342
619,526
513,907
8
521,265
446,550
98,261
67,357
619,526
513,907
abacus trust
consolidated statement of changes in equity
As AT 30 June 2007
At 1 July 2006
Recognition of 30% swap revaluation
Total income and expense for the period
recognised directly in equity
net income for the period
Total income for the period
equity raisings (net of issue costs)
Distribution to unitholders
At 30 June 2007
At 1 July 2005
Fair value adjustment of interest rate swaps
Recognition of unearned revenue for amortisation
Total income and expense for the period
recognised directly in equity
net income for the period
Total income for the period
equity raisings (net of issue costs)
net impact of merger with ADIF
Distribution to unitholders
At 30 June 2006
IssueD
CAPITAL
$’000
ReTAIneD
eARnInGs
$’000
ToTAL
eQuITY
$’000
446,550
67,357 513,907
337
337
337
337
89,123
89,123
-
-
-
-
89,460
74,715
-
-
(58,558)
89,460
74,715
(58,558)
521,265
98,259 619,524
339,782
41,292 381,074
-
-
-
(4,869)
(277)
(4,869)
(277)
(5,146)
(5,146)
-
82,172
82,172
-
77,026
115,877
-
(9,109)
-
-
(50,961)
77,026
115,877
(9,109)
(50,961)
446,550
67,357 513,907
47
annual financial report / continued
consolidated cash flow statement
YeAR enDeD 30 June 2007
Cash flows from operating activities
Income receipts
Interest received
borrowing costs
Payments to suppliers and employees
Net cash flows from operating activities
Cash flows from investing activities
Payments for investments and funds advanced
Proceeds from settlement of investments and funds repaid
Purchase of investment properties
Disposal of investment properties
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from issue of units
Payment of issue costs
Repayment of borrowings
Proceeds from borrowings
Distributions paid
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
ConsoLIDATeD
2007
$’000
2006
$’000
24,079
27,640
11,728
8,630
(13,860)
(3,230)
(11,251)
(1,711)
18,717
23,308
(246,648)
(340,947)
241,554
259,846
(50,492)
(40,971)
-
14,035
(55,586)
(108,037)
43,071
130,436
(2,373)
(84,000)
(3,277)
(91,000)
135,285
104,260
(66,073)
25,910
(45,412)
95,007
(10,959)
10,279
11,843
1,564
884
11,843
48
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus trust
abacus trust
notes to the concise financial statements
30 June 2007
1. TRusT InFoRMATIon
AT is a registered managed investment scheme and is a
component entity of the APG which comprises AGHL, AT,
AGPL and AIT. shares in AGHL and AGPL and units in AT and
AIT have been stapled together so that neither can be dealt
with without the other. The securities trade as one security on
the Australian stock exchange under the code AbP.
The concise financial report has been derived from the
annual financial report but does not include all notes of the
type normally included within the annual financial report
and therefore cannot be expected to provide as full an
understanding of the financial performance, financial position
and financial and investing activities of the Trust as the full
financial report.
The nature of the operations and principal activities of the
Trust are described in the Directors’ Report.
2. suMMARY oF sIGnIFICAnT ACCounTInG PoLICIes
bAsIs oF PRePARATIon
The concise financial report is a general-purpose financial
report, which has been prepared in accordance with the
requirements of the Corporations Act 2001 and Australian
Accounting standards. The concise financial report has
also been prepared on a historical cost basis, except for
investment properties and derivative financial instruments
which have been measured at fair value, interests in joint
ventures which are accounted for using the equity method,
and certain investments measured at net market value. The
carrying values of recognized assets and liabilities that are
covered by interest rate swap arrangements, are adjusted to
record changes in the fair values attributable to the risks that
are being covered by derivative financial instruments.
It is also recommended that the annual financial report be
considered together with any public announcements made by
the Trust during the year ended 30 June 2007 in accordance
with the continuous disclosure obligations arising under the
Corporations Act 2001.
The concise financial report is presented in Australian dollars
and all values are rounded to the nearest thousand dollars
($’000) unless otherwise stated under the option available to
the Trust under AsIC Class order 98/100. The Trust is an entity
to which the class order applies.
sTATeMenT oF CoMPLIAnCe
except for the amendments of AAsb 101 Presentation of
Financial Statements and AAsb 2007-4 amendments to
Australian Accounting Standards arising from ED 151 and
Other Amendments, which the Group has early adopted,
Australian Accounting standards and Interpretations that have
recently been issued or amended but are not yet effective
have not been adopted by the Group for the annual reporting
period ending 30 June 2007. These are outlined in the
following table.
49
ReFeRenCe
suMMARY
AAsb 2005-10 Amending standard issued as a
consequence of AAsb 7 Financial
Instruments: Disclosures.
APPLICATIon
DATe oF
sTAnDARD*
1 January
2007
AAsb 2007-1
Amending standard issued
as a consequence of AAsb
Interpretation 11 AAsb 2 – Group
and Treasury Share Transactions.
1 March
2007
AAsb 2007-3
Amending standard issued as a
consequence of AAsb 8 Operating
Segments.
1 January
2009
AAsb 2007-7
Amending standards for wording
errors, discrepancies and
inconsistencies.
1 July 2007
IMPACT on TRusT FInAnCIAL RePoRT
AAsb 7 is a disclosure standard so will have
no direct impact on the amounts included
in the Trust’s financial statements. However,
the amendments will result in changes to the
financial instrument disclosures included in
the Trust’s financial report.
This is consistent with the Trust’s existing
accounting policies for share-based
payments, so the standard is not expected
to have any impact on the Trust’s financial
report.
AAsb 8 is a disclosure standard so will have
no direct impact on the amounts included
in the Trust’s financial statements. However,
the standard is expected to have an impact
on the Trust’s segment disclosures as
segment information included in internal
management reports is more detailed than
that currently reported under AAsb 114
Segment Reporting.
The amendments are minor and do not
affect the recognition, measurement or
disclosure requirements of the standards.
Therefore the amendments are not
expected to have any impact on the Trust’s
financial report.
APPLICATIon
DATe FoR
TRusT*
1 July 2007
1 July 2007
1 July 2009
1 July 2007
1 January
2007
Refer to AAsb 2005-10 above.
1 July 2007
1 January
2009
1
november
2006
Refer to AAsb 2007-3 above.
1 July 2009
The prohibitions on reversing impairment
losses in AAsb 136 and AAsb 139, which are
to take precedence over the more general
statement in AAsb 134, are not expected
to have any impact on the Trust’s financial
report.
1 July 2007
1 March
2007
Refer to AAsb 2007-1 above
1 July 2007
AAsb 7
AAsb 8
AAsb
Interpretation
10
AAsb
Interpretation
11
new standard replacing disclosure
requirements of AAsb 130
Disclosures in the Financial
Statements of Banks and Similar
Financial Institutions and AAsb 132
Financial Instruments: Disclosure
and Presentation.
new standard replacing AAsb
114 Segment Reporting, which
adopts a management approach
to segment reporting.
Addresses an inconsistency
between AAsb 134-interim
Financial Reporting and the
impairment requirements relating
to goodwill in AAsb 136 Impairment
of Assets and equity instruments
classified as available for sale in
AAsb 139 Financial Instruments:
Recognition and Measurement
Addresses whether certain types of
share-based payment transactions
with employees (or other suppliers
of goods and services) should be
accounted for as equity-settled or
as cash-settled transactions under
AAsb 2 share-based-Payment. It
also specifies the accounting in a
subsidiary’s financial statements
for share-based payment
arrangements involving equity
instruments of the parent.
*designates the beginning of the applicable annual reporting period
50
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus trust
AAsb 2007-2, AAsb 2007-5, AAsb 2007-6, AAsb 123 and
AAsb Interpretation 12 will have no application to the Trust.
The financial report complies with Australian Accounting
standards, which include Australian equivalents to
International Financial Reporting standards (AIFRs). The
financial report also complies with International Financial
Reporting standards (IFRs).
3. seGMenT InFoRMATIon
The Trust predominantly operates in Australia. The Trust’s
segment reporting format is business segments as its risks
and rates of return can be readily identified with the type of
business and services provided.
segment revenue, segment expense and segment result do
not include transactions between business segments.
The Trust’s primary business segments are Property,
Property Finance and Joint Ventures and Developments. The
Property division comprises the leasing and maintenance
of commercial, retail and industrial properties and the
conversion of commercial properties into commercial strata
units intended for sale. Property Finance comprises mortgage
lending and related property financing solutions. Joint
Ventures & Developments comprise investments in joint
venture activities and in securities of other listed and unlisted
property trusts.
bAsIs oF ConsoLIDATIon
The constitution of AT was amended to remove the finite
The consolidated financial statements comprise the financial
statements of AT and its subsidiaries, AT and its subsidiaries
as from the date of the Abacus Trust obtained control until
such time control ceases.
The financial statements of subsidiaries are prepared for
the same reporting period as the parent company, using
consistent accounting policies with adjustments made to bring
into line any dissimilar accounting policies that may exist.
All intercompany balances and transactions, including
unrealised profits from intra-Trust transactions, have been
eliminated in full and subsidiaries are consolidated from the
date on which control is obtained by the Trust and cease to be
consolidated from the date on which control is transferred out
of the Trust.
The acquisition of subsidiaries is accounted for using the
purchase method of accounting. The purchase method
of accounting involves allocating the cost of the business
combination to the fair value of the assets acquired and the
liabilities and contingent liabilities assumed at the date of
acquisition.
51
annual financial report / continued
notes
busIness seGMenTs
Year ended 30 June 2007
Revenue
Revenue from external customers
Realised and unrealised gains
on investments
bank interest
Total consolidated revenue
Result
segment results
Interest income
Profit/(loss) before finance costs
Finance costs
Net profit for the year
Assets
segment assets
Total assets
Liabilities
segment liabilities
Interest bearing liabilities
unallocated liabilities
Total liabilities
Other segment information
Capital expenditure
Depreciation and amortisation
Cash flow
net cash flow from operating activities
net cash flow from investing activities
net cash flow from financing activities
52
AbACus AnnuAL FInAnCIAL RePoRT 2007
PRoPeRTY
$’000
PRoPeRTY
JoInT VenTuRes
FInAnCe & DeVeLoPMenTs
$’000
$’000
ToTAL
$’000
38,383 48,712
1,462
88,557
64,113 33,402
1,183
29,979
858
119,394
98,697
858
99,555
(10,432)
89,123
513,285
413,284
39,021
965,590
965,590
78,927 299
- 79,226
263,965
2,873
346,064
6,930 -
1,067
-
- 6,930
- 1,067
6,385
10,870
(4,680)
(42,054)
-
25,910
1,462
(8,852)
-
18,717
(55,586)
25,910
abacus trust
abacus trust
busIness seGMenTs
Year ended 30 June 2006
Revenue
Revenue from external customers
Realised and unrealised gains
on investments
bank interest
Total consolidated revenue
Result
segment results
Interest income
Profit/(loss) before finance costs
Finance costs
Net profit for the year
Assets
segment assets
Total assets
Liabilities
segment liabilities
Interest bearing liabilities
unallocated liabilities
Total liabilities
Other segment information
Capital expenditure
Depreciation and amortisation
Cash flow
net cash flow from operating activities
net cash flow from investing activities
net cash flow from financing activities
PRoPeRTY
$’000
PRoPeRTY
JoInT VenTuRes
FInAnCe & DeVeLoPMenTs
$’000
$’000
ToTAL
$’000
35,704 37,343
255
73,302
24,494
682
98,478
51,069 36,592 250 87,911
682
88,593
(6,421)
82,172
402,027
334,416
38,806
775,249
25,048
1,484
2,063
775,249
28,595
217,256
15,491
261,342
13,658 -
653
-
- 13,658
- 653
15,105
(26,935)
7,948
(67,497)
95,008
255
23,308
(13,605)
(108,037)
95,008
53
annual financial report / continued
notes
4. ReVenue AnD eXPenses
(a) Finance income
Interest on loans
bank interest
Total finance income
(b) Net realised gains on investments
sale of investment properties
expenses on sale of investment properties
Total net realised gains on investments
(c) Unrealised gains on investments
Change in fair value of investment properties
Total unrealised gains on investments
(d) Finance costs
Interest on bank loans
Amortisation of finance costs
unrealised loss (gains) on interest rate swap
Total finance costs
(e) Depreciation and amortisation
Amortisation of leasing incentives
(f) Other expenses
Property outgoings
bad and doubtful debts
Auditor’s remuneration
Custody fees
Registry maintenance costs
other
Total other expenses
54
AbACus AnnuAL FInAnCIAL RePoRT 2007
ConsoLIDATeD
2007
$’000
2006
$’000
48,712
37,088
858
682
49,570 37,770
10,093
1,950
(270)
(183)
9,823
1,767
20,156
22,727
20,156
22,727
14,677
11,495
330
322
(4,575)
(5,396)
10,432
6,421
1,067
653
9,888
7,332
3,000
21
100
62
121
98
30
60
5,633
1,659
18,772
9,232
abacus trust
5. DIsTRIbuTIons PAID AnD PRoPoseD
(a) Distributions paid during the year
Final distribution for financial year 30 June 2006:
3.00 cents per unit (2005: 2.90 cents)
Interim distributions paid during the year:
september: 3.00 cents per unit (2006: 2.90 cents)
December: 3.00 cents per unit (2006: 2.90 cents)
March: 3.25 cents per unit (2006: 3.00 cents)
Total
(b) Distributions proposed and recognised as a liability
Final distribution payable for the June quarter:
1.36 cents per unit (2006: 3.00 cents)*
ConsoLIDATeD
2007
$’000
2006
$’000
15,491
9,942
15,973
11,179
16,059
11,179
18,681
13,112
66,204
45,412
7,844
15,491
* Remaining 1.89 cents per unit was paid by AIT to total APG 3.25 cents per unit distribution
The distributions were paid from the AT (which does not pay tax provided it distributes all its taxable income) hence, there were
no franking credits attached.
