annual financial report 2009
AbAcuS ProPerty GrouP
GLoSSAry
At 30 June 2009, the Abacus Property Group (APG)
comprised the Abacus Trust (AT), the Abacus Income
Trust (AIT), Abacus Group Holdings Limited (AGHL) and
Abacus Group Projects Limited (AGPL). A summary of
the corporate structure is illustrated below.
AGHL has been identified as the parent entity for the
purpose of producing a consolidated financial report for
the APG. That is, The concise financial report of AGHL
services as a summary of the financial performance and
position of APG as a whole. It consolidates the financial
reports of AGHL, AT, AIT and AGPL and their controlled
entities.
To comply with Australian reporting requirements, the
concise financial reports of AT, AIT and AGPL are also
provided.
Abacus Abacus Funds Management Limited,
the responsible entity of the trusts
AGHL
Abacus Group Holdings Limited
AGPL
Abacus Group Projects Limited
AIT
APG
AT
Abacus Income Trust
Abacus Property Group
Abacus Trust
Abacus Group Holdings Limited
Abacus Trust
Abacus Income Trust
Abacus Group Projects Limited
02
18
19
21
23
25
26
90
91
93
97
annual financial report
abacus property group
30 June 2009
contentS
Directors’ Report
Auditor’s Independence Declaration
Consolidated Income and Distribution Statements
Consolidated Balance Sheet
Consolidated Statement of Changes in Equity
Consolidated Cash Flow Statement
Notes to the Financial Statements
Directors’ Declaration
Independent Audit Report
Corporate Governance Report
ASX Additional Information
Directory
responsible entity:
Abacus Funds Management Limited
ABN: 66 007 415 590
Level 34, Australia Square
264 - 278 George Street
SYDNEY NSW 2000
Tel: (02) 9253 8600
Fax: (02) 9253 8616
Website: www.abacusproperty.com.au
Directors of responsible entity:
John Thame, Chairman
Frank Wolf, Managing Director
William Bartlett
David Bastian
Dennis Bluth
Malcolm Irving
Len Lloyd
Directors of Abacus Group Holdings Limited:
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:
Registries Limited
Level 7, 207 Kent Street
SYDNEY NSW 2000
Tel: (02) 9290 9600
Fax: (02) 9279 0664
It is recommended that this Annual Financial Report should be read in conjunction with the Annual Financial Reports of Abacus Trust, Abacus Group Projects Limited and Abacus
Income Trust as at 30 June 2009. 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.
01
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.
directors report
30 June 2009
The Directors present their report together with the
consolidated financial report of Abacus Group Holdings
Limited and the auditor’s report thereon.
Abacus Group Holdings Limited has been identified
as the parent entity of the group referred to as the
Abacus Property Group (“APG” or the “Group”). The
consolidated financial reports of the Abacus Property
Group for the year ended 30 June 2009 comprises the
consolidated financial reports of Abacus Group Holdings
Limited (“AGHL”) and its controlled entities, Abacus
Trust (“AT”) and its controlled entities, Abacus Group
Projects Limited (“AGPL”) and its controlled entities and
Abacus Income Trust (“AIT”) and its controlled entities.
DirectorS
The Directors of Abacus Group Holdings Limited in
office during the financial year and until the date of this
report are as follows. Directors were in office for this
entire period unless otherwise stated.
John Thame
Frank Wolf
William Bartlett
David Bastian
Dennis Bluth
Malcolm Irving
Len Lloyd
Chairman (Non-executive)
Managing Director
Non-executive Director
Non-executive Director
Non-executive Director
Non-executive Director
Executive Director
PrinciPAL ActiVitieS
The Group operates predominantly in Australia and its
principal activities during the course of the year ended
30 June 2009 included:
•
investment in commercial, retail and industrial
properties;
• property funds management;
• property finance; and
• participation in property joint ventures and
developments.
abacus property group
reVieW oF oPerAtionS
The Group incurred a net loss attributable to members
of $102.4 million for the year ended 30 June 2009 (June
2008: $71.5 million profit). This loss has been calculated
in accordance with Australian Accounting Standards and
includes certain significant items that need adjustment
to enable securityholders to obtain an understanding of
the Group’s underlying profit of $72.0 million (June 2008:
$91.0 million).
The Underlying Profit reflects the statutory profit / (loss)
as adjusted in order to present a figure which reflects
the Directors’ assessment of the result for the ongoing
business activities of the Group, in accordance with the
AICD / Finsia principles for reporting Underlying Profit.
Statutory net profit / (loss)
attributable to securityholders
certain significant items:
Net change in fair value of
investments held at balance
date
Net change in fair value of
derivatives
Net change in fair value
of investment properties
and derivatives included in
equity accounted profits from
associates / joint ventures
Impairment of loan as part of
the restructuring of ADIFII
underlying profit
2009
$’000
2008
$’000
(102,412)
71,460
113,426
22,641
51,420
(3,137)
(1,467)
11,000
-
-
71,967 90,964
The statutory loss was principally caused by a
devaluation of the property portfolio by $107.5m and
adverse fair value movements of $48.3 million in the
Group’s interest rate swap book which is used to fix
the cost of borrowings and align these borrowings with
the net revenue earned by the property portfolio. The
4.25% fall in official interest rates during the year was
unprecedented. It resulted in a fair value adjustment in
the accounts from an asset of $11.3 million at 30 June
2008 to a liability of $37.0 million at 30 June 2009, a fair
value decrement of $48.3 million which was taken to
profit and loss.
Basic earnings / (loss) per security
(cents)
Diluted basic earnings per security
(cents)
Underlying earnings per security
(cents)
Diluted underlying earnings per
security (cents)
Distributions per security (cents)
(including proposed distribution)
2009
20081
(11.81)
10.98
(11.81)
10.80
8.30
13.98
8.30
13.75
7.75
13.50
The Group’s gearing was significantly reduced following
the $211 million capital raising through a rights issue and
a placement. The impact of the fair value adjustments in
respect of property devaluations and interest rate swaps
on the Group’s financial condition was as follows:
Total Assets ($ million)
Gearing (%)
Net Assets ($ million)
Net Tangible Assets ($ million)
NTA per security ($)
Retained earnings /
(Accumulated losses) ($ million)
Securities on issue (million)
Weighted average securities on
issue (million)
2009
2008
1,445.8
26.6
989.7
940.5
0.62
1,636.0
37.5
925.0
883.9
1.37
(14.6)
134.6
1,509.6
645.6
867.5
650.91
1 Prior period weighted average number of securities and EPSs have
been adjusted in accordance with AASB 133 “Earnings per Share”
(“AASB 133”). The weighted average number of securities on issue for
the current period, prior to the Equity Raisings, have also been adjusted
as required by AASB 133.
02
02
03
directors report
30 June 2009
abacus property group
Joint ventures & Developments
Investments managed within the Joint Ventures &
Developments division comprise direct and indirect
property investments and at 30 June 2009 totalled
$126.5 million (30 June 2008 $77.3 million).
The joint venture investments are with experienced
property investors and developers in New South
Wales, Victoria and overseas. These joint ventures
enable the Group to participate in a range of property-
related opportunities with participants who have local
knowledge and specialist property expertise.
Joint Ventures including equity accounted income
contributed $19.7 million to the Group result (30 June
2008 $9.3 million).
reVieW oF oPerAtionS (continueD)
Business activities which contributed to the Group’s
operating performance and financial condition for the
financial year were:
Property
Total property assets at 30 June 2009 were $897 million
(30 June 2008 $1,090 million). The property portfolio was
independently revalued during the year ended 30 June
2009, on a staggered basis, which resulted in a net full
year devaluation charge of $107.5 million.
During the year the Group acquired six properties for
$42 million and sold eleven self-storage properties for
$71 million to the Abacus Storage Fund which realised a
profit of $3.3 million.
Rental income increased from $76.4 million in 2008 to
$78.9 million due to net rental increases.
Funds Management
Following the acquisition of the additional properties
Abacus Storage Fund released a new offer document in
December seeking to raise $37 million. The Fund now
holds forty-one self storage facilities and is one of the
largest storage operator/investor in Australasia.
Funds Management was affected by the extreme change
in market conditions which resulted in potential investors
preferring cash to property based products. Despite
these conditions Funds Management contributed $13.2
million (30 June 2008 $38.9 million) to the Group result.
Property Finance
Total property finance assets including accrued interest
(and net of provisions) at 30 June 2009 were $146.2
million (30 June 2008 $144.7 million).
Revenue earned from interest and fees (net of
provisions) totalled $14.4 million for the year (30 June
2008 $13.2 million).
reVieW oF FinAnciAL conDition
SiGniFicAnt cHAnGeS in tHe StAte oF AFFAirS
During the year ended 30 June 2009, the contributed
equity of the Group increased $216.0 million to $987.5
million compared to $771.5 million at 30 June 2008 due
principally to the $24.4 million placement to the Kirsh
Group and the $187 million rights issue in March 2009.
Total equity increased by $64.7 million to $989.7 million
at 30 June 2009 compared to $925.0 million at 30 June
2008.
Net tangible assets per security were $0.62 at 30 June
2009 compared to $1.37 at 30 June 2008.
At 30 June 2009, existing bank loan facilities totalled
approximately $612.4 million, of which $392.2 million
was drawn. The weighted average maturity of its
secured, non-recourse bank debt is 1.6 years. The
Group manages interest rate exposure on debt facilities
through the use of interest rate swap contracts. At 30
June 2009, 76.3% (2008: 75.4%) of total debt facilities
were covered by interest rate swap arrangements at an
average interest rate (including bank margin) of 7.31%
(2008: 7.69%) and an average term to maturity of 4.69
years (2008: 5.07 years).
DiStributionS
Group distributions in respect of the year ended 30 June
2009 were $58.6 million (June 2008: $85.0 million), which
is equivalent to 7.75 cents per stapled security (June
2008: 13.5 cents). This distribution includes 0.75 cents
(11.3 million) that was paid on 7 August 2009. Further
details on the distributions are set out in note 9 of the
financial statements.
The following significant changes in the state of affairs of
the Group occurred during the financial year:
• Retained earnings (including the impact of
revaluations of investment properties and derivative
financial instruments and distributions) decreased
$149.2 million to accumulated losses of $14.6 million
at 30 June 2009 compared to $134.6 million of
retained earnings at 30 June 2008; and
•
Total equity increased by 6.99% from $925.0
million to $989.7 million at 30 June 2009 reflecting
the additional capital raised and net movements
in retained earnings, distributions and property
devaluations 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 financial year that has significantly affected,
or may affect, the Group’s operations in future financial
periods, the results of those operations or the Group’s
state of affairs in future financial 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 financial
statements would be unreasonably prejudicial to the
interests of the Group.
04
04
05
directors report
30 June 2009
abacus property group
reMunerAtion rePort (AuDiteD)
reMunerAtion & noMinAtion coMMittee
reMunerAtion rePort (AuDiteD) (continueD)
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 defined 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 five executives in the parent
and the Group receiving the highest remuneration.
For the purposes of this report, the term ‘executive’
encompasses the Managing Director, senior executives,
general managers and secretary of the parent and the
Group.
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
Chairman (Non-executive)
Managing Director
Director (Non-executive)
Director (Non-executive)
Director (Non-executive)
Director (Non-executive)
Executive Director
Chief Financial Officer
Director Funds Management
J. L’Estrange
General Manager Property Finance
P. Strain
E Varejes
Director Property
Chief Operating Officer and
Company Secretary
The Remuneration & Nomination Committee of the
Board of Directors is responsible for determining and
reviewing remuneration arrangements for the Board and
executives.
The Remuneration & Nomination Committee assesses
the appropriateness of the nature and amount of
remuneration of executives on a periodic basis by
reference to relevant employment market conditions
with the overall objective of ensuring maximum
stakeholder benefit from the retention of a high quality,
high performing Board and executive team.
reMunerAtion 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 competitive 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
Compliance Committee
Credit Committee
Due Diligence
Remuneration
Abacus Storage Funds
Management Limited Board
role
Fee
Chairman
$183,000
Member
Chairman
Member
Chairman
Member
Member
Member
Member
$69,000
$12,000
$6,000
$6,000
$5,760
$6,000
$6,000
$9,000
The payment of additional fees for serving on a
committee recognises the additional time commitment
required by directors who serve on one or more sub-
committees.
The non-executive directors do not receive retirement
benefits. Nor do they participate in any incentive
programs. The remuneration of non-executive directors
for the years ended 30 June 2009 and 30 June 2008 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.
06
06
07
directors report
30 June 2009
abacus property group
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
At the discretion of the Board, executives and senior
managers may receive STI payments based on reference
to a variety of measures, both financial and non-
financial. These measures primarily include Group capital
management and profitability 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 financial impact focus are
best suited to the outcomes desired by securityholders.
Non-financial measures are also taken into account.
The aggregate of annual STI payments available for
executives across the Group is subject to the approval
of the Remuneration Committee. Payments made are
delivered as a cash bonus in the following reporting
period.
reMunerAtion rePort (AuDiteD) (continueD)
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.
Remuneration consists of the following key elements:
•
•
fixed remuneration (base salary, superannuation and
non-monetary benefits).
variable remuneration
- short term incentive (STI); and
- long term incentive (LTI).
The proportion of fixed remuneration and variable
remuneration (potential short term and long term
incentives) for each executive is set out in Table 1. No
bonuses were paid in respect of the year ended 30
June 2009 as a consequence of the difficult economic
environment, other than a bonus to the Managing
Director for his role in developing and achieving the
Group’s capital management strategy.
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
fixed (primary) remuneration in a variety of forms
including cash and fringe benefits such as motor
vehicles. It is intended that the manner of payment
chosen will be optimal for the recipient without creating
undue cost for the Group.
The fixed remuneration component of executives is
detailed in Table 1.
reMunerAtion rePort (AuDiteD) (continueD)
(b) executive Security Loan Plan (eSLP)
Executives were offered limited recourse loans to
acquire Group securities on market. The executive
entered into a salary sacrifice arrangement under
which base remuneration, approximately equal to a
notional interest amount on the loan, was foregone by
the executive. The interest rate for a financial year was
equivalent to the Group distribution rate for that year.
The securities acquired under the ESLP were purchased
on market and were fully vested.
The loans provided under the ESLP were made in 2006
and 2007.
The loans will be repaid with the proceeds of securities
that were acquired under the ESLP.
The loans were accounted for in accordance with AASB
2 Share Based Payments, as follows:
•
•
The loans were not recorded on the balance sheet,
as they were regarded as options.
The value of a loan was 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.
Variable remuneration – Long term incentive (Lti)
objective
The objective of the LTI plans was to reward executives
in a manner that aligns remuneration with the creation of
securityholder wealth. As such, LTI grants are only made
to executives who are able to influence the generation
of securityholder wealth and thus have an impact on
the Group’s performance against the relevant long term
performance hurdle.
The LTI plans were no longer sustainable and in the
current form they no longer met the Group’s objective
that executives be rewarded in a manner that aligns
remuneration with the interests of securityholders.
Accordingly, effective 30 June 2009 the Group, with the
agreement of the participants, cancelled the LTI plans
that were in operation and are described below. The
remuneration committee is evaluating alternatives and
a new LTI proposal will be put to securityholders in due
course.
(a) executive Performance Award Plan (ePAP)
Security options were granted to executives employed
on the first day of the relevant financial year. The
security options were to vest over a period of 3 years
subject to meeting performance hurdles, with no
opportunity to retest. Executives were able to exercise
the security options for up to 7 years after vesting before
the options lapsed.
The cancellation of the EPAP has resulted in bringing
forward the remaining share based payment expenses
(fair value adjustment) to the current year. The amount of
the charge is $1.5m.
No LTI options were granted or exercised during the
year.
Table 2 provides details of LTI options granted during
the prior year.
08
08
09
directors report
30 June 2009
abacus property group
reMunerAtion rePort (AuDiteD) (continueD)
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.
