Abacus Property Group Annual Report 2008

Plain-text annual report

annual ﬁ nancial report 2008 Abacus Property Group At 30 June 2008, 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 identiﬁ ed as the parent entity for the purpose of producing a consolidated ﬁ nancial report for the APG. That is, The concise ﬁ nancial report of AGHL services as a summary of the ﬁ nancial performance and position of APG as a whole. It consolidates the ﬁ nancial reports of AGHL, AT, AIT and AGPL and their controlled entities. To comply with Australian reporting requirements, the concise ﬁ nancial reports of AT, AIT and AGPL are also provided. Abacus Group Holdings Limited Abacus Trust Abacus Income Trust Abacus Group Projects Limited Contents Glossary 01 Abacus Property Group 39 Abacus Trust 63 Abacus Income Trust 87 Abacus Group Projects Limited 109 Corporate Governance 111 ASX additional information 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 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 Abacus Group Holdings Limited and the Responsible Entity John Thame, Chairman Frank Wolf, Managing Director William Bartlett David Bastian Dennis Bluth Malcolm Irving Len Lloyd 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 Share Registry Computershare Investor Services Pty Ltd Level 3, 60 Carrington Street SYDNEY NSW 2000 Tel: Fax: (02) 8234 5050 (02) 1800 635 323 Toll free Contents 02 Directors’ Report 17 Auditor’s Independence Declaration 18 Consolidated Income and Distribution Statements 19 Consolidated Balance Sheet 21 Consolidated Statement of Changes in Equity 22 Consolidated Cash Flow Statement 23 Notes to the Concise Financial Statements 37 Directors’ Declaration 38 Independent Auditor’s Report The concise ﬁ nancial report is an extract from the full ﬁ nancial report for the year ended 30 June 2008. The ﬁ nancial statements and speciﬁ c disclosures included in the concise ﬁ nancial report have been derived from the full ﬁ nancial report. It is recommended that this Concise Annual Financial Report should be read in conjunction with the Concise Annual Financial Reports of Abacus Trust, Abacus Income Trust and Abacus Group Projects Limited for the year ended 30 June 2008. 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 ﬁ nancial report / continued directors’ report 30 JUNE 2008 The Directors present their report together with the consolidated ﬁ nancial report of Abacus Group Holdings Limited and the auditor’s report thereon. Abacus Group Holdings Limited (AGHL) has been identiﬁ ed as the parent entity of the group referred to as the Abacus Property Group (APG or the Group). The consolidated ﬁ nancial reports of Abacus Property Group for the year ended 30 June 2008 comprises the consolidated ﬁ nancial reports of Abacus Group Holdings Limited and its controlled entities, Abacus Trust and its controlled entities, Abacus Group Projects Limited and its controlled entity and Abacus Income Trust and its controlled entities. DIRECTORS The Directors of Abacus Group Holdings Limited in ofﬁ ce during the ﬁ nancial year and until the date of this report are as follows. Directors were in ofﬁ ce for this entire period unless otherwise stated. John Thame Frank Wolf Chairman (Non-executive) Managing Director William Bartlett Non-executive Director David Bastian Dennis Bluth Non-executive Director Non-executive Director Malcolm Irving Non-executive Director Len Lloyd Executive Director CORPORATE STRUCTURE The Group is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects 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 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 proﬁ t attributable to members of $71.5 million for the year ended 30 June 2008 (June 2007: $118.8 million). The Group earned a net ‘normalised’ proﬁ t attributable to members (excluding net property, investments, derivative and employee entitlement fair value revaluations) of $92 million (June 2007: $79.8 million). PRINCIPAL ACTIVITIES The Group operates predominantly in Australia and its principal activities during the course sof the year ended 30 June 2008 included: • investment in commercial, retail and industrial properties; • property funds management; • property ﬁ nance; and • participation in property joint ventures and developments. 2 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group DISTRIBUTIONS Group distributions in respect of the year ended 30 June 2008 were $85 million (June 2007: $68.8 million), which is equivalent to 13.5 cents per stapled security (June 2007: 12.5 cents) paid and payable as follows: Interim distribution paid 8 November 2007 Interim distribution paid 7 February 2008 Interim distribution paid 8 May 2008 Final distribution paid 7 August 2008 Total CENTS 3.25 3.25 3.50 3.50 13.50 $’000 20,225 20,466 22,109 22,183 84,983 REVIEW OF OPERATIONS APG’s normalised earnings grew by 15.3%, reﬂ ecting the Group’s robust growth in core business income and activity. Normalised earnings per stapled security of 14.7 cents exceeded distributions per stapled security of 13.5 cents (inclusive of the 8% year on year growth in distributions). Revenue and net proﬁ t decreased due principally to the impact of $15.6 million in net property devaluations in the year ended 30 June 2008 compared to $33.3 million in net property revaluations for the year ended 30 June 2007. Total income* Pre-tax proﬁ t Net proﬁ t after tax Net proﬁ t attributable to security holders Earnings per security (cents) ‘Normalised earnings’ per security (cents)** Distributions per security (cents) 30 JUNE 2008 $’000 138,423 69,392 72,426 71,460 11.42 14.70 13.50 30 JUNE 2007 $’000 % CHANGE 181,804 124,923 120,402 118,811 21.48 14.43 12.50 (23.9) (44.5) (39.8) (39.9) (46.8) 2 8 * Total revenue plus realised gains on sale of investments plus unrealised revaluation gains/(losses) on properties/investments ** Normalised earnings is net proﬁ t adjusted for AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other ﬁ nancial instruments and share based payments) Net property devaluations did not have a material impact on APG’s ﬁ nancial condition which remains robust. 30 JUNE 2008 30 JUNE 2007 % CHANGE Normalised earnings ($’000) Total assets ($ million) Gearing (%) Net assets ($ million) Net tangible assets ($ million) NTA per security ($) Retained earnings ($ million) Securities on issue (million) Weighted average securities on issue (million) 92,002 1,647 37.5 925 883.9 1.37 134.8 645.6 625.9 79,809 1,269 30.0 803.2 762.2 1.32 148.4 578.6 553.2 15.3 29.8 25.0 15.2 16.0 3.8 (9.2) 11.6 13.1 3 annual ﬁ nancial report / continued directors’ report 30 JUNE 2008 REVIEW OF OPERATIONS/CONTINUED Business activities which contributed to the Group’s operating performance and ﬁ nancial condition for the ﬁ nancial year were: Property Total investment property assets at 30 June 2008 were $1,090 million (30 June 2007: $834 million). During the year the Group acquired 28 properties for approximately $327 million across a diverse range of sectors including commercial, retail, industrial and self storage. Gains from the sale of four properties and strata suites increased Property’s contribution to the full year operating proﬁ t by $9.4 million (2007: $13.3 million). Rental income increased from $58 million in 2007 to $68 million due to a net increase in the property portfolio and net rental increases. Funds Management Gross assets under management (including APG assets) grew to $2.4 billion at 30 June 2008 (June 2007: $2.0 billion). In July 2007 the $190 million Abacus Diversiﬁ ed Income Fund II was launched to retail investors. The fund is an open-ended property fund investing in a diversiﬁ ed portfolio of investment properties and other property-based assets and since the fund’s establishment it has acquired an additional ﬁ ve properties for $48.9 million and sold one property with gross assets now approximating $219.1 million. Two new Special Opportunity Funds were launched during the year including the Abacus Jigsaw Trust that invests in the Jigsaw child care centres and the Abacus Fern Bay Fund that invests in a retiree home park north of Newcastle in NSW. During the year the following unlisted special opportunity funds were realised: Abacus Portfolio Services, Abacus Mariners Cove Equity Trust and Abacus Crows Nest Property Trust. The combined performance fees paid to Abacus upon realisation of these funds totalled $6.4 million and investors received an average return of 16.9%. The Abacus Hospitality Fund released a new offer document in April increasing the unit price from $1.00 to $1.03 and increasing the annual distribution from 8.0 to 8.25 cents. The number of assets owned by the fund has increased from four to eight, with gross assets now totalling $340.4 million. The fund is now one of the top 10 hotel investors in Australia. Funds management remained a material contributor to APG’s results with fees and other income totalling $43.8 million (30 June 2007: $38.2 million) Property Finance Total property ﬁ nance assets including accrued interest (and net of provisions) at 30 June 2008 were $144.7 million (30 June 2007: $120.5 million). Revenue earned from interest and fees (net of provisions) totalled $13.2 million for the year (30 June 2007: $14.2 million). Joint ventures and Developments Investments managed within the Joint Ventures and Developments division comprise direct and indirect property investments and at 30 June 2008 totalled $77.3 million (30 June 2007: $70.2 million). The joint venture investments are with experienced property investors and developers in New South Wales, Queensland and Victoria. These joint ventures enable the Group to participate in a range of property-related opportunities with industry leaders who have local knowledge and specialist property expertise. During the year, the Group established Abacus Sanctuary Residences Pty Limited, a joint venture with Sanctuary Residences (Australia) Pty Limited, a specialist retirement living operator. This joint venture will own and develop specialist retirement living projects. The Colemans Road project was settled in June 2008 and contributed $3.75 million in proﬁ t to the Group. Revenue in the form of equity accounted income, distributions and net fair value revaluations of listed securities and options contributed $3.8 million to the operating proﬁ t (30 June 2007: $4 million). REVIEW OF FINANCIAL CONDITION During the year ended 30 June 2008, the contributed equity of the Group increased by $123.1 million to $771.5 million compared to $648.4 million at 30 June 2007. Total equity increased by $121.8 million to $925 million at 30 June 2008 compared to $803.2 million at 30 June 2007 due principally to a $100 million capital raising on 25 July 2007. Net tangible assets per security increased 3.7% to $1.37 at 30 June 2008 compared to $1.32 at 30 June 2007. At 30 June 2008, existing bank loan facilities totalled approximately $755 million, of which $579 million was drawn. The weighted average maturity of its secured, non-recourse bank debt is 2.7 years. The Group manages interest rate exposure on debt facilities through the use of interest rate swap contracts. At 30 June 2008, 75.4% (2007: 71%) of total debt facilities were covered by interest rate swap 4 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group arrangements at an average interest rate (including bank margin) of 7.4% (2007: 7.03%) and an average term to maturity of 5.07 years (2007: 5.02 years). For the purposes of this report, the term ‘executive’ encompasses the Managing Director, senior executives, general managers and secretary of the parent and the Group. The Group’s net debt gearing ratio (calculated as total interest bearing liabilities less cash assets divided by total assets less cash assets) was 37.5% at 30 June 2008 compared to 30.0% at 30 June 2007. DETAILS OF KEY MANAGEMENT PERSONNEL (INCLUDING THE FIVE HIGHEST PAID EXECUTIVES OF THE COMPANY AND THE GROUP). i. Directors J. Thame F. Wolf W. Bartlett D. Bastian D. Bluth M. Irving L. Lloyd ii. Executives R. de Aboitiz T. Hardwick J. L’Estrange P. Strain E. Varejes Chairman (Non-executive) Managing Director Director (Non-executive) Director (Non-executive) Director (Non-executive) Director (Non-executive) Executive Director Chief Financial Ofﬁ cer Director Funds Management General Manager Property Finance Director Property Chief Operating Ofﬁ cer and Company Secretary REMUNERATION AND NOMINATION COMMITTEE The Remuneration and Nomination Committee of the Board of Directors is responsible for determining and reviewing remuneration arrangements for the Board and executives. The Remuneration and 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 beneﬁ t from the retention of a high quality, high performing Board and executive team. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS The following signiﬁ cant changes in the state of affairs of the Group occurred during the ﬁ nancial year: • Retained earnings (including the impact of revaluations of investment properties and derivative ﬁ nancial instruments) decreased $13.6 million to $134.8 million at 30 June 2008 compared to $148.4 million at 30 June 2007; and • Total equity increased by 15.2% from $803.2 million to $925 million at 30 June 2008 reﬂ ecting the additional capital raised and net movements in retained earnings, increased distributions and net negative property revaluations during the year. SIGNIFICANT EVENTS AFTER BALANCE DATE Other than as disclosed already in this report, there has been no matter or circumstance that has arisen since the end of the ﬁ nancial year that has signiﬁ cantly affected, or may affect, the Group’s operations in future ﬁ nancial periods, the results of those operations or the Group’s state of affairs in future ﬁ nancial periods. LIKELY DEVELOPMENTS AND EXPECTED RESULTS In the opinion of the Directors, disclosure of any further information on future developments and results than is already disclosed in this report or the ﬁ nancial statements would be unreasonably prejudicial to the interests 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. For the purposes of this report Key Management Personnel (KMP) of the Group are deﬁ ned as those persons having authority and responsibility for planning, directing and controlling the major activities of the parent company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the parent company, and includes the ﬁ ve executives in the parent and the Group receiving the highest remuneration. 5 annual ﬁ nancial report / continued directors’ report 30 JUNE 2008 REMUNERATION POLICY 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. The Group’s policy is commensurate with our competitors and is critical to achieving the Group’s overall objective of producing superior performance and growth. The Group’s policy is designed to reward individual performance and closely align the interests of the Board and executives to those of shareholders through the use of short-term and long-term incentives. 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 the Group’s performance and the creations of 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. NON-EXECUTIVE DIRECTOR 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 2007 when securityholders approved an aggregate remuneration limit of $600,000 per year. The aggregate remuneration limit 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 groups 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 Remuneration ROLE FEE Chairman $152,500 Member $57,500 Chairman $10,000 Member Member $5,000 $4,800 Member $10,000 Member $5,000 Abacus Storage Funds Management Limited Board Member $7,500 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 beneﬁ ts. Nor do they participate in any incentive programs. The remuneration of non-executive directors for the years ended 30 June 2008 and 30 June 2007 is detailed in Table 1 of this report. EXECUTIVE REMUNERATION 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 negotiated a detailed contract of employment with the Managing Director. Details of this contract are provided below. 6 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group Remuneration consists of the following key elements: • ﬁ xed remuneration (base salary, superannuation and non-monetary beneﬁ ts). • variable remuneration – short term incentive (STI); and – long term incentive (LTI). The proportion of ﬁ xed remuneration and variable remuneration (potential short term and long term incentives) for each executive is set out in table 1. FIXED REMUNERATION 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. The Committee has access to external advice independent of management. Structure Executives are given the opportunity to receive their ﬁ xed (primary) remuneration in a variety of forms including cash and fringe beneﬁ ts 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. The ﬁ xed 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 speciﬁ c target for group ﬁ nancial performance set at the beginning of the ﬁ nancial 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 ﬁ nancial and non-ﬁ nancial. These measures primarily include Group proﬁ tability targets, returns to security holders and certain key performance indicators such as assets under management. The Board considers that performance linked objectives that have an operational and ﬁ nancial impact focus are best suited to the outcomes desired by securityholders. Non-ﬁ nancial 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 inﬂ uence 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 the ﬁ rst day of the relevant ﬁ nancial 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 A-REIT. This peer group reﬂ ects the Group’s competitors for capital transactions and talent. The Group’s performance against the hurdle is determined according to the Group’s ranking against the peer group TSR growth over the performance period. 7 annual ﬁ nancial report / continued directors’ report 30 JUNE 2008 The security options will vest in accordance with the table below: No loans were provided under the ESLP during the year (2007: $20,000,000 to twelve executives). TSR target Below the 50th percentile 50th percentile 50th to 75th percentile 75th percentile PERCENTAGE OF SECURITY OPTIONS THAT VEST Nil 50% Progressive scale of an additional 2% for each percentile increase 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 sacriﬁ ce arrangement under which remuneration approximately equal to a notional interest amount on the loan is foregone by the executive. The interest rate for the ﬁ nancial year is 7.5%. 100% This loan is repayable on the same basis as applies under the ESLP. 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. This includes entering into contracts to hedge their exposure to options or shares granted as part of their remuneration package. Adherence to this policy is monitored on an annual basis. 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 sacriﬁ ce arrangement under which base remuneration approximately equal to a notional interest amount on the loan is foregone by the executive. The interest rate for a ﬁ nancial year is equivalent to the Group distribution rate for that year. 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. 8 ABACUS ANNUAL FINANCIAL REPORT 2008 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 model calculation (Binominal Tree American put option model) and this amount is treated as an employee expense with a corresponding increase in reserves. • 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 A-REIT Accumulation Index Total Return 180% 160% 140% 120% 100% 80% 60% 40% 20% 0% S&P ASX200 APG 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 30/12/2007 30/06/2008 abacus property group In addition to TSR, the Group’s performance is reﬂ ected in the following table: 30 JUNE 2004 30 JUNE 2005 30 JUNE 2006 30 JUNE 2007 30 JUNE 2008 Closing share price Distributions paid and proposed (cents) Normalised earnings per security (cents) Net tangible assets per security $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 $1.32 $1.15 13.50 14.70 $1.37 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 ﬁ xed 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. 