6. eARnInGs PeR unIT
basic earnings per unit
Diluted earnings per unit
basic earnings per unit excluding fair value adjustments (1)
Diluted earnings per unit excluding fair value adjustments (1)
net profit attributable to unitholders
net profit attributable to unitholders excluding fair value adjustments (1)
Weighted average number of stapled securities:
Weighted average number of stapled securities
for basic earnings per stapled security
effect of dilution:
stapled security options
Weighted average number of stapled securities
adjusted for the effect of dilution
ConsoLIDATeD
2007
CenTs
16.11
16.00
11.64
11.56
2006
CenTs
19.66
19.66
12.93
12.93
$‘000
$‘000
89,123
64,392
82,172
54,049
‘000
‘000
553,184
418,056
3,703
-
556,887
418,056
options granted to employees (including key management personnel) are considered to be potential stapled securities and
have been included in the determination of diluted earnings per stapled security to the extent they are dilutive. These options
have not been included in the determination of basic earnings per stapled security.
(1) Fair value adjustments include property revaluations, swap mark to market revaluations and share based payments.
55
annual financial report / continued
notes
7. non-CuRRenT AsseTs - InVesTMenT PRoPeRTIes
Investment properties are carried at the directors’ determination of fair value and are based on independent valuations where
appropriate. The determination of fair value includes reference to the original acquisition cost together with capital expenditure
since acquisition and either the latest full independent valuation or latest independent update. Total acquisition costs include
incidental costs of acquisition such as property taxes on acquisition, legal and professional fees and other acquisition related costs.
Independent valuation of each investment property is conducted annually either in December or June of each year. Independent
valuations are prepared using both the capitalisation of net income method and the discounting of future cashflows to their
present value method. Capital expenditure since valuation may include purchases of sundry properties (and associated expenses
of stamp duty, legal fees etc) and other capital refurbishment and repair expenditure.
PRoPeRTY
ACQuIsITIon CosT InCLuDInG
ALL ADDITIons
$’000
DATe
InDePenDenT
VALuATIon
DATe
ConsoLIDATeD VALue
2007
$’000
2006
$’000
66 Christina Road, Villawood, nsW (i)
28-May-02
8,187
30-Jun-06
12,426
12,400
Properties owned by the parent entity, Abacus Trust
12,426
12,400
CsIRo, Limestone Ave., Campbell, ACT (v)
4 Ray Road, epping, nsW (ii)
Ashfield Mall, Ashfield, nsW (iv)
10-12 Pike street, Rydalmere, nsW (v)
Liverpool Plaza, Liverpool, NSW (iv)
Macquarie street, Liverpool, nsW (iii)
Moore street, Liverpool, nsW (iii)
Aspley Village shopping Centre (iii)
Westpac (formerly santos) House, Adelaide sA (i)
50 Miller street, north sydney, nsW (ii)
970 nepean Highway, Moorabbin, nsW (ii)
12-14 butler Road, Hurstville (iv)
27 Grant street, Port Macquarie (vi)
21-Jun-02
12,686
30-Jun-07
20,000
18,000
30-Apr-97
26,959
30-Jun-07
54,500
51,000
15-sep-97
82,964
30-Jun-06
116,842
113,000
1-oct-98
14,262
30-Jun-07
22,400
19,300
16-Aug-04
32,840
30-Jun-06
37,020
37,000
21-sep-05
5,451
30-Jun-06
5,503
5,503
14-oct-05
2,265
30-Jun-06
2,297
2,297
15-Feb-06
16,579
01-Feb-06
18,607
16,579
5-oct-04
54,328
30-Jun-07
68,850
51,000
17-Dec-04
38,349
30-Jun-06
-
40,000
11-Aug-06
38,688
6-Jul-06
38,690
31-May-07
18,714
18-May-07
18,714
26-Jun-07
16,021
6-Jun-07
16,021
-
-
-
Properties owned by AT and its controlled entities
431,871
366,079
Notes:
(a) The aggregated value at 30 June 2007 includes capital expenditures after the last valuation date.
(i) As valued by Knight Frank Pty Limited
(iii) As valued by urbis Property Consultants
(v) As valued by FPD savills (nsW) Pty Limited
(ii) As valued by Colliers International Consultancy and Valuation Pty Ltd
(iv) As valued by Cb Richard ellis Pty Ltd
(vi) As valued by Jeffrey Reid Flanagan
ReConCILIATIons
Reconciliation of the carrying amounts of investment properties at the beginning and end of the current and previous financial year:
Investment properties
Carrying amount at beginning of the financial year
Additions and capital expenditure
net revaluation increments
Disposals
ConsoLIDATeD VALue
2007
$’000
2006
$’000
366,079
317,808
85,635
38,166
20,156
22,727
(40,000)
(12,622)
Carrying amount at end of the financial year
431,870
366,079
56
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus trust
abacus trust
8. ConTRIbuTeD eQuITY
(a) Issued Units
Issued capital
Finance and issue costs
Total contributed equity
(b) Movements in contributed equity for the year
At 1 July 2005
- net impact of merger with ADIF (1)
- institutional equity raising
- distribution reinvestment plan
- less transaction costs
At 1 July 2006
- institutional equity raising
- distribution reinvestment plan
- security purchase plan
- less transaction costs
End of the financial year June 2007
ConsoLIDATeD
2007
$’000
2006
$’000
535,690
459,475
(14,425)
(12,925)
521,265
446,550
ConsoLIDATeD
nuMbeR
$’000
VALue
$’0000
342,836 339,782
79,310
(9,109)
92,636
117,048
1,600
2,106
-
(3,277)
516,382 446,550
36,585
45,588
11,824
13,842
15,294
15,333
-
(1,500)
578,633
521,265
(1) net impact of merger with ADIF represents the aggregation of outstanding contributed equity (net of issue costs) as at 31 March 2006
(merger implementation date).
unitholders have the right to receive distributions from the Trust, as declared, and in the event of winding up of the Trust, are
entitle to participate in the proceeds from sale of all surplus assets in proportion to the number of units held.
unitholders can vote their units in accordance with the Corporations Act, either in person or by proxy, at a meeting of the Trust.
9. eVenTs AFTeR THe bALAnCe sHeeT DATe
since the end of the financial year:
on 26 July 2007, APG completed a capital raising via an institutional placement for $100 million (of which $74.45 million was
allocated to AT) and issued 52.6 million stapled securities at $1.90 per stapled security.
In July 2007, the Trust exchanged contracts to acquire two commercial office buildings for $23 million in the Varsity Lakes
business district on the Gold Coast, Queensland.
other than as disclosed in this report and to the knowledge of directors, there has been no other matter or circumstance that
has arisen since the end of the financial year that has or may affect the Trust’s operations in future financial years, the results of
those operations or the Trust’s state of affairs in future financial years.
57
annual financial report / continued
directors’ declaration
In accordance with a resolution of the directors of the responsible entity, we state that:
(1) in the opinion of the directors:
(a) the concise financial statements and notes of the consolidated entity are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the consolidated entity’s financial position as at 30 June 2006 and
of their performance for the year ended on that date; and
(ii) complying with Accounting Standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they
become due and payable.
(2) This declaration has been made after receiving the declarations required to be made to the directors
in accordance with sections 295A of the Corporations Act 2001 for the financial period ended 30 June 2007.
on behalf of the board of Abacus Funds Management Limited
JoHn THAMe
Chairman
FRAnK WoLF
Managing Director
sydney, 12 september 2007
58
AbACus AnnuAL FInAnCIAL RePoRT 2007
n Ernst & Young Centre
680 George Street
Sydney NSW 2000
Australia
GPO Box 2646
Sydney NSW 2001
n Tel 61 2 9248 5555
Fax 61 2 9248 5959
DX Sydney Stock
Exchange 10172
independent auditor’s report
to members of abacus trust
The accompanying concise financial report of Abacus Trust comprises the balance sheet as at 30 June 2007, the
income statement, statement of changes in equity and cash flow statement for the year then ended and related
notes, derived from the audited financial report of Abacus Trust for the year ended 30 June 2007. The concise
financial report also includes the director’s declaration. The concise financial report does not contain all the
disclosures required by the Australian Accounting standards.
Director’s Responsibility for the Concise Financial Report
The Directors of the Responsible entity for the trust are responsible for the preparation and presentation of the
concise financial report in accordance with Accounting standard AAsb 1039 Concise Financial Reports, and the
Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the
preparation of the concise financial report; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Autitor’s Responsibility
our responsibility is to express an opinion on the concise financial report based on our audit procedures. We
have conducted an independent audit, in accordance with Australian Auditing standards, of the financial report
of Abacus Trust for the year ended 30 June 2007. our audit report on the financial report for the year was signed
on 30 August 2007 and was not subject to any modification. The Australian 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 for the year is free from material misstatement.
our procedures in respect of the concise financial report included testing that the information in the concise
financial report is derived from, and is consistent with, the financial report for the year, and examination on a test
basis, of evidence supporting the amounts and other disclosures which were not directly derived from the financial
report for the year. These procedures have been undertaken to form an opinion whether, in all material respects,
the concise financial report complies with Accounting standard AAsb 1039 Concise Financial Reports.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001. We
confirm that the independence declaration required by the Corporations Act 2001 provided to the directors of the
Responsible entity for Abacus Trust on 30 August 2007.
Liability limited by a scheme approved under
Professional Standards Legislation.