The Group may terminate this employment agreement
by providing 12 months written notice or providing
payment in lieu of the notice period (based on the fixed
component of Dr Wolf’s remuneration).
other executives
There are no formal service agreements with other
executives. 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.
tAbLe 1: reMunerAtion oF Key MAnAGeMent PerSonneL
SHORT-TERM
POST
EMPLOYMENT
SECURITY-
BASED
PAYMENT*
TOTAL
%
PERFORMANCE
RELATED
SALARY &
FEES
CASH
BONUS
NON-
MONETARY
BENEFITS
SUPER-
ANNUATION
OPTIONS
2009
non-executive Directors
J Thame – Chairman
W Bartlett
D Bastian
D Bluth
M Irving
Sub-total
non-executive Directors
executive directors
F Wolf
– Managing Director
L Lloyd
– Managing Director,
Property Services
other Key Management Personnel
R de Aboitiz
– Chief Financial Officer
T Hardwick
– Director Funds Management
J L’Estrange
– General Manager
Property Finance
P Strain
– Director Property
E Varejes
– Chief Operating Officer
177,904
75,229
-
-
98,000
351,133
-
-
-
-
-
-
1,100,000
500,000
250,000
456,255
456,255
398,255
300,000
396,250
-
-
-
-
-
-
Sub-total executive KMP
3,357,015
500,000
total
3,708,148
500,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,745
6,953
97,400
91,400
-
209,498
-
-
-
-
-
-
191,649
82,182
97,400
91,400
98,000
560,631
100,000
473,718
2,173,718
100,000
147,115
497,115
13,745
97,115
567,115
13,745
147,115
617,115
31,745
147,115
577,115
50,000
130,449
480,449
73,750
147,115
617,115
382,985
1,289,742
5,529,742
592,483
1,289,742
6,090,373
-
-
-
-
-
-
45%
30%
17%
24%
25%
27%
24%
10
10
11
*These payments relate to options issued in prior periods. The options were cancelled on 30 June 2009 with the termination of the Executive Performance
Award Plan.
directors report
30 June 2009
abacus property group
tAbLe 1: reMunerAtion oF Key MAnAGeMent PerSonneL
SHORT-TERM
POST
EMPLOYMENT
SECURITY-
BASED
PAYMENT
TOTAL
%
PERFORMANCE
RELATED
SALARY &
FEES
CASH
BONUS
NON-
MONETARY
BENEFITS
SUPER-
ANNUATION
OPTIONS
2008
non-executive Directors
J Thame – Chairman
W Bartlett
D Bastian
D Bluth
M Irving
Sub-total
non-executive Directors
executive directors
F Wolf
– Managing Director
L Lloyd
– Managing Director,
Property Services
146,871
46,069
-
-
80,000
272,940
-
-
-
-
-
-
1,100,000
650,000
220,000
150,000
other Key Management Personnel
R de Aboitiz
– Chief Financial Officer
T Hardwick
– Director Funds Management
J L’Estrange
– General Manager
Property Finance
P Strain
– Director Property
E Varejes
– Chief Operating Officer
436,871
150,000
436,871
150,000
386,871
150,000
252,189
150,000
382,500
150,000
Sub-total executive KMP
3,215,302
1,550,000
total
3,488,242
1,550,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
13,129
21,431
84,800
79,800
-
199,160
-
-
-
-
-
-
160,000
67,500
84,800
79,800
80,000
472,100
100,000
311,859
2,161,859
100,000
98,558
568,558
13,129
48,558
648,558
13,129
98,558
698,558
13,129
98,558
648,558
47,811
81,891
531,891
67,500
98,558
698,558
354,698
836,540
5,956,540
553,858
836,540
6,428,640
-
-
-
-
-
-
44%
44%
31%
36%
38%
44%
36%
reMunerAtion rePort (AuDiteD) (continueD)
tAbLe 2: coMPenSAtion oPtionS: GrAnteD AnD
VeSteD DurinG tHe yeAr
executive Performance Award Plan
No options were issued under the Executive
Performance Award Plan during the year.
The following options were issued under the Executive
Performance Award Plan in the prior year. These options
have now been cancelled with the termination of the
Plan.
GRANTED
30 JUNE 2008
NO.
GRANT
DATE
TERMS & CONDITIONS
FOR EACH GRANT
FAIR
VALUE
PER
OPTION
AT GRANT
DATE ($)
(NOTE 24)
EXERCISE
PRICE PER
OPTION
($)
(NOTE 24)
F Wolf
L Lloyd
2,403,846
31/08/07
721,154
31/08/07
R de Aboitiz
721,154
31/08/07
T Hardwick
721,154
31/08/07
J L’Estrange
721,154
31/08/07
P Strain
E Varejes
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
executive Security Loan Plan
No options were issued under the Executive Security
Loan Plan during the current or the prior year.
12
12
13
directors report
30 June 2009
abacus property group
abacus property group
inForMAtion on DirectorS AnD oFFicerS
The Directors and Company Secretary of AGHL, AFML (the Responsible Entity of AT and AIT) and AGPL, in office
during the financial year and until the date of this report are as set out below, with qualifications, experience and special
responsibilities.
John thame AIBF, FCPA
Chairman (non-executive)
Chairman of Due Diligence Committee
Member of Audit Committee
Member of Remuneration & Nomination Committee
Mr Thame has over 30 years’ experience in the retail financial services industry in senior management positions. His
26-year career with Advance Bank included 10 years as Managing Director until the Bank’s merger with St George
Bank Limited in 1997. Mr Thame 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).
Frank Wolf PhD, BA Hons
Managing Director
Dr Wolf has over 20 years’ experience in the property and financial services industries, including involvement in retail,
commercial, industrial and hospitality-related assets in Australia, New Zealand and the United States. Dr Wolf has
been instrumental in over $2 billion worth of property related transactions, corporate acquisitions and divestments
and has financed specialist property-based assets in retirement and hospitality sectors. Dr Wolf is the Chairman of FSP
Group Pty Limited and a Director of Kingston Capital Limited (financial planning groups). He is also a director of HGL
Limited, a diversified publicly listed investment company.
David bastian CPA
Non-executive Director
Member of Due Diligence Committee
Member of Remuneration & Nomination Committee
Mr Bastian has almost 40 years’ experience in the financial services industry 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
Chairman of Compliance Committee
Member of Remuneration & Nomination Committee
Member of Due Diligence 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, BA, FAPI
Non-executive Director
Member of Due Diligence Committee
Mr Bluth 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 & Professional Standards Board and part-time Judicial Member of the
Administrative Decisions Tribunal, Retail Leases Division.
William J bartlett
FCA, CPA, FCMA, CA(SA)
Non-executive Director
Chairman of Remuneration & Nomination Committee
Member of Audit Committee
Member of Due Diligence Committee
Mr Bartlett has strong accounting, financial and corporate credentials. During his 23 year career with Ernst &
Young, he held the roles of Chairman of Worldwide Insurance Practice, National Director of Australian Financial
Services Practice and Chairman of the Client Service Board. Mr Bartlett is a director of Suncorp-Metway Limited, 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.
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 Officer
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 Officers were in office from the beginning of the financial year until the date of this report unless
otherwise stated.
As at the date of this report, the relevant interests of the directors 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
200,756
14,073,226
16,000
286,953
5,000,000
80,651
55,925
14
14
15
directors report
30 June 2009
abacus property group
abacus property group
inForMAtion on DirectorS AnD oFFicerS (continueD)
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
HELD
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
HELD
ATTENDED
22
22
22
22
22
22
22
22
20
20
20
20
22
19
4
4
4
4
4
4
3
3
3
3
3
3
3
3
3
3
3
2
J Thame
F Wolf
W Bartlett
D Bastian
D Bluth
M Irving
L Lloyd
indemnification and insurance of Directors and officers
The Group has paid an insurance premium in respect of a contract insuring all directors, full time executive officers and
secretary. The terms of this policy prohibit disclosure of the nature of the risks insured or the premium paid.
enVironMentAL reGuLAtion AnD PerForMAnce
The Group’s environmental responsibilities, such as waste removal and water treatment, have been managed in
compliance with all applicable regulations and licence requirements and in accordance with industry standards. No
breaches of requirements or any environmental issues have been discovered and brought to the board’s attention. There
has been no known significant breaches of any environmental requirements applicable to the Group.
AuDitorS inDePenDence DecLArAtion
We have obtained an independence declaration from
our auditor, Ernst & Young, and such declaration is
shown on page 18.
non-AuDit SerViceS
The following non-audit services were provided by
the Group’s auditor, Ernst & Young. The Directors are
satisfied that the provision of non-audit services is
compatible with the general standard of independence
for auditors imposed by the Corporations Act 2001.
The nature and scope of each type of non-audit service
provided means that auditor independence was not
compromised.
Ernst & Young received or are due to receive the
following amounts for the provision of non-audit
services:
Other assurance and compliance services
$34,500
$34,500
rounDinG
The amounts contained in this report and in the annual
financial report have been rounded to the nearest
$1,000 (where rounding is applicable) under the option
available to the group under ASIC Class Order 98/100.
The group is an entity to which the Class Order applies.
Signed in accordance with a resolution of the directors.
John Thame
Chairman
Sydney, 27 August 2009
Frank Wolf
Managing Director
16
16
17
abacus property group
conSoLiDAteD incoMe StAteMent
reVenue
Rental income
Finance income
Funds management income
Share of profit from equity accounted investments
Net change in fair value of investments derecognised during
the year
Income from distributions
Other income
total revenue and other income
Property expenses & outgoings
Depreciation and amortisation expense
Net change in fair value of derivatives
Net change in fair value of investments held at balance date
Finance costs
Administrative expenses
ProFit / (LoSS) beFore tAX
Income tax benefit / (expense)
ProFit / (LoSS) AFter tAX
ProFit / (LoSS) 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 profit / (loss) attributable to external minority interests
net ProFit / (LoSS)
basic earnings / (loss) per stapled security (cents)1
Diluted earnings / (loss) per stapled security (cents)21
10
10
(11.81)
(11.81)
Basic earnings / (loss) per parent share (cents)
Diluted earnings / (loss) per parent share (cents)
NOTES
6a
6b
16b
6c
7a
7b
7c
7d
8a
CONSOLIDATED
2009
$’000
2008
$’000
78,927
18,243
20,065
8,801
10,894
1,512
-
138,442
(11,406)
(1,994)
(51,420)
(113,426)
(44,864)
(19,500)
(104,168)
76,436
16,442
43,859
12,948
9,118
1,261
1,000
161,064
(12,350)
(2,104)
3,137
(22,641)
(41,557)
(16,157)
69,392
2009
$’000
484
1,049
715
9,107
4,824
30,652
-
46,831
(177)
-
(3,447)
(8,805)
(6,969)
683
28,116
PARENT
2008
$’000
555
1,137
101
-
-
5,075
-
6,868
(141)
-
123
(6,888)
(10,948)
1,874
(9,112)
1,178
(102,990)
3,034
72,426
866
28,982
3,409
(5,703)
8,553
(8,750)
(105,975)
(3,161)
(1,829)
(102,412)
(578)
(102,990)
55,490
1,935
22,785
71,460
966
72,426
10.98
10.80
-
-
-
-
-
-
-
-
-
-
3.34
3.34
(0.12)
(0.12)
18
19
1 Prior period weighted average number of securities and EPSs have been adjusted in accordance with AASB 133 “Earnings per Share” (“AASB 133”).
The weighted average number of securities on issue for the current period, prior to the Equity Raisings, have also been adjusted as required by AASB 133.
directors report
30 June 2009
abacus property group
conSoLiDAteD DiStribution StAteMent
conSoLiDAteD bALAnce SHeet
StAteMent oF DiStribution
Net profit/(loss) attributable to stapled security holders
Transfer from / (to) retained earnings
Distributions paid and payable
Distribution per stapled security (cents per security)
Weighted average number of securities (‘000)
CONSOLIDATED
PARENT
2009
$’000
2008
$’000
2009
$’000
2008
$’000
NOTES
(102,412)
149,666
47,254
7.00
867,488
71,460
13,523
84,983
13.50
650,891
(28,982)
28,982
-
-
-
9
9
10
(5,703)
5,703
-
-
-
current ASSetS
Cash and cash equivalents
Trade and other receivables
Investment properties
Property loans and other financial assets
Other
totAL current ASSetS
non-current ASSetS
Property, plant and equipment
Investment properties
Property loans & other financial assets
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
Other
totAL current LiAbiLitieS
non-current LiAbiLitieS
Trade and other payables
Interest-bearing loans and borrowings
Derivatives at fair value
Deferred tax liabilities
Other
totAL non-current LiAbiLitieS
totAL LiAbiLitieS
net ASSetS
totAL eQuity
11
12
15
13a
14
15
13b
16
8c
17
18a
19a
18b
19b
8c
CONSOLIDATED
NOTES
2009
$’000
2008
$’000
2009
$’000
9,124
22,093
44,289
106,144
6,655
188,305
46,777
26,154
3,849
157,278
11,753
245,811
32,276
708,550
339,044
125,821
11,329
38,225
2,243
31,840
928,591
281,474
104,093
1,177
41,139
1,796
1,257,488 1,390,110
275
6,889
-
16,933
104
24,201
-
6,450
145,161
-
4,283
32,394
-
188,288
PARENT
2008
$’000
2,340
2,018
-
19,894
73
24,325
-
8,280
105,437
-
4,176
32,394
50
150,337
1,445,793 1,635,921
212,489
174,662
13,272
61,829
2,832
77,933
67,973
63,704
2,102
133,779
134,025
601
-
134,626
78,897
3,937
-
82,834
9,676
329,555
37,035
355
1,512
378,133
456,066
989,727
989,727
-
580,874
(11,272)
2,614
4,927
577,143
710,922
924,999
924,999
3,000
2,637
313
-
1,143
7,093
-
61,746
(134)
-
3,918
65,530
141,719
70,770
70,770
148,364
26,298
26,298
20
20
21
directors report
30 June 2009
abacus property group
conSoLiDAteD bALAnce SHeet (continueD)
StAteMent oF cHAnGeS in eQuity
equity attributable to members of AGHL:
Contributed equity
Reserves
Retained earnings / (accumulated losses)
total equity attributable to members of AGHL
equity attributable to members of At:
Contributed equity
Retained earnings / (accumulated losses)
total equity attributable to members of At
equity attributable to members of AGPL:
Contributed equity
Reserves
Retained earnings / (accumulated losses)
total equity attributable to members of AGPL
equity attributable to members of Ait:
Contributed equity
Retained earnings
total equity attributable to members of Ait
equity attributable to external minority interest:
Contributed equity
Retained earnings / (accumulated losses)
total equity attributable to external minority interest
CONSOLIDATED
PARENT
2009
$’000
2008
$’000
2009
$’000
2008
$’000
NOTES
45,734
2,868
13,020
61,622
31,761
830
3,671
36,262
47,064
5,448
18,258
70,770
33,116
3,906
(10,724)
26,298
745,141
(53,713)
691,428
595,512
86,326
681,838
8,392
(400)
(3,144)
4,848
7,259
(483)
367
7,143
188,230
29,190
217,420
136,970
44,226
181,196
14,493
(84)
14,409
2,544
16,016
18,560
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
totAL eQuity
989,727
924,999
70,770
26,298
eQuity
Contributed equity
Reserves
Retained earnings / (accumulated losses)
Total stapled security holders’ interest in equity
Total external minority interest
totAL eQuity
21
987,497
2,468
(14,647)
975,318
14,409
989,727
771,502
347
134,590
906,439
18,560
924,999
47,064
5,448
18,258
70,770
-
70,770
33,116
3,906
(10,724)
26,298
-
26,298
CONSOLIDATED
At 1 July 2008
Revaluation of land & buildings
Foreign currency translation
Total income and expense for the year
recognised directly in equity
Net loss for the year
total income / (expense) for the year
Equity raisings
Issue costs
Distribution reinvestment plan
Units issued
Acquisition of interest in Abacus
Wollongong Trust
Minority interest in acquisition of
Abacus Jigsaw Trust
Sale of interest U-Stow-It Holdings
Sale of interest Fern Bay
Sale of interest in Hobart Growth
Distribution to security holders
Share based payments
ISSUED
CAPITAL
$’000
771,502
-
-
-
-
-
211,880
(4,881)
8,996
-
-
-
-
-
-
-
-
ATTRIBUTABLE TO THE STAPLED SECURITY HOLDER
EXTERNAL
ASSET
REVALUATION
RESERVE
$’000
FOREIGN
CURRENCY
TRANSLATION
$’000
EMPLOYEE
EQUITY
BENEFITS
$’000
RETAINED
EARNINGS
$’000
MINORITY
INTEREST
$’000
-
1,048
-
1,048
-
1,048
-
-
-
-
-
-
-
-
-
-
-
(3,559)
-
(469)
(469)
-
(469)
-
-
-
-
-
-
-
-
-
-
-
TOTAL
EQUITY
$’000
924,999
1,048
(469)
3,906
-
-
134,590
-
-
18,560
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,542
5,448
-
-
579
(102,412)
(102,412)
-
-
-
-
-
-
(286)
(65)
-
(46,474)
-
(14,647)
(578)
(578)
-
-
-
8,461
(126)
(102,990)
(102,411)
211,880
(4,881)
8,996
8,461
(126)
5,680
5,680
(15,586)
-
(2,002)
-
-
14,409
(15,872)
(65)
(2,002)
(46,474)
1,542
989,727
At 30 June 2009
987,497
1,048
(4,028)
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 / (expense) 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 Ltd
Distribution to security holders
Share based payments
At 30 June 2008
ISSUED
CAPITAL
$’000
648,440
-
-
-
-
107,422
(1,976)
17,616
-
-
-
-
771,502
ATTRIBUTABLE TO THE STAPLED SECURITY HOLDER
EXTERNAL
ASSET
REVALUATION
RESERVE
$’000
FOREIGN
CURRENCY
TRANSLATION
$’000
EMPLOYEE
EQUITY
BENEFITS
$’000
RETAINED
EARNINGS
$’000
MINORITY
INTEREST
$’000
TOTAL
EQUITY
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
(165)
(3,394)
(3,394)
-
(3,394)
-
-
-
-
-
-
-
(3,559)
2,868
-
148,365
-
3,697
-
803,205
(3,394)
-
-
-
-
-
-
-
-
-
1,038
3,906
-
-
(3,394)
71,460
71,460
-
-
-
-
-
(85,235)
-
134,590
966
966
-
-
-
(702)
14,599
-
-
18,560
72,426
69,032
107,422
(1,976)
17,616
(702)
14,599
(85,235)
1,038
924,999
22
22
23
directors report
30 June 2009
abacus property group
StAteMent oF cHAnGeS in eQuity (continueD)
conSoLiDAteD cASH FLoW StAteMent
PARENT
At 1 July 2008
Total income and expense for
the year
recognised directly in equity
Net income for the year
total income for the year
Equity raisings
Share based payments
At 30 June 2009
PARENT
At 1 July 2007
Total income and expense for
the year
recognised directly in equity
Net income for the year
total income for the year
Equity raisings
Share based payments
At 30 June 2008
ISSUED
CAPITAL
$’000
33,116
-
-
-
13,948
-
47,064
ISSUED
CAPITAL
$’000
26,039
-
-
-
7,077
-
33,116
ASSET
REVALUATION
RESERVE
$’000
FOREIGN
CURRENCY
TRANSLATION
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
EMPLOYEE
EQUITY
BENEFITS
$’000
3,906
RETAINED
EARNINGS
$’000
(10,724)
TOTAL
EQUITY
$’000
26,298
-
-
-
-
1,542
5,448
-
-
28,982
28,982
-
-
18,258
28,982
28,982
13,948
1,542
70,770
ASSET
REVALUATION
RESERVE
$’000
FOREIGN
CURRENCY
TRANSLATION
$’000
EMPLOYEE
EQUITY
BENEFITS
$’000
RETAINED
EARNINGS
$’000
TOTAL
EQUITY
$’000
-
-
-
-
-
-
-
71
2,868
(5,069)
23,909
(71)
-
(71)
-
-
-
-
48
(23)
-
-
-
1,038
3,906
(5,703)
(5,655)
-
-
(10,724)
(5,703)
(5,726)
7,077
1,038
26,298
cASH FLoWS FroM oPerAtinG ActiVitieS
Income receipts
Interest received
Distributions received
Income tax paid
Borrowing costs paid
Operating payments
net cASH FLoWS FroM oPerAtinG ActiVitieS
cASH FLoWS FroM inVeStinG ActiVitieS
Payments for investments and funds advanced
Proceeds from sale and settlement of investments and
funds repaid
Purchase of property, plant and equipment
Disposal of property, plant and equipment
Purchase of a controlled entity
Disposal of controlled entity
Purchase of investment properties
Disposal of investment properties
Payment for other investments
net cASH FLoWS uSeD in inVeStinG ActiVitieS
cASH FLoWS FroM FinAncinG ActiVitieS
Proceeds from issue of stapled securities
Payment of issue costs
Repayment of borrowings
Proceeds from borrowings
Distributions paid
net cASH FLoWS FroM/(uSeD in) FinAncinG
ActiVitieS
net increASe/(DecreASe) in cASH AnD cASH
eQuiVALentS
Net foreign exchange differences
Cash and cash equivalents at beginning of year
cASH AnD cASH eQuiVALentS At enD oF yeAr
CONSOLIDATED
NOTES
2009
$’000
2008
$’000
2009
$’000
156,870
1,215
688
(118)
(43,967)
(49,100)
169,152
1,957
1,281
(6,795)
(38,939)
(49,947)
7,635
31
591
-
(727)
(2,552)
PARENT
2008
$’000
7,391
93
1,732
(2,158)
(1,382)
(2,530)
11
65,588
76,709
4,978
3,146
23
(179,692)
(403,367)
(49,685)
(28,513)
83,400
204,446
(150)
-
-
25,424
(55,983)
54,020
10,336
(21,653)
20,946
(22,861)
-
(255,955)
57,090
(100)
29,245
-
-
-
-
(1,105)
-
-
19,072
-
-
-
-
-
-
(33)
(62,645)
(421,454)
(21,545)
(9,474)
211,463
(5,787)
(309,424)
123,964
(60,895)
110,711
(4,230)
(230,458)
555,962
(59,045)
13,948
-
-
554
-
7,077
(6)
(4,569)
-
-
(40,679)
372,940
14,502
2,502
(37,736)
28,195
(2,065)
(3,826)
83
46,777
9,124
(485)
19,067
46,777
-
2,340
275
-
6,166
2,340
11
24
24
25
notes to the financial statements
30 June 2009
abacus property group
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 securities Exchange (“the “ASX”) under
the code ABP.