9 annual ﬁ nancial report / continued directors’ report 30 JUNE 2008 TABLE 1: REMUNERATION OF KEY MANAGEMENT PERSONNEL 2008 SHORT-TERM POST EMPLOYMENT SECURITY- BASED PAYMENT % PERFORMANCE RELATED TOTAL SALARY & FEES CASH BONUS NON- MONETARY BENEFITS SUPER- ANNUATION ACCRUED LEAVE ENTITLEMENT OPTIONS Non-executive directors J Thame – Chairman W Bartlett D Bastian D Bluth M Irving 146,871 46,069 – – 80,000 Sub-total non-executive directors 272,940 – – – – – – Executive directors F Wolf – Managing Director 1,100,000 650,000 L Lloyd – Managing Director, Property Services 220,000 150,000 Other key management personnel R de Aboitiz – Chief Financial Ofﬁ cer 436,871 150,000 T Hardwick – Director Funds Management J L’Estrange – General Manager Property Finance P Strain – Director Property* 436,871 150,000 386,871 150,000 252,189 150,000 E Varejes – Chief Operating Ofﬁ cer 382,500 150,000 Sub-total executive KMP Total 3,215,302 1,550,000 3,488,242 1,550,000 – – – – – – – – – – – – – – 13,129 21,431 84,800 79,800 – 199,160 100,000 100,000 13,129 13,129 13,129 47,811 67,500 354,698 553,858 – – – – – – – – – – – – – – – – – – – – – 160,000 67,500 84,800 79,800 80,000 472,100 311,859 2,161,859 98,558 568,558 48,558 648,558 98,558 698,558 98,558 81,891 98,558 648,558 531,891 698,558 836,540 5,956,540 836,540 6,428,640 – – – – – – 44% 44% 31% 36% 38% 44% 36% * P. Strain did not meet the deﬁ nition of a key management person under AASB 124 for the 2007 ﬁ nancial year but is a key management person for 2008. 10 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group TABLE 1: REMUNERATION OF KEY MANAGEMENT PERSONNEL (CONT.) 2007 SHORT-TERM POST EMPLOYMENT SECURITY- BASED PAYMENT % PERFORMANCE RELATED TOTAL SALARY & FEES CASH BONUS NON- MONETARY BENEFITS SUPER- ANNUATION ACCRUED LEAVE ENTITLEMENT OPTIONS Non-executive directors J Thame – Chairman W Bartlett 1 D Bastian 2 D Bluth P Green 3 M Irving 73,702 25,274 18,300 54,479 14,788 80,000 Sub-total non-executive directors 266,543 – – – – – – – – – – – – – 86,298 – 35,000 33,134 1,462 – – 155,894 – – – – – – – – – – – – – – 160,000 25,274 53,300 87,613 16,250 80,000 422,437 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 Ofﬁ cer 5 305,382 100,000 S O’Donoghue – Chief Financial Ofﬁ cer 6 T Hardwick – Director Funds Management J L’Estrange – Gen. Man. Property Finance 63,461 – 387,313 150,000 319,314 150,000 E Varejes – Chief Operating Ofﬁ cer 327,500 150,000 Sub-total executive KMP Total KMP compensation 2,490,406 1,325,000 2,756,949 1,325,000 Other group executives P Strain 217,314 150,000 1 Appointed on 14/02/07 2 Appointed as non-executive director on 14/11/06 3 Resigned on 1/09/06 4 Resigned as Managing Director on 30/09/06 5 Appointed on 18/09/06 6 Resigned on 18/09/06 – – – – – – – – – – – – – – – – – – 59% – 58% 105,113 90,000 – 812,304 2,462,304 295,026 – 445,026 127,451 – 230,628 615,628 10,003 15,289 12,687 30,686 72,500 – – – – – 150,524 565,909 44% – 78,750 50,000 600,000 351,047 351,047 851,047 901,047 – 33% 59% 56% 463,729 295,026 1,945,550 6,519,711 619,623 295,026 1,945,550 6,942,148 12,686 – 183,857 563,857 59% 11 annual ﬁ nancial report / continued directors’ report 30 JUNE 2008 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 2008 Executive directors F Wolf L Lloyd Other key management personnel R de Aboitiz T Hardwick J L’Estrange P Strain E Varejes 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 NO. GRANT DATE FAIR VALUE PER OPTION AT GRANT DATE ($) (NOTE 24) EXERCISE PRICE PER OPTION ($) (NOTE 24) EXPIRY DATE FIRST EXERCISE DATE LAST EXERCISE DATE 2,403,846 31/08/07 721,154 31/08/07 721,154 31/08/07 721,154 31/08/07 721,154 31/08/07 721,154 31/08/07 721,154 31/08/07 0.202 0.202 0.202 0.202 0.202 0.202 0.202 2.01 2.01 2.01 2.01 2.01 2.01 2.01 30/08/17 30/09/10 30/08/17 30/08/17 30/09/10 30/08/17 30/08/17 30/09/10 30/08/17 30/08/17 30/09/10 30/08/17 30/08/17 30/09/10 30/08/17 30/08/17 30/09/10 30/08/17 30/08/17 30/09/10 30/08/17 GRANTED TERMS & CONDITIONS FOR EACH GRANT NO. GRANT DATE FAIR VALUE PER OPTION AT GRANT DATE ($) (NOTE 24) EXERCISE PRICE PER OPTION ($) (NOTE 24) EXPIRY DATE FIRST EXERCISE DATE LAST EXERCISE DATE 1,343,284 12/04/07 447,761 12/04/07 447,761 12/04/07 447,761 12/04/07 447,761 12/04/07 0.335 0.335 0.335 0.335 0.335 1.485 1.485 1.485 1.485 1.485 11/04/17 30/09/09 11/04/17 11/04/17 30/09/09 11/04/17 11/04/17 30/09/09 11/04/17 11/04/17 30/09/09 11/04/17 11/04/17 30/09/09 11/04/17 298,507 12/04/07 0.335 1.485 11/04/17 30/09/09 11/04/17 12 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group Executive Security Loan Plan No options were issued under the Executive Security Loan Plan during the year. The following options were issued under the Executive Security Loan Plan in the year ended 30 June 2007: GRANTED TERMS & CONDITIONS FOR EACH GRANT VESTED NO. GRANT DATE FAIR VALUE PER OPTION AT GRANT DATE ($) (NOTE 24) EXERCISE PRICE PER OPTION ($) (NOTE 24) EXPIRY DATE FIRST EXERCISE DATE LAST EXERCISE DATE NO. % 2,881,728 31/01/07 785,925 31/01/07 0.23 0.23 1.91 1.91 30/06/10 31/01/07 30/06/10 2,881,728 100% 30/06/10 31/01/07 30/06/10 785,925 100% 654,938 31/01/07 1,309,875 31/01/07 1,309,875 31/01/07 0.23 0.23 0.23 1.91 1.91 1.91 30/06/10 31/01/07 30/06/10 654,938 100% 30/06/10 31/01/07 30/06/10 1,309,875 100% 30/06/10 31/01/07 30/06/10 1,309,875 100% 30 JUNE 2007 Executive directors F Wolf L Lloyd Other key management personnel R de Aboitiz J L’Estrange E Varejes 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% TABLE 3: OPTIONS GRANTED AS PART OF REMUNERATION F Wolf L Lloyd R de Aboitiz T Hardwick J L’Estrange P Strain E Varejes TOTAL VALUE OF OPTIONS GRANTED DURING THE YEAR VALUE OF OPTIONS EXERCISED DURING THE YEAR VALUE OF OPTIONS LAPSED DURING THE YEAR REMUNERATION CONSISTING OF OPTIONS FOR THE YEAR % 485,577 145,673 145,673 145,673 145,673 145,673 145,673 – – – – – – – – – – – – – – 14 17 7 14 15 15 14 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. No options have been exercised. 13 annual ﬁ nancial report / continued directors’ report 30 JUNE 2008 INFORMATION ON DIRECTORS AND OFFICERS The Directors and Company Secretary of AGHL, AFML (the Responsible Entity of AT and AIT) and AGPL, in ofﬁ ce during the ﬁ nancial year and until the date of this report are as set out below, with qualiﬁ cations, experience and special responsibilities. John Thame AIBF, FCPA Chairman (non-executive) Member of Remuneration and Nomination Committee Member of Audit Committee Frank Wolf PhD BA Hons Managing Director Member of Credit Committee Mr Thame has over 30 years’ experience in the retail ﬁ nancial 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 was Chairman (2004 to 2008) and a director (1997 to 2008) of St George Bank Limited and St George Life Limited. He is also a director of Reckon Limited and The Village Building Co Limited (Group). Dr Wolf has over 20 years’ experience in the property and ﬁ nancial 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 ﬁ nanced specialist property-based assets in retirement and hospitality sectors. Dr Wolf is the Chairman of FSP Group Pty Limited and a Director of Kingston Capital Limited (ﬁ nancial planning groups). He is also a director of HGL Limited, a diversiﬁ ed publicly listed investment company. David Bastian CPA Non-executive Director Member of Credit Committee Member of Due Diligence Committee Member of Remuneration and Nomination Committee Mr Bastian has almost 40 years’ experience in the ﬁ nancial services industry, in particular in the packaging of commercial, retail and residential property projects and was the Managing Director of the Group until 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. Malcolm Irving AM, FCPA, SF Fin, BCom, Hon DLitt Non-executive Director Chairman of Audit Committee Member of Remuneration and Nomination Committee Mr Irving has over 40 years’ experience in company management, including 12 years as Managing Director of CIBC Australia Limited. He was a director of Keycorp Limited (2001 to 2007). He is also a director of O’Connell Street Associates Pty Ltd and Thales Australia Limited. 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 HWL Ebsworth, Lawyers and is a member of a number of Law Society and Law Council Committees. He is also a member of the Australian Valuation and Professional Standards Board. William J Bartlett FCA, CPA, FCMA, CA(SA) Non-executive Director Chairman of Remuneration and Nomination Committee Member of Audit Committee Mr Bartlett has strong accounting, ﬁ nancial 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, GWA 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) and Arana Therapeutics Limited (2004 to 2007). He is also a director of the Bradman Foundation and Museum. 14 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group INFORMATION ON DIRECTORS AND OFFICERS/CONTINUED Len Lloyd FAPI, WDA Executive Director 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 Ofﬁ cer Mr Varejes has been the Company Secretary since September 2006. He has over 25 years’ experience as a corporate lawyer in private practice. The Directors and Ofﬁ cers were in ofﬁ ce from the beginning of the ﬁ nancial year until the date of this report unless otherwise stated. As at the date of this report, the relevant interests of the directors and speciﬁ ed executives in the stapled securities of Abacus Property Group were as follows: Directors J Thame F Wolf W Bartlett D Bluth D Bastian M Irving L Lloyd APG SECURITIES HELD 55,378 9,718,341* 8,000 20,000 4,503,497 35,387 795,925* NUMBER OF OPTIONS OVER APG SECURITIES – 3,747,130 – – – – 1,168,915 * The holdings of F Wolf and L Lloyd include securities acquired under the Executive Share Loan Plan that are treated as options. DIRECTORS’ MEETINGS The number of meetings of directors (including meetings of committees of directors) of Abacus Group Holdings Limited and Abacus Funds Management Limited, the manager of the Abacus Property Group, held during the year and the number of meetings attended by each director were as follows: BOARD AUDIT COMMITTEE DUE DILIGENCE COMMITTEE NOMINATION & REMUNERATION COMMITTEE CREDIT COMMITTEE HELD ATTENDED HELD ATTENDED HELD ATTENDED HELD ATTENDED HELD ATTENDED J Thame F Wolf W Bartlett D Bastian D Bluth M Irving L Lloyd 12 12 12 12 12 12 12 11 11 12 12 12 11 11 4 4 4 4 3 3 2 2 2 2 1 2 2 2 17 17 17 7 7 7 7 17 17 17 15 annual ﬁ nancial report / continued directors’ report 30 JUNE 2008 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 ofﬁ cers 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 signiﬁ cant breaches of any environmental requirements applicable to the Group. STAPLED SECURITY OPTIONS As at the date of this report, there were 12,701,136 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 17. NON-AUDIT SERVICES The following non-audit services were provided by the Group’s auditor, Ernst & Young. The Directors are satisﬁ ed 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 – $80,600 $80,600 ROUNDING The amounts contained in this report and in the annual ﬁ nancial 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, 27 August 2008 FRANK WOLF Managing Director 16 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group ■ Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 ■ 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 17 annual ﬁ nancial report / continued consolidated income and distribution statements YEAR ENDED 30 JUNE 2008 Revenue Rental income Storage-related income Hotel-related income Finance income Funds management income Share of proﬁ t from equity accounted investments Income from distributions Other income Net realised gains on investments Net unrealised gains/(losses) on investments Total Revenue and Other Income Employee beneﬁ ts expense Depreciation and amortisation expense Finance costs Other expenses Proﬁ t before tax Income tax beneﬁ t/(expense) Proﬁ t after tax Proﬁ t attributable to: Equity holders of the parent entity Equity holders of other stapled entities (minority interest) Abacus Trust Abacus Group Projects Limited Abacus Income Trust Stapled security holders Net proﬁ t attributable to external minority interests Net proﬁ t Basic earnings per stapled security (cents) Diluted earnings per stapled security (cents) Basic earnings per stapled security ex fair value adjustments* Diluted earnings per stapled security ex fair value adjustments* STATEMENT OF DISTRIBUTION Net proﬁ t/(loss) attributable to securityholders Net transfer of undistributed income from/(to) securityholders’ funds Distributions paid and payable Distribution per stapled security (cents per security) Weighted average number of securities (‘000) CONSOLIDATED NOTES 2008 $’000 2007 $’000 68,030 6,934 1,472 16,442 43,859 12,948 1,261 1,000 9,118 (22,641) 57,734 – 9,272 15,372 38,230 1,444 1,170 840 23,107 34,635 138,423 181,804 (15,223) (2,104) (38,420) (13,284) 69,392 3,034 72,426 (11,606) (5,010) (21,909) (18,356) 124,923 (4,521) 120,402 (8,750) 629 55,490 1,935 22,785 71,460 966 72,426 11.42 11.23 14.70 14.45 71,460 13,523 84,983 13.50 89,122 (415) 29,475 118,811 1,591 120,402 21.48 21.33 14.43 14.33 118,811 (49,957) 68,854 12.50 625,857 553,184 4a 4b 4c 4d 5a 5b 5c 5d 7 7 7 7 6 6 7 * Based on net proﬁ t excluding AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other ﬁ nancial instruments and share based payments) 18 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group consolidated balance sheet YEAR ENDED 30 JUNE 2008 Current assets Cash and cash equivalents Trade and other receivables Inventories Investment properties Property loans and other ﬁ nancial assets Other Total current assets Non-current assets Property, plant and equipment Investment properties Property loans and other ﬁ nancial assets Equity accounted investments Deferred tax assets Intangible assets and goodwill Other Total non-current assets Total assets Current liabilities Trade and other payables Interest-bearing loans and borrowings Income tax payable Other Total current liabilities Non-current liabilities Interest-bearing loans and borrowings Deferred tax liabilities Other Total non-current liabilities Total liabilities Net assets Total equity CONSOLIDATED NOTES 2008 $’000 2007 $’000 8a 8b 46,777 26,154 9,848 3,849 157,278 1,905 245,811 31,839 928,591 292,746 104,093 1,177 41,139 1,797 19,068 65,322 13,359 12,524 256,236 1,806 368,315 30,553 660,536 70,945 89,299 4,268 40,977 4,510 1,401,382 1,647,193 901,088 1,269,403 67,973 63,704 – 2,102 53,948 171,183 7,139 417 133,779 232,687 580,874 222,491 2,614 4,927 588,415 722,194 924,999 924,999 2,278 8,742 233,511 466,198 803,205 803,205 19 annual ﬁ nancial report / continued consolidated balance sheet YEAR ENDED 30 JUNE 2008 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 Reserves Retained earnings Total equity attributable to unitholders of AIT: Contributed equity Retained earnings Total equity attributable to external minority interest: Contributed equity Retained earnings Total equity Equity Contributed equity Reserves Retained earnings/(accumulated losses) Total securityholders’ interest in equity Total external minority interest Total equity 20 ABACUS ANNUAL FINANCIAL REPORT 2008 CONSOLIDATED NOTES 2008 $’000 2007 $’000 31,761 830 3,671 36,262 595,512 86,326 681,838 7,259 (483) 619 7,395 136,970 44,226 181,196 2,544 15,764 18,308 24,684 2,703 10,532 37,919 504,561 98,260 602,821 6,240 – (1,043) 5,197 112,956 40,615 153,571 1,321 2,376 3,697 9 924,999 803,205 771,502 347 134,842 906,691 18,308 648,440 2,703 148,365 799,508 3,697 924,999 803,205 abacus property group consolidated statement of changes in equity YEAR ENDED 30 JUNE 2008 Consolidated At 1 July 2007 Foreign currency translation Total income and expense for the year recognised directly in equity Net income for the year Total income for the year Equity raisings Issue Costs Distribution reinvestment plan Disposal of the Matson Resort Acquired retained earnings on acquisition of U-Stow-It Holdings Limited Distribution to securityholders Share based payments At 30 June 2008 ISSUED CAPITAL $’000 ASSET REVALUATION RESERVE $’000 FOREIGN CURRENCY TRANSLATION $’000 EMPLOYEE EQUITY BENEFITS $’000 RETAINED EARNINGS $’000 MINORITY INTEREST $’000 TOTAL EQUITY $’000 648,440 – – – – 107,422 (1,976) 17,616 – – – – 771,502 – – – – – – – – – – – – – (165) (3,394) (3,394) – (3,394) – – – – – – – 2,868 148,365 3,697 803,205 – 71,460 71,460 – – – – – 966 966 – – – (702) (3,394) (3,394) 72,426 69,032 107,422 (1,976) 17,616 (702) – 14,599 14,599 (84,983) (252) (85,235) – – – – – – – – – 1,038 – – 1,038 (3,559) 3,906 134,842 18,308 924,999 At 1 July 2006 572,503 1,907 (229) – 96,626 2,304 673,111 Sale of property, plant and equipment Tax on options taken directly to equity Share of associate’s retained earnings Foreign currency translation Adjustment resulting from changes in associated entities Total income and expense for the year recognised directly in equity Net income for the year Total income for the year – – – – – – – – Equity raisings Issue costs Treasury shares Distribution to securityholders Share based payments At 30 June 2007 99,934 (1,500) (22,497) – – 648,440 (1,907) – – – – (1,907) – (1,907) – – – – – – – – 64 – 64 – 64 – – – – – – – – – – – – – – – 1,907 – – (821) (198) (1,019) 337 – 359 – – – 337 64 359 1,782 (198) (259) 118,811 1,591 120,402 120,593 1,393 120,143 – – (68,854) – – – – 99,934 (1,500) (22,497) (68,854) 2,868 2,868 – (165) 2,868 148,365 3,697 803,205 21 annual ﬁ nancial report / continued consolidated cash ﬂ ow statement YEAR ENDED 30 JUNE 2008 Cash ﬂ ows from operating activities Income receipts Interest received Distributions received Income tax (paid)/received Borrowing costs paid Operating payments Net cash ﬂ ows from operating activities Cash ﬂ ows from investing activities Payments for investments and funds advanced Proceeds from sale and settlement of investments and funds repaid Advances to related entities Disposal of property, plant and equipment 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 ﬂ ows from/(used in) investing activities Cash ﬂ ows from ﬁ nancing activities Proceeds from issue of stapled securities Payment of ﬁ nance costs Repayment of borrowings Proceeds from borrowings Distributions paid Net cash ﬂ ows from/(used in) ﬁ nancing 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 22 ABACUS ANNUAL FINANCIAL REPORT 2008 CONSOLIDATED 2008 $’000 2007 $’000 169,152 1,957 1,281 (6,795) (38,939) (49,947) 76,709 (336,703) 204,446 (66,664) 16,549 (22,861) (21,653) 4,397 (255,955) 57,090 (100) (421,454) 110,711 (4,230) (230,458) 555,962 (59,045) 372,940 28,195 (485) 19,067 46,777 101,918 16,627 1,139 806 (28,306) (16,914) 75,270 (333,953) 298,279 (141,458) – (2,302) 23,056 (68,924) 134,664 (8,849) (99,487) 64,197 (49) (190,801) 215,906 (66,075) 23,178 (1,039) – 20,107 19,068 abacus property group notes to the concise ﬁ nancial statements 30 JUNE 2008 1. CORPORATE INFORMATION Abacus Property Group (APG or the Group) is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects 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 neither can be dealt with without the other. The securities trade as one security on the Australian Stock Exchange (the ASX) under the code ABP. The ﬁ nancial report of the Group for the year ended 30 June 2008 was authorised for issue in accordance with a resolution of the directors on 27 August 2008. The nature of the operations and principal activities of the Group are described in the Directors’ Report. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) BASIS OF PREPARATION The concise ﬁ nancial report has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards. The concise ﬁ nancial report has been derived from the Annual Financial Report but does not include all notes of the type normally included within the annual ﬁ nancial report and therefore cannot be expected to provide as full an understanding of the ﬁ nancial performance, ﬁ nancial position and ﬁ nancing and investing activities of the Group as the full ﬁ nancial report. The concise ﬁ nancial report should be read in conjunction with the Annual Financial Report of Abacus Trust, Abacus Group projects Limited and Abacus Income Trust. It is also recommended that the annual ﬁ nancial report be considered together with any public announcements made by the Abacus Property Group during the year ended 30 June 2008 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001. The concise ﬁ nancial report has also been prepared on an historical cost basis, except for investment properties and derivative ﬁ nancial 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 ﬁ nancial instruments. The concise ﬁ nancial 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. (B) STATEMENT OF COMPLIANCE The concise ﬁ nancial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS), as issued by the IASB. (C) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS Except for the amendments arising from AASB 2007-7: 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 ended 30 June 2008. These are outlined in the table below. 