59
independent auditor’s report
to members of abacus trust
Auditor’s Opinion
In our opinion, the concise financial report and the directors’ declaration of Abacus Trust for the year ended
30 June 2007 complies with Accounting standard AAsb 1039 Concise Financial Reports.
eRnsT & YounG
eD PsALTIs
Partner
sydney, 12 september 2007
60
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus income trust
Directory
Responsible entity
Abacus Funds Management Limited
Level 34, Australia Square
264-278 George Street
SYDNEY NSW 2000
Tel (02) 9253 8600
Fax (02) 9253 8616
Website www.abacusproperty.com.au
Directors of responsible entity
John Thame, Chairman
Frank Wolf, Managing Director
David Bastian* (appointed 14/11/06)
Dennis Bluth
Malcolm Irving
Len Lloyd
William Bartlett (appointed 14/02/07)
Phillip Green (resigned 1/9/06)
*Resigned as Managing Director on 30/09/06
Company secretary
Ellis Varejes
Custodian
Perpetual Trustee Company Limited
Level 12, Angel Place
123 Pitt Street
SYDNEY NSW 2000
Auditor
Ernst & Young
Ernst & Young Centre
680 George Street
SYDNEY NSW 2000
Compliance Plan Auditor
Ernst & Young
Ernst & Young Centre
680 George Street
SYDNEY NSW 2000
Registry
Computershare Investor Services Pty Ltd
Level 3, 60 Carrington Street
SYDNEY NSW 2000
Tel (02) 1800 635 323 Toll free
Fax (02) 8234 5050
Contents
62
Directors’ Report
66
Auditor’s Independence Declaration
67
68
69
70
71
82
83
Consolidated Income and Distribution
Statements
Consolidated Balance Sheet
Consolidated Statement of Changes
in Equity
Consolidated Cash Flow Statement
Notes to the Concise Financial
Statements
Directors’ Declaration
Independent Auditor’s Report
It is recommended that this Annual Financial Report should be read in conjunction with the Annual Financial Reports of Abacus Trust, Abacus
Group Holdings Limited and Abacus Group Projects Limited for the year ended 30 June 2007. It is also recommended that the report be
considered together with any public announcements made by the Abacus Property Group in accordance with its continuous disclosure
obligations arising under the Corporations Act 2001.
61
annual financial report / continued
TRusT sTRuCTuRe
Abacus Property Group (APG or the Group) comprises of
Abacus Group Holding Limited (AGHL), Abacus Trust (AT),
Abacus Group Project Limited (AGPL) and Abacus Income
Trust (AIT). shares in AGHL and AGPL and units in AT and AIT
and have been stapled together so that none can be dealt
with without the other. An APG security consists of one share
in AGHL, one unit in AT, one share in AGPL and one unit in
AIT. A transfer, issue or reorganisation of a share or unit in
any of the component parts is accompanied by a transfer,
issue or reorganisation of a share or unit in each of the other
component parts.
AIT is an Australian registered managed investment scheme.
Abacus, the responsible entity of AIT, is incorporated and
domiciled in Australia and is a wholly owned subsidiary of
AGHL.
oPeRATInG PRoFIT
The Trust earned a net profit attributable to members of $29.4
million for the year ended 30 June 2007 (June 2006: $26.1
million).
The Trust earned a net profit attributable to members
(excluding net property and derivative financial instruments
revaluation movements) of $14.6 million (June 2006: $7.5
million).
DIsTRIbuTIons
AIT has a distribution of $10.96 million (1.89 cents per unit)
declared and provided for in respect of the quarter ended
30 June 2007. The AT funded all distributions to APG security
holders for the year ended 30 June 2007.
directors’ report
30 June 2007
The directors of Abacus, the responsible entity of the Abacus
Income Trust (AIT or the Trust) submit their report for the
Trust for the year ended 30 June 2007 and the auditor’s report
thereon.
DIReCToRs
The directors of the responsible entity in office during the
financial year and until the date of this report unless otherwise
stated:
John Thame
Chairman (non-executive)
Frank Wolf
Managing Director (executive)
David bastian*
William bartlett
non-executive director
(appointed 14/11/06)
non-executive director
(appointed 14/02/07)
Dennis bluth
non-executive director
Phillip Green
non-executive director
(resigned 1/9/06)
Malcolm Irving
non-executive director
Len Lloyd
executive director
(appointed 14/11/06)
*Resigned as Managing Director on 30 september 2006
As at the date of this report, the relevant interests of the
directors and specified executives in the stapled securities of
Abacus Property Group were as follows:
DIReCToRs
J Thame
F Wolf
D bastian
M Irving
L Lloyd
APG seCuRITIes
HeLD
nuMbeR oF oPTIons
oveR APG seCuRITIes
50,000
9,710,274*
4,486,352
30,014
785,925*
-
1,343,284
-
-
477,612
* The holdings of Dr Wolf and Mr Lloyd include securities
acquired under the executive share Loan Plan that are treated
as options.
PRInCIPAL ACTIvITIes
The principal activities of the Trust during the course of the
year ended 30 June 2007 include:
• investment in commercial, retail and industrial properties;
and
• property finance.
62
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus income trust
RevIeW oF oPeRATIons
TRusT oveRvIeW
The Trust operates within Australia and holds an investment portfolio of commercial, retail and industrial properties, and
mortgage loan investments.
AIT’s revenues and net profit grew in the year ended 30 June 2007:
Revenue
net Profit
earnings per security (cents)
Distributions per security (cents)
AIT’s financial condition also strengthened during the year:
Total assets ($ million)
Gearing (%)
net assets ($ million)
net tangible assets ($ million)
nTA per security ($)
securities on issue ($ million)
Weighted average securities on issue ($ million)
30 June 2007
$’000
30 June 2006
$’000
% CHAnGe
27,700
29,475
5.29
1.89
23,370
26,053
12.71
6.93
18.53
13.13
(58.38)
(72.73)
30 June 2007
30 June 2006
% CHAnGe
314
42.4
160
160
0.28
579
557
272
52.8
122
122
0.24
516
205
15.44
(19.70)
31.15
31.15
16.67
12.21
171.71
busIness ACTIvITIes
business activities which contributed to the Trust’s operating performance and financial condition for the year were:
Investment property portfolio
• The Trust acquired, through a 75% owned subsidiary, two additional retail properties in Townsville, QLD and Maryborough,
VIC for approximately $12.5 million.
• The revaluation of 14 existing properties in the portfolio resulted in a net increase of $13 million in the carrying value of
investment properties.
• In September 2006, the Trust sold an investment property in Kings Park, New South Wales realising a profit of approximately
$2.5 million. In addition, through a 75% owned subsidiary, the Trust completed the sale of an investment property in Bathurst,
New South Wales realising a profit of approximately $0.5 million.
• In April 2007, the Trust completed the sale of a 300 year carpark leasehold at 109 Pitt Street, New South Wales realising a
profit of approximately $3.3 million.
• Recurring net income from contracted rental receipts comprised approximately 85% of Trust earnings before interest, tax,
depreciation and amortisation for the year.
Property finance
• AIT decreased the size of its lending portfolio (including accrued interest) by $13 million to $4 million at 30 June 2007
compared to $17 million at 30 June 2006.
• AIT advanced approximately $13 million in loan funds to AGHL. At 30 June 2007, the balance of the loan to associated Group
entities was approximately $23 million.
63
annual financial report / continued
directors’ report
RevIeW oF FInAnCIAL ConDITIon
During the year ended 30 June 2007, the contributed equity of
the Trust increased $17 million (17%) to $117 million compared
to $100 million at 30 June 2006.
sIGnIFICAnT evenTs AFTeR bALAnCe DATe
on 26 July 2007, the APG completed a capital raising via an
institutional placement for $100 million and issued 52.6 million
stapled securities at $1.90 per stapled security.
other than as disclosed in this report and to the knowledge of
directors, there has been no matter or circumstance that has
arisen since the end of the financial year that has significantly
affected, or may affect, the Trust’s operations in future
financial years, the results of those operations or the Trust’s
state of affairs in future financial years.
LIKeLY DeveLoPMenTs AnD eXPeCTeD ResuLTs
The directors have excluded from this report any other
information on the likely developments in the operations
of the Trust and the expected results of those operations
in future financial years which are not of a material nature
and would not in the directors’ view be likely to result in
unreasonable prejudice to the operation of the Trust.
envIRonMenTAL ReGuLATIon AnD PeRFoRMAnCe
The Trust’ environmental responsibilities, such as waste
removal and water treatment, have been managed in
compliance with all applicable regulations and licence
requirements and in accordance with industry standards. no
breaches of requirements or any environmental issues have
been discovered and brought to the board’s attention. There
has been no known significant breaches of any environmental
requirements applicable to the Trust.
InDeMnIFICATIon AnD InsuRAnCe oF DIReCToRs AnD
oFFICeRs
As responsible entity of the Trust, Abacus has paid an
insurance premium in respect of a contract insuring its
directors and full time executive officers and secretary. The
terms of this policy prohibit disclosure of the nature of the
risks insured or the premium paid.
In early July 2006, the APG completed a $19.5 million capital
raising via a security Purchase Plan (13.8 million securities at
$1.41) of which approximately $2.9 million was allocated to AIT.
Total equity increased net $38 million to $160 million at 30
June 2007 compared to $122 million at 30 June 2006. net
tangible assets per unit is $0.28 at 30 June 2007 compared to
$0.24 at 30 June 2006.
At 30 June 2007, existing bank loan facilities totalled
approximately $104 million, of which approximately $95 million
was drawn. The Trust manages interest rate exposure on debt
facilities through the use of interest rate swap contracts. At 30
June 2007, approximately $73 million or 77% of total bank debt
facilities were covered by interest rate swap arrangements at
an average interest rate (including bank margin) of 6.38% and
an average term to maturity of 5 years.
The Trust’s net debt gearing ratio (calculated as total interest
bearing liabilities less cash assets divided by total assets) was
42.4% at 30 June 2007 compared to 52.8% at 30 June 2006.
unITs on Issue
At 30 June 2007, 578,633,460 units in AIT were on issue (2006:
516,381,609).
Fees PAID To THe ResPonsIbLe enTITY AnD AssoCIATes
AIT paid a management fee of $2.2 million out of scheme
property to the responsible entity for the year ended 30
June 2007 (2006: $1.9 million). In addition, AIT paid property
management fees to an associate of the responsible entity,
Abacus Property services Pty Limited, of $0.4 million (2006:
$0.5 million) for the year ended 30 June 2007.
sIGnIFICAnT CHAnGes In THe sTATe oF AFFAIRs
The following significant changes in the state of affairs of the
Trust occurred during the financial year:
- Retained earnings (including the impact of revaluations of
investment properties and derivative financial instruments)
increased $20.4 million to $40.6 million at 30 June 2007
compared to $20.2 million at 30 June 2006;
- Total equity increased 31% or $37.7 million to $160 million
at 30 June 2007 compared to $122.3 million at 30 June
2006, reflecting the additional capital raised, growth in
retained earnings and net positive revaluations during
the year.
64
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus income trust
AuDIToR’s InDePenDenCe DeCLARATIon
We have obtained an independence declaration from our
auditor, ernst & Young, and such declaration is shown on
the following page.
RounDInG
The amounts contained in this report and in the annual
financial report have been rounded to the nearest $1,000
(where rounding is applicable) under the option available to
the Trust under AsIC Class order 98/100. The Trust is an entity
to which the Class order applies.
signed in accordance with a resolution of the directors.
Abacus Funds Management Limited (Abn 66 007 415 590)
JoHn THAMe
Chairman
FRAnK WoLF
Managing Director
sydney, 12 september 2007
65
annual financial report / continued
n Ernst & Young Centre
680 George Street
Sydney NSW 2000
Australia
GPO Box 2646
Sydney NSW 2001
n Tel 61 2 9248 5555
Fax 61 2 9248 5959
DX Sydney Stock
Exchange 10172
auditor’s independence declaration
to the directors of abacus funds management limited as the
responsible entity for abacus income trust
In relation to our audit of the financial report of Abacus Income Trust for the financial year ended
30 June 2007, to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
eRnsT & YounG
eD PsALTIs
Partner
30 August 2007
66
AbACus AnnuAL FInAnCIAL RePoRT 2007
Liability limited by a scheme approved under
Professional Standards Legislation.