The financial report of the Group for the year ended 30
June 2009 was authorised for issue in accordance with a
resolution of the directors on 27 August 2009.
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 financial report is a general-purpose financial
report, which has been prepared in accordance with
the requirements of the Corporations Act 2001 and
Australian Accounting Standards. The financial report
has also been prepared on a historical cost basis,
except for investment properties and derivative financial
instruments which have been measured at fair value,
interests in joint ventures which are accounted for using
the equity method, and certain investments measured
at net market value. The carrying values of recognised
assets and liabilities that are covered by interest rate
swap arrangements, are adjusted to record changes in
the fair values attributable to the risks that are being
covered by derivative financial instruments.
The financial report is presented in Australian dollars
and all values are rounded to the nearest thousand
dollars ($’000) unless otherwise stated under the option
available to the Group under ASIC Class Order 98/100.
The Group is an entity to which the class order applies.
(b) Statement of compliance
The financial report complies with Australian Accounting
Standards and International Financial Reporting
Standards (IFRS), as issued by the IASB.
(c) new accounting standards and interpretations
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 2009. These are
outlined in the table below.
2. SuMMAry oF SiGniFicAnt AccountinG PoLicieS (continueD)
APPLICATION
DATE OF
STANDARD*
SUMMARY
New standard replacing AASB114
Segment Reporting, which adopts a
management reporting approach to
segment reporting.
1 January
2009
REFERENCE
AASB 8 and
AASB 2007-3
AASB 123
(Revised) and
AASB 2007-6
AASB 101
(Revised),
AASB 2007-8
and AASB
2007-10
AASB 3
(revised)
AASB127
(Revised)
The amendment to AASB 114 requires
all borrowing costs to be capitalised
if they are directly attributable to the
acquisition, construction or production
of a qualifying asset, unless the
qualifying asset is measured at fair
value.
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 reclassifications
of items in the financial statements,
changes in the presentation
requirements for dividends and
changes to the titles of the financial
statements.
Main changes are as follows:
- For each business combination
entered into, entities will have a choice
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.
- Acquisition related costs will be
expensed through profit or loss at the
time that such services are rendered.
The changes apply prospectively.
Under the revised standard, a change
in the ownership interest of a subsidiary
(whether that does not result in loss
of control, or the reduction in non-
controlling interests) will be accounted
for as an equity transaction.
APPLICATION
DATE FOR
GROUP*
1 July 2009
1 July 2009
1 July 2009
IMPACT ON GROUP FINANCIAL REPORT
The Group will be required to assess if
the current presentation of segments
in the accounts is consistent with the
segments used by our chief operating
decision maker when monitoring the
performance of the Group and whether
any reallocation of goodwill is required.
This revision will not have any impact
on assets currently classified as
Investment Properties and measured at
fair value. For properties that are under
development, interest incurred will
need to be capitalised but this is not
expected to have a significant impact
on current practice of the Group and
most in the market.
These amendments are only expected
to affect the presentation of the Group’s
financial report and will not have a
direct impact on the measurement
and recognition of amounts disclosed
in the financial report. The Group has
not determined at this stage whether
to present a single statement of
comprehensive income or two separate
statements.
1 January
2009
1 January
2009
1 July 2009
This will impact the financial statements
in FY10 should the Group enter
business combinations.
1 July 2009
1 July 2009
Impacts will be assessed upon actual
transactions completed by the Group
in FY10.
1 July 2009
26
26
27
notes to the financial statements
30 June 2009
abacus property group
2. SuMMAry oF SiGniFicAnt AccountinG PoLicieS (continueD)
2.
SuMMAry oF SiGniFicAnt AccountinG PoLicieS (continueD)
REFERENCE
APPLICATION
DATE OF
STANDARD*
SUMMARY
IMPACT ON GROUP FINANCIAL REPORT
APPLICATION
DATE FOR
GROUP*
The main amendments of relevance
are those made to AASB 127 removing
the ‘cost method’ and requiring all
dividends from a subsidiary, jointly
controlled entity or associate to be
recognised in profit or loss in an entity’s
separate financial statements (i.e. parent
company accounts) rather than just
dividends from post-acquisition profits.
The distinction between pre and post
acquisition profits no longer exists.
However, the payment of such dividends
requires the entity to consider whether
there is an indicator of impairment of
the investment in that subsidiary.
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 (that is, share of equity) rather
than its fair value.
This interpretation requires that when
the real estate developer is providing
construction services to the buyer’s
specifications, revenue may be recorded
as construction progresses. Otherwise,
revenue should be recognised on
completion of the relevant real estate
unit.
AASB 140.8 has been amended to
bring property that is being constructed
or developed for future use as an
investment property within the scope of
AASB 140 (instead of AASB 116).
The impact is that if the final intention
of the owner is to use this property for
capital appreciation or rent, the property
through construction will be measured
at fair value (versus at cost in the former
standard).
AASB 2008-7
AASB Int. 15
AASB 140
1 January
2009
This may impact the accounting of
investments in subsidiaries, joint
controlled entities and associates in
certain circumstances, with respect to
dividends from these entities going
forward. Any pre-acquisition profits
previously included in dividends
from these entities, whilst going
forward will be included in the P&L
(rather than reducing the carrying
value of investment), may result in an
impairment of the investment.
1 July 2009
1 January
2009
This standard could impact the
financial statement should the Group
enter a construction-type arrangement,
however as the Group recognises
profit in construction upon practical
completion and when all conditions
of the contract have been met, this
standard may not have a significant
impact.
1 January
2009
This standard could impact the
financial statements should the Group
have properties undergoing significant
construction and development for
future use as investment property,
in terms of measuring the property
through construction at fair value and
not only at construction costs incurred.
1 July 2009
1 July 2009
REFERENCE
Amendments
to
International
Financial
Reporting
Standards
APPLICATION
DATE OF
STANDARD*
SUMMARY
IMPACT ON GROUP FINANCIAL REPORT
APPLICATION
DATE FOR
GROUP*
The amended IFRS 7 requires fair value
measurements to be disclosed by the
source of inputs, using the following
three-level hierarchy:
- Quoted prices in active markets for
identical assets or liabilities (Level 1)
e.g. investment in listed securities
- Inputs other than quoted prices
included in Level 1 that are observable
for the asset or liability, whether
directly (as prices) or indirectly
(derived from prices) (Level 2) e.g.
investment in unlisted securities
- Inputs for the asset or liability that are
not based on observable market data
(unobservable inputs) (Level 3)
1 January
2009
This will impact the disclosures of the
Group’s related entities in FY10, with
respect to financial instruments such
as investment in listed and unlisted
securities or options.
1 July 2010
*designates the beginning of the applicable annual reporting period
AASB 2008-1 and AASB 2008-2 will have no application to the Group.
28
28
29
notes to the financial statements
30 June 2009
abacus property group
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
(d) basis of consolidation
The consolidated financial statements comprise the
financial statements of AGHL and its subsidiaries, AT and
its subsidiaries, AGPL and its subsidiaries, and AIT and
its subsidiaries collectively referred to as the Group.
The financial statements of subsidiaries are prepared for
the same reporting period as the parent company, using
consistent accounting policies with adjustments made
to bring into line any dissimilar accounting policies that
may exist.
All intercompany balances and transactions, including
unrealised profits from intra-group transactions, have
been eliminated in full and subsidiaries are consolidated
from the date on which control is 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
financial 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 Jigsaw Trust and Abacus Independent Retail
Property Trust that are not held by the Group and are
presented separately in the income statement and within
equity in the consolidated balance sheet.
(e) Foreign currency translation
Functional and presentation currency
Both the functional and presentation currency of the
Group are in Australian dollars. Each entity in the Group
determines its own functional currency and items are
included in the financial statements of each entity are
measured using that functional currency.
transactions and balances
Transactions in foreign currencies are initially recorded in
the functional currency by applying the exchange rates
ruling at the date of the transaction. Monetary assets
and liabilities denominated in foreign currencies are
retranslated at the rate of exchange ruling at the balance
sheet date.
All exchange differences in the consolidated financial
report are taken to profit or loss with the exception of
differences on foreign currency borrowings that provide
a hedge against a net investment in a foreign operation.
These are taken directly to equity until the disposal of
the net investment, at which time they are recognised
in profit or loss. On disposal of a foreign operation, the
cumulative amount recognised in equity relating to that
particular foreign operation is recognised in profit or
loss. Tax charges and credits attributable to exchange
differences on those borrowings are also recognised in
equity.
Non-monetary items that are measured in terms of
historical cost in a foreign currency are translated using
the exchange rate as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign
currency are translated using the exchange rates at the
date when the fair value was determined.
At reporting date the assets and liabilities of these
entities are translated into the presentation currency of
the Group at the rate of exchange prevailing at balance
date and the financial performance is translated at the
average exchange rate prevailing during the reporting
period. The exchange differences arising on translation
are taken directly to the foreign currency translation
reserve in equity.
net change in fair value of investments held at balance
date
Change in net market value of investments is recognised
as revenue or expense in determining the net profit for
the period. Refer note 2(o) for detailed commentary on
investment properties.
(g) expenses
Expenses including rates, taxes and other outgoings, are
brought to account on an accrual basis and any related
payables are carried at cost.
(h) cash and cash equivalents
Cash and cash equivalents in the balance sheet
comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less
that are readily convertible to known amounts of cash
which are subject to an insignificant risk of changes in
value.
For the purposes of the Cash Flow Statement, cash and
cash equivalents consist of cash and cash equivalents as
defined above.
(i) trade and other receivables
Trade receivables, which generally have 30 day terms,
are recognised at amortised cost, which in the case
of the Group, is the original invoice amount less an
allowance for any uncollectible amounts.
Collectibility of trade receivables is reviewed on an
ongoing basis. An allowance for doubtful debts is raised
when there is objective evidence that collection of the
full amount is no longer probable. Bad debts are written
off when identified.
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
(f) revenue recognition
Revenue is recognised and measured at the fair value of
the consideration received or receivable to the extent it
is probable that the economic benefits will flow to the
Group and the revenue can be reliably measured. The
following specific recognition criteria must also be met
before revenue is recognised:
Hotel and storage related income
Revenue from rendering of services is recognised in
accordance with the terms and conditions of the service
agreements.
rental income
Rental income from investment properties is accounted
for on a straight-line basis over the lease
Contingent rental income is recognised as income in the
periods in which it is earned. Lease incentives granted
are recognised as an integral part of the total rental
income.
term.
Finance income
Revenue is recognised as interest accrues using the
effective interest method. This is a method of
the amortised cost of a financial asset and allocating
the interest income over the relevant period using the
effective interest rate, which is the rate that exactly
discounts estimated future cash receipts through the
expected life of the financial asset to the net carrying
amount of the financial asset.
calculating
Dividends and distributions
Revenue is recognised when the Group’s right to receive
the payment is established.
net change in fair value of investments derecognised
during the year
Revenue from sale of investments is recognised on
settlement when the significant risks and rewards of the
ownership of the investments have been transferred to
the buyer. Risks and rewards are generally considered
to have passed to the buyer at the time of settlement of
the sale.
30
30
31
notes to the financial statements
30 June 2009
abacus property group
Financial assets at fair value through profit or loss
For investments where there is no quoted market or unit
price, fair value is determined by reference to the current
market value of another instrument which is substantially
the same or is calculated based on the expected cash
flows of the underlying net asset base of the investment.
After initial recognition, investments, which are classified
as held for trading, are measured at fair value. Financial
assets are classified as held for trading if they are
acquired for the purpose of selling in the near term
with the intention of making a profit. Gains or losses
on investments held for trading are recognised in the
income statement.
For investments that are actively traded in organised
financial markets, fair value is determined by reference
to Securities Exchange quoted market bid prices at the
close of business on the balance sheet date.
Loans and receivables
Loans and receivables including loan notes and loans to
key management personnel are non-derivative financial
assets with fixed or determinable payments that are
not quoted in an active market. Such assets are carried
at amortised cost using the effective interest method.
Gains and losses are recognised in profit or loss when
the loans and receivables are derecognised or impaired,
as well as through the amortisation process.