23 annual ﬁ nancial report / continued APPLICATION DATE FOR GROUP* 1 July 2008 1 July 2009 1 July 2009 1 July 2009 1 July 2009 IMPACT ON GROUP FINANCIAL REPORT AASB 8 is a disclosure standard so will have no direct impact on the amounts included in the Group’s ﬁ nancial statements although, it may directly impact the level at which goodwill is tested for impairment. In addition, the amendments may have an impact on the Group’s segment disclosures. These amendments are only expected to affect the presentation of the Group’s ﬁ nancial report and will not have a direct impact on the measurement and recognition of amounts disclosed in the ﬁ nancial report. The Group has not determined at this stage whether to present a single statement of comprehensive income or two separate statements. The Group has share-based payment arrangements that may be affected by these amendments. However, the Group has not yet determined the extent of the impact, if any. These amendments are not expected to have any impact on the Group’s ﬁ nancial report as the Group does not have on issue or expect to issue any puttable ﬁ nancial instruments as deﬁ ned by the amendments. The Group may enter into some business combinations during the next ﬁ nancial year and may therefore consider early adopting the revised standard. The Group has not yet assessed the impact of early adoption, including which accounting policy to adopt. REFERENCE SUMMARY AASB 8 and AASB 2007-3 New standard replacing AASB114 Segment Reporting, which adopts a management reporting approach to segment reporting. APPLICATION DATE OF STANDARD* 1 January 2009 AASB 101 and AASB 2007-8 AASB 2008-1 AASB 2008-2 AASB 3 (revised) 1 January 2009 1 January 2009 1 January 2009 1 July 2009 Introduces a statement of comprehensive income. Other revisions include impacts on the presentation of items in the statement of changes in equity, new presentation requirements for restatements or reclassiﬁ cations of items in the ﬁ nancial statements, changes in the presentation requirements for dividends and changes to the titles of the ﬁ nancial statements. The amendments clarify the deﬁ nition of ‘vesting conditions’, introducing the term ‘non- vesting conditions’ for conditions other than vesting conditions as speciﬁ cally deﬁ ned and prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisﬁ ed. The amendments provide a limited exception to the deﬁ nition of a liability so as to allow an entity that issues puttable ﬁ nancial instruments with certain speciﬁ ed features, to classify those instruments as equity rather than ﬁ nancial liabilities. The revised standard introduces a number of changes to the accounting for business combinations, the most signiﬁ cant of which allows entities a choice for each business combination entered into – to measure a non-controlling interest (formerly a minority interest) in the acquiree either at its fair value or at its proportionate interest in the acquiree’s net assets. This choice will effectively result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively. 24 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group REFERENCE SUMMARY AASB 8-3 Amendments to International Financial Reporting Standards Amendments to International Financial Reporting Standards Amending standard issued as a consequence of revisions to AASB 3 and AASB 127. The main amendments of relevance to Australian entities are those made to IAS 27 deleting the ‘cost method’ and requiring all dividends from subsidiary, jointly controlled entity or associate to be recognised in proﬁ t or loss in an entity’s separate ﬁ nancial statements (i.e. parent company account). The distinction between pre- and post- acquisition proﬁ ts is no longer required. However, the payment of such dividends requires the entity to consider whether there is an indicator of impairment. AASB 127 has also been amended to effectively allow the cost of an investment in a subsidiary, in limited reorganisations, to be based on the previous carrying amount of the subsidiary (i.e. share of equity) rather than its fair value. The improvements project is an annual project that provides a mechanism for making non-urgent, but necessary amendments to IFRSs. The IASB has separated the amendments into two parts: Part 1 deals with changes the IASG identiﬁ ed resulting in accounting changes; Part II deals with either terminology or editorial amendments that the IASB believes will have minimal impact. APPLICATION DATE OF STANDARD* 1 July 2009 1 January 2009 APPLICATION DATE FOR GROUP* 1 July 2009 1 July 2009 IMPACT ON GROUP FINANCIAL REPORT Refer to AASB 3 (revised) and AASB 127 (revised) above. Recognising all dividends received from subsidiaries, jointly controlled entities and associates as income will likely give rise to greater income being recognised by the parent entity after adoption of these amendments. In addition, if the Group enters into any group reorganisation establishing new parent entities, an assessment will need to be made to determine if the reorganisation meets the conditions imposed to be effectively accounted for on a carry- over basis’ rather than at fair value. The Group has not yet determined the extent of the impact of the amendments, if any. 1 July 2009 1 January 2009 except for amendments to IFRS 5, which are effective from 1 July 2009. * designates the beginning of the applicable annual reporting period AASB 2007-2, AASB 2007-9, AASB 1004, AASB 1049, AASB 1050, AASB 1051, AASB 1052, IFRIC 15, AASB 2007-5, AASB 2007-6, AASB 123 and AASB Interpretation 4, 12, 13, 14, 129 and 1038 will have no application to the Group. 25 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 3. SEGMENT INFORMATION The Group predominantly operates in Australia. The Group’s segment reporting format is business segments as its risks and rates of return can be readily identiﬁ ed with the type of business and services provided. Segment revenue, segment expense and segment result do not include transactions between business segments. The Group’s primary business segments are Property, Funds Management, Property Finance and Joint Ventures and Developments. The Property division comprises the investment in and 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 provides mortgage lending and related property ﬁ nancing solutions. Joint Ventures and Developments is responsible for the Group’s investments in joint venture activities and in securities of other listed and unlisted property trusts. (D) BASIS OF CONSOLIDATION The consolidated ﬁ nancial statements comprise the ﬁ nancial 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 concise ﬁ nancial 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 proﬁ ts from intra-group transactions, have been eliminated in full and subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consolidated from the date on which control is transferred out of the Group. Where there is a loss of control of a subsidiary, the consolidated ﬁ nancial statements include the results for the part of the reporting period during which the Group has control. 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 U-Stow-It 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. 26 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group Business segments Year ended 30 June 2008 Revenue Revenue from external customers Realised gains on investments Unrealised gains/(losses) on investments Unallocated revenue Total consolidated revenue Result Segment result Unallocated revenue Proﬁ t/(loss) before tax and ﬁ nance costs (EBIT) Finance costs Proﬁ t/(loss) before income tax and minority interest Income tax beneﬁ t Net proﬁ t 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 ﬂ ow information Total – operating Total – investing Total – ﬁ nancing PROPERTY $’000 FUNDS MANAGEMENT $’000 PROPERTY FINANCE $’000 JOINT VENTURES & DEVELOPMENTS $’000 TOTAL $’000 81,916 9,428 (15,656) 75,688 43,859 13,169 11,045 149,989 – – – – 43,859 13,169 (310) (6,985) 3,750 9,118 (22,641) 136,466 1,957 138,423 53,964 38,204 11,553 2,134 105,855 1,957 107,812 (38,420) 69,392 3,034 72,426 1,089,727 243,908 144,657 77,281 1,555,573 44,024 7,890 430 10,937 91,620 1,647,193 63,281 658,913 722,194 2,083 (15,656) 21 – – – – 2,104 (6,985) (22,641) 24,084 19,595 18,166 14,864 76,709 (284,276) 189,076 (467) (84,600) (52,111) (421,454) – 131,115 52,749 372,940 (a) Unallocated assets include goodwill, cash and other assets. (b) Unallocated liabilities include interest-bearing liabilities, tax liabilities and other liabilities. 27 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 PROPERTY $’000 FUNDS MANAGEMENT $’000 PROPERTY FINANCE $’000 JOINT VENTURES & DEVELOPMENTS $’000 TOTAL $’000 38,230 14,226 2,614 122,076 67,006 23,107 33,270 – – – – 123,383 38,230 14,226 – 1,365 3,979 23,107 34,635 179,818 1,986 181,804 100,918 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 41 111,124 1,269,403 40,556 425,642 466,198 4,549 33,270 461 – – – – 1,365 5,010 34,635 29,244 88,654 (5,475) 9,779 (98,633) – 29,730 (61,605) 24,154 6,517 75,270 (27,904) (99,488) 4,500 23,179 Business segments Year ended 30 June 2007 Revenue Revenue from external customers Realised gains on investments Unrealised gains on investments Unallocated revenue Total consolidated revenue Result Segment result Unallocated revenue Proﬁ t/(loss) before tax and ﬁ nance costs (EBIT) Finance costs Proﬁ t/(loss) before income tax and minority interest Income tax expense Net proﬁ t 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 ﬂ ow information Net cash ﬂ ow from operating activities Net cash ﬂ ow from investing activities Net cash ﬂ ow from ﬁ nancing activities 28 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group 4. REVENUE (a) Finance income Interest and fee income on secured loans Provision for doubtful debts Bank interest Total ﬁ nance income (b) Funds Management Income Asset management fees Property management fees Consulting and other income Interest on loans to funds management entities Sale of units in AHF* Sale of the Rendezvous Hotel Sale of units in Matson Hotel* Total funds management income (c) Net realised gains on disposal of: Investment properties Units in Abacus Miller Street Trust* Listed securities Total net realised gains on investments (d) Unrealised gains/(losses) on investments Change in fair value of investment properties Change in fair value of property securities Total unrealised gains on investments * Sale was to new fund managed by AFML CONSOLIDATED 2008 $’000 2007 $’000 19,485 (5,000) 1,957 16,442 7,541 847 12,180 13,924 – – 9,367 43,859 9,428 – (310) 9,118 (15,656) (6,985) (22,641) 13,386 – 1,986 15,372 3,253 438 5,548 7,803 8,672 12,516 – 38,230 13,284 9,823 – 23,107 33,270 1,365 34,635 29 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 5. EXPENSES (a) Employee beneﬁ ts expense Wages and salaries Share based payments Other Total employee beneﬁ ts expense (b) Depreciation and amortisation expense Depreciation of property, plant and equipment – hotels Depreciation of property, plant and equipment – other 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 ﬁ nance costs Total ﬁ nance costs (on historical basis) Unrealised gains on interest rate swaps Total ﬁ nance costs (d) Other expenses Property outgoings Custody fees Registry maintenance costs Rental expenses Other administrative expenses Total other expenses 30 ABACUS ANNUAL FINANCIAL REPORT 2008 CONSOLIDATED 2008 $’000 2007 $’000 12,726 1,038 1,459 15,223 362 309 56 1,377 2,104 40,086 – 1,471 41,557 (3,137) 38,420 12,350 218 323 735 (342) 13,284 8,465 2,868 273 11,606 3,268 429 119 1,194 5,010 23,839 4,671 634 29,144 (7,235) 21,909 8,752 170 405 420 8,609 18,356 abacus property group 6. DISTRIBUTIONS PAID AND PROPOSED (a) Distributions paid during the year Final distribution for ﬁ nancial year 30 June: 3.00 cents per unit (2006: 3.00 cents) Interim distributions paid during the year: September: 3.25 cents per unit (2007: 3.00 cents) December: 3.25 cents per unit (2007: 3.00 cents) March: 3.5 cents per unit (2007: 3.25 cents) (b) Distributions proposed and recognised as a liability Final distribution payable for the June quarter: 3.5 cents per unit (2007: 3.25 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 ﬁ nancial year are: CONSOLIDATED 2008 $’000 2007 $’000 18,419 15,491 20,225 20,466 22,109 81,219 15,926 16,013 18,496 65,926 22,183 18,419 – franking account balance as at the end of the ﬁ nancial year at 30% (2007: 30%) 11,244 6,329 – 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 ﬁ nancial year 8 – 11,252 15 4,900 11,244 31 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 7. EARNINGS PER STAPLED SECURITY Attributable to Stapled Security holders of the Group The following reﬂ ects the income used in the basic and diluted earnings per stapled security computations. Earnings used in calculating earnings per security: Net proﬁ t attributable to security holders Net proﬁ t attributable to stapled security holders excluding fair value adjustments (1) CONSOLIDATED 2008 $’000 2007 $’000 71,460 92,002 118,811 79,810 2008 ’000 2007 ’000 Weighted average number of stapled securities: Weighted average number of stapled securities for basic earnings per share 625,857 553,184 Effect of dilution: Stapled security options Weighted average number of stapled securities adjusted for the effect of dilution 10,479 636,336 3,703 556,887 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 ﬁ nancial instruments and share based payments. 32 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group 8. INVESTMENT PROPERTIES Investment properties are carried at the Directors’ determination of fair value and are based on independent valuations. 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 valuations of each investment property is conducted annually either in December or June of each year. This schedule was adopted in the current ﬁ nancial year. Independent valuations are prepared using both the capitalisation of net income method and the discounting of future cashﬂ ows 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 ACQUISITION DATE COSTS INCL ALL ADDITIONS $’000 INDEPENDENT VALUATION DATE CONSOLIDATED 2008 $’000 2007 $’000 109 Pitt Street, Sydney, NSW(i) 22-Jun-99 3,849 30-Jun-06 3,849 12,524 (b) Non-current assets 66 Christina Road, Villawood, NSW(iv) 28-May-02 8,213 30-Jun-08 CSIRO, Limestone Ave., Campbell, ACT(vi) 4 Ray Road, Epping, NSW(v) Ashﬁ eld Mall, Ashﬁ eld, NSW(iv) 10-12 Pike Street, Rydalmere, NSW(vi) Liverpool Plaza, Liverpool, NSW(iv) Macquarie Street, Liverpool, NSW(iv) Moore Street, Liverpool, NSW(iv) Aspley Village Shopping Centre (iii) Westpac House, Adelaide SA(iv) Homemaker City, Moorabbin, NSW(iv) 95 and 117 Mina Parade, Alderley, QLD Cnr Main Street and Bellevue Drive and 12,686 30-Jun-08 27,043 30-Jun-08 13,241 20,000 52,100 12,426 20,000 54,500 86,806 30-Jun-08 112,000 116,842 21-Jun-02 30-Apr-97 15-Sep-97 1-Oct-98 14,262 30-Jun-08 16-Aug-04 32,860 31-Dec-07 21-Sep-05 14-Oct-05 15-Feb-06 5-Oct-04 11-Aug-06 14-Sep-07 5,451 31-Dec-07 2,265 31-Dec-07 16,374 1-Feb-06 54,327 30-Jun-08 38,690 30-Jun-08 20,971 16-Jul-07 22,200 42,278 5,500 2,300 – 69,700 32,050 22,133 169 Varsity Parade, Varsity Lakes, QLD (vii) 17-Sep-07 24,042 30-Jun-08 22,760 16-18 and 17-21 Anzac Street, and 206-220 Hume Highway, Greenacre, NSW 1769 Hume Highway, Campbellﬁ eld (vii) 12-14 Butler Road, Hurstville, NSW(v) 27 Grant Street, Port Macquarie, NSW(vii) 8 Sylvania Way, Lisarow, NSW(vi) 198-206 St Johns Road, Glebe, NSW 144-168 National Boulevarde, Campbellﬁ eld Lot 121, Orielton Road, Smeaton Grange 23 Norton Street, Leichhardt, NSW Townsville Storage facilities Rocklea Storage facilities 30-Nov-07 12-Nov-07 31-May-07 26-Jun-07 23-Jul-07 4-Oct-07 9-Nov-07 22-Nov-07 22-Oct-07 13-Sep-07 27-Mar-08 14,037 19-Sep-07 18,538 30-Jun-08 18,714 30-Jun-08 16,021 30-Jun-08 10,510 30-Jun-08 6,501 5-Sep-07 21,668 28-Sep-07 10,198 12-Oct-07 9,062 30-Sep-07 23,823 13-Sep-07 6,125 7-Jan-08 17,063 17,665 17,395 14,796 9,505 6,671 21,268 10,010 8,894 23,840 6,125 22,400 37,020 5,503 2,297 18,607 68,850 38,690 – – – – 18,714 16,021 – – – – – – – 33 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 ACQUISITION DATE COSTS INCL ALL ADDITIONS $’000 INDEPENDENT VALUATION DATE 3,589 7-Jan-08 6,878 10-Sep-07 52,400 30-Jun-08 56,157 27-Nov-07 7,866 30-Jun-08 11,956 11,961 19,222 30-Jun-06 31-Dec-07 30-Jun-07 5,109 30-Jun-08 32,272 31-Dec-07 5,040 4,722 6,857 8,832 7,340 1,174 8,092 30-Jun-08 30-Jun-08 31-Dec-07 30-Jun-08 30-Jun-08 30-Jun-07 30-Jun-08 15,536 30-Jun-08 6,150 2,965 4,337 3,029 7,228 7,743 4,802 2,894 8,195 30-Jun-08 30-Jun-08 30-Jun-08 30-Jun-08 30-Jun-08 31-Dec-07 30-Jun-08 4-Mar-08 31-Dec-07 1,007 5-Dec-06 5,161 31-Dec-07 16,647 8-Jun-07 19,556 21-Nov-07 CONSOLIDATED 2008 $’000 3,599 6,150 54,845 56,157 12,000 – 11,000 – 6,500 43,596 13,300 6,050 5,750 2007 $’000 – – – 12,000 13,300 12,700 21,000 6,500 39,000 12,000 5,877 5,700 10,200 10,300 9,000 2,000 10,800 15,000 7,200 3,200 4,360 3,460 9,000 1,950 10,200 15,537 6,900 3,100 4,500 3,200 10,850 10,250 8,508 4,400 2,984 7,294 1,013 5,851 14,474 19,556 7,743 4,802 – 6,900 1,007 5,200 – – 928,591 660,536 932,440 673,060 Property Salisbury Storage facilities Hamilton Storage facilities U-Stow-It Storage facilities Allara 8 Station Street, Wollongong, NSW(vii) 1-5 Lake Dingley, Melbourne 367 Peel Street, Tamworth, NSW(iv) 500 Princes Highway,Noble Park,VIC(ii) 31-33 Windorah Avenue, Stafford, QLD (v) Lennons Plaza, 66 Queen St., QLD (v) 27-Mar-08 10-Sep-07 23-Nov-07 31-Jan-08 30-Jun-03 28-May-03 22-Feb-04 27-Nov-03 3-Nov-03 19-Dec-03 26 Savage Street and 681 Curtin Avenue, Pinkenba, QLD(v) 23-Jan-04 671 Gympie Rd, Chermside, QLD (vii) 9-14 Yates Street, Mawson Lakes, SA(v) 36-52 National Blvd, Campbellﬁ eld, VIC(v) Gympie Market Place, Gympie (vii) 29-47 and 18-20 Becker St, Cobar NSW(iv) 50 Mostyn Street, Castlemaine, VIC(vii) 29 Queen Street, North Bundaberg, QLD (v) 93 Victoria Street, Eaglehawk, VIC(vii) 12 Docker Street, Wangaratta, QLD (vii) Kingscote Kangaroo Island, SA(iv) 96-98 Victoria Street, St.George, QLD (ii) 293-295 Grt Eastern Highway, Midland WA(iv) Mt View Plaza, Kirwan, QLD (i) Mid City Plaza, Maryborough, VIC 41-49 George St., Gordonvale, QLD 244-256 Liverpool Road, Ashﬁ eld, NSW(iv) Woodlands Drive, Braeside, VIC 4-8 Jacobs Street, Bankstown (vi) 20-28 Sir William Pickering Dv, Christchurch, NZ 106 Nelson Bay Road, Fern Bay, NSW(viii) Non-current – Investment properties Total investment properties 17-Dec-04 7-Jun-05 18-Jul-05 7-Jun-04 5-Aug-04 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 4-Mar-08 26-Mar-98 20-Dec-06 2-Dec-02 20-Jul-07 6-Feb-08 (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 (vii) As valued by Landmark White (viii) As valued by Robertson & Robertson 34 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group Notes: (a) The value of properties not externally valued at 30 June 2008 may include 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 ﬁ nancial years while the sale of the commercial units continues at 30 June 2008. (c) The Abacus Income Trust owns 98.4% of the units in the Wollongong Property Trust which owns 8 Station Street, Wollongong. (d) Property is owned by Abacus Independent Retail Proeprty Trust (AIRPT). Abacus Retail Property Trust, a wholly owned trust of Abacus Income Trust, owns 75% of the units in AIRPT. (e) The Group acquired 58.07% interest in U-Stow-It Holdings Pty Limited in November 2007. (f) The investment properties are used as security for secured bank debt. RECONCILIATIONS Reconciliation of the carrying amounts of investment properties at the beginning and end of the current and previous ﬁ nancial year: Investment properties Carrying amount at beginning of the ﬁ nancial year Additions and capital expenditure Acquisition through business combinations Net revaluation increments Disposals/transfer CONSOLIDATED 2008 $’000 2007 $’000 673,060 293,582 54,846 (15,806) (73,242) 600,567 105,890 – 33,270 (66,667) Carrying amount at end of the ﬁ nancial year 932,440 673,060 35 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 9. CONTRIBUTED EQUITY (a) Issued stapled securities Stapled securities – securities ﬁ nanced by APG under the ESLP Total contributed equity (b) Movement in stapled securities on issue At 1 July 2007 – security purchase plan – institutional equity raising – distribution reinvestment plan – less transaction costs At 30 June 2008 CONSOLIDATED 2008 $’000 2007 $’000 793,999 (22,497) 771,502 670,937 (22,497) 648,440 CONSOLIDATED STAPLED SECURITIES NUMBER ’000 578,633 3,991 52,632 10,348 – VALUE $’000 648,440 7,422 100,000 17,616 (1,976) 645,604 771,502 10. EVENTS AFTER THE BALANCE SHEET DATE 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 ﬁ nancial year that has or may affect the Group’s operations in future ﬁ nancial years, the results of those operations or the Group’s state of affairs in future ﬁ nancial years. 