abacus income trust
consolidated income and distribution statements
YeAR enDeD 30 June 2007
Revenue
Property income
Finance income
Income from distributions
net realised gains on investments
net realised gains on property, plant and equipment
net unrealised gains on investment
Total revenue
Depreciation
Finance costs
other expenses
Profit before and after income tax
net profit attributable to minority interests – external
Net profit attributable to unitholders
Basic earnings per unit (cents)
Diluted earnings per unit (cents)
basic earnings per unit ex fair value adjustments*
Diluted earnings per unit ex fair value adjustments*
*based on net profit adjusted for AIFRs fair value adjustments (namely property
revaluations and swap mark to market revaluations)
sTATeMenT oF DIsTRIbuTIon
net profit attributable to unitholders
net transfer of undistributed income to unitholders’ funds
Distributions paid and payable
Distribution per unit (cents per unit)
Weighted average number of units (‘000)
noTes
2007
$’000
2006
$’000
4(a)
4(b)
4(c)
4(d)
4(e)
4(f)
23,527
4,173
–
2,985
3,269
13,114
47,068
(759)
(7,630)
(7,460)
19,842
3,528
–
–
–
16,219
39,589
(922)
(6,413)
(5,777)
31,219
26,477
(1,744)
(424)
29,475
26,053
5.33
5.29
12.71
–
2.64 3.67
2.63
-
2007
$’000
29,475
(18,511)
10,964
1.89
2006
$’000
26,053
(18,998)
7,055
6.93
556,887
204,997
5
6
67
annual financial report / continued
consolidated balance sheet
As AT 30 June 2007
Current assets
Cash and cash equivalents
Trade and other receivables
other financial assets
other
Total current assets
Non-current assets
Investment properties
Property, plant and equipment
other financial assets
other
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest-bearing loans and borrowings
Total current liabilities
Non-current liabilities
Interest-bearing loans and borrowings
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Asset revaluation reserve
undistributed income
Total parent entity interest in equity
Total outside equity interest
Total equity
68
AbACus AnnuAL FInAnCIAL RePoRT 2007
noTes
2007
$’000
2006
$’000
4,208
46,976
27,273
516
1,348
2,959
27,229
552
78,973
32,088
7
215,558
204,132
15,991
2,825
307
30,725
4,893
274
234,681
240,024
313,654
272,112
16,302
32,250
4,861
39,238
48,552
44,099
105,012
105,702
105,012
105,702
153,564
149,801
160,090
122,311
8(a)
117,196
–
40,615
157,811
2,279
99,672
1,907
20,197
121,776
535
160,090
122,311
abacus income trust
consolidated statement of changes in equity
YeAR enDeD 30 June 2007
AsseT
RevALuATIon
ReseRve
$’000
1,907
(1,907)
ReTAIneD
eARnInGs
$’000
20,197
1,907
MInoRITY
InTeResT
$’000
ToTAL
equITY
$’000
535
–
122,311
–
(1,907) 1,907
– –
–
(1,907)
–
–
–
29,475
31,382
–
(10,964)
40,615
1,744
1,744
–
–
31,219
31,219
17,524
(10,964)
2,279
160,090
At 1 July 2006
sale of property, plant & equipment
Total income and expense for the period
recognised directly in equity
net income for the period
Total income for the period
equity raisings (net of issue costs)
Distribution to unitholders
At 30 June 2007
At 1 July 2005
IssueD
CAPITAL
$’000
99,672
–
–
–
–
17,524
–
117,196
92,029
Revaluation of property, plant & equipment
–
Total income and expense for the period
recognised directly in equity
net income for the period
Total income for the period
equity raisings (net of issue costs)
Distribution to unitholders
At 30 June 2006
857
1,050
2,411
–
1,050
–
–
–
–
–
24,841
24,841
–
(7,055)
20,197
–
–
–
7,643
–
99,672
1,907
113
–
–
422
422
–
–
95,410
1,050
1,050
25,263
25,263
7,643
(7,055)
535
122,311
69
annual financial report / continued
consolidated cash flow statement
YeAR enDeD 30 June 2007
Cash flows from operating activities
Income receipts
Interest received
Interest paid
operating payments
Net cash flows from operating activities
Cash flows from investing activities
Payments for investments
Proceeds from sale and settlement of investments
Advances to/(from) related entities
Disposal of property, plant and equipment
Purchase of investment properties
Disposal of investment properties
Payments for other investments
Net cash flows used in investing activities
Cash flows from financing activities
Proceeds from issue of units
Payment of issue costs
Payment of finance cost
Repayment of borrowings
Proceeds from borrowings
Distributions paid
Net cash flows from financing activities
Net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of the year
70
AbACus AnnuAL FInAnCIAL RePoRT 2007
2007
$’000
2006
$’000
18,027
4,042
(8,321)
(2,405)
16,445
6,631
(7,980)
(3,535)
11,343
11,561
(7,134)
11,000
(43,329)
17,735
(19,113)
23,575
3
(14,411)
12,821
2,945
–
(42,470)
–
1,966
(17,263)
(39,149)
17,524
(219)
(213)
(35,245)
26,935
(2)
8,780
2,860
1,348
4,208
7,909
(47)
–
(23,318)
52,964
(9,397)
28,111
523
825
1,348
abacus income trust
notes to the concise financial statements
30 June 2007
recently been issued or amended but are not yet effective
have not been adopted by the Trust for the annual reporting
period ending 30 June 2007. These are outlined in the table
below.
1. TRusT InFoRMATIon
AIT is a registered managed investment scheme and is a
component entity of the APG which comprises AGHL, AT,
AGPL and AIT. shares in AGHL and AGPL and units in AT and
AIT have been stapled together so that neither can be dealt
with without the other. The securities trade as one security on
the Australian stock exchange (the As”) under the code AbP.
The nature of the operations and principal activities of the
Trust are described in the Directors’ Report.
2. suMMARY oF sIGnIFICAnT ACCounTInG PoLICIes
bAsIs oF PRePARATIon
The concise financial report has been prepared in accordance
with the requirements of the Corporations Act 2001 and
Australian Accounting standards. The concise financial report
has also been prepared on a historical cost basis, except for
investment properties and derivative financial instruments
which have been measured at fair value, interests in joint
ventures which are accounted for using the equity method,
and certain investments measured at net market value. The
carrying values of recognised assets and liabilities that are
covered by interest rate swap arrangements, are adjusted to
record changes in the fair values attributable to the risks that
are being covered by derivative financial instruments.
The concise financial report has been derived from the
annual financial report but does not include all notes of the
type normally included within the annual financial report
and therefore cannot be expected to provide as full an
understanding of the financial performance, financial position
and financial and investing activities of the Trust as the full
financial report.
It is also recommended that the annual financial report be
considered together with any public announcements made by
the Group during the year ended 30 June 2007 in accordance
with the continuous disclosure obligations arising under the
Corporations Act 2001.
The concise financial report is presented in Australian dollars
and all values are rounded to the nearest thousand dollars
($’000) unless otherwise stated under the option available to
the Trust under AsIC Class order 98/100. The Trust is an entity
to which the class order applies.
sTATeMenT oF CoMPLIAnCe
except for the amendments of AAsb 101 Presentation of
Financial Statements and AAsb 2007-4 amendments to
Australian Accounting Standards arising from ED 151 and
Other Amendments, which the Trust has early adopted,
Australian Accounting standards and Interpretations that have
71
annual financial report / continued
notes
ReFeRenCe
suMMARY
AAsb 2005-10 Amending standard issued as a
consequence of AAsb 7 Financial
Instruments: Disclosures.
APPLICATIon
DATe oF
sTAnDARD*
1 January
2007
AAsb 2007-1
Amending standard issued
as a consequence of AAsb
Interpretation 11 AAsb 2 – Group
and Treasury Share Transactions.
1 March
2007
AAsb 2007-3
Amending standard issued as a
consequence of AAsb 8 Operating
Segments.
1 January
2009
AAsb 2007-7
Amending standards for wording
errors, discrepancies and
inconsistencies.
1 July 2007
IMPACT on TRusT FInAnCIAL RePoRT
AAsb 7 is a disclosure standard so will have
no direct impact on the amounts included
in the Trust’s financial statements. However,
the amendments will result in changes to the
financial instrument disclosures included in
the Trust’s financial report.
This is consistent with the Trust’s existing
accounting policies for share-based
payments, so the standard is not expected
to have any impact on the Trust’s financial
report.
AAsb 8 is a disclosure standard so will have
no direct impact on the amounts included
in the Trust’s financial statements. However,
the standard is expected to have an impact
on the Trust’s segment disclosures as
segment information included in internal
management reports is more detailed than
that currently reported under AAsb 114
Segment Reporting.
The amendments are minor and do not
affect the recognition, measurement or
disclosure requirements of the standards.
Therefore the amendments are not
expected to have any impact on the Trust’s
financial report.
APPLICATIon
DATe FoR
TRusT*
1 July 2007
1 July 2007
1 July 2009
1 July 2007
1 January
2007
Refer to AAsb 2005-10 above.
1 July 2007
1 January
2009
1
november
2006
Refer to AAsb 2007-3 above.
1 July 2009
The prohibitions on reversing impairment
losses in AAsb 136 and AAsb 139, which are
to take precedence over the more general
statement in AAsb 134, are not expected
to have any impact on the Trust’s financial
report.
1 July 2007
AAsb 7
AAsb 8
AAsb
Interpretation
10
new standard replacing disclosure
requirements of AAsb 130
Disclosures in the Financial
Statements of Banks and Similar
Financial Institutions and AAsb 132
Financial Instruments: Disclosure
and Presentation.
new standard replacing AAsb
114 Segment Reporting, which
adopts a management approach
to segment reporting.
Addresses an inconsistency
between AAsb 134-interim
Financial Reporting and the
impairment requirements
relating to goodwill in AAsb 136
Impairment of Assets and equity
instruments classified as available
for sale in AAsb 139 Financial
Instruments: Recognition and
Measurement.
72
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus income trust
abacus income trust
APPLICATIon
DATe oF
sTAnDARD*
1 March
2007
IMPACT on TRusT FInAnCIAL RePoRT
Refer to AAsb 2007-1 above
APPLICATIon
DATe FoR
TRusT*
1 July 2007
ReFeRenCe
suMMARY
AAsb
Interpretation
11
Addresses whether certain
types of share-based payment
transactions with employees (or
other suppliers of goods and
services) should be accounted for
as equity-settled or as cash-settled
transactions under AAsb 2 share-
based-Payment. It also specifies
the accounting in a subsidiary’s
financial statements for share-
based payment arrangements
involving equity instruments of the
parent.
*designates the beginning of the applicable annual reporting period
AAsb 2007-2, AAsb 2007-5, AAsb 2007-6, AAsb 123 and AAsb Interpretation 12 will have no application to the Trust.
The financial report complies with Australian Accounting standards, which include Australian equivalents to International
Financial Reporting standards (AIFRs). The financial report also complies with International Financial Reporting standards
(IFRs).
bAsIs oF ConsoLIDATIon
The consolidated financial statements comprise the financial statements of AIT and its subsidiaries collectively referred to as the
Trust.
The financial statements of subsidiaries are prepared for the same reporting period as the parent company, using consistent
accounting policies with adjustments made to bring into line any dissimilar accounting policies that may exist.
All intercompany balances and transactions, including unrealised profits from intra-group transactions, have been eliminated in
full and subsidiaries are consolidated from the date on which control is obtained by the Trust and cease to be consolidated from
the date on which control is transferred out of the Trust.
The acquisition of subsidiaries is accounted for using the purchase method of accounting. The purchase method of accounting
involves allocating the cost of the business combination to the fair value of the assets acquired and the liabilities and contingent
liabilities assumed at the date of acquisition.
Minority interests represent those equity interests in The Wollongong Property Trust and Abacus Independent Retail Property
Trust that are not held by the Trust and are presented separately in the income statement and within equity in the consolidated
balance sheet.
3. seGMenT InFoRMATIon
The Trust predominantly operates in Australia. The Trust’s segment reporting format is business segments as its risks and rates
of return can be readily identified with the type of business and services provided.
segment revenue, segment expense and segment result do not include transactions between business segments.
The Trust’s primary business segments are Property, and Property Finance. The Property division comprises the leasing
and maintenance of commercial, retail and industrial properties. Property Finance comprises mortgage lending and related
property financing solutions.
