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