36 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group directors’ declaration In accordance with a resolution of the Directors, we state that: (1) in the opinion of the Directors: (a) the ﬁ nancial 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 ﬁ nancial position as at 30 June 2008 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 ﬁ nancial year ending 30 June 2008. On behalf of the Board JOHN THAME Chairman Sydney, 27 August 2008 FRANK WOLF Managing Director 37 ■ Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 ■ 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 38 ABACUS ANNUAL FINANCIAL REPORT 2008 Liability limited by a scheme approved under Professional Standards Legislation. 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 Abacus Group Holdings Limited and the Responsible Entity John Thame, Chairman Frank Wolf, Managing Director William Bartlett David Bastian Dennis Bluth Malcolm Irving Len Lloyd Company Secretary Ellis Varejes Custodial 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 Share 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 Consolidated Income and Distribution Statements 46 Consolidated Balance Sheet 47 Consolidated Statement of Changes in Equity 48 Consolidated Cash Flow Statement 49 Notes to the Concise Financial Statements 60 Directors’ Declaration 61 Independent Auditor’s Report The concise ﬁ nancial report is an extract from the full ﬁ nancial report for the year ended 30 June 2008. The ﬁ nancial statements and speciﬁ c disclosures included in the concise ﬁ nancial report have been derived from the full ﬁ nancial report. It is recommended that this Concise Annual Financial Report should be read in conjunction with the Concise Annual Financial Reports of Abacus Property Group, Abacus Income Trust and Abacus Group Projects Limited for the year ended 30 June 2008. 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 ﬁ nancial report / continued directors’ report 30 JUNE 2008 The Directors of Abacus Funds Management Limited (AFML), the responsible entity of the Abacus Trust (AT or the Trust), present their report together with the consolidated ﬁ nancial report of Abacus Trust and the auditor’s report thereon. PRINCIPAL ACTIVITIES The Trust operates predominantly in Australia and its principal activities during the course of the year ended 30 June 2008 included: DIRECTORS The Directors of AFML in ofﬁ ce during the ﬁ nancial year and until the date of this report are as follows. Directors were in ofﬁ ce for this entire period unless otherwise stated. John Thame Frank Wolf Chairman (Non-executive) Managing Director William Bartlett Non-executive Director David Bastian Non-executive Director Dennis Bluth Non-executive Director Malcolm Irving Non-executive Director Len Lloyd Executive Director As at the date of this report, the relevant interests of the directors and speciﬁ ed executives in the stapled securities of Abacus Property Group were as follows: Directors J Thame F Wolf W Bartlett D Bluth D Bastian M Irving L Lloyd APG SECURITIES HELD 55,378 NUMBER OF OPTIONS OVER APG SECURITIES – 9,718,341* 3,747,130 8,000 20,000 4,503,497 35,387 – – – – 795,925* 1,168,915 * The holdings of F Wolf and L Lloyd include securities acquired under the Executive Share Loan Plan that are treated as options. • investment in commercial, retail and industrial properties; • property ﬁ nance; and • participation in property joint ventures TRUST STRUCTURE The Abacus Property Group is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects Limited (AGPL) and Abacus Income Trust (AIT). 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. AT is an Australian registered managed investment scheme. Abacus Funds Management Limited, 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 proﬁ t attributable to members of $54.34 million for the year ended 30 June 2008 (June 2007: $89.12 million). The Trust earned a net ‘normalised’ proﬁ t attributable to members (excluding net property, investments, derivative and employee entitlement fair value revaluations) of $72.19 million (June 2007: $64.39 million). 40 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus trust DISTRIBUTIONS Trust distributions in respect of the year ended 30 June 2008 were $67.42 million (June 2007: $58.56 million), which is equivalent to 10.54 cents per stapled security (June 2007: 10.61 cents) paid and payable as follows: Interim distribution paid 8th November 2007 Interim distribution paid 7th February 2008 Interim distribution paid 7th May 2008 Final distribution paid 7th August 2008 Total CENTS 3.25 3.25 3.50 0.54 10.54 $’000 20,622 20,862 22,521 3,420 67,425 REVIEW OF OPERATIONS Net devaluations in investment properties of $20.59 million reduced AT’s revenues and net proﬁ t for the year ended 30 June 2008. Normalised earnings per security were essentially unchanged as was distributions per security. As per prior years normalised earnings per security exceeded distributions per security: Total income Net proﬁ t attributable to unit holders Earnings per security (cents) ‘Normalised earnings’ per security (cents)** Distributions per security (cents) 30 JUNE 2008 $’000 100,258 55,490 8.87 11.69 10.54 30 JUNE 2007 $’000 116,377 89,123 16.11 11.64 10.61 % CHANGE (13.9%) (37.7%) (44.9%) (0.4%) (0.7%) ** Normalised earnings is net proﬁ t adjusted for AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other ﬁ nancial instruments and share based payments) AT’s balance sheet grew due to a capital raising and asset acquisitions and its ﬁ nancial condition remained robust during the year: Total assets ($ million) Gearing (%) Net assets ($ million) Net tangible assets ($ million) NTA per security ($) Retained earnings ($million) Units on issue (million) Weighted average units on issue (million) 30 JUNE 2008 30 JUNE 2007 1,219 30 682 682 1.06 86 646 636 966 28 620 620 1.07 98 579 557 % CHANGE 26.2% 3.6% 10.0% 10.0% (1.9%) (12.2%) 11.6% 14.2% 41 annual ﬁ nancial report / continued directors’ report 30 JUNE 2008 Business activities which contributed to the Trust’s operating performance and ﬁ nancial condition for the ﬁ nancial year were: Property Total investment property assets at 30 June 2008 were $542 million (30 June 2007: $432million). During the year the Trust acquired 9 properties with an aggregate purchase price of more than $137 million, including 169 Varsity Parade, Varsity Lakes QLD, 95 and 117 Mina Parade, Alderly QLD, 16-18, 20-21 Anzac St and 206-220 Hume Highway, Greenacre NSW, 1769 Hume Highway, Campbellﬁ eld VIC, 8 Sylvania Way, Lisarow NSW, 198-206 St Johns Rd Glebe NSW, 23 Norton St, Leichhardt NSW, 144-168 National Boulevard, Campbellﬁ eld NSW and Lot 121 Orielton Rd, Smeaton Grange. Revaluation of the property portfolio during the ﬁ nancial year reduced the Trust’s assets by $21 million (2007: $20 million revaluation gain). Rental income increased from $35 million in 2007 to $41 million for the year. Property Finance Total assets including accrued interest (net of provisions) at 30 June 2008 were $526 million (30 June 2007: $410.5 million). Revenue earned from interest and fees (net of provisions) totalled $70.7 million for the year (30 June 2007: $48.7 million). During the year ended 30 June 2008, the contributed equity of the Trust increased $75 million to $596 million compared to $521 million at 30 June 2007. Total equity increased by $62 million to $682 million at 30 June 2008 compared to $620 million at 30 June 2007. Net tangible assets per security decreased 1.9% to $1.05 at 30 June 2008 compared to $1.07 at 30 June 2007. At 30 June 2008, existing bank loan facilities totalled approximately $444 million, of which $339 million was drawn. The weighted average maturity of its secured, non-recourse bank debt is 2.4 years (2007: 3.5years). The Trust manages interest rate exposure on debt facilities through the use of interest rate swap contracts. At 30 June 2008, 88% (2007: 71%) of total debt facilities were covered by interest rate swap arrangements at an average interest rate (including bank margin) of 7.44% (2007: 6.29%) and an average term to maturity of 2.33 years (2007: 3.5 years). The Trust’s net debt gearing ratio (calculated as total interest bearing liabilities less cash assets divided by total assets) was 30% at 30 June 2008 compared to 28% at 30 June 2007. 42 ABACUS ANNUAL FINANCIAL REPORT 2008 UNITS ON ISSUE At 30 June 2008, 645,604,240 units in AT were on issue (2007: 578,633,460). Units on issue increased net 66,970,780 during the year ended 30 June 2008. FEES PAID TO THE RESPONSIBLE ENTITY AND ASSOCIATES AT paid a management fee of $8.3 million and property acquisition fee of $2.6 million out of scheme property to the responsible entity for the year ended 30 June 2008 (2007: management fee of $2 million and nil property acquisition fee). In addition, AT paid property management fees to an associate of the responsible entity, Abacus Property Services Pty Limited of $0.7 million for the year ended 30 June 2008 (2007: $0.5 million). SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS The following signiﬁ cant changes in the state of affairs of the Trust occurred during the ﬁ nancial year: • Retained earnings (including the impact of revaluations of investment properties and derivative ﬁ nancial instruments) decreased by $14 million to $84 million at 30 June 2008 compared to $98 million at 30 June 2007; and • Total equity increased by 10% from $620 million to $682 million at 30 June 2008 reﬂ ecting the additional capital raised, net of movements in retained earnings and revaluations during the year. SIGNIFICANT EVENTS AFTER BALANCE DATE Other than as disclosed already in this report, there has been no matter or circumstance that has arisen since the end of the ﬁ nancial year that has signiﬁ cantly affected, or may affect, the Trust’s operations in future ﬁ nancial periods, the results of those operations or the Trust’s state of affairs in future ﬁ nancial periods. LIKELY DEVELOPMENTS AND EXPECTED RESULTS In the opinion of the Directors, disclosure of any further information on future developments and results than is already disclosed in this report or the ﬁ nancial statements would be unreasonably prejudicial to the interests of the Trust. abacus trust ENVIRONMENTAL REGULATION AND PERFORMANCE The Trust’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 signiﬁ cant breaches of any environmental requirements applicable to the Trust. AUDITORS INDEPENDENCE DECLARATION We have obtained an independence declaration from our auditor, Ernst & Young, and such declaration is shown on page 44. NON-AUDIT SERVICES There were no non-audit services provided by the Trust’s auditor, Ernst & Young. ROUNDING The amounts contained in this report and in the annual ﬁ nancial 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. JOHN THAME Chairman Sydney, 27 August 2008 FRANK WOLF Managing Director 43 ■ Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 ■ 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 44 ABACUS ANNUAL FINANCIAL REPORT 2008 Liability limited by a scheme approved under Professional Standards Legislation. abacus trust consolidated income and distribution statements YEAR ENDED 30 JUNE 2008 Revenue Rental income Finance income Share of proﬁ t from equity accounted investments Other income Net realised gains on investments Net unrealised gains/(losses) on investments Total Revenue and Other Income Depreciation and amortisation expense Finance costs Other expenses Net proﬁ t attributable to unitholders of Abacus Trust Basic earnings per stapled security (cents) Diluted earnings per stapled security (cents) Basic earnings per stapled security ex fair value adjustments* Diluted earnings per stapled security ex fair value adjustments* CONSOLIDATED NOTES 2008 $’000 2007 $’000 4(a) 4(b) 4(c) 5(a) 5(b) 5(c) 40,695 71,742 7,415 1,000 – (20,594) 100,258 (998) (23,248) (20,522) 55,490 8.87 8.72 11.69 11.50 35,366 49,570 1,462 – 9,823 20,156 116,377 (1,067) (10,432) (15,755) 89,123 16.11 16.00 11.64 11.56 * Based on net proﬁ t excluding AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other ﬁ nancial instruments and share based payments) STATEMENT OF DISTRIBUTION Net proﬁ t attributable to unitholders Net transfer of undistributed income from/(to) unitholders’ funds Distributions paid and payable Distribution per unit (cents per unit) Weighted average number of units (‘000) 55,490 11,935 67,425 10.54 89,123 (30,565) 58,558 10.61 636,336 556,887 6 6 7 45 annual ﬁ nancial report / continued consolidated balance sheet AS AT 30 JUNE 2008 Current assets Cash and cash equivalents Trade and other receivables Inventories Property loans and other ﬁ nancial assets Other Total current assets Non-current assets Investment properties Equity accounted investments Property loans and other ﬁ nancial 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 Other Total non-current liabilities Total liabilities Net assets Equity Contributed equity Retained earnings Total equity 46 ABACUS ANNUAL FINANCIAL REPORT 2008 CONSOLIDATED NOTES 2008 $’000 2007 $’000 30,914 2,998 2,728 434,141 637 471,418 542,093 92,947 111,434 1,530 748,004 1,219,422 134,210 7,000 141,210 379,669 16,705 396,374 537,584 681,838 595,512 86,326 681,838 884 50,169 2,728 392,382 734 446,897 431,870 59,201 23,245 4,174 518,490 965,387 76,996 169,372 246,368 99,493 – 99,493 345,861 619,526 521,265 98,261 619,526 8 9(a) abacus trust consolidated statement of changes in equity YEAR ENDED 30 JUNE 2008 At 1 July 2007 Net income for the year Total income for the year Equity raisings Issue costs Treasury units Distribution to unitholders At 30 June 2008 At 1 July 2006 Recognition of 30% swap revaluation in AMSHT Total income and expense for the year recognised directly in equity Net income for the year Total income for the year Equity raisings Issue costs Distribution to unitholders At 30 June 2007 ISSUED CAPITAL $’000 RETAINED EARNINGS $’000 TOTAL EQUITY $’000 521,265 98,261 619,526 – – 55,490 55,490 92,952 (2,000) (16,705) – – – – (67,425) 55,490 55,490 92,952 (2,000) (16,705) (67,425) 595,512 86,326 681,838 446,550 67,357 513,907 – – – – 76,215 (1,500) 339 339 89,123 89,462 – – 339 339 89,123 89,462 76,215 (1,500) – (58,558) (58,558) 521,265 98,261 619,526 47 annual ﬁ nancial report / continued consolidated cash ﬂ ow statement YEAR ENDED 30 JUNE 2008 CONSOLIDATED NOTES 2008 $’000 2007 $’000 Cash ﬂ ows from operating activities Income receipts Interest received Borrowing costs paid Operating payments Net cash ﬂ ows from operating activities 10 Cash ﬂ ows from investing activities Payments for investments and funds advanced Proceeds from sale and settlement of investments and funds repaid Purchase of investment properties Net cash ﬂ ows from/(used in) investing activities Cash ﬂ ows from ﬁ nancing activities Proceeds from issue of units Payment of ﬁ nance costs Repayment of borrowings Proceeds from borrowings Distributions paid Net cash ﬂ ows from/(used in) ﬁ nancing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 10 79,406 1,047 (25,176) (24,814) 30,463 24,079 11,728 (13,860) (3,230) 18,717 (134,496) (246,648) 126,178 (127,913) (136,231) 79,978 (4,199) (226,818) 345,844 (59,007) 135,798 30,030 884 30,914 241,554 (50,492) (55,586) 43,071 (2,373) (84,000) 135,285 (66,073) 25,910 (10,959) 11,843 884 48 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus trust notes to the concise ﬁ nancial statements 30 JUNE 2008 1. TRUST INFORMATION The concise ﬁ nancial report of the Trust for the year ended 30 June 2008 was authorised for issue in accordance with a resolution of the directors on 27 August 2008. AT is a registered managed investment scheme and is a component entity of the Abacus Property Group (APG) – which now comprises Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Income Trust (AIT) and Abacus Group Projects Limited (AGPL). The securities of each respective component trade as one security on the Australian Stock Exchange (the ASX) under the code ABP. Units in AT and AIT and shares in AGHL and AGPL have been stapled together so that neither can be dealt with without the other. An APG security consists of one unit in AT, one unit in AIT, one share in AGHL and one share in AGPL. A transfer, issue or reorganisation of a unit or share in each of the other component parts is accompanied by a transfer, issue or reorganisation of a unit or share in each of the other component parts. The nature of the operations and principal activities of the Trust are described in the Directors’ Report. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) BASIS OF PREPARATION The concise ﬁ nancial report has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards. The concise ﬁ nancial report has been derived from the Annual Financial Report but does not include all notes of the type normally included within the annual ﬁ nancial report and therefore cannot be expected to provide as full an understanding of the ﬁ nancial performance, ﬁ nancial position and ﬁ nancing and investing activities of the Trust as the full ﬁ nancial report. The concise ﬁ nancial report should be read in conjunction with the Annual Financial Report of Abacus Property Group, Abacus Group Projects Limited and Abacus Income Trust. It is also recommended that the annual ﬁ nancial report be considered together with any public announcements made by the Abacus Property Group during the year ended 30 June 2008 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001. The concise ﬁ nancial report has also been prepared on an historical cost basis, except for investment properties and derivative ﬁ nancial 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 ﬁ nancial instruments. The concise ﬁ nancial 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 Trust is an entity to which the class order applies. (B) STATEMENT OF COMPLIANCE The concise ﬁ nancial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS), as issued by the IASB. (C) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS Except for the amendments arising from AASB 2007-7: 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 recently been issued or amended but are not yet effective have not been adopted by the Trust for the annual reporting period ended 30 June 2008. These are outlined in the table below. 49 annual ﬁ nancial report / continued APPLICATION DATE FOR TRUST* 1 July 2008 APPLICATION DATE OF STANDARD* IMPACT ON GROUP FINANCIAL REPORT 1 January 2009 AASB 8 is a disclosure standard so will have no direct impact on the amounts included in the Trust ﬁ nancial statements although, it may directly impact the level at which goodwill is tested for impairment. In addition, the amendments may have an impact on the Trust’s segment disclosures. 1 January 2009 These amendments are only 1 July 2009 expected to affect the presentation of the Trust ﬁ nancial report and will not have a direct impact on the measurement and recognition of amounts disclosed in the ﬁ nancial report. The Trust has not determined at this stage whether to present a single statement of comprehensive income or two separate statements. 1 January 2009 The Trust has share-based payment arrangements that may be affected by these amendments. However, the Trust has not yet determined the extent of the impact, if any. 1 July 2009 1 January 2009 These amendments are not expected 1 July 2009 to have any impact on the Trust ﬁ nancial report as the Trust does not have on issue or expect to issue any puttable ﬁ nancial instruments as deﬁ ned by the amendments. 