73
annual financial report / continued
notes
busIness seGMenTs
Year ended 30 June 2007
Revenue
Revenue from external customers
Realised and unrealised gains on investments
bank interest
Total consolidated revenue
Result
segment results
Interest income
Profit/(loss) before finance costs
Finance costs
Net profit for the year
Assets
segment assets
Total assets
Liabilities
segment liabilities
Interest bearing liabilities
Total liabilities
Other segment information:
Capital expenditure
Depreciation and amortisation
Cashflow
net cash flow from operating activities
net cash flow from investing activities
net cash flow from financing activities
74
AbACus AnnuAL FInAnCIAL RePoRT 2007
PRoPeRTY
$’000
PRoPeRTY
FInAnCe
$’000
ToTAL
$’000
23,527
3,905
33,994
2,843
27,432
19,368
268
47,068
36,837
268
37,105
(7,630)
29,475
283,556
30,098
313,654
(13,796)
30,098
313,654
16,302
137,262
153,564
6,391
759
–
–
6,391
759
7,549
(21,129)
8,780
3,794
3,866
–
11,343
(17,263)
8,780
abacus income trust
abacus income trust
busIness seGMenTs
Year ended 30 June 2006
Revenue
Revenue from external customers
Realised and unrealised gains on investments
bank interest
Total consolidated revenue
Result
segment results
Interest income
Profit/(loss) before finance costs
Finance costs
Net profit for the year
Assets
segment assets
Total assets
Liabilities
segment liabilities
Interest bearing liabilities
Total liabilities
Other segment information:
Capital expenditure
Depreciation and amortisation
net cash flow from operating activities
net cash flow from investing activities
net cash flow from financing activities
PRoPeRTY
$’000
PRoPeRTY
FInAnCe
$’000
ToTAL
$’000
19,842
3,357
29,639
2,656
239,990
32,122
4,861
32,122
4,750
922
5,272
(37,559)
28,111
–
–
6,289
(1,590)
–
23,199
16,219
171
39,589
32,295
171
32,466
(6,413)
26,053
272,112
272,112
36,983
112,818
149,801
4,750
922
11,561
(39,149)
28,111
75
annual financial report / continued
notes
4. Revenue AnD eXPenses
(a) Finance income
Interest on mortgage loans
bank interest
Total finance income
(b) Net realised gains on investments
sale of investment properties
expenses on sale of investment properties
Total net realised gains on investments
(c) Net realised gains on property, plant and equipment
sale of property , plant and equipment
expenses on sale of property, plant and equipment
Total net realised gains on investments
(d) Unrealised gains on investments
Change in fair value of investment properties
Total unrealised gains on investments
(e) Finance costs
Interest on loans
Amortisation of finance costs
unrealised gains on interest rate swaps
Total finance costs
(f) Other expenses
Property outgoings
Audit fees
Registry maintenance costs
Custody fee
Management Fee
other
Total other expenses
76
AbACus AnnuAL FInAnCIAL RePoRT 2007
ConsoLIDATeD
2007
$’000
2006
$’000
3,905
268
4,173
3,357
171
3,528
23,600
(20,615)
2,985
18,148
(14,879)
3,269
–
–
–
–
–
–
13,114
13,114
16,219
16,219
9,285
77
(1,732)
7,630
8,662
57
(2,306)
6,413
4,981
3,448
118
3
43
2,204
111
7,460
55
50
25
1,898
301
5,777
abacus income trust
5. DIsTRIbuTIons PAID AnD PRoPoseD
(a) Distributions paid during the year
Final distribution for financial year 30 June 2006:
nil (2005: 2.31 cents)
Interim distributions paid during the year:
september: nil (2006: 2.31 cents)
December: nil (2006: 2.31 cents)
March: nil (2006: 2.31 cents)
(b) Distributions proposed and recognised as a liability
Final distribution payable for the June quarter:
1.89 cents per unit (2006: nil)
6. eARnInGs PeR unIT
basic earnings per unit
Diluted earnings per unit
basic earnings per unit excluding fair value adjustments (1)
Diluted earnings per unit excluding fair value adjustments(1)
Earnings used in calculating earnings per unit:
net profit attributable to unitholders
net profit attributable to unitholders excluding fair value adjustments (1)
noTes
2007
$’000
2006
$’000
1
–
1
–
2
2,342
2,366
2,370
2,319
9,397
10,963
1
2007
CenTs
2006
CenTs
5.33
12.71
5.29
–
2.64
2.63
2007
CenTs
3.67
–
2006
CenTs
29,475
14,628
26,053
7,528
Weighted average number of stapled securities:
Weighted average number of stapled securities for basic earnings per share
553,184
204,997
effect of dilution:
stapled security options
Weighted average number of stapled securities adjusted for the effect of dilution
3,703
–
556,887
204,997
options granted to employees (including key management personnel) are considered to be potential stapled securities and
have been included in the determination of diluted earnings per stapled security to the extent they are dilutive. These options
have not been included in the determination of basic earnings per stapled security.
(1) Fair value adjustments include property revaluations, revaluations of derivatives and other financial instruments and share based payments.
77
annual financial report / continued
notes
7. non-CuRRenT AsseTs - InvesTMenT PRoPeRTIes
Investment properties are carried at the directors’ determination of fair value and are based on independent valuations where
appropriate. The determination of fair value includes reference to the original acquisition cost together with capital expenditure
since acquisition and either the latest full independent valuation or latest independent update. Total acquisition costs include
incidental costs of acquisition such as property taxes on acquisition, legal and professional fees and other acquisition related costs.
Independent valuation of each investment property is conducted annually either in December or June of each year.
Independent valuations are prepared using both the capitalisation of net income method and the discounting of future
cashflows to their present value method. Capital expenditure since valuation may include purchases of sundry properties
(and associated expenses of stamp duty, legal fees etc) and other capital refurbishment and repair expenditure.
78
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus income trust
ACquIsITIon
DATe (b)
28-May-03
30-Jun-03
22-Feb-04
27-nov-03
03-nov-03
19-Dec-03
16-Feb-04
23-Jan-04
17-Dec-04
07-Jun-05
07-Jun-04
18-Jul-05
05-Aug-04
11-May-05
18-Aug-05
31-oct-05
11-May-05
29-sep-05
18-Jul-05
21-Dec-05
21-Jun-06
31-Aug-06
29-Jun-07
CosT InCL. InDePenDenT
vALuATIon
ADDITIons
DATe
$’000
11,956 30/06/2006
2007
$’000
13,300
ConsoLIDATeD
vALue
2008
$’000
13,300
7,866 30/06/2006
12,000
12,000
11,961 30/06/2006
12,700
12,700
19,222 30/06/2007
21,000
19,920
5,109 30/06/2007
6,500
5,740
32,272 30/06/2006
39,000
39,000
15,937 30/06/2006
–
17,100
5,040 30/06/2007
12,000
8,970
4,722 30/06/2006
5,877
5,900
6,857 30/06/2006
5,700
5,700
7,340 30/06/2007
9,000
7,450
8,832 30/06/2007
10,300
9,000
1,173 30/06/2007
1,950
1,650
8,092 30/06/2007
10,200
9,342
3,030 30/06/2007
3,200
2,830
2,965 30/06/2007
3,100
2,700
3,484 30/06/2005
–
3,490
6,150 30/06/2007
6,900
6,580
15,536 30/06/2007
15,536
9,201
4,337 30/06/2007
4,500
4,337
7,228 30/06/2007
10,250
7,222
7,743 30/06/2007
7,743
–
4,802 23/04/2007
4,802
–
215,558
204,132
PRoPeRTY
1-5 Lake Drive, Dingley, Melbourne
8 station street, Wollongong, nsW (d)
367 Peel street, Tamworth, nsW
500 Princes Highway,noble Park,vIC (ii)
31-33 Windorah Avenue, stafford, qLD (i)
Lennons Plaza, 66 queen street, qLD
23-43 Tattersall Rd, Kings Park, nsW
26 savage street & 681 Curtin Avenue,
Pinkenba, qLD (i)
671 Gympie Rd, Chermside, qLD
9-14 Yates street, Mawson Lakes, sA
Gympie Market Place, Gympie (ii) (e)
36-52 national blvd, Campbellfield, vIC (i)
29-47 & 18-20 becker st, Cobar, nsW (i) (e)
50 Mostyn street, Castlemaine, vIC (i) (e)
96-98 victoria street, st.George, qLD (ii) (e)
12 Docker street, Wangaratta, qLD (i) (e)
208 Howick street, bathurst, nsW
93 victoria street, eaglehawk, vIC (i) (e)
29 queen street, north bundaberg, qLD (e)
Kingscote Kangaroo Island, sA (i) (e)
293-295 Grt eastern Hwy, Midland WA (i) (e)
50 bamford Lane, Kirwan, qLD (e)
Corner nolan & napier streets, Maryborough, vIC (e)
Properties owned by AIT and its controlled entities
(i) As valued by Cb Richard ellis
(ii) As valued by Colliers
Notes:
(a) The aggregated value at 30 June 2007 includes capital expenditures after the last valuation date.
(b) Refers to the date of acquisition by the underlying entity.
(c) The investment properties are used as security over the bank loans.
(d) AIT owns 98.4% of the units in the Wollongong Property Trust which owns 8 station street, Wollongong.
(e) AIT owns 100% of the units in Abacus Retail Property Trust which owns 75% of the in the Abacus Independent Retail Property
Trust which owns:
- Gympie Market Place, Gympie , qLD;
- 50 bamford Lane, Kirwan, qLD;
- 29-47 & 18-20 becker st, Cobar, nsW;
- 12 Docker street, Wangaratta, qLD;
- 50 Mostyn street, Castlemaine, vIC;
- Kingscote Kangaroo Island, sA;
- 96-98 victoria street, st Geroge, qLD ;
- 29 queen st. north bundaberg, qLD; and
- 93 victoria street, eaglehawk, vIC;
- 293-295 Grt Western Hwy, Midland, WA
- Corner nolan & napier streets, Maryborough, vIC;
79
annual financial report / continued
notes
Reconciliations
Reconciliation of the carrying amounts of investment properties at the beginning and end of the current and previous financial
year:
Carrying amount at beginning of financial year
Additions
Disposals
net revaluation increments
Carrying amount at end of financial year
8. ConTRIbuTeD equITY
(a) Issued units
Issued units
Finance and issue costs
Total contributed equity
(b) Movements in contributed equity for the year
At 1 July 2005
- distribution reinvestment plan
- net impact of merger with APG
- less transaction costs
At 30 June 2006
- institutional equity raising
At 30 June 2007
ConsoLIDATeD vALue
2006
$’000
2007
$’000
204,132
18,902
(20,590)
13,114
146,050
41,863
–
16,219
215,558
204,132
noTes
2007
$’000
2006
$’000
122,517
(5,321)
117,196
104,992
(5,320)
99,672
nuMbeR
‘000
2007
vALue
$‘000
101,479
92,029
200
414,703
–
516,382
62,251
190
7,719
(266)
99,672
17,524
578,633
117,196
unitholders have the right to receive distributions from AIT, as declared, and in the event of winding up of the Trust, are entitled
to participate in the proceeds from sale of all surplus assets in proportion to the number of units held.
unitholders of units can vote their shares and units in accordance with the Corporations Act, either in person or by proxy, at a
meeting of Trust.
80
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus income trust
9. evenTs AFTeR THe bALAnCe sHeeT DATe
on 26 July 2007, the Group completed a capital raising via an institutional placement for $100 million and issued 52.6 million
stapled securities at $1.90 per stapled security.
other than as disclosed in this report and to the knowledge of directors, there has been no matter or circumstance that has
arisen since the end of the financial year that has or may affect the Group’s operations in future financial years, the results of
those operations or the Group’s state of affairs in future financial years.
81
annual financial report / continued
directors’ declaration
In accordance with a resolution of the directors of the responsible entity, we state that:
(1) in the opinion of the directors:
(a) the concise financial statements and notes, of the Trust and of the consolidated entity are in accordance with the
Corporations Act 2001, including :
(i) giving a true and fair view of the Trust’s and consolidated entity’s financial position as at 30 June 2007 and of their
performance for the year ended on that date; and
(ii) complying with Accounting standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Trust will be able to pay its debts as and when they
become due and payable.
(2) This declaration has been made after receiving the declarations required to be made to the directors
in accordance with sections 295A of the Corporations Act 2001 for the financial period ended 30 June 2007.
on behalf of the board of Abacus Funds Management Limited:
JoHn THAMe
Chairman
FRAnK WoLF
Managing Director
sydney, 12 september 2007
82
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus income trust
n Ernst & Young Centre
680 George Street
Sydney NSW 2000
Australia
GPO Box 2646
Sydney NSW 2001
n Tel 61 2 9248 5555
Fax 61 2 9248 5959
DX Sydney Stock
Exchange 10172
independent auditor’s report
to the members of abacus income trust
The accompanying concise financial report of Abacus Income Trust comprises the balance sheet as at 30 June 2007,
the income statement, statement of changes in equity and cash flow statement for the year then ended and related
notes, derived from the audited financial report of Abacus Income Trust for the year ended 30 June 2007.