Subsidiaries
Investment in subsidiaries are held at lower of cost or
recoverable amount.
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
(j) Derivative financial instruments and hedging
The Group uses derivative financial instruments such
as interest rate swaps to hedge its risks associated with
interest rate. Such derivative financial instruments are
initially recognised at fair value on the date on which a
derivative contract is entered into and are subsequently
remeasured to fair value. Derivatives are carried as assets
when their fair value is positive and as liabilities when
their fair value is negative.
Any gains or losses arising from changes in the fair value
of derivatives are taken directly to profit or loss for the
year.
The fair values of interest rate swaps are determined by
reference to market values for similar instruments.
(k) investments and other financial assets
All investments are initially recognised at cost, being the
fair value of the consideration given.
Financial assets in the scope of AASB 139 Financial
Instruments: Recognition and Measurement are
classified as either financial assets at fair value through
profit or loss, loans and receivables, held to maturity
investments, or available-for-sale financial assets. The
Group determines the classification of its financial
assets after initial recognition and, when allowed
and appropriate, re-evaluates this designation at
each financial year-end. At 30 June 2009 the Group’s
investments in listed and unlisted securities have been
classified as either financial assets at fair value through
profit or loss and property loans are classified as loans
and receivables.
recognition and derecognition
Purchases and sales of financial assets that require
delivery of assets within the time frame generally
established by regulation or convention in the market
place are recognised on the trade date i.e. the date that
the Group commits to purchase the assets. Financial
assets are derecognised when the right to receive cash
flows from the financial assets have expired or been
transferred.
(m) interest in joint ventures
Joint venture entities
The Group’s interest in joint venture entities is accounted
for under the equity method of accounting in the
consolidated financial statements. The investment in
the joint venture entities is carried in the consolidated
balance sheet at cost plus post-acquisition changes in
the Group’s share of net assets of the joint ventures,
less any impairment in value. The consolidated income
statement reflects the Group’s share of the results of
operations of the joint ventures.
Investments in joint ventures are held at cost in the
investing entities.
Joint venture assets
The Group’s interest in joint venture assets is accounted
for in the financial statements by proportionately
consolidating its interests in the assets and liabilities of
the joint venture. The Group also recognises its share of
the expenses that the joint venture incurs and its share
of the income that the joint venture earns.
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
(l) investment in associates
The Group’s investment in its associates is accounted
for under the equity method of accounting in the
consolidated financial statements. The associates are
entities over which the Group has significant influence
but not control and accordingly are neither subsidiaries
nor joint ventures.
The investment in the associates is carried in the
consolidated balance sheet at cost plus post-acquisition
changes in the Group’s share of net assets of the
associates, less any impairment in value. The Group’s
share of its associates’ post-acquisition profits or losses
is recognised in the income statement, and its share of
post-acquisition movements in reserves is recognised in
reserves. The cumulative post-acquisition movements
are adjusted against the carrying amount of the
investment.
When the Group’s share of losses in an associate
equals or exceeds its interest in the associate, including
any unsecured long-term receivable and loans, the
Group does not recognise further losses, unless it has
incurred obligations or made payments on behalf of the
associate.
The reporting dates of the associates and the Group
are identical and the associates’ accounting policies
conform to those used by the Group for like transactions
and events in similar circumstances.
Investments in associates held by the parent are held at
cost in the parent’s financial statements.
32
32
33
notes to the financial statements
30 June 2009
abacus property group
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
(n) Property, plant and equipment
Land and buildings are measured at fair value, based
on periodic valuations by external independent valuers,
less accumulated depreciation on buildings and less
any impairment losses recognised after the date of the
revaluation.
Plant and equipment is stated at historical cost less
accumulated depreciation and any impairment losses.
Depreciation is calculated on a straight-line basis over
the estimated useful life of the asset as follows:
Buildings – 40 years
Plant and equipment – over 5 to 15 years
revaluations of land and buildings
Any revaluation increment is credited to the asset
revaluation reserve included in the equity section of
the balance sheet except to the extent that it reverses
a revaluation decrease of the same asset previously
recognised in profit or loss, in which case the increase is
recognised in profit or loss.
Any revaluation decrease is recognised in profit or loss
except to the extent that it offsets a previous revaluation
increase for the same asset in which case the decrease
is debited directly to the asset revaluation reserve to the
extent of the credit balance existing in the revaluation
reserve for that asset.
Gains and losses on disposals are determined by
comparing proceeds with the carrying amount. These
are included in the income statement.
Any accumulated depreciation as at the revaluation date
is eliminated against the gross carrying amounts of the
assets and the net amounts are restated to the revalued
amounts of the assets.
Upon disposal, any revaluation reserve relating to the
particular asset being sold is transferred to retained
earnings.
Disposal
An item of property, plant and equipment is
derecognised upon disposal or when no future
economic benefits are expected to arise from the
continued use of the asset.
Any gain or loss arising on derecognition of the asset
(calculated as the difference between the net disposal
proceeds and the carrying amount of the asset) is
included in the income statement in the year the asset is
derecognised.
(o) investment properties
Investment properties are measured initially at cost,
including transaction costs. The carrying amount
includes the cost of replacing parts of an existing
investment property at the time that the cost is incurred
if the recognition criteria are met, and excludes the
costs of day-to-day servicing of an investment property.
Subsequent to initial recognition, investment properties
are stated at fair value, which reflects market conditions
at the balance sheet date. Gains or losses arising from
changes in the fair values of investment properties are
recognised in profit or loss in the year in which they
arise.
Investment properties are derecognised either when
they have been disposed of or when the investment
property is permanently withdrawn from use and no
future economic benefit is expected from its disposal.
Any gains or losses on the retirement or disposal of an
investment property are recognised in profit or loss in
the year of retirement or disposal.
Transfers are made to investment property when, and
only when, there is a change in use, evidenced by
commencement of an operating lease to another party
or ending of construction or development. Transfers are
made from investment property when, and only when,
there is a change in use, evidenced by commencement
of development with a view to sale.
Under AASB 140, investment properties, including any
plant and equipment, are not subject to depreciation.
However, depreciation allowances in respect of certain
buildings, plant and equipment are currently available to
investors for taxation purposes.
Gains and losses arising from changes in the fair value
of investment properties are included in the income
statement in the year in which they arise. Any gains
or losses on the sale of investment properties are
recognised in the income statement in the year of sale.
(p) Leases
The determination of whether an arrangement is or
contains a lease is based on the substance of the
arrangement and requires an assessment of whether the
fulfilment of the arrangement is dependent on the use of
a specific asset or assets and the arrangement conveys a
right to use the asset.
Group as lessee
Operating lease payments are recognised as an expense
in the income statement on a straight-line basis over
the lease term. Lease incentives are recognised in the
income statement as an integral part of the total lease
expense.
Group as a lessor
Leases in which the Group retains substantially all the
risks and benefits of ownership of the lease assets are
classified as operating leases. The initial direct cost
incurred in negotiating an operating lease is added to
the carrying amount of the leased asset and recognised
as an expense over the lease term on the same basis as
rental income.
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
(o) investment properties (continued)
For a transfer from investment property to inventories,
the deemed cost of property for subsequent accounting
is its fair value at the date of change in use. For a transfer
from inventories to investment property, any difference
between the fair value of the property at that date and
its previous carrying amount is recognised in profit
or loss. When the Group completes the construction
or development of a “self-constructed investment
property”, any difference between the fair value of the
property at that date and its previous carrying amount is
recognised in profit or loss.
Land and buildings are considered to have the function
of an investment and are therefore regarded as a
composite asset, the overall value of which is influenced
by many factors, the most prominent being income
yield, rather than diminution in value of the building
content due to the passing of time. Accordingly, the
buildings and all components thereof, including integral
plant and equipment, are not depreciated.
The directors obtain independent valuations on
investment properties annually to ensure that the
carrying amount does not differ materially from the
assets’ fair value. The cycle of this review is staggered
such that investment properties are independently
revalued in either the June or the December reporting
cycles. In determining fair value, the capitalisation of net
income method and the discounting of future cashflows
to their present value have been used.
Lease incentives provided by the Group to lessees,
and rental guarantees which may be received by the
Group from third parties (arising from the acquisition of
investment properties) are included in the measurement
of fair value of investment property and are treated as
separate assets. Such assets are amortised over the
respective periods to which the lease incentives and
rental guarantees apply, either using a straight-line basis,
or a basis which is more representative of the pattern of
benefits.
34
34
35
notes to the financial statements
30 June 2009
abacus property group
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
Impairment losses recognised for goodwill are not
subsequently reversed.
intangible assets
Intangible assets acquired separately or in a business
combination are initially measured at cost. Following
initial recognition, intangibles are carried at cost less
accumulated amortisation and impairment losses.
Intangible assets created within the business are not
capitalised and expenditure is charged against profits in
the period in which the expenditure is incurred.
The useful lives of these intangible assets are assessed
to be either finite or indefinite. Intangible assets
with finite lives are amortised over the useful life and
assessed for impairment whenever there is an indication
that the intangible asset maybe impaired.
The amortisation period and the amortisation method
for an intangible asset with a finite life is reviewed at
least each financial year-end. Changes in the expected
useful life or the expected pattern of consumption
of future economic benefit embodied in the asset
are accounted for prospectively by changing the
amortisation period or method, as appropriate,
which is a change in an accounting estimate. The
amortisation expense on intangible assets with finite
lives is recognised in the income statement through the
‘depreciation and amortisation expense’ line item.
Intangible assets with indefinite useful lives are tested
for impairment annually either individually or at the
cash generating unit level. Such intangibles are not
amortised. The useful life of an intangible asset with
an indefinite life is reviewed each reporting period
to determine whether the indefinite life assessment
continues to be supportable. If not, the change in
the useful life assessment from indefinite to finite is
accounted for as a change in an accounting estimate
and is thus accounted for on a prospective basis.
(q) Goodwill and intangibles
Goodwill
Goodwill on acquisition is initially measured at cost
being the excess of the cost of the business combination
over the acquirer’s interest in the net fair value of the
identifiable assets, liabilities and contingent liabilities.
Following initial recognition, goodwill is measured at
cost less any accumulated impairment losses and is not
amortised. Goodwill is reviewed for impairment, annually
or more frequently if events or changes in circumstances
indicate that the carrying value may be impaired.
For the purpose of impairment testing, goodwill
acquired in a business combination is, from the
acquisition date, allocated to each of the Group’s cash-
generating units, or groups of cash-generating units,
that are expected to benefit from the synergies of the
combination, irrespective of whether other assets or
liabilities of the Group are assigned to those units or
groups of units. Each unit or group of units to which the
goodwill is so allocated:
• Represents the lowest level within the Group
at which the goodwill is monitored for internal
management purposes; and
•
Is not larger than a segment based on either the
Group’s primary or the Group’s secondary reporting
format determined in accordance with AASB 114
Segment Reporting.
Impairment is determined by assessing the recoverable
amount of the cash-generating unit (group of cash-
generating units), to which the goodwill relates. When
the recoverable amount of the cash-generating unit
(group of cash-generating units) is less that the carrying
amount, an impairment loss is recognised. When
goodwill forms part of a cash-generating unit (group
of cash-generating units) and an operation within that
unit is disposed of, the goodwill associated with the
operation disposed of is included in the carrying amount
of the operation when determining the gain or loss on
disposal of the operation. Goodwill disposed of in this
manner is measured based on the relative values of
the operation disposed of and the portion of the cash-
generating unit retained.
tax rate that reflects the time value of money and the
risks specific to the liability. The increase in the provision
resulting from the passage of time is recognised in
finance costs.
employee leave benefits
i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-
monetary benefits, annual leave and accumulating sick
leave expected to be settled within 12 months of the
reporting date are recognised in respect of employees’
services up to the reporting date. They are measured at
the amounts expected to be paid when the liabilities are
settled. Liabilities for non-accumulating sick leave are
recognised when the leave is taken and are measured at
the rates paid or payable.
ii) Long service leave
The liability for long service leave is recognised and
measured as the present value of expected future
payments to be made in respect of services provided by
employees up to the reporting date using the projected
unit credit method. Consideration is given to expected
future wage and salary levels, experience of employee
departures, and periods of service. Expected future
payments are discounted using market yields at the
reporting date on national government bonds with
terms to maturity and currencies that match, as closely
as possible, the estimated future cash outflows.
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
(r) impairment of non-financial assets other than
goodwill
Intangible assets that have an indefinite useful life are
not subject to amortisation and are tested annually for
impairment, or more frequently if events or changes
in circumstances indicate that they might be impaired.
Other assets are tested for impairment whenever events
or changes in circumstances indicate that the carrying
amount may not be recoverable. An impairment loss is
recognised for the amount by which the asset’s carrying
amount exceeds its recoverable amount. Recoverable
amount is the higher of an asset’s fair value less costs
to sell and value in use. For the purposes of assessing
impairment, assets are grouped at the lowest levels
for which there are separately identifiable cash inflows
that are largely independent of the cash inflows from
other assets or groups of assets (cash-generating
units). Non-financial assets other that goodwill that
suffered an impairment are tested for possible reversal
of the impairment whenever events or changes in
circumstances indicate that the impairment may have
reversed.
(s) trade and other payables
Trade payables and other payables are carried at
amortised cost. They represent liabilities for goods and
services provided to the Group prior to the end of the
financial year that are unpaid and arise when the Group
becomes obliged to make future payments in respect of
the purchase of these goods and services. The amounts
are unsecured and are usually paid within 30 days of
recognition.
(t) Provisions and employee leave benefits
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past
event and it is probable that an outflow of resources
embodying economic benefits will be required to settle
the obligation and a reliable estimate can be made of
the amount of the obligation.
Provisions are measured at the present value of
management’s best estimate of the expenditure
required to settle the present obligation at the balance
sheet date. If the effect of the time value of money is
material, provisions are discounted using a current pre-
36
36
37
notes to the financial statements
30 June 2009
abacus property group
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
(u) Distributions and dividends
The Trusts generally distribute their distributable
assessable income to their unitholders. Such
distributions are determined by reference to the taxable
income of the respective Trusts. Distributable income
may include capital gains arising from the disposal of
investments and tax-deferred income. Unrealised gains
and losses on investments that are recognised as income
are usually retained and are generally not assessable
or distributable until realised. Capital losses are not
distributed to security holders but are retained to be
offset against any future realised capital gains.
A liability for dividend or distribution is recognised in the
Balance Sheet if the dividend or distribution has been
declared, determined or publicly recommended prior to
balance date.
(v) interest-bearing loans and borrowings
All loans and borrowings are initially recognised at cost,
being the fair value of the consideration received net of
transaction costs associated with the borrowing.
After initial recognition, interest-bearing loans and
borrowings are subsequently measured at amortised
cost using the effective interest method. Fees paid in
the establishment of loan facilities that are yield related
are included as part of the carrying amount of loans and
borrowings.
Borrowings are classified as current liabilities where the
Group has an unconditional right to defer settlement of
the liability for at least 12 months after the balance sheet
date.
borrowing costs
Borrowing costs are recognised as an expense when
incurred unless they relate to a qualifying asset or to
upfront borrowing establishment and arrangement
costs, which are deferred and amortised as an expense
over the life of the facility or five years whichever is
shorter. A qualifying asset is an asset that generally
takes more than 12 months to get ready for its intended
use or sale. In these circumstances, the financing
costs are capitalised into the cost of the asset. Where
funds are borrowed by the Group for the acquisition
or construction of a qualifying asset, the amount of the
borrowing costs capitalised are those incurred in relation
to the borrowing.
(w) Securities-based payment transactions
The Group provided benefits to its employees (including
key management personnel) in the form of securities-
based payments, whereby employees render services
in exchange for stapled securities or rights over stapled
securities (equity-settled transactions).
The Executive Performance Award Plan (EPAP) and the
Executive Security Loan Plan (ESLP) which provided
benefits to senior executives were cancelled on 30 June
2009.
The cost of these equity-settled transactions with
employees was measured by reference to the fair value
of the equity instruments at the date at which they were
granted. The fair value was determined by an external
valuer using a binomial model, further details of which
are given in note 26.
In valuing equity-settled transactions, no account was
taken of any vesting conditions, other than conditions
linked to the price of the stapled securities of the Group
(market conditions) if applicable.
The cost of equity-settled transactions was recognised,
together with a corresponding increase in equity, over
the period in which the performance and/or service
conditions are fulfilled (the vesting period), ending on
the date on which the relevant employees become fully
entitled to the award (the vesting date).
award on the date that it is granted, the cancelled and
new award are treated as if they were a modification
of the original award, as described in the previous
paragraph.
The dilutive effect, if any, of outstanding options
is reflected as additional security dilution in the
computation of diluted earnings per stapled security
(see note10).