1 July 2009 1 July 2009 The Trust may enter into some business combinations during the next ﬁ nancial year and may therefore consider early adopting the revised standard. The Trust has not yet assessed the impact of early adoption, including which accounting policy to adopt. REFERENCE SUMMARY AASB 8 and AASB 2007-3 New standard replacing AASB114 Segment Reporting, which adopts a management reporting approach to segment reporting. AASB 101 and AASB 2007-8 AASB 2008-1 AASB 2008-2 AASB 3 (revised) Introduces a statement of comprehensive income. Other revisions include impacts on the presentation of items in the statement of changes in equity, new presentation requirements for restatements or reclassiﬁ cations of items in the ﬁ nancial statements, changes in the presentation requirements for dividends and changes to the titles of the ﬁ nancial statements. The amendments clarify the deﬁ nition of ‘vesting conditions’, introducing the term ‘non- vesting conditions’ for conditions other than vesting conditions as speciﬁ cally deﬁ ned and prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisﬁ ed. The amendments provide a limited exception to the deﬁ nition of a liability so as to allow an entity that issues puttable ﬁ nancial instruments with certain speciﬁ ed features, to classify those instruments as equity rather than ﬁ nancial liabilities. The revised standard introduces a number of changes to the accounting for business combinations, the most signiﬁ cant of which allows entities a choice for each business combination entered into – to measure a non- controlling interest (formerly a minority interest) in the acquiree either at its fair value or at its proportionate interest in the acquiree’s net assets. This choice will effectively result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively. 50 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus trust REFERENCE SUMMARY AASB 8-3 Amendments to International Financial Reporting Standards Amendments to International Financial Reporting Standards Amending standard issued as a consequence of revisions to AASB 3 and AASB 127. The main amendments of relevance to Australian entities are those made to IAS 27 deleting the ‘cost method’ and requiring all dividends from subsidiary, jointly controlled entity or associate to be recognised in proﬁ t or loss in an entity’s separate ﬁ nancial statements (i.e. parent company account). The distinction between pre- and post- acquisition proﬁ ts is no longer required. However, the payment of such dividends requires the entity to consider whether there is an indicator of impairment. AASB 127 has also been amended to effectively allow the cost of an investment in a subsidiary, in limited reorganisations, to be based on the previous carrying amount of the subsidiary (i.e. share of equity) rather than its fair value. The improvements project is an annual project that provides a mechanism for making non-urgent, but necessary amendments to IFRSs. The IASB has separated the amendments into two parts: Part 1 deals with changes the IASG identiﬁ ed resulting in accounting changes; Part II deals with either terminology or editorial amendments that the IASB believes will have minimal impact. APPLICATION DATE OF STANDARD* 1 July 2009 IMPACT ON GROUP FINANCIAL REPORT Refer to AASB 3 (revised) and AASB 127 (revised) above. 1 January 2009 Recognising all dividends received from subsidiaries, jointly controlled entities and associates as income will likely give rise to greater income being recognised by the parent entity after adoption of these amendments. APPLICATION DATE FOR TRUST* 1 July 2009 1 July 2009 In addition, if the Trust enters into any group reorganisation establishing new parent entities, an assessment will need to be made to determine if the reorganisation meets the conditions imposed to be effectively accounted for on a carry-over basis’ rather than at fair value. The Trust has not yet determined the extent of the impact of the amendments, if any. 1 July 2009 1 January 2009 except for amendments to IFRS 5, which are effective from 1 July 2009. * designates the beginning of the applicable annual reporting period AASB 2007-2, AASB 2007-9, AASB 1004, AASB 1049, AASB 1050, AASB 1051, AASB 1052, IFRIC 15, AASB 2007-5, AASB 2007-6, AASB 123 and AASB Interpretation 4, 12, 13, 14, 129 and 1038 will have no application to the Trust. 51 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 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 identiﬁ ed 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 investment in and ownership of commercial, retail and industrial properties. Property Finance provides mortgage lending and related property ﬁ nancing solutions. Other activities include equity accounted investments. (D) BASIS OF CONSOLIDATION The consolidated ﬁ nancial statements comprise the ﬁ nancial statements of AT and its subsidiaries. The concise ﬁ nancial 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 proﬁ ts from intra-group transactions, have been eliminated in full and subsidiaries are consolidated from the date on which control is transferred to the Trust and cease to be consolidated from the date on which control is transferred out of the Trust. Where there is a loss of control of a subsidiary, the consolidated ﬁ nancial statements include the results for the part of the reporting period during which the Trust has control. 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. 52 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus trust notes to the concise ﬁ nancial statements 30 JUNE 2008 Business segments Year ended 30 June 2008 Revenue Revenue from external customers Unrealised gains/(losses) on investments Unallocated revenue Total consolidated revenue Result Segment result Unallocated revenue Proﬁ t/(loss) before tax and ﬁ nance costs (EBIT) Finance costs Proﬁ t/(loss) before income tax Income tax expense Net proﬁ t 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 ﬂ ow information Net cash ﬂ ow from operating activities Net cash ﬂ ow from investing activities Net cash ﬂ ow from ﬁ nancing activities PROPERTY $’000 PROPERTY FINANCE $’000 OTHER $’000 TOTAL $’000 41,695 (20,594) 21,101 70,695 – 70,695 7,415 – 7,415 10,235 60,578 6,878 119,805 (20,594) 99,211 1,047 100,258 77,691 1,047 78,738 (23,248) 55,490 – 55,490 547,662 529,092 103,444 1,180,198 3,483 128,516 – 39,224 1,219,422 131,999 405,585 537,584 998 20,594 – – – – 998 20,594 25,632 (129,400) 49,612 (3,362) 37,413 81,919 8,193 30,463 (44,244) (136,231) 4,267 135,798 (a) Unallocated assets include goodwill, cash and other assets. (b) Unallocated liabilities include interest-bearing liabilities, tax liabilities and other liabilities. 53 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 PROPERTY $’000 PROPERTY FINANCE $’000 OTHER $’000 TOTAL $’000 35,366 29,979 48,712 1,462 – – 85,540 29,979 858 116,377 64,112 33,402 1,183 98,697 858 99,555 (10,432) 89,123 513,285 413,284 39,021 965,590 965,590 78,927 299 – 79,226 266,838 346,064 6,930 1,067 1,067 6,385 (4,680) – – – – – – – 6,930 1,067 1,067 10,870 (42,054) 25,910 1,462 (8,852) – 18,717 (55,586) 25,910 Business segments Year ended 30 June 2007 Revenue Revenue from external customers Realised and unrealised gains on investments Unallocated revenue Total consolidated revenue Result Segment results Interest Income Proﬁ t/(loss) before ﬁ nance costs Finance costs Net proﬁ t for the year Assets Segment assets Total assets Liabilities Segment liabilities Interest bearing liabilities Total liabilities Other segment information: Capital expenditure Depreciation and amortisation Other non-cash expenses Cashﬂ ow Net cash ﬂ ow from operating activities Net cash ﬂ ow from investing activities Net cash ﬂ ow from ﬁ nancing activities 54 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus trust 4. REVENUE (a) Finance income Interest and fee income on secured loans Bank interest Total ﬁ nance income (b) Net realised gains on disposal of: Sale of investment properties Expenses on sale of investment properties Total net realised gains on investments (c) Net Unrealised gains on investments Change in fair value of investment properties Total net unrealised gains/(loss) on investments 5. EXPENSES (a) Depreciation and amortisation expense Amortisation of leasing incentives Total depreciation and amortisation expense (b) Finance costs Interest on loans Amortisation of ﬁ nance costs Total ﬁ nance costs (on historical basis) Unrealised gains on interest rate swaps Total ﬁ nance costs (c) Other expenses Property outgoings Bad and doubtful debts Auditor’s remuneration Custody fees Registry maintenance costs Other Total other expenses CONSOLIDATED 2008 $’000 70,695 1,047 71,742 – – – (20,594) (20,594) 998 998 25,176 970 26,146 (2,898) 23,248 6,849 5,000 20 164 – 8,489 20,522 2007 $’000 48,712 858 49,570 10,093 (270) 9,823 20,156 20,156 1,067 1,067 14,677 330 15,007 (4,575) 10,432 6,871 3,000 100 121 30 5,633 15,755 55 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 6. DISTRIBUTIONS PAID AND PROPOSED (a) Distributions paid during the year Final distribution for ﬁ nancial year 30 June: 1.36 cents per unit (2006: 3.00 cents) Interim distributions paid during the year: September: 3.25 cents per unit (2007: 3.00 cents) December: 3.25 cents per unit (2007: 3.00 cents) March: 3.5 cents per unit (2007: 3.25 cents) (b) Distributions proposed and recognised as a liability Final distribution payable for the June quarter: 0.54 cents per unit (2007: 1.36 cents) CONSOLIDATED 2008 $’000 2007 $’000 7,844 15,491 20,622 20,862 22,521 71,849 15,973 16,059 18,681 66,204 3,420 7,844 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. 7. EARNINGS PER UNIT Attributable to Unitholders of the Trust The following reﬂ ects the income used in the basic and diluted earnings per unit computation: (a) Earnings used in calculating earnings per unit: Net proﬁ t attributable to unitholders Net proﬁ t attributable to unitholders fair value adjustments (1) (1) Fair value adjustments include property revaluations, revaluations of derivatives and other ﬁ nancial instruments and share based payments. 55,490 73,186 89,123 64,392 2008 ’000 2007 ’000 (b) Weighted average number of units: Weighted average number of units for basic earnings per share 625,857 553,184 Effect of dilution: Stapled security options Weighted average number of units adjusted for the effect of dilution 10,479 636,336 3,703 556,887 Options granted to employees (including key management personnel) are considered to be potential units 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. 56 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus trust 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 valuations of each investment property is conducted annually either in December or June of each year. This schedule was adopted in the current ﬁ nancial year. Independent valuations are prepared using both the capitalisation of net income method and the discounting of future cashﬂ ows 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 DATE COSTS INCL ALL ADDITIONS $’000 INDEPENDENT VALUATION DATE CONSOLIDATED 2008 $’000 2007 $’000 66 Christina Road, Villawood, NSW(i) 28-May-02 8,213 31-Dec-07 13,242 12,426 Properties owned by the parent entity, Abacus Trust 13,242 12,426 CSIRO, Limestone Ave., Campbell, ACT(vii) 21-Jun-02 12,686 30-Jun-08 20,000 4 Ray Road, Epping, NSW(ii) Ashﬁ eld Mall, Ashﬁ eld, NSW(v) 10-12 Pike Street, Rydalmere, NSW(vii) Liverpool Plaza, Liverpool, NSW(iv) Macquarie Street, Liverpool, NSW(iii) Moore Street, Liverpool, NSW(iii) Aspley Village Shopping Centre (iii) Westpac House, Adelaide SA(i) (50% interest) 970 Nepean Highway, Moorabbin, NSW(viii) 12-14 Butler Road, Hurstville (v) 27 Grant Street, Port Macquarie (viii) 8 Sylvania Way, Lisarow NSW(vii) 198-206 St Johns Rd, Glebe NSW 23 Norton St, Leichhardt NSW Lot 121 Orielton Rd, Smeaton Grange 169 Varsity Parade, Varsity Lakes QLD (viii) 95 and 117 Mina Parade, Alderly QLD 20,000 54,500 30-Apr-97 27,043 30-Jun-08 52,100 15-Sep-97 86,806 30-Jun-08 112,000 116,842 1-Oct-98 14,262 30-Jun-08 22,200 22,400 16-Aug-04 32,860 31-Dec-07 42,278 37,020 21-Sep-05 5,451 31-Dec-07 14-Oct-05 2,265 31-Dec-07 5,500 2,300 5,503 2,297 15-Feb-06 16,374 30-Jun-07 – 18,607 5-Oct-04 54,328 30-Jun-08 11-Aug-06 38,688 31-Dec-07 31-May-07 18,714 30-Jun-08 26-Jun-07 16,021 30-Jun-08 23-Jul-07 10,510 31-Dec-07 4-Oct-07 6,501 5-Sep-07 22-Oct-07 9,062 30-Sep-07 22-Nov-07 10,198 12-Oct-07 17-Sep-07 24,042 30-Jun-08 23,000 14-Sep-07 20,971 9-Jul-07 22,342 69,700 32,050 17,750 15,100 9,700 6,821 9,063 21,668 10,197 68,850 38,690 18,714 16,021 – – – – – – – – – 144-168 National Boulevard, Campbellﬁ eld NSW 9-Nov-07 21,668 30-Jun-08 16-18, 20-21 Anzac St and 206-220 Hume Highway, Greenacre NSW 30-Nov-07 14,037 19-Sep-07 1769 Hume Highway, Campbellﬁ eld VIC(vii) 12-Nov-07 18,538 30-Jun-08 17,232 17,850 Properties owned by Abacus Trust and its controlled entities 542,093 431,870 57 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 Notes: (a) The aggregated value at 30 June 2008 includes capital expenditures after the last valuation date. (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 Jeffrey Reid Flanagan (vii) As valued by DTZ (viii) As valued by Landmarkwhite RECONCILIATIONS Reconciliation of the carrying amounts of investment properties at the beginning and end of the current and previous ﬁ nancial year: Investment properties Carrying amount at beginning of the ﬁ nancial year Additions and capital expenditure Net revaluation increments/(decrements) Disposals Carrying amount at end of the ﬁ nancial year CONSOLIDATED 2008 $’000 2007 $’000 431,870 366,079 130,817 (20,594) 85,635 20,156 – (40,000) 542,093 431,870 58 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus trust 9. CONTRIBUTED EQUITY (a) Issued Units Issued Capital Finance and issue costs Total contributed equity (b) Movement in units on issue At 1 July 2007 – institutional equity raising – distribution reinvestment plan – security purchase plan – less transaction costs – securities ﬁ nanced by APG under the ESLP At 30 June 2008 CONSOLIDATED 2008 $’000 2007 $’000 611,936 (16,424) 535,690 (14,425) 595,512 521,265 CONSOLIDATED UNITS HELD NUMBER ‘000 VALUE $’000 578,633 521,265 52,632 10,348 3,991 – – 74,453 12,973 5,526 (2,000) (16,705) 645,604 595,512 10. EVENTS AFTER THE BALANCE SHEET DATE 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 ﬁ nancial year that has or may affect the Trust’s operations in future ﬁ nancial years, the results of those operations or the Trust’s state of affairs in future ﬁ nancial years. 59 annual ﬁ nancial 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 ﬁ nancial 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 ﬁ nancial position as at 30 June 2008 and of their performance for the year ended on that date; and (ii) complying with Accounting Standards and the Corporations Regulations 2001; and 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 ﬁ nancial year ending 30 June 2008 On behalf of the Board JOHN THAME Chairman Sydney, 27 August 2008 FRANK WOLF Managing Director 60 ABACUS ANNUAL FINANCIAL REPORT 2008 ■ Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 ■ Tel 61 2 9248 5555 Fax 61 2 9248 5959 DX Sydney Stock Exchange 10172 independent auditor’s report TO MEMBERS OF ABACUS TRUST Liability limited by a scheme approved under Professional Standards Legislation. 61 annual ﬁ nancial report / continued independent auditor’s report TO MEMBERS OF ABACUS TRUST 62 ABACUS ANNUAL FINANCIAL REPORT 2008 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 Abacus Funds Management Limited and the Responsible Entity John Thame, Chairman Frank Wolf, Managing Director William Bartlett David Bastian Dennis Bluth Malcolm Irving Len Lloyd 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 Share 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 64 Directors’ Report 68 Auditor’s Independence Declaration 69 Consolidated Income and Distribution Statements 70 Consolidated Balance Sheet 71 Consolidated Statement of Changes in Equity 72 Consolidated Cash Flow Statement 73 Notes to the Concise Financial Statements 84 Directors’ Declaration 85 Independent Auditor’s Report The concise ﬁ nancial report is an extract from the full ﬁ nancial report for the year ended 30 June 2008. The ﬁ nancial statements and speciﬁ c disclosures included in the concise ﬁ nancial report have been derived from the full ﬁ nancial report. It is recommended that this Concise Annual Financial Report should be read in conjunction with the Concise Annual Financial Reports of Abacus Trust and Abacus Group Projects Limited for the year ended 30 June 2008. 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. 63 annual ﬁ nancial report / continued TRUST STRUCTURE The Abacus Property Group (APG) is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects Limited (AGPL) and Abacus Income Trust (AIT). 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. AIT is an 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 Trust earned a net proﬁ t attributable to members of $22.8 million for the year ended 30 June 2008 (June 2007: $29.5 million). The Trust earned a net ‘normalised’ proﬁ t attributable to members (excluding net property, investments, derivative and employee entitlement fair value revaluations) of $19.5 million (June 2007: $14.6 million). DISTRIBUTIONS AIT has a distribution of $19.2 million (3.50 cents per unit) declared and provided for in respect of the quarter ended 30 June 2008. AT funded all other distributions to APG security holders for the year ended 30 June 2008. directors’ report 30 JUNE 2008 The Directors of Abacus Funds Management Limited (AFML), the Responsible Entity of the Abacus Income Trust (AIT or the Trust) submit their report for the Trust for the year ended 30 June 2008 and the auditor’s report thereon. DIRECTORS The Directors of the Responsible Entity in ofﬁ ce during the ﬁ nancial year and until the date of this report are as follows. Directors were in ofﬁ ce for this entire period unless otherwise stated. John Thame Frank Wolf Chairman (Non-executive) Managing Director William Bartlett Non-executive Director David Bastian Dennis Bluth Non-executive Director Non-executive Director Malcolm Irving Non-executive Director Len Lloyd Executive Director As at the date of this report, the relevant interests of the directors and speciﬁ ed executives in the stapled securities of Abacus Property Group were as follows: Directors J Thame F Wolf W Bartlett D Bluth D Bastian M Irving L Lloyd APG SECURITIES HELD 55,378 NUMBER OF OPTIONS OVER APG SECURITIES – 9,718,341* 3,747,130 8,000 20,000 4,503,497 35,387 – – – – 795,925* 1,168,915 * The holdings of F Wolf and L Lloyd include securities acquired under the Executive Share Loan Plan that are treated as options. PRINCIPAL ACTIVITIES The Trust operates predominantly in Australia and its principal activities during the course of the year ended 30 June 2008 included: • investment in commercial, retail and industrial properties; and • property ﬁ nance. 64 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus income trust REVIEW OF OPERATIONS AIT’s revenues, net proﬁ t and normalised earnings per unit contracted as a result of asset revaluation being $10 million less than the prior year. Distributions per unit grew strongly in the year ended 30 June 2008: Total income* Net proﬁ t attributable to unitholders Earnings per unit (cents) ‘Normalised earnings’ per unit (cents)** Distributions per unit (cents) 30 JUNE 2008 $’000 30 JUNE 2007 $’000 39,580 22,786 3.64c 3.11c 3.50c 43,928 29,475 5.33c 2.64c 1.89c % CHANGE -9.90% -22.69% -31.71% 17.80% 85.19% * Total revenue plus realised gains on sale of investments plus unrealised revaluation gains/(losses) on properties/investments ** Normalised earnings is net proﬁ t adjusted for AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other ﬁ nancial instruments) Similarly the AIT’s ﬁ nancial condition remained comparable to the prior year: Total assets ($ million) Gearing (%) Net assets ($ million) Net tangible assets ($ million) NTA per security ($) Retained earnings ($million) Units on issue (million) Weighted average units on issue (million) 30 JUNE 2008 30 JUNE 2007 354 40.66% 313 42.94% 183 183 0.29 44 645 626 160 160 0.28 41 579 553 % CHANGE 13.10% -5.31% 14.38% 14.38% 3.57% 7.32% 11.40% 13.20% Business activities which contributed to the Trust’s operating performance and ﬁ nancial condition for the ﬁ nancial year were: Property Total investment property assets at 30 June 2008 were $190 million (30 June 2007 $216 million). During the year the Trust acquired a property in Gordonvale ($3 million) and undertook capital improvements in North Bundaberg project ($2 million). Revaluation of the property portfolio during the ﬁ nancial year contributed $3.5 million to the Trust’s assets (2007: $13.1 million) Gains from sale of 3 properties (Matson, Dingley and Noble Park) increased operating proﬁ t by $16.2 million (2007: $6.3 million). Rental income decreased from $20 million (2007) to $17 million for the year due to a net reduction in the property portfolio. 