The concise financial report also includes the directors’ declaration. The concise financial report does not contain
all the disclosures required by the Australian Accounting standards.
Directors’ Responsibility for the Concise Financial Report
The Directors of the Responsible entity for the trust are responsible for the preparation and presentation of the
concise financial report in accordance with Accounting standard AAsb 1039 Concise Financial Reports, and the
Corporations Act 2001. This responsibility includes establishing and maintaining internal controls relevant to the
preparation of the concise financial report; selecting and applying appropriate accounting policies; and making
accounting estimates that are reasonable in the circumstances.
Auditor’s Responsibility
our responsibility is to express an opinion on the concise financial report based on our audit procedures.
We have conducted an independent audit, in accordance with Australian Auditing standards, of the financial report
of Abacus Income Trust for the year ended 30 June 2007. our audit report on the financial report for the year was
signed on 30 August 2007 and was not subject to any modification. The Australian 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 for the year is free from material misstatement.
our procedures in respect of the concise financial report included testing that the information in the concise
financial report is derived from, and is consistent with, the financial report for the year, and examination on a test
basis, of evidence supporting the amounts and other disclosures which were not directly derived from the financial
report for the year. These procedures have been undertaken to form an opinion whether, in all material respects,
the concise financial report complies with Accounting standard AAsb 1039 Concise Financial Reports.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
We confirm that the independence declaration required by the Corporations Act 2001 provided to the directors
of the Responsible entity of Abacus Income Trust on 30 August 2007.
Liability limited by a scheme approved under
Professional Standards Legislation.
83
annual financial report / continued
independent auditor’s report
to members of abacus income trust
Auditor’s Opinion
In our opinion, the concise financial report and the directors’ declaration of Abacus Income Trust for the year ended
30 June 2007 complies with Accounting standard AAsb 1039 Concise Financial Reports.
eRnsT & YounG
eD PsALTIs
Partner
sydney, 12 september 2007
abacus group projects limited
Directory
Abacus Group Projects Limited
ABN: 11 104 066 104
Level 34, Australia Square
264-278 George Street
SYDNEY NSW 2000
Tel (02) 9253 8600
Fax (02) 9253 8616
Website www.abacusproperty.com.au
Directors
John Thame, Chairman (appointed 14/11/06)
Frank Wolf, Managing Director
David Bastian * (appointed 14/11/06)
Dennis Bluth (appointed 14/11/06)
Malcolm Irving (appointed 14/11/06)
Len Lloyd
William Bartlett (appointed 14/02/07)
*Resigned as Managing Director on 30/09/06
Company secretary
Ellis Varejes
Registry
Level 3, 60 Carrington Street
SYDNEY NSW 2000
Tel (02) 1800 635 323 Toll free
Fax (02) 8234 5050
Auditor
Ernst & Young
Ernst & Young Centre
680 George Street
SYDNEY NSW 2000
Computershare Investor Services Pty Ltd
92
Consolidated Cash Flow Statement
Contents
86
Directors’ Report
88
Auditor’s Independence Declaration
89
Consolidated Income and Distribution
Statements
Consolidated Balance Sheet
Consolidated Statement of Changes
in Equity
93 Notes to the Concise Financial
Statements
Directors’ Declaration
Independent Auditor’s Report
90
91
98
99
84
AbACus AnnuAL FInAnCIAL RePoRT 2007
It is recommended that this Annual Financial Report should be read in conjunction with the Annual Financial Reports of Abacus Property
Group, Abacus Trust and Abacus Income Trust as at 30 June 2007. It is also recommended that the report be considered together with
any public announcements made by the Abacus Property Group in accordance with its continuous disclosure obligations arising under the
Corporations Act 2001.
abacus group projects limited
Directory
Abacus Group Projects Limited
ABN: 11 104 066 104
Level 34, Australia Square
264-278 George Street
SYDNEY NSW 2000
Tel (02) 9253 8600
Fax (02) 9253 8616
Website www.abacusproperty.com.au
Directors
John Thame, Chairman (appointed 14/11/06)
Frank Wolf, Managing Director
David Bastian * (appointed 14/11/06)
Dennis Bluth (appointed 14/11/06)
Malcolm Irving (appointed 14/11/06)
Len Lloyd
William Bartlett (appointed 14/02/07)
*Resigned as Managing Director on 30/09/06
Company secretary
Ellis Varejes
Registry
Computershare Investor Services Pty Ltd
Level 3, 60 Carrington Street
SYDNEY NSW 2000
Tel (02) 1800 635 323 Toll free
Fax (02) 8234 5050
Auditor
Ernst & Young
Ernst & Young Centre
680 George Street
SYDNEY NSW 2000
Contents
86
Directors’ Report
88
Auditor’s Independence Declaration
89
90
91
Consolidated Income and Distribution
Statements
Consolidated Balance Sheet
Consolidated Statement of Changes
in Equity
92
Consolidated Cash Flow Statement
93 Notes to the Concise Financial
Statements
Directors’ Declaration
Independent Auditor’s Report
98
99
It is recommended that this Annual Financial Report should be read in conjunction with the Annual Financial Reports of Abacus Property
Group, Abacus Trust and Abacus Income Trust as at 30 June 2007. It is also recommended that the report be considered together with
any public announcements made by the Abacus Property Group in accordance with its continuous disclosure obligations arising under the
Corporations Act 2001.
85
annual financial report / continued
directors’ report
30 June 2007
The directors present their report together with the
consolidated financial reports of Abacus Group Projects
Limited (AGPL or the Company) and the auditor’s report
thereon.
DIReCToRs
The directors of AGPL in office during the year and until the
date of this report are set out below:
DIReCToRs
The directors of AGPL in office during the financial year and
until the date of this report unless otherwise stated:
John Thame
Chairman (non-executive)
Frank Wolf
Managing Director (executive)
David bastian*
William bartlett
non-executive director
(appointed 14/11/06)
non-executive director
(appointed 14/02/07)
Dennis bluth
non-executive director
Phillip Green
non-executive director
(resigned 1/9/06)
Malcolm Irving
non-executive director
Len Lloyd
executive director
(appointed 14/11/06)
*Resigned as Managing Director on 30 september 2006
As at the date of this report, the relevant interests of the
directors and specified executives in the stapled securities of
Abacus Property Group were as follows:
DIReCToRs
J Thame
F Wolf
D bastian
M Irving
L Lloyd
APG seCuRITIes
HeLD
nuMbeR oF oPTIons
oveR APG seCuRITIes
50,000
9,710,274*
4,486,352
30,014
785,925*
-
1,343,284
-
-
477,612
* The holdings of Dr Wolf and Mr Lloyd include securities
acquired under the executive share Loan Plan that are treated
as options.
PRInCIPAL ACTIvITIes
The principal activity of AGPL during the year was the
management of hotel operations, specifically, the Rydges
esplanade Hotel, Cairns.
86
AbACus AnnuAL FInAnCIAL RePoRT 2007
CoRPoRATe sTRuCTuRe
AGPL is a company incorporated and domiciled in Australia.
AGPL is a member of the Abacus Property Group (APG or
the Group), which comprises Abacus Group Holdings Limited
(AGHL), Abacus Trust (AT), Abacus Income Trust (AIT) and
AGPL. shares in AGHL and AGPL and units in AT and AIT
and have been stapled together so that none can be dealt
with without the other. An APG security consists of one share
in AGHL, one unit in AT, one share in AGPL and one unit in
AIT. A transfer, issue or reorganisation of a share or unit in
any of the component parts is accompanied by a transfer,
issue or reorganisation of a share or unit in each of the other
component parts.
oPeRATInG PRoFIT
AGPL incurred a consolidated net loss attributable to
members of $0.4 million for the year ended 30 June 2007
(June 2006: $0.8 million loss).
eARnInGs PeR sHARe
basic earnings per share
Diluted earnings per share
YeAR enDeD
30 June 2007
CenTs
YeAR enDeD
30 June 2006
CenTs
(0.08)
(0.07)
(0.40)
(0.40)
DIvIDenDs
There were no dividends paid by AGPL during the year ended
30 June 2007 (June 2006: nil).
RevIeW oF oPeRATIons
CoMPAnY oveRvIeW
AGPL operates wholly within Australia and operates a hotel
business via its 75% interest in Abacus Matson Holdings Pty
Limited.
oPeRATInG ResuLTs FoR THe YeAR
Total revenues fell slightly from $12.7 million (2006) to $12.0
million (2007). Total expenses fell from $13.7 million (2006)
to $13.1 million (2007). The net loss before tax marginally
improved to $1.1 million (2007) from $1.2 million loss (2006)
RevIeW oF FInAnCIAL ConDITIon
Aside from the marginal improvement in operating
performance, net assets grew from $5.8 million (2006) to $6.1
million (2007) through additional equity raising.
abacus group projects limited
Fees PAID To AbACus AnD AssoCIATes
AGPL paid a management fee of $0.04 million (2006: $0.04
million) to Abacus for the year ended 30 June 2007. In addition,
AGPL paid property management fees of $0.06 million (2006:
$0.06 million) to an associate company, Abacus Property
services Pty Limited, for the year ended 30 June 2007.
LIKeLY DeveLoPMenTs AnD eXPeCTeD ResuLTs
The Directors have excluded from this report any other
information on the likely developments in the operations of
the Company and the expected results of those operations
in future financial years which are not of a material nature
and would not in the Directors’ view be likely to result in
unreasonable prejudice to the operation of the Company.
sIGnIFICAnT CHAnGes In THe sTATe oF AFFAIRs
There have been no significant changes other than the raising
of $0.9 million in equity.
envIRonMenTAL ReGuLATIon AnD PeRFoRMAnCe
environmental responsibilities, such as waste removal and
water treatment, have been managed in compliance with
all applicable regulations and licence requirements and
in accordance with industry standards. no breaches of
requirements or additional environmental issues have been
discovered nor brought to the board’s attention. There have
been no known significant breaches of any environmental
requirements applicable to the Company.
InDeMnIFICATIon AnD InsuRAnCe oF DIReCToRs AnD
oFFICeRs
As Manager of AGPL, Abacus has paid an insurance premium
in respect of a contract insuring its directors and full time
executive officers and secretary. The terms of this policy
prohibit disclosure of the nature of the risks insured or the
premium paid.
AuDIToR’s InDePenDenCe DeCLARATIon
We have obtained an independence declaration from our
auditors, ernst & Young, and such declaration is shown on the
following page.
RounDInG
The amounts contained in this report and in the annual
financial report have been rounded to the nearest $1,000
(where rounding is applicable) under the option available to
the Company under AsIC Class order 98/100. The Company
is an entity to which the Class order applies.
signed in accordance with a resolution of the directors.
Abacus Group Projects Limited (Abn 11 104 066 104)
JoHn THAMe
Chairman
sIGnIFICAnT evenTs AFTeR bALAnCe DATe
on 26 July 2007, APG completed a capital raising via an
institutional placement for $100 million and issued 52.6 million
stapled securities at $1.90 per stapled security.
FRAnK WoLF
Managing Director
sydney, 12 september 2007
other than as disclosed already in this report and to the
knowledge of directors, there has been no matter or
circumstance that has arisen since the end of the financial year
that has significantly affected, or may effect, the Company’s
operations in future financial years, the results of those
operations or the Company’s state of affairs in future financial
years.