(x) contributed equity
Issued and paid up capital is recognised at the fair value
of the consideration received by the Group. Stapled
securities are classified as equity. Incremental costs
directly attributable to the issue of new
shown in equity as a deduction, net of tax, from the
proceeds.
securities are
(y) transfers to (from) total equity
In respect of the Group, revaluation increments or
decrements arising from changes in the fair value
of investment properties and derivative financial
instruments, unrealised gains and losses in the net value
of investments, accrued income not yet assessable and
expenses provided for or accrued not yet deductible,
net capital losses and tax free or tax deferred amounts
maybe transferred to equity and may not be included in
the determination of distributable income.
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
(w) Securities-based payment transactions (continued)
At each subsequent reporting date until vesting, the
cumulative charge to the income statement is the
product of (i) the grant date fair value of the award;
(ii) the current best estimate of the number of awards
that will vest, taking into account such factors as the
likelihood of employee turnover during the vesting
period and the likelihood of non-market performance
conditions being met; and (iii) the expired portion of the
vesting period.
The charge to the income statement for the period is
the cumulative amount as calculated above less the
amounts already charged in previous periods. There is a
corresponding credit to equity.
Equity-settled awards granted by AGHL to employees
of its subsidiary were recognised in the parent’s separate
financial statements as an additional investment in
the subsidiary with a corresponding credit to equity.
These amounts are eliminated on consolidation. As a
result of all employees in the Group being employed
by Abacus Funds Management Limited there is no
expense incurred by AGHL. The expense recognised by
the Group is the total expense associated with all such
awards.
Until an award has vested, any amounts recorded are
contingent and will be adjusted if more or fewer awards
vest than were originally anticipated to do so. Any award
subject to a market condition is considered to vest
irrespective of whether or not that market condition is
fulfilled, provided that all other conditions are satisfied.
If the terms of an equity-settled award are modified, as
a minimum an expense is recognised as if the terms had
not been modified. An additional expense is recognised
for any modification that increases the total fair value of
the security based payment arrangement, or is otherwise
beneficial to the employee, as measured at the date of
modification.
If an equity-settled award is cancelled, it is treated as
if it had vested on the date of cancellation, and any
expense not yet recognised for the award is recognised
immediately. However, if a new award is substituted for
the cancelled award and designated as a replacement
38
38
39
notes to the financial statements
30 June 2009
abacus property group
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
(z) taxation
The Group comprises taxable and non-taxable entities.
A liability for current and deferred tax and tax expense
is only recognised in respect of taxable entities that are
subject to income tax and potential capital gains tax as
detailed below.
Abacus trust and Abacus income trust
Under current Australian income tax legislation neither
AT or AIT are liable to Australian income tax provided
security holders are presently entitled to the taxable
income of the Trusts and the Trusts generally distribute
their taxable income.
company income tax
AGHL and its Australian resident wholly-owned
subsidiaries have formed a Tax Consolidation Group.
AGHL has entered into tax funding agreements with its
Australian resident wholly-owned subsidiaries, so that
each subsidiary agrees to pay or receive its share of the
allocated tax at the current tax rate.
The head entity, AGHL and the controlled entities in the
tax consolidated group continue to account for their
own current and deferred tax amounts.
In addition to its own current and deferred tax amounts,
AGHL also recognises the current tax liabilities (or assets)
and the deferred tax assets arising from unused tax
losses and unused tax credits assumed from controlled
entities in the tax consolidated group.
Assets or liabilities arising under tax funding agreements
with the tax consolidated entities are recognised as
amounts receivable from or payable to other entities in
the group.
Any difference between the amounts assumed and
amounts receivable of payable under the tax funding
agreement are recognised as a contribution to (or
distribution from) wholly-owned tax consolidated
entities.
Current tax assets and liabilities for the current and prior
periods are measured at the amount expected to be
recovered from or paid to the taxation authorities. The
tax rates and tax laws used to compute the amount are
those that are enacted or substantively enacted by the
balance sheet date.
Deferred income tax assets are recognised for all
deductible temporary differences, carry forward of
unused tax assets and unused tax losses, to the extent
that it is probable that taxable profit will be available
against which the deductible temporary differences, and
the carry-forward of unused tax assets and unused tax
losses can be utilised, except:
when the deferred income tax asset relating to
the deductible temporary difference arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
when the deductible temporary differences
associated with investments in subsidiaries,
associates and interests in joint ventures, deferred
tax assets are only recognised to the extent that it is
probable that the temporary differences will reverse
in the foreseeable future and taxable profit will be
available against which the temporary differences
can be utilised.
The carrying amount of deferred income tax assets is
reviewed at each balance sheet date and reduced to the
extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred
income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed
at each balance sheet date and are recognised to the
extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.
The net amount of GST recoverable from, or payable to,
the taxation authority is included as part of receivables
or payables in the balance sheet.
Cash flows are included in the Cash Flow Statement
on a gross basis and the GST component of cash flows
arising from investing and financing activities, which is
recoverable from, or payable to, the taxation authority
are classified as operating cash flows.
Commitments and contingencies are disclosed net of
the amount of GST recoverable from, or payable to, the
taxation authority.
(aa) earnings per stapled security (ePSS)
Basic EPSS is calculated as net profit attributable to
stapled security holders, adjusted to exclude costs of
servicing equity (other than distributions) divided by the
weighted average number of stapled securities on issue
during the period under review.
Diluted EPSS is calculated as net profit attributable to
stapled security holders, adjusted for:
costs of servicing equity (other than distributions);
the after tax effect of dividends and interest
associated with dilutive potential stapled securities
that have been recognised as expenses; and
other non-discretionary changes in revenues or
expenses during the period that would result from
the dilution of potential stapled securities;
divided by the weighted average number of stapled
securities and dilutive potential stapled securities,
adjusted for any bonus element.
2. SuMMAry oF SiGniFicAnt AccountinG
PoLicieS (continueD)
(z) taxation (continued)
Deferred income tax is provided on all temporary
differences at the balance sheet date between the tax
bases of assets and liabilities and their carrying amounts
for financial reporting purposes.
Deferred income tax liabilities are recognised for all
taxable temporary differences, except:
when the deferred income tax liability arises from
the initial recognition of an asset or liability in a
transaction that is not a business combination and,
at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; or
when the taxable temporary differences associated
with investments in subsidiaries, associates and
interests in joint ventures, and the timing of the
reversal of the temporary differences can be
controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are measured
at the tax rates that are expected to apply to the year
when the asset is realised or the liability is settled, based
on tax rates (and tax laws) that have been enacted or
substantively enacted at the balance sheet date.
Income taxes relating to items recognised directly in
equity are recognised in equity and not in the income
statement.
Deferred tax assets and deferred tax liabilities are offset
only if a legally enforceable right exists to set off current
tax assets against current tax liabilities and the deferred
tax assets and liabilities relate to the same taxable entity
and the same taxation authority.
Goods and services tax (GSt)
Revenues, expenses and assets are recognised net of
the amount of GST except when the GST incurred on
a purchase of goods and services is not recoverable
from the taxation authority, in which case the GST is
recognised as part of the cost of acquisition of the
asset or as part of the expense item as applicable; and
receivables and payables are stated with the amount of
GST included.
40
40
41
notes to the financial statements
30 June 2009
abacus property group
3. FinAnciAL riSK MAnAGeMent
The Group manages its exposure to risk by:
The risks arising from the use of the Group’s financial
instruments are credit risk, liquidity risk and market risk
(interest rate risk , price risk and foreign currency risk).
The Group’s financial risk management focuses on
mitigating the unpredictability of the financial markets
and its impact on the financial performance of the
Group. The Board reviews and agrees policies for
managing each of these risks, which are summarised
below.
The main purpose of the financial instruments used by
the Group is to raise finance for the Group’s operations.
The Group has various other financial assets and
liabilities such as trade receivables and trade payables,
which arise directly from its operations. The Group also
enters into derivative transactions principally interest
rate swaps. The purpose is to manage the interest rate
exposure arising from the Group’s operations and its
sources of finance.
Details of the significant accounting policies and
methods adopted, including the criteria for recognition,
the basis of measurement and the basis on which
income and expenses are recognised, in respect of
each class of financial asset, financial liability and equity
instrument are disclosed in notes 2 and 4 to the financial
statements.
(a) credit risk
Credit risk is the risk of financial loss to the Group if a
customer or counterparty to a financial instrument fails
to meet its contractual obligations, and arises principally
from the Group’s receivables from customers, investment
in securities, secured property loans and interest bearing
loans and derivatives with banks.
-
-
-
-
-
-
derivative counterparties and cash transactions are
limited to high credit quality financial institutions;
policy which limits the amount of credit exposure to
any one financial institution;
providing loans as an investment into joint ventures,
associates, related parties and third parties where
it is comfortable with the underlying property
exposure within that entity;
regularly monitoring loans and receivables balances
on an ongoing basis;
regularly monitoring the performance of its
associates, joint ventures, related parties and third
parties on an ongoing basis; and
obtaining collateral as security (where required or
appropriate).
The Group’s credit risk is predominately driven by its
Property Finance business which provides loans to third
parties, those using the funds for property development.
The Group mitigates the exposure to this risk by
evaluation of the application before acceptance. The
analysis will specifically focus on:
-
the Loan Valuation Ratio (LVR) at drawdown;
- mortgage ranking;
-
-
-
background of the developer (borrower) including
previous developments;
that the terms and conditions of higher ranking
mortgages are acceptable to the Group;
appropriate property insurances are in place with a
copy provided to the Group; and
- market analysis of the completed development
being used to service drawdown.
The Group also mitigates this risk by ensuring adequate
security is obtained and timely monitoring of the
financial instrument to identify any potential adverse
changes in the credit quality.
3. FinAnciAL riSK MAnAGeMent (continueD)
(b) Liquidity risk
Prudent liquidity risk management implies maintaining
sufficient cash and marketable securities, the availability
of funding though an adequate and diverse amount
of committed credit facilities, the ability to close out
market positions and the flexibility to raise funds through
the issue of new stapled securities or the distribution
reinvestment plan.
The Group’s policy is to maintain an available loan facility
with banks sufficient to meet expected operational
expenses and to finance investment acquisitions for a
period of 90 days, including the servicing of financial
obligations. Current loan facilities are assessed and
extended for a maximum period based on the Group’s
expectations of future interest and market conditions.
As at 30 June 2009, the Group had undrawn committed
facilities of $220 million and cash of $9.1 million which
are adequate to cover short term funding requirements.
Further information regarding the Group’s debt profile is
disclosed in Note 19.
(c) refinancing risk
Refinancing risk is the risk that unfavorable interest rate
and credit market conditions result in an unacceptable
increase in the Group’s credit margins and interest cost.
Refinancing risk arises when the Group is required to
obtain debt to fund existing and new debt positions.
The Group is exposed to refinancing risks arising from
the availability of finance as well as the interest rates and
credit margins at which financing is available. The Group
manages this risk by spreading maturities of borrowings
and interest rate swaps and reviewing potential
transactions to understand the impact on the Group’s
credit worthiness.
(d) Market ristMarket risk is the risk that changes in
market prices, such as foreign exchange rates, interest
rates and equity prices will affect the Group’s income or
the value of its holdings of financial instruments. The
objective of market risk management is to manage
and control market risk exposures within acceptable
parameters, while optimising the return.
Foreign currency risk
The Group is exposed to currency risk on its investment
in foreign operations, equity investments, investment in
associates and property loans denominated in a currency
other than the functional currency of Group entities.
The currencies in which these transactions primarily are
denominated in NZD and to much lesser extent GBP
and SGD.
As a result the Group’s balance sheet can be affected
by movements in the A$/NZ$, A$/GBP$ and A$/SGD$
exchange rates.
The Group borrows loan funds in New Zealand dollars to
substantially match the foreign currency property asset
value exposure with a corresponding foreign currency
liability and therefore expects to substantially mitigate
foreign currency risk on its New Zealand denominated
asset values.
interest rate risk
The Group’s exposure to the risk of changes in market
interest rates relates primarily to the Group’s long-term
debt obligations with a floating interest rate.
The Group’s policy is to manage its interest cost using a
mix of fixed and variable rate debt. The Group’s aim is to
keep between 60% and 100% of its borrowings at fixed
rates of interest. To manage this mix in a cost-efficient
manner, the Group enters into interest rate swaps,
in which the Group agrees to exchange, at specified
intervals, the difference between fixed and variable rate
interest amounts calculated by reference to an agreed-
upon notional principal amount. At 30 June 2009, after
taking into account the effect of interest rate swaps,
approximately 76.3% of the Group’s borrowings are
subject to fixed rate agreements (2008: 75.4%).
42
42
43
notes to the financial statements
30 June 2009
abacus property group
recovery of deferred tax assets
Deferred tax assets are recognised for deductible
temporary differences as management considers that it
is probable that future taxable profits will be available to
utilise those temporary differences.
classification of and valuation of investments
The Group has decided to classify investments in listed
and unlisted securities as ‘held for trading’ investments
and movements in fair value are recognised directly in
profit or loss. The fair value of listed securities has been
determined by reference to published price quotations
in an active market. The fair value of unlisted securities
has been determined by reference to the net assets of
the entity and available redemption facilities.
impairment of property loans and financial assets other
than goodwill
The Group assesses impairment of all assets at each
reporting date by evaluating conditions specific to
the Group and to the particular asset that may lead
to impairment. If an impairment trigger exists the
recoverable amount of the asset is determined. For
property loans and interim funding to related funds this
involves value in use calculations, which incorporate
a number of key estimates and assumptions around
cashflows and fair value of underlying investment
properties held by the borrower and expected timing of
cashflows from equity raisings of related funds.
3. FinAnciAL riSK MAnAGeMent (continueD)
(d) Market risk (continued)
Fair value interest rate risk
As the Group holds interest rate swaps against its
variable rate debt there is a risk that the economic
value of a financial instrument will fluctuate because of
changes in market interest rates. The level of fixed rate
debt is disclosed in note 19 and it is acknowledged
that this risk is a by-product of the Group’s attempt to
manage its cash flow interest rate risk.
(e) other market price risk
The Group is exposed to equity securities price risk.
The key risk variable is the quoted price of securities
which is influenced by a range of factors, most of which
are outside the control of the Group. Management
of the Group monitors the securities in its investment
portfolio based on market indices and published prices.
Investments within the portfolio are managed on an
individual basis and all buy / sell decisions are approved
by the Managing Director and the Chief Financial
Officer.
4. SiGniFicAnt AccountinG JuDGMentS,
eStiMAteS AnD ASSuMPtionS
In applying the Group’s accounting policies
management continually evaluates judgments, estimates
and assumptions based on experience and other factors,
including expectations of future events that may have
an impact on the Group. All judgments, estimates and
assumptions made are believed to be reasonable based
on the most current set of circumstances available
to management. Actual results may differ from the
judgments, estimates and assumptions. Significant
judgments, estimates and assumptions made by
management in the preparation of these financial
statements are outlined below:
(i) Significant accounting judgments
operating lease commitments – Group as lessor
The Group has entered into commercial property leases
on its investment property portfolio. The Group has
determined that it retains all the significant risks and
rewards of ownership of these properties and has thus
classified the leases as operating leases.
control and significant influence
Determination of whether the Group has control or
significant influence over an investee is based on
judgemental assessments of both the rights the Group
has in the investee and the risks and rewards it is
exposed to.
5. SeGMent inForMAtion
The Group predominantly operates in Australia. The
Group’s segment reporting format is business segments
as the Group’s risks and rates of return can be readily
identified with the type of business and services
provided. Segment results, assets and liabilities include
items directly attributable to a segment as well as those
that can be allocated on a reasonable basis.
Segment revenue, segment expense and segment result
do not include transactions between business segments.
4. SiGniFicAnt AccountinG JuDGMentS,
eStiMAteS AnD ASSuMPtionS (continueD)
(ii) Significant accounting estimates and assumptions
impairment of goodwill and intangibles with indefinite
useful lives
The Group determines whether goodwill and intangibles
with indefinite useful lives are impaired at least on
an annual basis. This requires an estimation of the
recoverable amount of the cash-generating units to
which the goodwill and intangibles with indefinite useful
lives are allocated. No impairment loss was recognised
in the current year in respect of goodwill.
Fair value of derivatives
The fair value of derivatives is determined using closing
quoted market prices (where there is an active market) or
a suitable pricing model based on discounted cash flow
analysis using assumptions supported by observable
market rates. Where the derivatives are not quoted in
an active market their fair value has been determined
using (where available) quoted market inputs and other
data relevant to assessing the value of the financial
instrument, including financial guarantees granted by
the Group, estimates of the probability of exercise.
Valuation of investment properties
The Group makes judgements in respect of the fair value
of investment properties (note 2(o)). The fair value of
these properties are reviewed regularly by management
with reference to annual external independent property
valuations and market conditions existing at reporting
date, using generally accepted market practices. The
assumptions underlying estimated fair values are those
relating to the receipt of contractual rents, expected
future market rentals, maintenance requirements,
capitalisation rates discount rates that reflect current
market uncertaintities and current and recent property
investment prices. If there is any material change in
these assumptions or regional, national or international
economic conditions, the fair value of investment
properties may differ and may need to be re-estimated.