65 annual ﬁ nancial report / continued directors’ report 30 JUNE 2008 REVIEW OF FINANCIAL CONDITION During the year ended 30 June 2008, the contributed equity of the Trust increased $20 million to $137 million compared to $117 million at 30 June 2007 as a result of capital raising on 25 July 2007. Net tangible assets per unit marginally increased 3.57% to $0.29 at 30 June 2008 compared to $0.28 at 30 June 2007. At 30 June 2008, existing bank loan facilities totalled approximately $135 million, of which $108 million was drawn. The weighted average maturity of its secured, non-recourse bank debt is 2.62 (2007: 5.02). The Trust manages interest rate exposure on debt facilities through the use of interest rate swap contracts. At 30 June 2008, 66% (2007: 53%) of total debt facilities were covered by interest rate swap arrangements at an average interest rate (including bank margin) of 7.33% (2007: 6.38%) and an average term to maturity of 2.66 years (2007: 5.00). The Trust’s net debt gearing ratio (calculated as total interest bearing liabilities less cash assets divided by the net of total asset and cash) was 40.66% at 30 June 2008 compared to 42.94% at 30 June 2007. UNITS ON ISSUE At 30 June 2008, 645,604,240 units in AIT were on issue (2007: 578,633,460). FEES PAID TO THE RESPONSIBLE ENTITY AND ASSOCIATES The AIT paid a management fee out of scheme property to the Responsible Entity of $3.4 million for the year ended 30 June 2008 (2007: $2.2 million). In addition, AIT paid property management fees to an associate of the Responsible Entity, Abacus Property Services Pty Limited of $0.3 million (2007: $0.4 million) for the year ended 30 June 2008. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS The following signiﬁ cant changes in the state of affairs of the Trust occurred during the ﬁ nancial year: • retained earnings (including the impact of revaluations of investment properties and derivative ﬁ nancial instruments) increased $3 million to $44 million at 30 June 2008 compared to $41 million at 30 June 2007; and • total equity increased by 14.38% from $160 million to $183 million at 30 June 2008 reﬂ ecting the additional capital raised, growth in retained earnings and net positive revaluations during the year. SIGNIFICANT EVENTS AFTER BALANCE DATE Other than as disclosed already in this report, there has been no matter or circumstance that has arisen since the end of the ﬁ nancial year that has signiﬁ cantly affected, or may affect, the Trust’s operations in future ﬁ nancial periods, the results of those operations or the Trust’s state of affairs in future ﬁ nancial periods. LIKELY DEVELOPMENTS AND EXPECTED RESULTS In the opinion of the Directors, disclosure of any further information on future developments and results than is already disclosed in this report or the ﬁ nancial statements would be unreasonably prejudicial to the interests of the Trust. ENVIRONMENTAL REGULATION AND PERFORMANCE The Trust’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 signiﬁ cant breach of any environmental requirements applicable to the Trust. 66 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus income trust AUDITORS INDEPENDENCE DECLARATION We have obtained an independence declaration from our auditor, Ernst & Young, and such declaration is shown on page 68. ROUNDING The amounts contained in this report and in the annual ﬁ nancial 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. JOHN THAME Chairman Sydney, 27 August 2008 FRANK WOLF Managing Director 67 annual ﬁ nancial report / continued auditor’s independence declaration TO THE DIRECTORS OF ABACUS FUND MANAGEMENT LIMITED AS THE RESPONSIBLE ENTITY FOR ABACUS INCOME TRUST 68 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus income trust consolidated income and distribution statements YEAR ENDED 30 JUNE 2008 Revenue Rental income Finance income Income from distributions Net realised gains on investments Net realised gain on property, plant and equipment Net unrealised gains on investments Total Revenue and Other Income Depreciation and amortisation expense Finance costs Other expenses Net proﬁ t Attributable to: Minority interest Unitholders of parent entity 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* CONSOLIDATED NOTES 2008 $’000 2007 $’000 4a 4b 4c 4d 4e 4f 17,150 2,726 – 6,995 9,252 3,457 39,580 (300) (9,613) (7,060) 22,607 (179) 22,786 22,607 3.64 3.58 3.11 3.06 20,387 4,173 – 2,985 3,269 13,114 43,928 (759) (7,630) (4,320) 31,219 1,744 29,475 31,219 5.33 5.29 2.64 2.63 * Based on net proﬁ t excluding AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other ﬁ nancial instruments and share based payments) STATEMENT OF DISTRIBUTION Net proﬁ t attributable to unitholders Net transfer of undistributed income (to)/from unitholders’ funds Distributions paid and payable Distribution per unit (cents) Weighted average number of units (‘000) 22,786 (3,604) 19,182 3.50 29,475 (18,511) 10,964 1.89 625,857 553,184 5 6 69 annual ﬁ nancial report / continued consolidated balance sheet AS AT 30 JUNE 2008 Current assets Cash and cash equivalents Trade and other receivables Property loans and other ﬁ nancial assets Other Total current assets Non-current assets Property, plant and equipment Investment properties Property loans and other ﬁ nancial 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 Retained earnings Total unitholders’ interest in equity Total external minority interest Total equity 70 ABACUS ANNUAL FINANCIAL REPORT 2008 CONSOLIDATED NOTES 2008 $’000 2007 $’000 3,453 114,208 43,280 584 161,525 – 190,158 2,019 252 192,429 353,954 24,715 4,987 29,702 4,208 46,516 27,273 641 78,638 15,991 215,558 2,825 307 234,681 313,319 16,302 32,171 48,473 140,963 140,963 104,756 104,756 170,665 153,229 183,289 160,090 136,970 44,219 181,189 2,100 117,196 40,615 157,811 2,279 183,289 160,090 7 8a abacus income trust consolidated statement of changes in equity YEAR ENDED 30 JUNE 2008 At 1 July 2007 Net income for the year Total income for the year Equity raisings Issue costs Treasury units Distribution to securityholders At 30 June 2008 At 1 July 2006 Sale of property, plant and equipment Total income and expense for the year recognised directly in equity Net income for the year Total income for the year Equity raisings Distribution to securityholders At 30 June 2007 ISSUED CAPITAL $’000 117,196 – – 23,904 110 (4,240) – 136,970 99,672 – – – – 17,524 – 117,196 ASSET REVALUATION RESERVE $’000 – – – – – – – 1,907 (1,907) RETAINED EARNINGS $’000 40,615 22,786 22,786 – – (19,182) 44,219 20,196 1,907 (1,907) 1,907 – (1,907) – – – 29,475 31,382 – (10,963) 40,615 MINORITY INTEREST $’000 TOTAL EQUITY $’000 2,279 160,090 (179) (179) – – – 22,607 22,607 23,904 110 (4,240) (19,182) 2,100 183,289 535 122,310 – – 1,744 1,744 – – – – 31,219 31,219 17,524 (10,963) 2,279 160,090 71 annual ﬁ nancial report / continued consolidated cash ﬂ ow statement YEAR ENDED 30 JUNE 2008 Cash ﬂ ows from operating activities Income receipts Interest received Borrowing costs paid Operating payments Net cash ﬂ ows from operating activities Cash ﬂ ows from investing activities Payments for investments and funds advanced Proceeds from sale and settlement of investments and funds repaid Advances to related entities Disposal of property, plant and equipment Purchase of investment properties Disposal of investment properties Payment for other investments CONSOLIDATED 2008 $’000 2007 $’000 17,918 233 (6,916) (10,509) 726 (13,807) – (62,366) 16,549 (5,512) 43,050 (4) 18,027 4,042 (8,321) (2,405) 11,343 (7,134) 11,000 (43,329) 17,735 (19,113) 23,575 3 Net cash ﬂ ows from/(used in) investing activities (22,090) (17,263) Cash ﬂ ows from ﬁ nancing activities Proceeds from issue of units Payment of ﬁ nance costs Repayment of borrowings Proceeds from borrowings Distributions paid Net cash ﬂ ows from/(used in) ﬁ nancing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year 23,905 – (1,742) 9,410 (10,964) 20,609 (755) 4,208 3,453 17,524 (432) (35,245) 26,935 (2) 8,780 2,860 1,348 4,208 72 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus income trust notes to the concise ﬁ nancial statements 30 JUNE 2008 1. TRUST INFORMATION AIT is a registered managed investment scheme and is a component entity of the Abacus Property Group (APG) – which comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects 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 neither can be dealt with without the other. The securities trade as one security on the Australian Stock Exchange (the ASX) under the code ABP. The concise ﬁ nancial report has also been prepared on an historical cost basis, except for investment properties and derivative ﬁ nancial 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 ﬁ nancial instruments. The nature of the operations and principal activities of the Trust are described in the Directors’ Report. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) BASIS OF PREPARATION The concise ﬁ nancial report has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards. The concise ﬁ nancial report has been derived from the Annual Financial Report but does not include all notes of the type normally included within the annual ﬁ nancial report and therefore cannot be expected to provide as full an understanding of the ﬁ nancial performance, ﬁ nancial position and ﬁ nancing and investing activities of the Group as the full ﬁ nancial report. The concise ﬁ nancial report should be read in conjunction with the Annual Financial Report of Abacus Trust and Abacus Group Projects Limited. It is also recommended that the annual ﬁ nancial report be considered together with any public announcements made by the Abacus Property Group during the year ended 30 June 2008 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001. The concise ﬁ nancial 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. (B) STATEMENT OF COMPLIANCE The concise ﬁ nancial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS), as issued by the IASB. (C) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS Except for the amendments arising from AASB 2007-7: 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 recently been issued or amended but are not yet effective have not been adopted by the Trust for the annual reporting period ended 30 June 2008. These are outlined in the table below. 73 annual ﬁ nancial report / continued APPLICATION DATE OF STANDARD* IMPACT ON TRUST FINANCIAL REPORT APPLICATION DATE FOR TRUST* 1 January 2009 AASB 8 is a disclosure standard so 1 July 2008 will have no direct impact on the amounts included in the Trust’s ﬁ nancial statements although, it may directly impact the level at which goodwill is tested for impairment. In addition, the amendments may have an impact on the Trust’s segment disclosures. 1 January 2009 These amendments are only 1 July 2009 expected to affect the presentation of the Trust’s ﬁ nancial report and will not have a direct impact on the measurement and recognition of amounts disclosed in the ﬁ nancial report. The Trust has not determined at this stage whether to present a single statement of comprehensive income or two separate statements. 1 January 2009 The Trust has share-based payment arrangements that may be affected by these amendments. However, the Trust has not yet determined the extent of the impact, if any. 1 July 2009 1 January 2009 These amendments are not expected 1 July 2009 to have any impact on the Trust’s ﬁ nancial report as the Trust does not have on issue or expect to issue any puttable ﬁ nancial instruments as deﬁ ned by the amendments. 1 July 2009 1 July 2009 The Trust may enter into some business combinations during the next ﬁ nancial year and may therefore consider early adopting the revised standard. The Trust has not yet assessed the impact of early adoption, including which accounting policy to adopt. REFERENCE SUMMARY AASB 8 and AASB 2007-3 New standard replacing AASB114 Segment Reporting, which adopts a management reporting approach to segment reporting. AASB 101 and AASB 2007-8 AASB 2008-1 AASB 2008-2 AASB 3 (revised) Introduces a statement of comprehensive income. Other revisions include impacts on the presentation of items in the statement of changes in equity, new presentation requirements for restatements or reclassiﬁ cations of items in the ﬁ nancial statements, changes in the presentation requirements for dividends and changes to the titles of the ﬁ nancial statements. The amendments clarify the deﬁ nition of ‘vesting conditions’, introducing the term ‘non- vesting conditions’ for conditions other than vesting conditions as speciﬁ cally deﬁ ned and prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisﬁ ed. The amendments provide a limited exception to the deﬁ nition of a liability so as to allow an entity that issues puttable ﬁ nancial instruments with certain speciﬁ ed features, to classify those instruments as equity rather than ﬁ nancial liabilities. The revised standard introduces a number of changes to the accounting for business combinations, the most signiﬁ cant of which allows entities a choice for each business combination entered into – to measure a non- controlling interest (formerly a minority interest) in the acquiree either at its fair value or at its proportionate interest in the acquiree’s net assets. This choice will effectively result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively. 74 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus income trust REFERENCE SUMMARY AASB 8-3 Amendments to International Financial Reporting Standards Amendments to International Financial Reporting Standards Amending standard issued as a consequence of revisions to AASB 3 and AASB 127. The main amendments of relevance to Australian entities are those made to IAS 27 deleting the ‘cost method’ and requiring all dividends from subsidiary, jointly controlled entity or associate to be recognised in proﬁ t or loss in an entity’s separate ﬁ nancial statements (i.e. parent company account). The distinction between pre- and post- acquisition proﬁ ts is no longer required. However, the payment of such dividends requires the entity to consider whether there is an indicator of impairment. AASB 127 has also been amended to effectively allow the cost of an investment in a subsidiary, in limited reorganisations, to be based on the previous carrying amount of the subsidiary (i.e. share of equity) rather than its fair value. The improvements project is an annual project that provides a mechanism for making non-urgent, but necessary amendments to IFRSs. The IASB has separated the amendments into two parts: Part 1 deals with changes the IASG identiﬁ ed resulting in accounting changes; Part II deals with either terminology or editorial amendments that the IASB believes will have minimal impact. APPLICATION DATE OF STANDARD* 1 July 2009 IMPACT ON TRUST FINANCIAL REPORT Refer to AASB 3 (revised) and AASB 127 (revised) above. 1 January 2009 Recognising all dividends received from subsidiaries, jointly controlled entities and associates as income will likely give rise to greater income being recognised by the parent entity after adoption of these amendments. APPLICATION DATE FOR TRUST* 1 July 2009 1 July 2009 In addition, if the Trust enters into any trust reorganisation establishing new parent entities, an assessment will need to be made to determine if the reorganisation meets the conditions imposed to be effectively accounted for on a carry-over basis’ rather than at fair value. The Trust has not yet determined the extent of the impact of the amendments, if any. 1 July 2009 1 January 2009 except for amendments to IFRS 5, which are effective from 1 July 2009. * designates the beginning of the applicable annual reporting period AASB 2007-2, AASB 2007-9, AASB 1004, AASB 1049, AASB 1050, AASB 1051, AASB 1052, IFRIC 15, AASB 2007-5, AASB 2007-6, AASB 123 and AASB Interpretation 4, 12, 13, 14, 129 and 1038 will have no application to the Trust. 75 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 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 identiﬁ ed 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 investment in and ownership of commercial, retail and industrial properties. Property Finance provides mortgage lending and related property ﬁ nancing solutions. (D) BASIS OF CONSOLIDATION The consolidated ﬁ nancial statements comprise the ﬁ nancial statements of AIT and its subsidiaries. The concise ﬁ nancial 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 proﬁ ts from intra-trust transactions, have been eliminated in full and subsidiaries are consolidated from the date on which control is transferred to the Trust and cease to be consolidated from the date on which control is transferred out of the Trust. Where there is a loss of control of a subsidiary, the consolidated ﬁ nancial statements include the results for the part of the reporting period during which the Trust has control. 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. 76 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus income trust Business segments Year ended 30 June 2008 Revenue Revenue from external customers Realised gains on investments Unrealised gains on investments Total consolidated revenue Result Segment result Finance costs Net proﬁ t for the year Assets Segment assets Liabilities Segment liabilities Other segment information: Depreciation and amortisation Increase in fair value of investments Cash ﬂ ow information Net cash ﬂ ow from operating activities Net cash ﬂ ow from investing activities Net cash ﬂ ow from ﬁ nancing activities PROPERTY $’000 PROPERTY FINANCE $’000 TOTAL $’000 17,150 16,247 3,457 36,854 2,726 – – 2,726 29,494 2,726 19,876 16,247 3,457 39,580 32,220 (9,613) 22,607 310,674 43,280 353,954 127,385 43,280 170,665 300 3,457 493 (8,283) 20,609 – – 233 (13,807) – 300 3,457 726 (22,090) 20,609 77 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 Business segments Year ended 30 June 2007 Revenue Revenue from external customers Realised gains on investments Unrealised gains on investments Total consolidated revenue Result Segment result Finance costs Net proﬁ t for the year Assets Segment assets Liabilities Segment liabilities Other segment information: Depreciation and amortisation Increase in fair value of investments Cash ﬂ ow information Net cash ﬂ ow from operating activities Net cash ﬂ ow from investing activities Net cash ﬂ ow from ﬁ nancing activities 78 ABACUS ANNUAL FINANCIAL REPORT 2008 PROPERTY $’000 PROPERTY FINANCE $’000 TOTAL $’000 20,387 6,254 13,114 39,755 4,173 – – 24,560 6,254 13,114 4,173 43,928 35,738 3,111 38,849 (7,630) 31,219 283,221 30,098 313,319 123,131 30,098 153,229 759 13,114 7,549 (21,129) 8,780 – – 759 13,114 3,794 3,866 – 11,343 (17,263) 8,780 abacus income trust 4. REVENUE AND EXPENSES (a) Finance income Interest and fee income on secured loans Bank interest Total ﬁ nance income (b) Net realised gains on investments 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 property plant and equipment (d) Net unrealised gains on investments Change in fair value of investment properties Total net unrealised gains on investments (e) Finance costs Interest on loans Amortisation of ﬁ nance costs Total ﬁ nance costs (on historical basis) Unrealised (gains)/losses on interest rate swaps Total ﬁ nance costs (f) Other expenses Property outgoings Audit fees Custody fees Management fees Other administrative expenses Total other expenses CONSOLIDATED 2008 $’000 2,493 233 2,726 43,050 (36,055) 6,995 16,549 (7,297) 9,252 3,457 3,457 9,121 329 9,450 163 9,613 3,248 32 49 3,396 335 7,060 2007 $’000 3,905 268 4,173 23,600 (20,615) 2,985 18,148 (14,879) 3,269 13,114 13,114 9,285 77 9,362 (1,732) 7,630 1,841 118 43 2,204 114 4,320 79 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 5. DISTRIBUTIONS PAID AND PROPOSED (a) Distributions paid during the year Final distribution for ﬁ nancial year 30 June: 3.00 cents per unit (2006: nil) (b) Distributions proposed and recognised as a liability Final distribution payable for the June quarter: 3.5 cents per unit (2007: 3.25 cents) 6. EARNINGS PER UNIT The following reﬂ ects the income used in the basic and diluted earnings per unit computations: Earnings used in calculating earnings per unit: Net proﬁ t attributable to unitholders Net proﬁ t attributable to unitholders excluding fair value adjustments (1) CONSOLIDATED 2008 $’000 – – 2007 $’000 10,963 10,963 19,182 10,963 22,786 19,492 2008 ’000 29,475 14,628 2007 ’000 Weighted average number of units: Weighted average number of units for basic earnings per unit 625,857 553,184 Effect of dilution: Options Weighted average number of units adjusted for the effect of dilution 10,479 636,336 3,703 556,887 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 ﬁ nancial instruments and share based payments. 