87
annual financial report / continued
n Ernst & Young Centre
680 George Street
Sydney NSW 2000
Australia
GPO Box 2646
Sydney NSW 2001
n Tel 61 2 9248 5555
Fax 61 2 9248 5959
DX Sydney Stock
Exchange 10172
auditor’s independence declaration
to the directors of abacus group projects limited
In relation to our audit of the financial report of Abacus Group Projects Limited for the financial year ended
30 June 2007 to the best of my knowledge and belief, there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001 or any applicable code of professional conduct.
eRnsT & YounG
eD PsALTIs
Partner
30 August 2007
88
AbACus AnnuAL FInAnCIAL RePoRT 2007
Liability limited by a scheme approved under
Professional Standards Legislation.
abacus group projects limited
consolidated income and distribution statements
YeAR enDeD 30 June 2007
Revenue
net hotel income
Income from distributions
Finance income
net realised gains on investments
Total revenue
employee benefits expense
Depreciation and amortisation expense
Hotel overheads
other expenses
net unrealised loss on investments
(Loss)/profit before income tax
Income tax benefit
Net (loss)/profit
net loss/(profit) attributable to minority interests - external
Net (loss)/profit attributable to members
basic earnings per AGPL share
Diluted earnings per AGPL share
noTes
2007
$’000
2006
$’000
4a
12,025
12,265
–
15
383
9
4e
–
142
12,040
12,799
4b
4c
4d
4f
(5,181)
(185)
(3,578)
(4,150)
–
(1,054)
511
(543)
128
(5,188)
(192)
(3,778)
(4,511)
(280)
(1,150)
350
(800)
(30)
(415)
(830)
cents
(0.08)
(0.07)
cents
(0.40)
(0.40)
89
annual financial report / continued
consolidated balance sheet
As AT 30 June 2007
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
other
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Deferred tax assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Income tax payable
Provisions
Total current liabilities
Non-current liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Retained earnings/(accumulated losses)
Total parent interest in equity
Total outside interest in equity
Total equity
90
AbACus AnnuAL FInAnCIAL RePoRT 2007
2007
$’000
2006
$’000
2,031
4,585
125
64
1,243
3,978
128
133
6,805
5,482
924
915
954
2,793
9,598
3,155
–
139
3,294
–
209
209
871
1,035
486
2,392
7,874
1,601
121
152
1,874
15
227
242
3,503
2,116
6,095
5,758
6,437
(1,043)
5,394
701
6,095
5,557
(628)
4,929
829
5,758
abacus group projects limited
consolidated statement of changes in equity
YeAR enDeD 30 June 2007
At 1 July 2006
net income for the period
Total income for the period
equity raisings (net of issue costs)
At 30 June 2007
At 1 July 2005
net income for the period
Total income for the period
equity raisings (net of issue costs)
net impact of merger with ADIF
At 30 June 2006
ReTAIneD
eARnInGs
$’000
MInoRITY
InTeResT
$’000
IssueD
CAPITAL
$’000
5,557
–
–
(628)
(415)
(415)
880
–
6,437
(1,043)
ToTAL
equITY
$’000
5,758
(543)
(543)
880
6,095
829
(128)
(128)
–
701
5,110
–
–
10
437
5,557
202
(830)
(830)
–
–
799
6,111
30
30
–
–
(800)
(800)
10
437
(628)
829
5,758
91
annual financial report / continued
consolidated cash flow statement
YeAR enDeD 30 June 2007
Cash flows from operating activities
net receipts from hotel business
Interest received
Distributions received
Responsible entity’s fee paid
Lease rental
other operating payments
Net cash flows from operating activities
Cash flows from investing activities
Proceeds from sale of investments
Purchase of plant and equipment
Net cash flows from/(used in) investing activities
Cash flows from financing activities
Proceeds from issue of stapled securities
Advances from/(to) related entities
Net cash flows from/(used in) financing activities
net increase in cash and cash equivalents
Cash and cash equivalents at beginning of period
Cash and cash equivalents at end of period
2007
$’000
2006
$’000
3,934 2,953
15 9
3 402
(101)
(2,851)
(129)
871
(99)
(2,653)
(271)
341
–
(119)
(119)
2,384
(27)
2,357
–
36
36
788
1,243
2,031
478
(2,902)
(2,424)
274
969
1,243
92
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus group projects limited
notes to the concise financial statements
30 June 2007
1. CoRPoRATe InFoRMATIon
AGPL is a member of the APG which comprises AGHL, AT, AIT
and AGPL. shares in AGHL and AGPL and units in AT and AIT
and have been stapled together so that neither can be dealt
with without the other. The securities trade as one security on
the Australian stock exchange under the code AbP.
2. suMMARY oF sIGnIFICAnT ACCounTInG PoLICIes
bAsIs oF PRePARATIon
The concise financial report has been prepared in accordance
with the requirements of the Corporations Act 2001 and
Australian Accounting standards. The concise financial report
has also been prepared on a historical cost basis, except for
investment properties and derivative financial instruments
which have been measured at fair value, interests in joint
ventures which are accounted for using the equity method,
and certain investments measured at net market value. The
carrying values of recognised assets and liabilities that are
covered by interest rate swap arrangements, are adjusted to
record changes in the fair values attributable to the risks that
are being covered by derivative financial instruments.
The concise financial report has been derived from the
annual financial report but does not include all notes of the
type normally included within the annual financial report
and therefore cannot be expected to provide as full an
understanding of the financial performance, financial position
and financial and investing activities of the Company as the
full financial report.
It is also recommended that the annual financial report be
considered together with any public announcements made
by the Company during the year ended 30 June 2007 in
accordance with the continuous disclosure obligations arising
under the Corporations Act 2001.
The concise financial report is presented in Australian dollars
and all values are rounded to the nearest thousand dollars
($’000) unless otherwise stated under the option available to
the Company under AsIC Class order 98/100. The Company
is an entity to which the class order applies.
sTATeMenT oF CoMPLIAnCe
except for the amendments of AAsb 101 Presentation of
Financial Statements and AAsb 2007-4 amendments to
Australian Accounting Standards arising from ED 151 and
Other Amendments, which the Company has early adopted,
Australian Accounting standards and Interpretations that have
recently been issued or amended but are not yet effective
have not been adopted by the Company for the annual
reporting period ending 30 June 2007. These are outlined in
the table on the following page.
93
annual financial report / continued
notes
ReFeRenCe
suMMARY
AAsb 2005-10 Amending standard issued as a
consequence of AAsb 7 Financial
Instruments: Disclosures.
APPLICATIon
DATe oF
sTAnDARD*
1 January
2007
AAsb 2007-1
Amending standard issued
as a consequence of AAsb
Interpretation 11 AAsb 2 – Group
and Treasury Share Transactions.
1 March
2007
AAsb 2007-3
Amending standard issued as a
consequence of AAsb 8 Operating
Segments.
1 January
2009
AAsb 2007-7
Amending standards for wording
errors, discrepancies and
inconsistencies.
1 July 2007
IMPACT on CoMPAnY FInAnCIAL RePoRT
AAsb 7 is a disclosure standard so will have
no direct impact on the amounts included
in the Company’s financial statements.
However, the amendments will result
in changes to the financial instrument
disclosures included in the Company’s
financial report.
This is consistent with the Company’s
existing accounting policies for share-based
payments, so the standard is not expected
to have any impact on the Company’s
financial report.
AAsb 8 is a disclosure standard so will have
no direct impact on the amounts included
in the Company’s financial statements.
However, the standard is expected to have
an impact on the Company’s segment
disclosures as segment information included
in internal management reports is more
detailed than that currently reported under
AAsb 114 Segment Reporting.
The amendments are minor and do not
affect the recognition, measurement or
disclosure requirements of the standards.
Therefore the amendments are not
expected to have any impact on the
Company’s financial report.
APPLICATIon
DATe FoR
CoMPAnY*
1 July 2007
1 July 2007
1 July 2009
1 July 2007
1 January
2007
Refer to AAsb 2005-10 above.
1 July 2007
1 January
2009
1
november
2006
Refer to AAsb 2007-3 above.
1 July 2009
The prohibitions on reversing impairment
losses in AAsb 136 and AAsb 139, which are
to take precedence over the more general
statement in AAsb 134, are not expected to
have any impact on the Company’s financial
report.
1 July 2007
AAsb 7
AAsb 8
AAsb
Interpretation
10
new standard replacing disclosure
requirements of AAsb 130
Disclosures in the Financial
Statements of Banks and Similar
Financial Institutions and AAsb 132
Financial Instruments: Disclosure
and Presentation.
new standard replacing AAsb
114 Segment Reporting, which
adopts a management approach
to segment reporting.
Addresses an inconsistency
between AAsb 134-interim
Financial Reporting and the
impairment requirements
relating to goodwill in AAsb 136
Impairment of Assets and equity
instruments classified as available
for sale in AAsb 139 Financial
Instruments: Recognition and
Measurement
94
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus group projects limited
APPLICATIon
DATe oF
sTAnDARD*
1 March
2007
IMPACT on CoMPAnY FInAnCIAL RePoRT
Refer to AAsb 2007-1 above
APPLICATIon
DATe FoR
CoMPAnY*
1 July 2007
ReFeRenCe
suMMARY
AAsb
Interpretation
11
Addresses whether certain
types of share-based payment
transactions with employees (or
other suppliers of goods and
services) should be accounted for
as equity-settled or as cash-settled
transactions under AAsb 2 share-
based-Payment. It also specifies
the accounting in a subsidiary’s
financial statements for share-
based payment arrangements
involving equity instruments of the
parent.
*designates the beginning of the applicable annual reporting period
AAsb 2007-2, AAsb 2007-5, AAsb 2007-6, AAsb 123 and AAsb Interpretation 12 will have no application to the Company.
The financial report complies with Australian Accounting standards, which include Australian equivalents to International
Financial Reporting standards (AIFRs). The financial report also complies with International Financial Reporting standards
(IFRs).
bAsIs oF ConsoLIDATIon
The consolidated financial statements comprise AGPL (the Parent Company) and Abacus Matson Holdings Pty Limited (the
subsidiary).
The financial statements of the subsidiary are prepared for the same reporting period as the parent company, using consistent
accounting policies.
Adjustments are made to bring into line any dissimilar accounting policies that may exist.
All intercompany balances and transactions, including unrealised profits arising from intra-Group transactions, have been
eliminated in full.
The subsidiary is consolidated from the date on which control is transferred to the AGPL and cease to be consolidated from the
date on which control is transferred out of the AGPL.
Where there is loss of control of the subsidiary, the consolidated financial statements include the results for the part of the
reporting period during which the AGPL has control.
Minority interests represent the interests in Abacus Matson Holdings Pty Ltd not held by the AGPL are presented separately in
the income statement and within equity in the consolidated balance sheet.
3. seGMenT InFoRMATIon
The Company operates wholly within Australia and derives income from management of a hotel in queensland.
95
annual financial report / continued
notes
4. Revenue AnD eXPenses
(a) Net hotel income
Revenue
Cost of sales
Total net hotel income
(b) Employee benefits expense
Wages and salaries
Leave provisions
others
Total employee benefits expense
(c) Depreciation and amortisation expense
Depreciation of plant and equipment
Amortisation of intangibles - management rights
Total depreciation and amortisation expense
(d) Other expenses
expenses on sale of investment properties
Management fees
Auditor’s remuneration
Lease rental
Provision for diminution in value of joint venture interest
other
Total other expenses
(e) Net realised gains on investments
sale of commercial office suites
Total net realised gains on investments
(f) Net unrealised loss on investments
Change in fair value of property, plant and equipment
Total net unrealised loss on investments
96
AbACus AnnuAL FInAnCIAL RePoRT 2007
2007
$’000
2006
$’000
14,393
(2,368)
12,025
14,702
(2,437)
12,265
4,110
347
724
5,181
66
119
185
–
101
31
4,015
–
3
4,150
–
–
–
–
4,184
379
625
5,188
73
119
192
132
99
16
2,739
1,500
25
4,511
142
142
(280)
(280)
abacus group projects limited
5. ConTRIbuTeD equITY
(a) Issued shares
Issued shares
(b) Movement in stapled securities on issue
At 1 July 2005
- institutional equity raising
- net impact of merger with ADIF
At 30 June 2006
- security purchase plan
- institutional equity raising
- distribution reinvestment plan
At 30 June 2007
nuMbeR
’000
vALue
$’000
578,633
6,437
nuMbeR
’000
101,479
200
414,703
516,382
13,842
36,585
11,824
vALue
$’000
5,110
10
437
5,557
176
525
179
578,633
6,437
shareholders have the right to receive dividends from AGPL and, in the event of winding up of the AGPL, are entitled to
participate in the proceeds from sale of all surplus assets in proportion to the number of shares held.
shareholders can vote their shares in accordance with the Corporations Act, either in person or by proxy, at a meeting
of the AGPL.