44
44
45
notes to the financial statements
30 June 2009
abacus property group
5. SeGMent inForMAtion (continueD)
5. SeGMent inForMAtion (continueD)
The Group’s primary business segments based on its management reporting system 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 financing solutions. Joint Ventures & Developments is responsible for
the Group’s investments in joint venture activities and in property securities.
PROPERTY
$’000
FUNDS
MANAGEMENT
$’000
PROPERTY
FINANCE
$’000
JOINT
VENTURES/
DEVELOPMENTS
$’000
YEAR ENDED 30 JUNE 2009
revenue
Revenue from external customers
Equity accounted investments
Net change in fair value of investments derecognised
during the year
Unallocated revenue
total consolidated revenue
Direct costs
Allocated costs
Unallocated expenses
Segment result
Net change in fair value of investments held
at balance date
Segment result after fair value adjustments
Finance costs / loss on derivatives
Loss before tax and minority interest
Income tax benefit
net loss for the year
Assets and Liabilities
Segment assets
Unallocated assets (a)
total assets
Segment liabilities
Unallocated liabilities (b)
total liabilities
other segment information:
Depreciation and amortisation
cash flow information
Total - operating
Total - investing
Total - financing
79,147
645
356
-
80,148
(13,437)
(7,020)
-
59,691
(107,518)
(47,827)
896,822
-
12,614
-
3,693
15,151
15,540
5,336
14,839
3,195
3,316
-
21,350
-
(8,106)
-
13,244
14,447
-
-
-
14,447
-
(1,560)
-
12,887
9,099
4,961
7,222
-
21,282
-
(1,562)
-
19,720
TOTAL
$’000
117,532
8,801
10,894
1,215
138,442
(13,437)
(18,248)
(1,215)
105,542
-
-
(5,908)
(113,426)
13,244
12,887
13,812
(7,884)
223,371
-
146,162
-
10,432
-
2,123
-
126,524
-
2,123
-
(96,284)
(104,168)
1,178
(102,990)
1,392,879
52,914
1,445,793
27,292
428,774
456,066
-
-
-
3,693
12,075
(425)
13,974
29,283
(55,061)
(59,989)
9,079
(22,699)
-
65,588
(62,645)
(40,679)
YEAR ENDED 30 JUNE 2008
revenue
Revenue from external customers
Net change in fair value of investments
derecognised during the year
Unallocated revenue
PROPERTY
$’000
FUNDS
MANAGEMENT
$’000
PROPERTY
FINANCE
$’000
JOINT
VENTURES/
DEVELOPMENTS
$’000
TOTAL
$’000
81,916
9,428
-
43,859
13,169
11,045
149,989
-
-
-
-
(310)
-
9,118
1,957
total consolidated revenue
91,344
43,859
13,169
10,735
161,064
Direct costs
Allocated costs
Unallocated expenses
Segment result
(14,454)
(6,389)
-
-
-
(4,970)
(1,420)
-
-
-
(1,421)
-
(14,454)
(14,200)
(1,957)
70,501
38,889
11,749
9,314
130,453
Net change in fair value of investments
held at balance date
(15,656)
-
-
(6,985)
(22,641)
Segment result after fair value adjustments
54,845
38,889
11,749
2,329
107,812
Finance costs / loss on derivatives
Profit before tax and minority interest
Income tax benefit
net profit for the year
Assets and Liabilities
Segment assets
Unallocated assets
total assets
Segment liabilities
Unallocated liabilities
total liabilities
other segment information:
Depreciation and amortisation
cash flow information
Total - operating
Total - investing
Total - financing
(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
80,348
1,635,921
63,281
647,641
710,922
3,575
-
-
-
3,575
24,084
(284,276)
189,076
19,595
(467)
-
18,166
(84,600)
131,115
14,864
76,709
(52,111)
(421,454)
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.
46
46
47
notes to the financial statements
30 June 2009
abacus property group
6. reVenue
7. eXPenSeS
(a) Finance income
Interest and fee income on secured loans
Provision for doubtful debts
Bank interest
total finance income
(b) Funds Management income
Asset management fees
Property management fees
Consulting and other income
Interest on loans to funds management entities
Impairment of loan as part of the restructuring of ADIFII
Sale of units in Matson Hotel *
total funds management income
* Sale was to a fund managed by AFML
(c) net change in fair value of investments:
Net change in fair value of investment properties derecognised
during the year#
Net change in fair value of other investments derecognised during
the year^
CONSOLIDATED
2009
$’000
2008
$’000
2009
$’000
22,102
(5,074)
1,215
18,243
5,885
1,039
13,293
10,848
(11,000)
-
20,065
19,485
(5,000)
1,957
16,442
7,541
847
12,180
13,924
-
9,367
43,859
1,018
-
31
1,049
-
-
715
-
-
-
715
1,784
9,428
-
9,110
(310)
4,824
total net change in fair value of investments
10,894
9,118
4,824
PARENT
2008
$’000
1,043
-
94
1,137
-
-
101
-
-
-
101
-
-
-
#
Includes the sale of the property portfolio of Abacus Storage Solutions Trust and the shares held in Abacus Storage Solutions Limited to Abacus
Storage Fund on 31 December 2008.
^ The units held in Abacus Hobart Growth Trust were sold to Abacus Diversified Income Fund II on 30 June 2009.
(a) Depreciation and amortisation expense
Depreciation of property, plant and equipment - hotels
Depreciation of property, plant and equipment - other
Amortisation of intangible assets
Amortisation - leasehold improvements
total depreciation and amortisation expense
(b) net change in fair value of investments
Net change in fair value of investment properties held at
balance date *
Net change in fair value of property securities held at
balance date
total net change in fair value of investments
* Refer to notes 2(o) and 15.
(c) Finance costs
Interest on loans
Amortisation of finance costs
total finance costs
(d) Administrative expenses
Wages and salaries
Share based payments
Other administrative expenses
total administrative expenses
CONSOLIDATED
2009
$’000
285
493
31
1,185
1,994
2008
$’000
362
309
56
1,377
2,104
2009
$’000
PARENT
2008
$’000
-
-
-
-
-
-
-
-
-
-
107,518
15,656
2,954
(367)
5,908
6,985
5,851
7,255
113,426
22,641
8,805
6,888
43,165
1,699
44,864
10,240
1,542
7,718
19,500
40,086
1,471
41,557
12,726
1,038
2,393
16,157
6,969
-
6,969
-
-
(683)
(683)
10,942
6
10,948
-
-
(1,874)
(1,874)
48
48
49
notes to the financial statements
30 June 2009
abacus property group
8. incoMe tAX
8. incoMe tAX (continueD)
CONSOLIDATED
2009
$’000
2008
$’000
2009
$’000
PARENT
2008
$’000
(a) income tax expense
The major components of income tax expense are:
income Statement
current income tax
Current income tax charge
Adjustments in respect of current income tax of previous years
Deferred income tax
Movement in depreciable assets tax depreciation
Relating to origination and reversal of temporary differences
income tax expense / (benefit) reported in the income statement
2,216
(41)
121
(3,474)
(1,178)
(652)
(314)
99
(2,167)
(3,034)
767
(23)
(1,592)
(503)
15
(1,625)
(866)
-
(1,314)
(3,409)
(b) numerical reconciliation between aggregate tax expense recognised in the income statement and tax expense
calculated per the statutory income tax rate
A reconciliation between tax expense and the product of accounting profit before income tax multiplied by the
Group’s applicable income tax rate is as follows:
(Loss) / profit before income tax expense
Prima facie income tax (benefit) / expense calculated at 30%
Less prima facie income tax on loss / (profit) from AT and AIT
Prima Facie income tax of entities subject to income tax
Distributions from trusts
Tax advantaged distributions
Rebateable (franked) dividends
Entertainment
Share based payments
Foreign exchange translation adjustments
Adjustment of prior year deferred tax applied
Other items (net)
income tax expense / (benefit)
income tax expense/(benefit) reported in the consolidated
income statement
(104,168)
(31,250)
29,999
(1,251)
-
-
-
11
463
(55)
(43)
(303)
(1,178)
69,392
20,818
(22,863)
(2,045)
(171)
(1)
(2)
3
311
-
(1,160)
31
(3,034)
28,116
8,435
(9,000)
(565)
-
-
-
-
-
(55)
(23)
(223)
(866)
(9,112)
(2,734)
-
(2,734)
(171)
(2)
-
-
-
-
(502)
-
(3,409)
(1,178)
(3,034)
(866)
(3,409)
The Group has income tax losses for which no deferred tax asset is recognised on the balance sheet of gross $9.6 million tax effected (2008: nil), which are
available indefinitely for offset against future income gains subject to continuing to meet relevant statutory tests.
(c) recognised deferred tax assets and liabilities
Deferred income tax at 30 June 2009 relates to the following:
Deferred tax liabilities
Revaluation of investment properties to fair value
Revaluation of investments to fair value
Other
Gross deferred income tax liabilities
Set off of deferred tax assets
net deferred income tax liabilities
Deferred tax assets
Revaluation of investment properties to fair value
Revaluation of investments to fair value
Provisions
Losses available for offset against future taxable income
Employee provisions
Other
Gross deferred income tax assets
Set off of deferred tax assets
net deferred income tax assets
CONSOLIDATED
2009
$’000
2008
$’000
2009
$’000
PARENT
2008
$’000
45
1,767
661
2,473
(2,118)
355
1,165
2,236
7,984
1,008
386
668
13,447
(2,118)
11,329
7,193
(1,398)
283
6,078
(3,464)
2,614
-
-
1,717
1,629
1,216
79
4,641
(3,464)
1,177
-
-
198
198
(198)
-
1,165
904
1,401
940
-
71
4,481
(198)
4,283
(110)
(1,789)
182
(1,717)
1,717
-
-
-
713
1,746
-
-
2,459
1,717
4,176
unrecognised temporary differences
At 30 June 2009, there are no unrecognised temporary
differences associated with the Group’s investments in
subsidiaries, associate or joint venture, as the Group
has no liability for additional taxation should unremitted
earnings be remitted (2008: $nil).
tax consolidation
AGHL and its 100% owned Australian resident subsidiaries
have formed a tax consolidated group. AGHL is the head
entity of the tax consolidated group. The head entity
and the controlled entities in the tax consolidated group
continue to account for their own current and deferred
tax amounts. The Group has applied the group allocation
approach in determining the appropriate amount of
current taxes and deferred taxes to allocate to members
of the tax consolidated group. The current and deferred
tax amounts are measured in a systematic manner that
is consistent with the broad principles in AASB 112
Income Taxes. The nature of the tax funding agreement is
discussed further below.
nature of the tax funding agreement
Members of the tax consolidated group have entered into
a tax funding agreement. Under the funding agreement
the allocation of tax within the group is based on
accounting profit, which is not an acceptable method of
allocation under UIG 1052. The tax funding agreement
requires payments to/from the head entity to be
recognised via an inter-entity receivable (payable) which is
at call. To the extent that there is a difference between the
amount allocated under the tax funding agreement and
the allocation under UIG 1052, the head entity accounts
for these as equity transactions.
50
50
51
notes to the financial statements
30 June 2009
abacus property group
8. incoMe tAX (continueD)
10. eArninGS Per StAPLeD Security
The amounts receivable or payable under the tax funding agreement are due upon receipt of the funding advice from
the head entity, which is issued as soon as practicable after the end of each financial year. The head entity may also
require payment of interim funding amounts to assist with its obligations to pay tax instalments.
9. DiStributionS PAiD AnD ProPoSeD
(a) Distributions paid during the year
June 2008 quarter: 3.50 cents per stapled security (2007: 3.25 cents)
September 2008 quarter: 3.50 cents per stapled security (2007: 3.25 cents)
December 2008 quarter: 1.75 cents per stapled security (2007: 3.25 cents)
March 2009 quarter: 1.75 cents per stapled security (2008: 3.50 cents)
(b) Distributions proposed and not recognised as a liability*
June 2009 quarter: 0.75 cents per stapled security (2008: nil)
(c) Distributions proposed and recognised as a liability
June 2008 quarter: nil (2008: 3.5 cents)
CONSOLIDATED
2009
$’000
2008
$’000
2009
$’000
PARENT
2008
$’000
22,637
22,677
11,387
13,190
69,891
18,419
20,225
20,466
22,109
81,219
11,322
-
-
22,637
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Distributions were paid from 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.
* The final distribution of 0.75 cents per stapled security was declared on 1 July 2009. The distribution was paid on 7 August 2009 for $11.3 million. No
provision for the distribution has been recognised in the balance sheet at 30 June 2009 as the distribution had not been declared by the end of the year.
Basic earnings / (loss) per stapled security (cents)
Diluted earnings / (loss) per stapled security (cents)
Reconciliation of earnings used in calculating earnings per stapled security
Basic and diluted earnings per stapled security
net profit / (loss)
Basic and diluted underlying earnings per stapled security
net profit / (loss)
Weighted average number of stapled securities:
Weighted average number of stapled securities for basic earning per share
Effect of dilution: Stapled security options
Weighted average number of stapled securities adjusted for the effect of dilution
2009
$’000
(11.81)
(11.81)
2008
$’000
10.98
10.80
(102,412)
71,460
71,967
90,964
867,488
-
867,488
650,891
10,479
661,370
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. The options were cancelled when the Executive Performance Award Plan was terminated on 30 June 2009.
Prior period weighted average number of securities and EPSs have been adjusted in accordance with AASB 133 “Earnings per Share” (“AASB 133”).
The weighted average number of securities on issue for the current period, prior to the Equity Raisings, have also been adjusted as required by AASB 133.
(c) Franking credit balance
The amount of franking credits available for the subsequent financial
year are:
Franking account balance as at the beginning of the financial year at 30%
(2008: 30%)
Franking credits that will arise from the receipt of dividends recognised
as receivables at reporting date
Prior year tax adjustment
Franking credits that will arise from the payment of income tax payable
as at the end of the financial year
11,252
11,244
11,252
11,244
-
(949)
-
10,303
8
-
8
(949)
-
-
11,252 10,303 11,252
-
52
52
53
notes to the financial statements
30 June 2009
abacus property group
11. cASH AnD cASH eQuiVALentS
12. trADe AnD otHer receiVAbLeS
(102,990)
72,426
28,982
(5,703)
13. ProPerty LoAnS AnD otHer FinAnciAL ASSetS
reconciliation to cash Flow Statement
For the purposes of the Cash Flow Statement, cash and
cash equivalents comprise the following at 30 June 2009:
Cash at bank and in hand (i)
CONSOLIDATED
2009
$’000
2008
$’000
2009
$’000
PARENT
2008
$’000
9,124
46,777
275
2,340
(i) cash at bank earns interest at floating rates. The carrying amounts of cash and cash equivalents represent fair value.
(a) reconciliation of net profit after tax to net cash flows
from operations
Net profit / (loss)
Adjustments for:
Depreciation of non-current assets
Amortisation of non-current assets
Provision for doubtful debts
Impairment of loan as part of the restructuring of ADIFII
Income distribution
Net change in fair value of derivatives
Net change in fair value of investments
Net (gain)/loss on sale of non-current assets
Increase/(decrease) in payables
Decrease/(increase) in receivables and other assets
net cash from operating activities
(b) non-cash financing and investing activities
Disposal of subsidiary by providing a mortgage loan facility (note 13)
Disclosure of financing facilities
Refer to note 19d.
778
2,915
5,074
11,000
-
51,420
113,426
(10,894)
(13,668)
8,527
65,588
671
1,433
5,000
-
-
(3,848)
15,806
(9,118)
(10,210)
4,549
76,709
-
-
-
-
(30,000)
447
9,062
(5,063)
5,170
(3,620)
4,978
-
12
-
-
-
7,132
(367)
-
(1,661)
3,733
3,146
8,245
-
-
-
Disclosure of non-cash financing activities
Non-cash financing activities include capital raised pursuant to APG’s distribution reinvestment plan. During the year 18.2
million stapled securities were issued with a cash equivalent of $9 million.