80 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus income trust 7. 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 valuations of each investment property is conducted annually either in December or June of each year. This schedule was adopted in the current ﬁ nancial year. Independent valuations are prepared using both the capitalisation of net income method and the discounting of future cashﬂ ows 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. CONSOLIDATED ACQUISITION DATE COSTS INCL ALL ADDITIONS $’000 INDEPENDENT VALUATION DATE 2008 $’000 7,866 30-Jun-08 12,000 Property 8 Station Street, Wollongong, NSW(iv) 1-5 Lake Dingley, Melbourne,VIC 367 Peel Street, Tamworth, NSW(i) 500 Princes Highway,Noble Park,VIC 31-33 Windorah Avenue, Stafford, QLD (ii) Lennons Plaza, 66 Queen St., QLD (ii) 26 Savage Street and 681 Curtin Avenue, Pinkenba, QLD (ii) 671 Gympie Rd, Chermside, QLD (iv) 9-14 Yates Street, Mawson Lakes, SA(ii) 36-52 National Blvd, Campbellﬁ eld, VIC(ii) Gympie Market Place, Gympie, QLD (iv) 29-33 Marshall St, Cobar NSW(iv) 50 Mostyn Street, Castlemaine, VIC(iv) 29 Queen Street, North Bundaberg, QLD (ii) 93 Victoria Street, Eaglehawk, VIC(iv) 12 Docker Street, Wangaratta, QLD (vi) Kingscote Kangaroo Island, SA(iv) 96-98 Victoria Street, St.George, QLD (ii) 293-295 Grt Eastern Highway, Midland WA(iii) Mt View Plaza, Kirwan, QLD (v) Mid City Plaza, Maryborough, VICº(iv) 41-49 George St, Gordonvale, QLD Properties owned by AIT and its controlled entities (i) As valued by CB Richard Ellis Pty Ltd (ii) As valued by FPD Savills (NSW) Pty Limited (iii) As valued by DTZ Australia (iv) As valued by Landmarkwhite (v) As valued by Knight Frank 30-Jun-03 28-May-03 22-Feb-04 27-Nov-03 3-Nov-03 19-Dec-03 23-Jan-04 17-Dec-04 7-Jun-05 18-Jul-05 7-Jun-04 5-Aug-04 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 4-Mar-08 11,956 11,961 19,222 30-Jun-06 30-Jun-08 30-Jun-07 5,109 30-Jun-08 32,272 31-Dec-07 5,040 4,722 6,857 8,832 7,340 1,713 8,092 30-Jun-08 30-Jun-08 31-Dec-07 30-Jun-08 30-Jun-08 30-Jun-08 30-Jun-08 15,536 30-Jun-08 6,150 2,965 4,337 3,030 7,228 7,743 4,802 30-Jun-08 30-Jun-08 30-Jun-08 30-Jun-08 30-Jun-08 31-Dec-07 30-Jun-08 2,984 4-Mar-08 2007 $’000 12,000 13,300 12,700 21,000 6,500 39,000 – 11,000 – 6,500 43,596 13,300 12,000 6,050 5,750 5,877 5,700 10,200 10,300 9,000 2,000 10,800 15,000 7,200 3,200 4,360 3,460 9,000 1,950 10,200 15,536 6,900 3,100 4,500 3,200 10,850 10,250 8,508 4,400 2,984 7,743 4,802 – 190,158 215,558 81 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 Notes: (a) The value of properties not externally valued at 30 June 2008 may include capital expenditures after the last valuation date. (b) The Abacus Income Trust owns 98.4% of the units in the Wollongong Property Trust which owns 8 Station Street, Wollongong. (c) Property is owned by Abacus Independent Retail Property Trust (AIRPT). Abacus Retail Property Trust, a wholly owned trust of Abacus Income Trust, owns 75% of the units in AIRPT. (d) Properties undergoing major redevelopment were valued at cost including capitalised costs. (e) Investment properties are used as security for secured bank debt. RECONCILIATIONS Reconciliation of the carrying amounts of investment properties at the beginning and end of the current and previous ﬁ nancial year: Investment properties Carrying amount at beginning of the ﬁ nancial year Additions and capital expenditures Net revaluation increments Disposals/transfer Carrying amount at end of the ﬁ nancial year CONSOLIDATED 2008 $’000 2007 $’000 215,558 5,438 3,457 (34,295) 190,158 204,132 18,902 13,114 (20,590) 215,558 82 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus income trust 8. CONTRIBUTED EQUITY (a) Issued units Issued units Finance and issue costs Units ﬁ nanced by APG under the ESLP Total contributed equity (b) Movement in contributed equity for the year At 1 July 2007 – security purchase plan – institutional equity raising – distribution reinvestment plan – transaction costs recovery At 30 June 2008 – Units ﬁ nanced by APG under the ESLP CONSOLIDATED 2008 $’000 2007 $’000 146,421 (5,211) (4,240) 136,970 122,517 (5,321) – 117,196 CONSOLIDATED UNITS ISSUED NUMBER ‘000 578,633 3,991 52,632 10,348 – 645,604 – 645,604 VALUE $‘000 117,196 1,412 19,025 3,467 110 141,210 (4,240) 136,970 9. EVENTS AFTER THE BALANCE SHEET DATE 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 ﬁ nancial year that has or may affect the Trust’s operations in future ﬁ nancial years, the results of those operations or the Trust’s state of affairs in future ﬁ nancial years. 83 annual ﬁ nancial 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 ﬁ nancial 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 ﬁ nancial position as at 30 June 2008 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 ﬁ nancial year ended 30 June 2008. On behalf of the Board JOHN THAME Chairman Sydney, 27 August 2008 FRANK WOLF Managing Director 84 ABACUS ANNUAL FINANCIAL REPORT 2008 ■ Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 ■ 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 Liability limited by a scheme approved under Professional Standards Legislation. 85 annual ﬁ nancial report / continued independent auditor’s report TO THE MEMBERS OF ABACUS INCOME TRUST 86 ABACUS ANNUAL FINANCIAL REPORT 2008 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 of the Company John Thame, Chairman Frank Wolf, Managing Director William Bartlett David Bastian Dennis Bluth Malcolm Irving Len Lloyd 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 Share 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 88 Directors’ Report 91 Auditor’s Independence Declaration 92 Consolidated Income and Distribution Statements 93 Consolidated Balance Sheet 94 Consolidated Statement of Changes in Equity 95 Consolidated Cash Flow Statement 96 Notes to the Concise Financial Statements 106 Directors’ Declaration 107 Independent Auditor’s Report The concise ﬁ nancial report is an extract from the full ﬁ nancial report for the year ended 30 June 2008. The ﬁ nancial statements and speciﬁ c disclosures included in the concise ﬁ nancial report have been derived from the full ﬁ nancial report. It is recommended that this Concise Annual Financial Report should be read in conjunction with the Concise Annual Financial Reports of Abacus Trust and Abacus Income Trust for the year ended 30 June 2008. 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. 87 annual ﬁ nancial report / continued directors’ declaration 30 JUNE 2008 The Directors present their report together with the consolidated ﬁ nancial report of Abacus Group Projects Limited (AGPL or the Company) and the auditor’s report thereon. PRINCIPAL ACTIVITIES The Company operates predominantly in Australia and its principal activities during the course of the year ended 30 June 2008 included: DIRECTORS The Directors of Abacus Group Projects Limited in ofﬁ ce during the ﬁ nancial year and until the date of this report are as follows. Directors were in ofﬁ ce for this entire period unless otherwise stated. • investment in commercial, retail and industrial properties; • hotel operations management; • self-storage management; • funds management; and • investment. John Thame Frank Wolf Chairman (Non-executive) Managing Director William Bartlett Non-executive Director David Bastian Dennis Bluth Non-executive Director Non-executive Director Malcolm Irving Non-executive Director Len Lloyd Executive Director As at the date of this report, the relevant interests of the directors and speciﬁ ed executives in the stapled securities of Abacus Property Group were as follows: Directors J Thame F Wolf W Bartlett D Bluth D Bastian M Irving L Lloyd APG SECURITIES HELD NUMBER OF OPTIONS OVER APG SECURITIES 55,378 – 9,718,341* 3,747,130 8,000 20,000 4,503,497 35,387 – – – – 795,925* 1,168,915 * The holdings of F Wolf and L Lloyd include securities acquired under the Executive Share Loan Plan that are treated as options. 88 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus group projects limited Similarly the AGPL’s ﬁ nancial condition also strengthened during the year: Total Assets ($’000) Net Assets ($’000) Net Tangible Assets ($’000) NTA per security ($) Securities on issue (million) Weighted average securities on issue (million) 30 JUNE 2008 30 JUNE 2007 188,106 31,817 28,834 4.6 9,598 6,095 5,180 0.9 645.6 578.6 625.9 553.2 During the year, AGPL purchased a $6.1 million storage facility at 31 Ruakura Road, Hamilton, New Zealand and storage facilities at Townsville, Queensland for $33.6 million and acquired 58.07% of the shareholdings in U-Stow-It Holdings Limited which operates self-storage facilities in Canberra. In addition, AGPL purchased a $19.6 million home park village at 106 Nelson Bay Road, Fern Bay and a commercial building in 51 Allara Street in Canberra for $56.2 million. These acquisitions increased AGPL’s consolidated total assets to $188.6 million (June 30 2007 $9.6 million). In December 2007, AGPL sold its interest in the hotel business which contributed a net gain of $0.12 million. CORPORATE STRUCTURE AGPL is a member of the Abacus Property Group (APG) which is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects Limited (AGPL) and Abacus Income Trust (AIT). 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. AGPL is a company incorporated and domiciled in Australia. OPERATING PROFIT The Company earned a net proﬁ t attributable to members of $1.1 million for the year ended 30 June 2008 (June 2007: $0.4 million loss). DIVIDENDS There were no dividends paid by Abacus Group Projects Limited during the year ended 30 June 2008 (June 2007: nil). REVIEW OF OPERATIONS AGPL revenues, net proﬁ t grew strongly in the year ended 30 June 2008: Total revenue * Pre-tax proﬁ t Net proﬁ t Earnings per security (cents) 30 JUNE 2008 $’000 30 JUNE 2007 $’000 11,786 12,040 3,741 2,922 0.13 (45) (543) (.08) * Total revenue plus realised gains on sale of investments plus unrealised revaluation gains on properties/investments 89 annual ﬁ nancial report / continued AUDITORS INDEPENDENCE DECLARATION We have obtained an independence declaration from our auditor, Ernst & Young, and such declaration is shown on page 91. ROUNDING The amounts contained in this report and in the annual ﬁ nancial 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. JOHN THAME Chairman Sydney, 27 August 2008 FRANK WOLF Managing Director directors’ declaration 30 JUNE 2008 FEES PAID TO ABACUS FUNDS MANAGEMENT LIMITED AND ASSOCIATES AGPL paid a management fee to Abacus Funds Management Limited (AFML) of $0.47 million (2007: $0.04 million) for the year ended 30 June 2008. In addition, AGPL paid property management fees to an associate company, Abacus Property Services Pty Limited of $0.125 million (2007: $0.06 million) for the year ended 30 June 2008. LIKELY DEVELOPMENTS AND EXPECTED RESULTS In the opinion of the Directors, disclosure of any further information on future developments and results than is already disclosed in this report or the ﬁ nancial statements would be unreasonably prejudicial to the interests of the Company. ENVIRONMENTAL REGULATION AND PERFORMANCE The Company’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 signiﬁ cant breaches of any environmental requirements applicable to the Company. SIGNIFICANT EVENTS AFTER BALANCE DATE Other than as disclosed already in this report, there has been no matter or circumstance that has arisen since the end of the ﬁ nancial year that has signiﬁ cantly affected, or may affect, the Company’s operations in future ﬁ nancial periods, the results of those operations or the Company’s state of affairs in future ﬁ nancial periods. 90 ABACUS ANNUAL FINANCIAL REPORT 2008 ■ Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 ■ 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 Liability limited by a scheme approved under Professional Standards Legislation. 91 annual ﬁ nancial report / continued consolidated income and distribution statements YEAR ENDED 30 JUNE 2008 Continuing operations Revenue Rental income Storage-related income Funds management income Finance income Income from distribution Net realised gains on investment Net unrealised gains on investment Total Revenue Depreciation expense Finance costs Other expenses Proﬁ t/(loss) from continuing operations before tax Income tax beneﬁ t/(expense) Proﬁ t from/(loss) continuing operations after tax Discontinued operation Proﬁ t/(loss) from discontinued operation after income tax Net proﬁ t Attributable to: Minority interest Member of the parent Earnings per share for proﬁ t/(loss) from continuing operations attributable to the ordinary shareholders of the company: Basic earnings per share (cents) Diluted earnings per share (cents) Basic earnings per share ex fair value adjustments* Diluted earnings per share ex fair value adjustments* Earnings per share for proﬁ t/(loss) attributable to the ordinary shareholders of the company: Basic earnings per share (cents) Diluted earnings per share (cents) Basic earnings per share ex fair value adjustments* Diluted earnings per share ex fair value adjustments* CONSOLIDATED NOTES 2008 $’000 2007 $’000 4a 4b 4c 4d 4e 4f 3,280 6,914 420 77 – 115 980 11,786 (30) (5,523) (2,492) 3,741 (1,149) 2,592 330 2,922 1,786 1,136 0.13 0.13 (0.11) (0.11) 0.18 0.18 (0.11) (0.11) – – – – – – – – – – (45) (45) 13 (32) (511) (543) 128 (415) (0.08) (0.07) (0.11) (0.11) (0.08) (0.07) (0.11) (0.11) * Based on net proﬁ t excluding AIFRS fair value adjustments (namely property revaluations, revaluations of derivatives and other ﬁ nancial instruments and share based payments) 92 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus group projects limited consolidated balance sheet AS AT 30 JUNE 2008 Current assets Cash and cash equivalents Trade and other receivables Inventories Other Total current assets Non-current assets Property, plant and equipment Investment properties Investment in subsidiaries Property loan and other ﬁ nancial assets Deferred tax assets Intangible assets and goodwill Total non-current assets Total assets Current liabilities Trade and other payables Interest-bearing loans and borrowings Income tax payable Other Total current liabilities Non-current liabilities Interest-bearing loans and borrowings Deferred tax liabilities Other Total non-current liabilities Total liabilities Net assets Equity Contributed equity Reserves Retained earnings/(accumulated losses) Total security holders’ interest in equity Total external minority interest Total equity CONSOLIDATED NOTES 6 7 2008 $’000 2,257 464 – 355 3,076 193 170,273 – 11,109 472 2,983 185,030 188,106 5,926 41,812 222 – 47,960 101,410 6,835 84 108,329 156,289 31,817 7,259 (483) 93 6,869 24,948 31,817 2007 $’000 2,031 4,585 125 64 6,805 924 – – – 954 915 2,793 9,598 3,155 – – 139 3,294 – – 209 209 3,503 6,095 6,437 – (1,043) 5,394 701 6,095 93 annual ﬁ nancial report / continued consolidated statement of changes in equity YEAR ENDED 30 JUNE 2008 At 1 July 2007 Net income for the year Total income for the year Equity raisings Issue costs Treasury shares Disposal of interest in Matson Resort Foreign currency translation Interest in Abacus Ventures Trust Interest on acquisition of U-Stow-It Holdings Limited At 30 June 2008 At 1 July 2006 Net income for the year Total income for the year Equity raisings At 30 June 2007 ISSUED CAPITAL $’000 6,437 – – 1,106 (87) (197) – – – – FOREIGN CURRENCY TRANSLATION $’000 – – – – – – – (483) – – RETAINED EARNINGS $’000 (1,043) 1,136 1,136 – – – – – – – MINORITY INTEREST $’000 701 1,786 1,786 – – – (701) – 8,827 14,335 7,259 (483) 93 24,948 5,557 – – 880 6,437 – – – – – (628) (415) (415) – (1,043) 829 (128) (128) – 701 TOTAL EQUITY $’000 6,095 2,922 2,922 1,106 (87) (197) (701) (483) 8,827 14,335 31,817 5,758 (543) (543) 880 6,095 94 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus group projects limited consolidated cash ﬂ ow statement YEAR ENDED 30 JUNE 2008 Cash ﬂ ows from operating activities Income receipts Interest received Distributions received Borrowing costs paid Operating payments Net cash ﬂ ows from/(used in) operating activities Cash ﬂ ows from investing activities Payments for investments and funds advanced Advances from related entities Purchase of a controlled entity Purchase of plant and equipment Disposal of property, plant and equipment Purchase of investment properties Net cash ﬂ ows from/(used in) investing activities Cash ﬂ ows from ﬁ nancing activities Proceeds from issue of stapled securities Proceeds from borrowings Net cash ﬂ ows from/(used in) ﬁ nancing 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 2008 $’000 2007 $’000 15,958 3,934 80 – (4,145) (10,929) 964 (10,478) 6,627 (22,861) – 926 (107,228) (133,014) 1,106 131,653 132,759 709 (483) 2,031 2,257 15 3 – (3,081) 871 – 36 – (119) – – (83) – – – 788 – 1,243 2,031 95 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 1. CORPORATE INFORMATION Abacus Group Projects Limited (AGPL or the Company) is a member of Abacus Property Group (APG ) which is comprised of Abacus Group Holdings Limited (AGHL), Abacus Trust (AT), Abacus Group Projects 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 neither can be dealt with without the other. The securities trade as one security on the Australian Stock Exchange (the ASX) under the code ABP. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (A) BASIS OF PREPARATION The concise ﬁ nancial report has been prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standards. The concise ﬁ nancial report has been derived from the Annual Financial Report but does not include all notes of the type normally included within the annual ﬁ nancial report and therefore cannot be expected to provide as full an understanding of the ﬁ nancial performance, ﬁ nancial position and ﬁ nancing and investing activities of the Company as the full ﬁ nancial report. The concise ﬁ nancial report should be read in conjunction with the Annual Financial Report of Abacus Trust and Abacus Income Trust. It is also recommended that the annual ﬁ nancial report be considered together with any public announcements made by the Abacus Property Group during the year ended 30 June 2008 in accordance with the continuous disclosure obligations arising under the Corporations Act 2001. The concise ﬁ nancial report has also been prepared on an historical cost basis, except for investment properties and derivative ﬁ nancial 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 ﬁ nancial instruments. The concise ﬁ nancial 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. (B) STATEMENT OF COMPLIANCE The concise ﬁ nancial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS), as issued by the IASB. (C) NEW ACCOUNTING STANDARDS AND INTERPRETATIONS Except for the amendments arising from AASB 2007-7: 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 ended 30 June 2008. These are outlined in the table below. 