97
annual financial report / continued
directors’ declaration
In accordance with a resolution of the directors, we state that:
(1) in the opinion of the directors:
(a) the concise financial statements and notes, of the Company and of the consolidated entity are in accordance with the
Corporations Act 2001, including :
(i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2007 and of their
performance for the year ended on that date; and
(ii) complying with Accounting standards and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due
and payable.
(2) This declaration has been made after receiving the declarations required to be made to the directors in accordance with
sections 295A of the Corporations Act 2001 for the financial year ending 30 June 2007.
on behalf of the board:
JoHn THAMe
Chairman
FRAnK WoLF
Managing Director
sydney, 12 september 2007
98
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus group projects limited
n Ernst & Young Centre
680 George Street
Sydney NSW 2000
Australia
GPO Box 2646
Sydney NSW 2001
n Tel 61 2 9248 5555
Fax 61 2 9248 5959
DX Sydney Stock
Exchange 10172
independent auditor’s report
to the members of abacus group projects limited
The accompanying concise financial report of Abacus Group Projects Limited comprises the balance sheet as at 30
June 2007, the income statement, statement of changes in equity and cash flow statement for the year then ended
and related notes, derived from the audited financial report of Abacus Group Projects Limited for the year ended
30 June 2007. The concise financial report also includes the directors’ declaration. The concise financial report does
not contain all the disclosures required by the Australian Accounting standards.
Directors’ Responsibility for the Concise Financial Report
The Directors are responsible for the preparation and presentation of the concise financial report in accordance
with Accounting standard AAsb 1039 Concise Financial Reports, and the Corporations Act 2001. This responsibility
includes establishing and maintaining internal controls relevant to the preparation of the concise financial report;
selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in
the circumstances.
Auditor’s Responsibility
our responsibility is to express an opinion on the concise financial report based on our audit procedures.
We have conducted an independent audit, in accordance with Australian Auditing standards, of the financial report
of Abacus Group Projects Limited for the year ended 30 June 2007. our audit report on the financial report for the
year was signed on 30 August 2007 and was not subject to any modification. The Australian 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 for the year is free from material misstatement.
our procedures in respect of the concise financial report included testing that the information in the concise
financial report is derived from, and is consistent with, the financial report for the year, and examination on a test
basis, of evidence supporting the amounts and other disclosures which were not directly derived from the financial
report for the year. These procedures have been undertaken to form an opinion whether, in all material respects,
the concise financial report complies with Accounting standard AAsb 1039 Concise Financial Reports.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinion.
Independence
In conducting our audit, we have complied with the independence requirements of the Corporations Act 2001.
We confirm that the independence declaration required by the Corporations Act 2001 provided to the directors
of Abacus Group Projects Limited on 30 August 2007.
Liability limited by a scheme approved under
Professional Standards Legislation.
99
annual financial report / continued
independent auditor’s report
to members of abacus group projects limited
Auditor’s Opinion
In our opinion, the concise financial report and the directors’ declaration of Abacus Group Projects Limited for the
year ended 30 June 2007 complies with Accounting standard AAsb 1039 Concise Financial Reports.
eRnsT & YounG
eD PsALTIs
Partner
sydney, 12 september 2007
100
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
corporate governance
This report sets out the Group’s position relating to each
of the AsX Corporate Governance Council Principles of
Good Corporate Governance during the year. Additional
information, including charters and policies, is available
through a dedicated corporate governance information
section on the Abacus website at www.abacusproperty.com.
au under ‘About Abacus’.
PRInCIPLe 1: LAY soLID FounDATIons FoR MAnAGeMenT
AnD oveRsIGHT
The board has adopted a charter that sets out the
responsibilities reserved by the board, those delegated to the
Managing Director and those specific to the Chairman.
PRInCIPLe 2: sTRuCTuRe THe boARD To ADD vALue
Board size and composition
The board is comprised of two executive directors and five
non-executive directors. The majority of the board (Messrs
Thame, bluth, Irving and bartlett) are independent members.
The board has determined that an independent director is
one who is not:
• a current executive or a substantial securityholder of the
Group;
• a director who has been employed in an executive capacity
by the Group;
• involved in material contractual relationships with the Group;
or
• a principal of a material adviser or material consultant to the
Group.
Given the nature of the Group’s business and current stage
of development, the board considers its current composition
provides the necessary skills and experience to ensure a
proper understanding of, and competence to deal with, the
current and emerging issues of the business to optimise
the financial performance of the Group and returns to
securityholders. Details of the skills, experience and expertise
of each director are set out on pages 13-14.
Directors’ independent advice
Directors may seek independent professional advice on any
matter connected with the performance of their duties. In
such cases, the Group will reimburse the reasonable costs of
such advice.
Nomination and Remuneration Committee
The board has established a nomination and Remuneration
committee. The Committee’s charter sets its role,
responsibilities and membership requirements. The members
of the committee and their attendance at meetings are
provided on page 15.
The selection and Appointment of non-executive Directors
policy sets out the procedures followed when considering the
appointment of new directors.
PRInCIPLe 3: PRoMoTe eTHICAL AnD ResPonsIbLe
DeCIsIon-MAKInG
Standards of ethical behaviour
The Group’s Code of Conduct promotes ethical practices and
responsible decision making by directors and employees. The
Code deals with confidentiality of information, protection of
company assets, disclosure of potential conflicts of interest
and compliance with laws and regulations.
Trading in Group securities
The Group policy restricts trading in Group securities by
directors and employees. The policy sets out the periods in
which trading in Group securities is permitted.
PRInCIPLe 4: sAFeGuARD InTeGRITY In FInAnCIAL
RePoRTInG
Financial report accountability
The Managing Director and the Chief Financial officer provide
a written assurance to the board that the Group’s financial
reports present a true and fair view, in all material respects, of
the Group’s financial condition and operational results and are
in accordance with relevant accounting standards.
Audit committee
The Audit Committee comprises two independent non-
executive directors and the chairman of the Committee is not
the chairman of the board. The members of the committee
and their attendance at meetings are provided on page 15.
The Audit Committee has a formal charter which sets out
its specific roles and responsibilities, and composition
requirements.
The procedures for the selection and appointment of the
external auditor are set out in the Audit Committee Charter.
PRInCIPLe 5: MAKe TIMeLY AnD bALAnCeD DIsCLosuRe
The Group has a policy and procedures designed to ensure
compliance with AsX Listing Rule disclosure requirements.
The Managing Director is responsible for ensuring that the
Group complies with its disclosure obligations.
101
annual financial report / continued
PRInCIPLe 10: ReCoGnIse THe LeGITIMATe InTeResTs oF
sTAKeHoLDeRs
The Code of Conduct discussed under Principle 3 guides
compliance with legal and ethical responsibilities and also
sets a standard for employees and directors dealing with the
Group’s obligations to external stakeholders.
corporate governance
PRInCIPLe 6: ResPeCT THe RIGHTs oF seCuRITYHoLDeRs
The Group aims to keep securityholders informed of
significant developments and activities of the Group. The
Group’s website is updated regularly and includes annual
and half-yearly reports, distribution history and all other
announcements lodged with the AsX.
In addition, the Group publishes a newsletter from time to
time which updates investors and their advisers on the current
activities of the Group.
External auditor
The external auditor attends the annual general meetings of
the Group and is available to answer securityholder questions.
PRInCIPLe 7: ReCoGnIse AnD MAnAGe RIsK
The Audit Committee has responsibility for reviewing the
Group’s risk management framework. During the year a
review of the risk management framework was undertaken
in consultation with an external consultant. As a result of the
review and the Group’s growth an updated risk management
plan was adopted.
The risk register is updated with any emerging risks and the
responsibility for managing those risks.
The Managing Director and Chief Financial officer confirm in
writing to the board that the financial statements present a
true and fair view and that this statement is based on a sound
system of financial risk management and internal compliance.
The statement also confirms that these controls implement
the policies adopted by the board and that the Group’s
financial risk and internal compliance controls are operating
efficiently and effectively in all material respects.
PRInCIPLe 8: enCouRAGe enHAnCeD PeRFoRMAnCe
The nomination and Remuneration Committee is responsible
for assessing the processes for evaluating the performance of
the board and key executives.
PRInCIPLe 9: ReMuneRATe FAIRLY AnD ResPonsIbLY
The Group’s remuneration policies including security-based
payment plans and the remuneration of key management
personnel are discussed in the Remuneration Report.
The members of the committee and their attendance at
meetings are provided on page 15.
non-executive directors are paid fees for their service and do
not participate in other benefits which may be offered other
than those which are statutory requirements.
102
AbACus AnnuAL FInAnCIAL RePoRT 2007
abacus property group
asx additional information
Abacus Property Group is made up of the Abacus Trust, Abacus Income Trust, Abacus Group Holdings Limited and Abacus
Group Projects Limited. The responsible entity of the Abacus Trust and Abacus Income Trust is Abacus Funds Management
Limited. unless specified otherwise, the following information is current as at 31 August 2007.
number of holders of ordinary fully paid stapled securities
voting rights attached to ordinary fully paid stapled securities
one vote per stapled security
8,298
number of holders holding less than a marketable parcel of ordinary fully paid stapled securities
78
secretary, Abacus Funds Management Limited
secretary, Abacus Group Holdings Limited
secretary, Abacus Group Projects Limited
Registered office
Abacus Funds Management Limited
Abacus Group Holdings Limited
Abacus Group Projects Limited
ellis varejes
Level 34, Australia square
264-278 George street
sydney nsW 2000
612 9253 8600
Registry
Computershare Investor services Pty Ltd
other stock exchanges on which Abacus Property Group securities are quoted
number and class of restricted securities or securities subject to voluntary escrow that are on issue
There is no current on-market buy-back
subsTAnTIAL seCuRITYHoLDeR noTIFICATIons (CuRRenT As AT 14 sePTeMbeR 2007)
seCuRITYHoLDeRs
ubs nominees Pty Limited
Deutsche bank Group
babcock & brown Group
InG Australia Holdings Limited
Australia and new Zealand banking Group Limited
seCuRITIes ReGIsTeR
nuMbeR oF seCuRITIes
1-1000
1,001-5,000
5,001-10,000
10,001-100,000
100,001 – over
GPo box 7045
sydney nsW 1115
1300 855 080
none
none
nuMbeR oF seCuRITIes
43,874,239
36,650,881
23,537,211
35,696,384
35,750,736
nuMbeR oF seCuRITYHoLDeRs
244
729
1,615
5,487
223
103
annual financial report / continued
asx additional information
ToP 20 LARGesT seCuRITYHoLDInGs
seCuRITYHoLDeRs
1 national nominees Limited
2 HsbC Custody nominees (Australia) Limited
3 J P Morgan nominees Australia Limited
4 AnZ nominees Limited
5 AnZ nominees Limited
6 RbC Dexia Investor services Australia nominees Pty Ltd
7 Australian executor Trustees Limited
8 suncorp Custodian services Pty Limited
9 Cogent nominees Pty Limited
10 RbC Dexia Investor services Australia nominees Pty Ltd
11 Citicorp nominees Pty Limited
12 Citicorp nominees Pty Limited
13 Avanteos Investments Limited
14 Citicorp nominees Pty Limited
15 netwealth Investments Limited
16 Avanteos Investments Limited
17 Avanteos Investments Limited
18 Pluteus (no. 164) Pty Limited
19 RbC Dexia Investor services Australia nominees Pty Ltd
20 Multiplex Funds Management Limited
nuMbeR oF
seCuRITIes
% oF IssueD
seCuRITIes
80,706,845
67,904,104
67,587,188
34,922,392
20,325,425
18,116,372
17,233,170
15,757,831
13,238,904
12,810,920
11,164,624
9,861,040
9,121,088
6,834,482
5,699,008
3,268,562
3,168,388
2,734,146
2,647,060
2,359,592
12.72
10.70
10.65
5.50
3.20
2.86
2.72
2.48
2.09
2.02
1.76
1.55
1.44
1.08
0.90
0.52
0.50
0.43
0.42
0.37
104
AbACus AnnuAL FInAnCIAL RePoRT 2007
Abacus Property Group
Level 34 Australia Square
264-278 George Street
Sydney NSW 2000
T 612 9253 8600
F 612 9253 8616
E enquiries@abacusproperty.com.au
www.abacusproperty.com.au
Gillespie Advertising Pty Ltd
www.abacusproperty.com.au