Trade debtors
Related party receivables
Guarantee receivable on settlement of a property
Other debtors
Gross receivables
Less provision for doubtful debts
total net trade and other receivables
CONSOLIDATED
2009
$’000
9,556
5,597
-
7,124
22,277
(184)
22,093
2008
$’000
6,201
2,043
14,250
4,171
26,665
(511)
26,154
2009
$’000
742
5,504
-
643
6,889
-
6,889
CONSOLIDATED
2009
$’000
2008
$’000
2009
$’000
PARENT
2008
$’000
1,096
203
-
719
2,018
-
2,018
PARENT
2008
$’000
-
1,210
18,684
-
-
-
-
19,894
-
-
-
-
-
(a) current
Secured loans - amortised cost(i)
Loans to related parties - amortised cost
Interim funding to related funds - amortised cost (ii)
Interest receivable on secured loans - amortised cost
Interest receivable on interim funding to related funds
Provision for doubtful debts
Investments in securities - listed (fair value)
(b) non-current
Secured loans - amortised cost(i)
Interim funding to related funds - amortised cost (ii)
Interest receivable on secured loans - amortised cost
Interest receivable on interim funding to related funds
Provision for impairment on loan in relation to restructuring of
ADIFII
Investments in securities - listed (fair value)
Investments in securities - unlisted (fair value)
Investments in subsidiaries - at cost
Investments in joint ventures - at cost
51,221
-
51,634
9,273
845
(13,016)
6,187
106,144
166,789
155,999
5,682
4,122
(11,000)
-
17,452
-
-
339,044
95,203
-
52,719
16,093
1,263
(8,000)
-
157,278
52,969
183,593
7,212
1,652
-
18,831
17,217
-
-
281,474
-
10,851
-
-
-
-
6,082
16,933
-
31,267
-
216
-
-
13,020
81,288
19,370
145,161
14,651
-
75,712
15,074
105,437
54
54
55
(i) Mortgages are secured by real property assets. The current facilities are scheduled to mature on or before 30 June 2010 and the non-current facilities will
mature between 1 July 2010 and 30 June 2018. Weighted average interest rate was 10.05% pa as at 30 June 2009 (2008: 12.4%).
(ii) Interim funding is provided to other entities outside the Group managed by the responsible entity AFML to enable acquisition of properties ahead
of receipt of funds from investors. The loans are unsecured and the rates of interest equal the rate of the respective fund’s distribution. These loans rank
equally with other unsecured liabilities and unitholders in the event of winding up.
notes to the financial statements
30 June 2009
abacus property group
14. non-current ASSetS – ProPerty, PLAnt AnD eQuiPMent
15. inVeStMent ProPertieS
Land and buildings
At 1 July, net of accumulated depreciation
Additions
Disposals
Revaluations
Effect of movements in foreign exchange
Depreciation charge for the year
At 30 June, net of accumulated depreciation
Fair value
Accumulated depreciation
net carrying amount at end of period
Plant and equipment
At 1 July, net of accumulated depreciation
Additions
Disposals
Depreciation charge for the year
At 30 June, net of accumulated depreciation
Cost or fair value
Accumulated depreciation
net carrying amount at end of period
total net carrying amount of Property, Plant & equipment
Property
Hotel properties - Pubs (1)
Budget lodge / hostel accommodation
Other
CONSOLIDATED
2009
$’000
2008
$’000
2009
$’000
PARENT
2008
$’000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
30,302
60
-
1,048
179
(331)
31,258
31,258
-
31,258
1,537
150
(193)
(476)
1,018
1,591
(573)
1,018
32,276
28,678
21,021
(18,947)
-
-
(450)
30,302
30,483
(181)
30,302
1,876
1,530
(1,707)
(161)
1,537
1,628
(91)
1,537
31,840
CONSOLIDATED VALUE
2009
$’000
2008
$’000
6,965
21,694
3,617
32,276
6,905
20,979
3,956
31,840
(1.) Value of licenses are accounted for separately as intangibles (see note 17)
Property, plant and equipment pledged as security for liabilities
The Group has nil freehold land and buildings subject to a first charge from the Group’s bank loans (2008: $23.6m) as
disclosed in note 19.
current
Commercial
Industrial
Other
total current
non - current
Retail
Commercial
Industrial
Storage
Other
Total non-current
Total investment properties
CONSOLIDATED
2009
$’000
26,391
13,640
4,258
44,289
2008
$’000
3,849
-
-
3,849
CONSOLIDATED
2009
$’000
2008
$’000
266,843
283,450
131,233
3,807
23,217
708,550
752,839
279,090
350,444
163,085
94,559
41,413
928,591
932,440
2009
$’000
PARENT
2008
$’000
-
-
-
-
2009
$’000
-
-
-
-
5,550
5,550
5,550
-
-
-
-
PARENT
2008
$’000
-
-
-
-
6,927
6,927
6,927
reconciliation
A reconciliation of the carrying amount of investment properties at the beginning and end of the year is as follows:
Carrying amount at beginning of the financial period
Additions and capital expenditure
Acquisition through business combinations
Fair value adjustments for properties held at balance date
Disposals
Effect of movements in foreign exchange
carrying amount at end of the financial year
CONSOLIDATED
2009
$’000
932,440
49,462
-
(107,517)
(121,764)
218
752,839
2008
$’000
673,210
293,432
54,846
(15,806)
(73,242)
-
932,440
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, latest independent update or directors’ valuation. 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. The key
underlying assumptions, on a portfolio basis, contained within the independent and director valuations above are as follows:
56
56
57
notes to the financial statements
30 June 2009
abacus property group
15. inVeStMent ProPertieS (continueD)
• A weighted average capitalisation rate for the
portfolio 8.53% (2008: 7.75%) which for each
category is as follows;
- Retail - 7.97% (2008: 7.32%)
- Commercial – 8.62% (2008: 7.62%)
- Industrial – 9.02% (2008: 7.64%)
- Other – 7.98% (2008: 6.51%)
•
The current occupancy rate for the portfolio is 90%
which is not expected to materially change during
the period relevant to the valuations (based on a
conservative 50% tenant retention rate):
• A weighted average rent review for the 12 months to
30 June 2010 of 3.6% (excludes market reviews and
assumes CPI reviews of 3%).
The independent and director valuations are based
on common valuation methodologies including
capitalisation and discounted cash flow approaches,
which have regard to recent market sales evidence.
Accordingly, the directors’ valuations at 30 June 2009
have regards to market sales evidence in adopting a
market valuation for each property including the key
assumptions outlined.
Some of the investment properties are used as security
for secured bank debt.
The current investment properties represent five
industrial and commercial properties which are either
subject to a sales contract or an active sales campaign.
All properties are expected to be sold by 30 June 2010.
16. non-current ASSetS - inVeStMentS AccounteD For uSinG tHe eQuity MetHoD
Investment in associates
Investment in joint ventures
(a) Details of Associates and Joint Ventures
(i) Associates
Stanright Limited (1)
Abacus Storage Fund (2)
Abacus Miller Street Trust (3)
Abacus Wodonga Land Fund (2)
(ii) Joint Ventures
Abacus Rosebury Property Trust
Willoughby Development Trust
The Tulip Unit Trust
Pakenham Valley Unit Trust
The Main Street Pakenham Trust
The Bay Street Brighton Unit Trust
The Abacus Colemans Road Trust
Fordtrans Pty Ltd
Abacus Aspley Village Trust
The Mount Druitt Unit Trust
Jigsaw Trust
Hampton Residential Retirement Trust
Note
16a (i)
16a (ii)
2009
$’000
22,039
103,782
125,821
CONSOLIDATED
2008
$’000
7,638
96,455
104,093
2009
2008
%
40
15
30
15
%
40
-
30
-
ownership interest
2008
%
50
50
50
50
50
50
50
50
33
50
-
-
2009
%
50
50
50
50
50
50
50
50
33
50
50
50
CONSOLIDATED
2009
$’000
5,108
14,584
1,622
725
22,039
CONSOLIDATED
2008
$’000
1,577
-
6,061
-
7,638
2009
$’000
200
200
1,903
5,360
-
3,173
1,483
59,041
19,332
934
7,263
4,893
103,782
carrying value
2008
$’000
200
770
1,902
6,684
2,145
3,170
2,850
56,799
21,033
902
96,455
-
-
(1) A subsidiary of Abacus Group Holdings Limited, the London Trust, has a 40% interest in Stanright Limited, a UK company which holds a 50% interest
in Grant Thornton House in the UK.
(2) The subsidiaries of Abacus Group Holdings Limited act as the Responsible Entities of these Funds.
(3) Abacus Trust has a 30% interest in the Abacus Miller Street Holdings Trust which owns 50 Miller Street in North Sydney.
(4) Abacus Funds Management Limited acts as the Responsible Entity of Abacus Hospitality Fund and Abacus Diversified Income Fund II. Accordingly
these funds are considered to be associates of the Group.
(5) The joint venture entities acquire and develop commercial and residential properties intended for resale.
(6) There were no impairment losses or contingent liabilities relating to the investment in the associates and joint ventures.
58
58
59
notes to the financial statements
30 June 2009
abacus property group
16. non-current ASSetS - inVeStMentS AccounteD For uSinG tHe eQuity MetHoD (continueD)
17. intAnGibLe ASSetS AnD GooDWiLL
(b) Share of associates and joint ventures’ net profits
Abacus Aspley Village Trust
Abacus Miller Street Trust (3)
Abacus Rosebury Property Trust
Abacus Storage Fund (2)
Abacus Wodonga Land Fund
Fordtrans Pty Ltd
Hampton Residential Retirement Trust
Jigsaw Trust
Other
Pakenham Valley Unit Trust
Stanright Limited (1)
The Abacus Colemans Road Trust
The Bay Street Brighton Unit Trust
The Main Street Pakenham Trust
The Mount Druitt Unit Trust
The Tulip Unit Trust
(c) extract from associates and joint ventures’ balance sheets
Current assets
Non-current assets
Current liabilities
Non-current liabilities
net assets
Share of net assets
2009
$’000
645
(4,062)
-
435
(765)
4,707
(109)
155
(22)
4,168
3,455
45
134
(126)
32
109
8,801
CONSOLIDATED
2008
$’000
-
-
-
-
-
7,165
-
-
572
1,869
-
3,434
-
(92)
-
-
12,948
2009
$’000
42,065
829,662
871,727
(124,490)
(394,064)
(518,554)
353,173
125,821
CONSOLIDATED
2008
$’000
7,548
303,002
310,550
(14,304)
(100,012)
(114,316)
196,234
104,093
Goodwill
Balance at 1 July
Acquisition through business combinations
Disposal
balance at 30 June
Management rights, licences and entitlements
At 1 July, net of accumulated amortisation
Acquisition
Disposal of management rights and licences
Amortisation charge for the year
At 30 June, net of accumulated amortisation
total goodwill and intangibles
CONSOLIDATED
2009
$’000
2008
$’000
2009
$’000
35,090
67
(2,696)
32,461
6,049
-
(285)
-
5,764
38,225
32,394
2,696
-
35,090
8,583
285
(2,764)
(55)
6,049
41,139
32,394
-
-
32,394
-
-
-
-
-
32,394
PARENT
2008
$’000
32,394
-
-
32,394
-
-
-
-
-
32,394
Description of the Group’s intangible assets and goodwill
Goodwill
After initial recognition, goodwill acquired in a business combination is measured at cost less any accumulated
impairment losses. Goodwill is not amortised but is subject to impairment testing on an annual basis or whenever there
is an indication of impairment.
Management rights, licences and entitlements
Management rights, licences and entitlements represent intangible assets acquired through the acquisition of certain
hotel assets. Licences and entitlements essentially relate to gaming and liquor licence rights attaching to the hotel
assets. These intangible assets have been determined to have indefinite useful lives and the cost model is utilised
for their measurement. These licences and entitlements have been granted for an indefinite period by the relevant
government department. This supports the Group’s assertion that these assets have an indefinite useful life. As these
management rights, licences and entitlements are an integral part of owning a hotel asset, they are subjected to
impairment testing on an annual basis or whenever there is an indication of impairment as part of the annual property
valuation and review process of the hotels as a going concern.
impairment tests for goodwill and intangibles with indefinite useful lives
(i) Description of the cash generating units and the other relevant information
Goodwill acquired through business combinations and management rights, licences and entitlements have been
allocated to two individual cash generating units, each of which is a reportable segment, for impairment testing as
follows:
• Funds Management - property / asset management business
• Property - or specifically the hotel assets
60
60
61
notes to the financial statements
30 June 2009
abacus property group
17. intAnGibLe ASSetS AnD GooDWiLL (continueD)
Funds Management
The recoverable amount of the Funds Management unit has been determined based on a value in use calculation using
cash flow projections as at 30 June covering a five-year period.
A post tax discount rate of 10.59% (2008: 9.14%) and a terminal growth rate of 3% (2008: 3%) has been applied to the
cash flow projections.
The increase in goodwill relates to the acquisition of the Abacus Jigsaw Trust during the year.
Property
The recoverable amount of the indefinite life intangible assets have been determined based on the independent and
directors’ valuations of the hotels on a going concern basis. Common valuation methodologies including capitalisation
and discounted cash flow approaches are used, with assumptions reference to recent market sales evidence.
Accordingly, the directors’ valuations at 30 June 2009 have regards to market sales evidence in adopting a market
valuation for each property including the key assumptions outlined.
(i) Carrying amounts of goodwill, management rights, licences and entitlements allocated to each of the cash
generating units
The carrying amounts of goodwill, management rights, licences and entitlements are allocated to Funds Management
and Property as follows:
Goodwill
Management rights, licences
and entitlements
FUNDS
MANAGEMENT
PROPERTY
2009
$’000
2008
$’000
2009
$’000
2008
$’000
2009
$’000
TOTAL
2008
$’000
PARENT
2008
$’000
2009
$’000
32,461
32,394
-
2,696
32,461
35,090
32,394
32,394
-
-
5,764
6,049
5,764
6,049
-
-
(iii) Key assumptions used in valuation calculations
Funds Management Goodwill
The calculation of value in use is most sensitive to the following assumptions:
a. Fee income
b. Discount rates
c. Property values of the funds/properties under management
Fee income – fee income is based on actual income in the year preceding the start of the budget period and actual
funds under management.
Discount rates – discount rates reflect management’s estimate of the time value of money and the risks specific to each
unit that are not reflected in the cash flows.
Property values – property values are based on the fair value of properties which are valued annually by independent
valuers.
17. intAnGibLe ASSetS AnD GooDWiLL
(continueD)
(iii) Key assumptions used in valuation calculations
(continued)
Hotel intangible Assets
The calculation of the hotel valuations is most sensitive
to the following assumptions:
a. Hotel income
b. Discount rates and capitalisation rates with
reference to market sales evidence
c. Other value adding or potential attributes of the
hotel asset
Hotel income – hotel income is based on actual
income in the year preceding the start of the budget
period, adjusted based on industry norms for valuation
purposes.
Discount rates and capitalisation rates – these rates
reflect management’s estimate of the time value of
money and the risks specific to each unit that are not
reflected in the cash flows, with reference to recent
market sales evidence.
Other value adding or potential attributes – unique
features of individual hotel assets that will add or have
the potential to add value to the property in determining
the total fair value of the hotel.
(iv) Sensitivity to changes in assumptions
Significant and prolonged property value falls and
market influences which could increase discount
rates could cause goodwill to be impaired in the
future.
62
62
63
notes to the financial statements
30 June 2009
abacus property group
18. trADe AnD otHer PAyAbLeS
19. intereSt beArinG LoAnS AnD borroWinGS
(a) current
Trade creditors
Other creditors
Rental guarantee
Goods and services tax
Accrued expenses
Distributions on stapled securities
Related party payables
- Subsidiaries and other group entities
- Other related parties
(b) non-current
Capital guarantee
Rental guarantee
626
3,279
2,314
1,893
5,160
13,272
-
-
-
13,272
3,000
6,677
9,677
CONSOLIDATED
2009
$’000
2008
$’000
2,891
15,775
14,250
1,461
10,709
45,086
22,658
2009
$’000
205
52
-
(27)
236
466
-
PARENT
2008
$’000
79
238
-
(8)
159
468
-
-
229
67,973
133,559
-
134,025
78,429
-
78,897
-
-
-
3,000
-
3,000
-
-
-
Since the last annual reporting date, the following guarantees in respect of the Abacus Diversified Income Fund II
(“ADIFII”) have commenced:
a) Cash Distribution Yield Guarantee whereby the Group has agreed to underwrite the cash distribution yield of 8.5%
from 1 July 2008 to 30 June 2011. This will be achieved by Abacus Finance Pty Ltd deferring the interest on the
Working Capital Facility or by the Group deferring any of the fees payable to it under the constitution of ADIFII (or
a combination of these things) or in any other way the Group considers appropriate. Any interest or fee deferral
or other funding support may be recovered if the actual cash distribution exceeds the cash required to meet the
underwritten distribution over the Guarantee Period, or after the Guarantee Period or at the expiry of the Working
Capital Facility.
b) Capital Return Guarantee whereby the Group will offer to acquire units in ADIFII at $1.00 per unit. This guarantee
will apply to all ADIFII units on issue as at 1 July 2013. If at that time the net asset value per unit (as determined by
the Group) is less than $1.00 per unit, the Group will make an offer to acquire each ADIFII unit for $1.00, payable at
the Group’s discretion in cash or by way of the issue of stapled securities in the Group to an equivalent value based
on the 10 day volume weighted average price of the Group’s stapled securities over the period ending on 30 June
2013. This offer will be made by 30 September 2013. At the end of the year the fair value of the guarantee was $3
million.