96 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus group projects limited REFERENCE SUMMARY AASB 8 and AASB 2007-3 New standard replacing AASB114 Segment Reporting, which adopts a management reporting approach to segment reporting. AASB 101 and AASB 2007-8 AASB 2008-1 AASB 2008-2 AASB 3 (revised) AASB 8-3 Introduces a statement of comprehensive income. Other revisions include impacts on the presentation of items in the statement of changes in equity, new presentation requirements for restatements or reclassiﬁ cations of items in the ﬁ nancial statements, changes in the presentation requirements for dividends and changes to the titles of the ﬁ nancial statements. The amendments clarify the deﬁ nition of ‘vesting conditions’, introducing the term ‘non- vesting conditions’ for conditions other than vesting conditions as speciﬁ cally deﬁ ned and prescribe the accounting treatment of an award that is effectively cancelled because a non-vesting condition is not satisﬁ ed. The amendments provide a limited exception to the deﬁ nition of a liability so as to allow an entity that issues puttable ﬁ nancial instruments with certain speciﬁ ed features, to classify those instruments as equity rather than ﬁ nancial liabilities. The revised standard introduces a number of changes to the accounting for business combinations, the most signiﬁ cant of which allows entities a choice for each business combination entered into – to measure a non- controlling interest (formerly a minority interest) in the acquiree either at its fair value or at its proportionate interest in the acquiree’s net assets. This choice will effectively result in recognising goodwill relating to 100% of the business (applying the fair value option) or recognising goodwill relating to the percentage interest acquired. The changes apply prospectively. Amending standard issued as a consequence of revisions to AASB 3 and AASB 127. APPLICATION DATE OF STANDARD* IMPACT ON COMPANY FINANCIAL REPORT APPLICATION DATE OF COMPANY* 1 January 2009 AASB 8 is a disclosure standard so 1 July 2008 will have no direct impact on the amounts included in the Company’s ﬁ nancial statements although, it may directly impact the level at which goodwill is tested for impairment. In addition, the amendments may have an impact on the Company’s segment disclosures. 1 January 2009 These amendments are only 1 July 2009 expected to affect the presentation of the Company’s ﬁ nancial report and will not have a direct impact on the measurement and recognition of amounts disclosed in the ﬁ nancial report. The Company has not determined at this stage whether to present a single statement of comprehensive income or two separate statements. 1 January 2009 The Company has share-based 1 July 2009 payment arrangements that may be affected by these amendments. However, the Company has not yet determined the extent of the impact, if any. 1 January 2009 These amendments are not expected to have any impact on the Company’s ﬁ nancial report as the Company does not have on issue or expect to issue any puttable ﬁ nancial instruments as deﬁ ned by the amendments. 1 July 2009 1 July 2009 1 July 2009 The Company may enter into some business combinations during the next ﬁ nancial year and may therefore consider early adopting the revised standard. The Company has not yet assessed the impact of early adoption, including which accounting policy to adopt. 1 July 2009 Refer to AASB 3 (revised) and AASB 127 (revised) above. 1 July 2009 97 annual ﬁ nancial report / continued REFERENCE SUMMARY Amendments to International Financial Reporting Standards Amendments to International Financial Reporting Standards The main amendments of relevance to Australian entities are those made to IAS 27 deleting the ‘cost method’ and requiring all dividends from subsidiary, jointly controlled entity or associate to be recognised in proﬁ t or loss in an entity’s separate ﬁ nancial statements (i.e. parent company account). The distinction between pre- and post- acquisition proﬁ ts is no longer required. However, the payment of such dividends requires the entity to consider whether there is an indicator of impairment. AASB 127 has also been amended to effectively allow the cost of an investment in a subsidiary, in limited reorganisations, to be based on the previous carrying amount of the subsidiary (i.e. share of equity) rather than its fair value. The improvements project is an annual project that provides a mechanism for making non-urgent, but necessary amendments to IFRSs. The IASB has separated the amendments into two parts: Part 1 deals with changes the IASG identiﬁ ed resulting in accounting changes; Part II deals with either terminology or editorial amendments that the IASB believes will have minimal impact. APPLICATION DATE OF STANDARD* IMPACT ON COMPANY FINANCIAL REPORT 1 January 2009 Recognising all dividends received from subsidiaries, jointly controlled entities and associates as income will likely give rise to greater income being recognised by the parent entity after adoption of these amendments. APPLICATION DATE OF COMPANY* 1 July 2009 In addition, if the Company enters into any Company reorganisation establishing new parent entities, an assessment will need to be made to determine if the reorganisation meets the conditions imposed to be effectively accounted for on a carry- over basis’ rather than at fair value. The Company has not yet determined the extent of the impact of the amendments, if any. 1 July 2009 1 January 2009 except for amendments to IFRS 5, which are effective from 1 July 2009. * designates the beginning of the applicable annual reporting period AASB 2007-2, AASB 2007-9, AASB 1004, AASB 1049, AASB 1050, AASB 1051, AASB 1052, IFRIC 15, AASB 2007-5, AASB 2007-6, AASB 123 and AASB Interpretation 4, 12, 13, 14, 129 and 1038 will have no application to the Company. (D) BASIS OF CONSOLIDATION The consolidated ﬁ nancial statements comprise the ﬁ nancial statements of AGPL and its subsidiaries. The concise ﬁ nancial 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 proﬁ ts from intra-Company transactions, have been eliminated in full and subsidiaries are consolidated from the date on which control is transferred to the Company and cease to be consolidated from the date on which control is transferred out of the Company. Where there is a loss of control of a subsidiary, the consolidated ﬁ nancial statements include the results for the part of the reporting period during which the Company has control. 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 Ventures Trust, Abacus Villages Trust, Abacus Allara Trust and U-Stow-It Holdings Limited that are not held by the Company and are presented separately in the income statement and within equity in the consolidated balance sheet. 98 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus group projects limited 3. SEGMENT INFORMATION The Company predominantly operates in Australia. The Company’s segment reporting format is business segments as its risks and rates of return can be readily identiﬁ ed with the type of business and services provided. Segment revenue, segment expense and segment result do not include transactions between business segments. The Company’s primary business segments are Property, Funds management, Investment, Hotel and Self-storage management. The Property division comprises the investment in and ownership of commercial, retail and industrial properties. CONTINUING OPERATIONS DISCONTINUING OPERATION PROPERTY $’000 FUNDS MANAGEMENT $’000 INVESTMENT INCOME $’000 STORAGE RELATED INCOME $’000 TOTAL $’000 HOTEL OPERATIONS $’000 TOTAL OPERATIONS $’000 Business segments Year ended 30 June 2008 Revenue Revenue from external customers 3,357 420 – – – – – – 115 6,914 10,691 6089 16,780 980 – 980 115 – 115 Unrealised gains (loss) on investments Realised gains (loss) on investments Total consolidated revenue and other income Result Segment result Finance costs Proﬁ t/(loss) before income tax and minority interest Assets Segment assets Total assets Liabilities Segment liabilities Total liabilities Other segment information: Depreciation and amortisation Increase in fair value of investments Cash ﬂ ow information 3,357 420 115 7,894 11,786 6,089 16,895 2,705 420 115 6,024 9,264 (5,523) 3,741 472 9,736 (5,523) 4,213 77,735 7,970 – 102,401 188,106 76,635 7,808 – 71,846 156,289 30 980 30 980 Net cash ﬂ ow from operating activities 405 420 Net cash ﬂ ow from investing activities Net cash ﬂ ow from ﬁ nancing activities (119,690) 82,463 – – (40) 927 179 964 (14,251) (133,014) – 50,296 132,759 188,106 188,106 156,289 156,289 99 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 CONTINUING OPERATIONS DISCONTINUING OPERATION PROPERTY $’000 FUNDS MANAGEMENT $’000 INVESTMENT INCOME $’000 STORAGE RELATED INCOME $’000 TOTAL $’000 HOTEL OPERATIONS $’000 TOTAL OPERATIONS $’000 – – – – – – – – – – – – – – – – – 12,040 12,040 12,040 12,040 (1,054) (1,054) – – – – – 9,598 – 3,503 (1,054) 9,598 9,598 3,503 3,503 185 185 871 871 (83) (83) Business segments Year ended 30 June 2007 Revenue Revenue from external customers Total consolidated revenue and other income Result Segment result Proﬁ t/(loss) before income tax and minority interest Assets Segment assets Total assets Liabilities Segment liabilities Total liabilities Other segment information: Depreciation and amortisation Cash ﬂ ow information Net cash ﬂ ow from operating activities Net cash ﬂ ow from investing activities 100 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus group projects limited 4. REVENUE AND EXPENSES (a) Finance income Bank interest Total ﬁ nance income (b) Net realised gains on disposal of: Shares in Abacus Matson Holdings Pty Ltd Total net realised gains on investments (c) Unrealised gains on investments Change in fair value of investment properties Total unrealised gains on investments (d) Depreciation expense Depreciation of property, plant and equipment Total depreciation expense (e) Finance costs Interest on loans Amortisation of ﬁ nance costs Total ﬁ nance costs (on historical basis) Unrealised gains on interest rate swaps Total ﬁ nance costs (f) Other expenses Property outgoings Other administrative expenses Total other expenses CONSOLIDATED 2008 $’000 77 77 115 115 980 980 30 30 6,211 153 6,364 (841) 5,523 1,578 914 2,492 2007 $’000 – – – – – – – – – – – – – – 45 45 101 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 5. EARNINGS PER SHARE The following reﬂ ects the income used in the basic and diluted earnings per share computations: (a) Earnings used in calculating earnings per shares: Net proﬁ t/(loss) from continuing operations attributed to ordinary shareholders of the parent Proﬁ t attributable to discontinued operations Net proﬁ t/(loss) attributable to ordinary shareholders of the parent Net proﬁ t/(loss) attributable to shareholders excluding fair value adjustments (1) CONSOLIDATED 2008 $’000 2007 $’000 806 330 1,136 (678) 2008 ’000 (415) – (415) (415) 2007 ’000 (b) Weighted average number of shares: Weighted average number of shares for basic earnings per share 625,857 553,184 Effect of dilution: Share options Weighted average number of shares adjusted for the effect of dilution 10,479 636,336 3,703 556,887 Options granted to employees (including key management personnel) are considered to be potential shares and have been included in the determination of diluted earnings per share to the extent they are dilutive. These options have not been included in the determination of basic earnings per share. (1) Fair value adjustments include property revaluations, revaluations of derivatives and other ﬁ nancial instruments and share based payments. 102 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus group projects limited 6. 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 valuations of each investment property is conducted annually either in December or June of each year. This schedule was adopted in the current ﬁ nancial year. Independent valuations are prepared using both the capitalisation of net income method and the discounting of future cashﬂ ows 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. ACQUISITION DATE COSTS INCL ALL ADDITIONS $’000 INDEPENDENT VALUATION DATE 13-Sep-07 10-Sep-07 23-Nov-07 6-Feb-08 31-Jan-08 33,537 13-Sep-07 6,150 10-Sep-07 54,967 30-Jun-08 19,800 21-Nov-07 56,158 27-Nov-07 CONSOLIDATED 2008 $’000 33,564 6,150 54,846 19,556 56,157 170,273 2007 $’000 – – – – – – Property Townsville Storage facilities (i) Hamilton Storage facilities (ii) U-Stow-It Storage facilities (iii) 106 Nelson Bay Rd, Bayway Village (iv) 51 Allara St, Canberra (v) (i) As valued by Blackwell Consulting (ii) As valued by DTZ Australia (iii) As valued by CB Richard Ellis Pty Ltd (iv) As valued by Robertson & Robertson (v) As valued by Knight Frank Notes: (a) The Group acquired 58.07% interest in U-Stow-It Holdings Pty Limited in November 2007. (b) The investment properties are used as security for secured bank debt. 103 annual ﬁ nancial report / continued notes to the concise ﬁ nancial statements 30 JUNE 2008 RECONCILIATIONS Reconciliation of the carrying amounts of investment properties at the beginning and end of the current and previous ﬁ nancial year: Investment properties Carrying amount at beginning of the ﬁ nancial year Additions and capital expenditures Acquisition through business combinations Net revaluation increments Carrying amount at end of the ﬁ nancial year CONSOLIDATED 2008 $’000 – 115,427 53,866 980 170,273 2007 $’000 – – – – – 104 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus group projects limited 7. CONTRIBUTED EQUITY (a) Issued Shares Issued Shares – securities ﬁ nanced by APG under the ESLP Total contributed equity (b) Movement in stapled securities on issue At 1 July 2007 – security purchase plan – institutional equity raising – distribution reinvestment plan – less transaction cost At 30 June 2008 – securities ﬁ nanced by APG under the ESLP CONSOLIDATED 2008 $’000 7,456 (197) 7,259 2007 $’000 6,437 – 6,437 CONSOLIDATED STAPLED SECURITIES NUMBER ‘000 578,633 3,991 52,632 10,348 – 645,604 – 645,604 VALUE $’000 6,437 61 825 220 (87) 7,456 (197) 7,259 8. EVENTS AFTER THE BALANCE SHEET DATE 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 ﬁ nancial year that has or may affect the Company’s operations in future ﬁ nancial years, the results of those operations or the Company’s state of affairs in future ﬁ nancial years. 105 annual ﬁ nancial 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 ﬁ nancial 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 ﬁ nancial position as at 30 June 2008 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 ﬁ nancial year ended 30 June 2008. On behalf of the Board JOHN THAME Chairman Sydney, 27 August 2008 FRANK WOLF Managing Director 106 ABACUS ANNUAL FINANCIAL REPORT 2008 ■ Ernst & Young Centre 680 George Street Sydney NSW 2000 Australia GPO Box 2646 Sydney NSW 2001 ■ 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 [insert Auditor’s report] Liability limited by a scheme approved under Professional Standards Legislation. 107 annual ﬁ nancial report / continued independent auditor’s report TO THE MEMBERS OF ABACUS GROUP PROJECTS LIMITED 108 ABACUS ANNUAL FINANCIAL REPORT 2008 abacus property group corporate governance report 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 speciﬁ c to the Chairman. PRINCIPLE 2: STRUCTURE THE BOARD TO ADD VALUE Board size and composition The board is comprised of two executive directors and ﬁ ve 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 ﬁ nancial performance of the Group and returns to securityholders. Details of the skills, experience and expertise of each director are set out on page 19. 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 21. 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 conﬁ dentiality of information, protection of company assets, disclosure of potential conﬂ icts 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 ofﬁ cer provide a written assurance to the Board that the Group’s ﬁ nancial reports present a true and fair view, in all material respects, of the Group’s ﬁ nancial condition and operational results and are in accordance with relevant accounting standards. Audit Committee The Audit Committee comprises three 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 21. The Audit Committee has a formal charter which sets out its speciﬁ c 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. 109 annual ﬁ nancial report / continued corporate governance report 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. 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 21. Non-executive directors are paid fees for their service and do not participate in other beneﬁ ts which may be offered other than those which are statutory requirements. 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. PRINCIPLE 6: RESPECT THE RIGHTS OF SECURITYHOLDERS The Group aims to keep securityholders informed of signiﬁ cant 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 Business Risk Management Policy dealing with oversight and management of material business risks is set out in the corporate governance information section on the Abacus website at www.abacusproperty.com.au. During the year in consultation with an external consultant the Group’s risk management framework was updated. Under the compliance plan the responsible managers report regularly on the risks they manage and any emerging risks. The Audit Committee has responsibility for reviewing the Group’s risk management framework. The Managing Director and Chief Financial Ofﬁ cer conﬁ rm in writing to the Board that the ﬁ nancial statements present a true and fair view and that this statement is based on a sound system of risk management and internal compliance. The statement also conﬁ rms that these controls implement the policies adopted by the Board and that the Group’s risk and internal compliance controls are operating efﬁ ciently and effectively in all material respects. 110 ABACUS ANNUAL FINANCIAL REPORT 2008 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 speciﬁ ed otherwise, the following information is current as at 20 August 2008. Number of holders of ordinary fully paid stapled securities Voting rights attached to ordinary fully paid stapled securities 9,059 one vote per stapled security Number of holders holding less than a marketable parcel of ordinary fully paid stapled securities 144 Secretary, Abacus Funds Management Limited Secretary, Abacus Group Holdings Limited Secretary, Abacus Group Projects Limited Registered ofﬁ ce Abacus Funds Management Limited Abacus Group Holdings Limited Abacus Group Projects Limited Registry 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 Securityholders UBS Nominees Pty Limited ING Australia Holdings Limited Australia and New Zealand Banking Group Limited SECURITIES REGISTER Number of Securities 1-1000 1,001-5000 5,001-10000 10,001-100000 100,001 – over Ellis Varejes Level 34, Australia Square 264-278 George Street Sydney NSW 2000 612 9253 8600 Computershare Investor Services Pty Ltd GPO Box 7045 Sydney NSW 1115 1300 855 080 none none NUMBER OF SECURITIES 46,014,131 35,696,384 47,346,039 NUMBER OF SECURITYHOLDERS 276 1,003 1,888 5,652 240 111 annual ﬁ nancial report / continued asx additional information TOP 20 LARGEST SECURITYHOLDINGS Securityholders 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 National Nominees Limited HSBC Custody Nominees (Australia) Limited J P Morgan Nominees Australia Limited Australian Executor Trustees Limited ANZ Nominees Limited ANZ Nominees Limited RBC Dexia Investor Services Australia Nominees Pty Ltd RBC Dexia Investor Services Australia Nominees Pty Ltd Citicorp Nominees Pty Limited AMP Life Limited Suncorp Custodian Services Pty Limited Netwealth Investments Limited Citicorp Nominees Pty Limited Tricom Nominees Pty Ltd Cogent Nominees Pty Limited Avanteos Investments Limited Cogent Nominees Pty Limited Avanteos Investments Limited Citicorp Nominees Pty Limited Bond Street Custodians Limited NUMBER OF SECURITIES % ISSUED SECURITIES 72,762,246 67,805,259 67,255,797 22,783,538 18,925,925 18,351,968 15,726,881 14,650,822 13,926,343 13,689,857 12,593,346 11,686,484 10,900,839 10,479,000 9,940,264 7,548,766 5,744,520 5,345,446 4,759,784 4,543,868 11.23% 10.46% 10.38% 3.52% 2.92% 2.83% 2.43% 2.26% 2.15% 2.11% 1.94% 1.80% 1.68% 1.62% 1.53% 1.17% 0.89% 0.83% 0.73% 0.70% 112 ABACUS ANNUAL FINANCIAL REPORT 2008 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 www.abacusproperty.com.au

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