(a) current
Bank loans - A$ *
Loan from related parties
Less: Unamortised borrowing costs
(b) non-current
Bank loans - A$
Bank loans - NZ$
Loan from related parties
Loan from Abacus Trust
Less: Unamortised borrowing costs
(c) Maturity profile of current and non-current interest bearing loans
Due within one year
Due between one and five years
Due after five years
CONSOLIDATED
2009
$’000
2008
$’000
62,000
510
(681)
61,829
330,219
-
-
-
(664)
329,555
62,510
324,234
5,985
392,729
52,923
10,937
(156)
63,704
505,313
20,462
57,260
-
(2,161)
580,874
63,860
562,573
20,462
646,895
2009
$’000
601
-
-
601
2,637
-
-
-
-
2,637
601
2,637
-
3,238
PARENT
2008
$’000
-
3,937
-
3,937
4,697
-
4,854
52,195
-
61,746
3,937
61,746
-
65,683
The Group maintains a range of interest-bearing loans and borrowings. The sources of funding are spread over a number
of counterparties and the terms of the instruments are negotiated to achieve a balance between capital availability and
cost of debt.
Bank loans – A$ are provided by several banks at interest rates that include both fixed and floating arrangements. The
loans are denominated in Australian dollars and the term to maturity varies from May 2010 to November 2017. The
effective fixed interest rate of borrowings which are covered by fixed rate swaps was 8.06% at year end (2008 7.41%),
while interest on floating rate borrowings are paid quarterly based on existing swap and yield rates quoted on the rate
reset date. The bank loans are secured by a charge over the investment properties and certain property, plant and
equipment as detailed in note 14 and note 15. Approximately 76.3% (2008: 75.4%) of available bank debt facilities were
subject to fixed rate arrangements with a weighted average term to maturity of 4.69 years (2008: 5.07 years). APG’s
effective interest rate as at 30 June 2009 was 7.31% (2008: 7.69%).
*Under the Group’s Working Capital Facility the contractual maturity date of this facility is May 2010. The Group has received from its Bank an offer to
extend the facility’s maturity out to February 2011 (the same date as the core facility).
64
64
65
notes to the financial statements
30 June 2009
abacus property group
19. intereSt beArinG LoAnS AnD borroWinGS (continueD)
(d) Financing facilities available
At reporting date, the following financing facilities had been negotiated and were available:
Total facilities - bank loans
Facilities used at reporting date - bank loans
Facilities unused at reporting date - bank loans
These facilities comprise fixed and floating rate secured facilities.
CONSOLIDATED
2009
$’000
2008
$’000
612,442
(392,219)
220,223
741,064
(578,698)
162,366
2009
$’000
5,335
(3,238)
2,097
PARENT
2008
$’000
4,697
(4,697)
-
The Group has entered into a club facility which is a secured, limited recourse debt agreement with ANZ (as lead
arranger), CBA and St George Bank. Under the agreement certain properties owned by AT, AIT, AGPL and AGHL form a
common security pool, which is collateral for this loan facility.
20. FinAnciAL inStruMentS
(i) credit risk
credit risk exposures
The Group’s maximum exposure to credit risk at the reporting date was:
Receivables
Secured property loans
Interim funding to related funds
Cash and cash equivalents
Derivatives
CARRYING AMOUNT
CONSOLIDATED
2009
$’000
22,093
219,949
201,600
9,124
-
452,766
2008
$’000
26,154
163,477
239,227
46,777
11,272
486,907
2009
$’000
6,889
-
42,334
275
-
49,498
PARENT
2008
$’000
2,018
1,210
18,684
2,340
134
24,386
20. FinAnciAL inStruMentS (continueD)
(i) credit risk (continued)
Secured property loans and receivables
The following table illustrates grouping of the Group’s investment in secured loans. As noted in disclosure note 3, the
Group mitigates the exposure to this risk by evaluation of the credit submission before acceptance, ensuring security is
obtained and consistent and timely monitoring of the financial instrument to identify any potential adverse changes in
the credit quality:
30-JUN-09
Consolidated
less: provisioning
total consolidated
Parent
less: provisioning
total Parent
TOTAL
$’000
467,658
(24,016)
443,642
49,223
-
49,223
ORIGINAL
TERM (1)
EXTENDED
TERM
PAST DUE
TERM (2)
IMPAIRED (3)
$’000
$’000
$’000
$’000
422,905
(12,200)
410,705
49,223
-
49,223
-
-
-
-
-
28,806
(441)
28,365
-
-
-
15,947
(11,375)
4,572
-
-
-
(1.) Terms are extended typically in recognition of traditional project delays (e.g. weather, development approvals).
(2.) For loans with past due terms all are less than two years old.
(3.) In considering the impairment of loans, the Group will undertake a market analysis of the secured property development which is used to service the
loan and identify if a deficiency of security exists and the extent of that deficiency, if any. If there is an indicator of impairment, fair value calculations of
expected future cashflows are determined and if there are any differences to the carrying value of the loan, an impairment is recognised.
30-Jun-08
Consolidated
less: provisioning
total consolidated
Parent
less: provisioning
total Parent
TOTAL
$’000
436,369
(8,511)
427,858
21,912
-
21,912
ORIGINAL
TERM
$’000
333,815
-
333,815
21,912
-
21,912
EXTENDED
TERM
$’000
PAST DUE
TERM (1)
$’000
1,936
-
1,936
-
-
-
92,021
-
92,021
-
-
-
IMPAIRED
$’000
8,597
(8,511)
86
-
-
-
As at 30 June 2009, the Group had the following concentrations of credit risk:
(1.) For loans with past due terms $84.3 million are less than two years old, $6.3 million are two to three years and $1.5 million are three years old.
Secured property loans: 69% of secured property loans is represented by 5 borrowers (2008: 63% of secured
property loans was represented by 4 borrowers); and
Interim Funding to Related Funds: represented by the Abacus Diversified Income Fund II $82.7 million, and the
Abacus Hospitality Fund $70.6 million (2008: Abacus Diversified Income Fund II $105.6 million, Abacus Hospitality
Fund $97.6 million).
66
66
67
notes to the financial statements
30 June 2009
abacus property group
20. FinAnciAL inStruMentS (continueD)
(i) credit risk (continued)
Investment in secured property loans are interest bearing on average 2.5 year terms. A provision for impairment
loss is typically recognised when there is objective evidence that the loan has not been repaid by the due date and
management has determined that the full amount of the loan may not be recoverable. An impairment loss of $5.1
million for secured property loans and an $11.0 million impairment of the ADIFII loan as part of the restructuring (2008:
$5.5 million) has been recognised by the Group in the current year.
The movement in the allowance for impairment in respect of secured property loans and receivables during the year was
as follows:
Balance at 1 July 2008
Impairment loss recognised (secured property loans)
Impairment loss recognised (ADIFII)
Impairment loss utilised / written back
balance at 30 June 2009
CONSOLIDATED
2009
$’000
8,511
5,099
11,000
(594)
24,016
2008
$’000
3,011
5,500
-
-
8,511
2009
$’000
PARENT
2008
$’000
-
-
-
-
-
-
-
-
-
-
20. FinAnciAL inStruMentS (continueD)
(ii) Liquidity risk (continued)
CONSOLIDATED
30-JUN-08
Liabilities
Trade and other payables
Interest bearing loans and borrowings
total liabilities
PARENT
30-JUN-08
Liabilities
Trade and other payables
Interest bearing loans and borrowings
total liabilities
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS
1 YEAR OR
LESS
$’000
$’000
$’000
67,973
646,895
714,868
67,973
937,214
1,005,187
67,973
72,442
140,415
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS
1 YEAR OR
LESS
$’000
$’000
$’000
OVER 1
YEAR TO 5
YEARS
$’000
-
857,254
857,254
OVER 1
YEAR TO 5
YEARS
$’000
78,897
65,683
144,580
78,897
86,828
165,725
78,897
4,252
83,149
-
82,576
82,576
OVER 5
YEARS
$’000
-
7,518
7,518
OVER 5
YEARS
$’000
-
-
-
(ii) Liquidity risk
The table below shows an analysis of the contractual maturities of key liabilities which forms part of the Group’s
assessment of liquidity risk.
(iii) currency risk
The Group considers its exposure to foreign currency risk as insignificant.
CONSOLIDATED
30-JUN-09
Liabilities
Trade and other payables
Interest bearing loans and borrowings incl
derivatives#
total liabilities
PARENT
30-JUN-09
Liabilities
Trade and other payables
Interest bearing loans and borrowings incl
derivatives^
CARRYING
AMOUNT
$’000
CONTRACTUAL
CASH FLOWS
$’000
1 YEAR OR
LESS
$’000
OVER 1 YEAR
TO 5 YEARS
$’000
OVER 5
YEARS
$’000
22,948
22,948
13,272
9,676
-
429,764
587,366
175,126
402,240
10,510
452,712
610,314
188,398
411,916
10,510
CARRYING
AMOUNT
CONTRACTUAL
CASH FLOWS
1 YEAR OR
LESS
OVER 1 YEAR
TO 5 YEARS
$’000
$’000
$’000
$’000
OVER 5
YEARS
$’000
137,025
137,025
134,025
3,551
5,697
1,694
3,000
4,004
-
-
-
total liabilities
140,576
142,722
135,719
7,004
# Includes derivative of a principal value of $294.4 million.
^ Includes derivative of a principal value of $2.86 million.
68
68
69
notes to the financial statements
30 June 2009
abacus property group
20. FinAnciAL inStruMentS (continueD)
(iv) interest rate risk
The Group’s exposure to interest rate risk and the effective weighted average interest rates for each class of financial
asset and financial liability are:
CONSOLIDATED
30-JUN-09
Financial Assets
Cash and cash equivalents
Receivables
Secured and related party loans
total financial assets
Weighted average interest rate
Financial liabilities
Interest bearing liabilities - bank
Related party loans
Derivatives
Payables
total financial liabilities
Weighted average interest rate
PARENT
30-JUN-09
Financial Assets
Cash and cash equivalents
Receivables
Secured and related party loans
total financial assets
Weighted average interest rate
Financial liabilities
Interest bearing liabilities - bank
Derivatives
Payables
total financial liabilities
Weighted average interest rate
FLOATING
INTEREST
RATE
$’000
FIXED
INTEREST
MATURING IN 1
YEAR OR LESS
$’000
FIXED
INTEREST
MATURING IN
1 TO 5 YEARS
$’000
FIXED
INTEREST
MATURING IN
OVER 5 YEARS
$’000
NON
INTEREST
BEARING
TOTAL
$’000
$’000
9,124
-
-
9,124
2.93%
110,430
-
-
-
110,430
4.71%
-
-
78,026
78,026
10.75%
49,104
-
-
-
49,104
8.15%
-
-
199,344
199,344
10.84%
232,686
-
-
-
232,686
8.11%
-
-
131,476
131,476
8.44%
-
22,093
12,703
34,796
9,124
22,093
421,549
452,766
-
-
-
-
-
-
510
37,035
22,948
60,493
392,220
510
37,035
22,948
452,713
FLOATING
INTEREST
RATE
FIXED
INTEREST
MATURING IN 1
YEAR OR LESS
FIXED
INTEREST
MATURING IN
1 TO 5 YEARS
FIXED
INTEREST
MATURING IN
OVER 5 YEARS
NON
INTEREST
BEARING
TOTAL
$’000
$’000
$’000
$’000
$’000
$’000
275
-
27,643
27,918
3.21%
673
-
-
673
4.99%
-
-
-
-
476
-
-
476
8.15%
-
-
10,851
10,851
15.00%
2,089
-
-
2,089
8.15%
-
-
-
-
-
-
-
-
-
6,889
3,840
10,729
275
6,889
42,334
49,498
-
313
137,025
137,338
3,238
313
137,025
140,576
20. FinAnciAL inStruMentS (continueD)
(iv) interest rate risk (continued)
CONSOLIDATED
30-JUN-08
Financial Assets
Cash and cash equivalents
Receivables
Secured and related party loans
Derivatives
total financial assets
weighted average interest rate
Financial liabilities
Interest bearing liabilities - bank
Related party loans
Payables
total financial liabilities
Weighted average interest rate
PARENT
30-JUN-08
Financial Assets
Cash and cash equivalents
Receivables
Secured and related party loans
Derivatives
total financial assets
Weighted average interest rate
Financial liabilities
Interest bearing liabilities - bank
Related party loans
Payables
total financial liabilities
Weighted average interest rate
FLOATING
INTEREST
RATE
$’000
FIXED
INTEREST
MATURING IN 1
YEAR OR LESS
$’000
FIXED
INTEREST
MATURING IN
1 TO 5 YEARS
$’000
FIXED
INTEREST
MATURING IN
OVER 5 YEARS
$’000
NON
INTEREST
BEARING
TOTAL
$’000
$’000
46,777
-
-
-
46,777
7.34%
141,533
42,250
-
183,783
8.93%
-
-
145,876
-
145,876
12.88%
5,000
10,937
-
15,937
7.60%
-
-
211,833
-
211,833
9.00%
409,386
15,010
-
424,396
7.57%
-
-
33,593
-
33,593
7.90%
20,462
-
-
20,462
8.17%
-
26,154
11,402
11,272
48,828
46,777
26,154
402,704
11,272
486,907
-
-
67,973
67,973
576,381
68,197
67,973
712,551
FLOATING
INTEREST
RATE
$’000
FIXED
INTEREST
MATURING IN 1
YEAR OR LESS
$’000
FIXED
INTEREST
MATURING IN
1 TO 5 YEARS
$’000
FIXED
INTEREST
MATURING IN
OVER 5 YEARS
$’000
NON
INTEREST
BEARING
TOTAL
$’000
$’000
2,340
-
-
-
2,340
7.34%
-
-
-
-
-
-
16,053
-
16,053
6.89%
-
3,937
-
3,937
10.00%
-
-
-
-
-
4,697
57,049
-
61,746
13.49%
-
-
-
-
-
-
-
-
-
-
2,018
3,841
134
5,993
2,340
2,018
19,894
134
24,386
-
-
78,897
78,897
4,697
60,986
78,897
144,580
70
70
71
notes to the financial statements
30 June 2009
abacus property group
20. FinAnciAL inStruMentS (continueD)
(iv) interest rate risk (continued)
Summarised interest rate sensitivity analysis
The table below illustrates the potential impact a change in interest rate by +/- 1% would have had on the Group’s profit
and equity:
CONSOLIDATED
30-Jun-09
Financial assets
Financial liabilities
PARENT
30-Jun-09
Financial assets
Financial liabilities
CONSOLIDATED
30-JUN-08
Financial assets
Financial liabilities
PARENT
30-JUN-08
Financial assets
CARRYING
AMOUNT
FLOATING
$’000
9,124
147,465
CARRYING
AMOUNT
PROFIT
$’000
(91)
1,475
FLOATING
PROFIT
$’000
27,918
986
$’000
(279)
10
CARRYING
AMOUNT
FLOATING
$’000
46,777
183,783
CARRYING
AMOUNT
PROFIT
$’000
(468)
1,838
AUD
-1%
EQUITY
$’000
-
-
AUD
-1%
EQUITY
$’000
-
-
AUD
-1%
EQUITY
$’000
-
-
AUD
-1%
PROFIT
$’000
91
(1,475)
PROFIT
$’000
279
(10)
PROFIT
$’000
468
(1,838)
+1%
EQUITY
$’000
-
-
+1%
EQUITY
$’000
-
-
+1%
EQUITY
$’000
-
-
+1%
FLOATING
PROFIT
EQUITY
PROFIT
EQUITY
$’000
2,340
$’000
(23)
$’000
-
$’000
23
$’000
-
The analysis for the interest rate sensitivity of financial liabilities includes derivatives.
20. FinAnciAL inStruMentS (continueD)
(iv) interest rate risk (continued)
CONSOLIDATED
30-JUN-08
Financial assets
Financial liabilities
PARENT
30-JUN-08
Financial assets
CARRYING
AMOUNT
FLOATING
$’000
619
20,462
CARRYING
AMOUNT
PROFIT
$’000
(6)
205
NZD
-1%
EQUITY
$’000
-
-
NZD
-1%
PROFIT
$’000
6
(205)
+1%
EQUITY
$’000
-
-
+1%
FLOATING
PROFIT
EQUITY
PROFIT
EQUITY
$’000
619
$’000
(6)
$’000
-
$’000
6
$’000
-
(v) Price risk
The Group is exposed to equity securities risk. Equity securities price risk arises from investments in listed and unlisted
securities. The key risk variable is the quoted price of the securities, which is influenced by a range of factors, most of
which are outside the control of the Group. As a result, the Group does not use financial instruments to manage the price
risk exposure on property securities but instead regularly monitors levels of exposure and conducts sensitivity analysis for
fluctuations in the quoted securities prices.
A fluctuation of 15% in the price of the equity securities would impact the net profit after income tax expense of the
Group, with all other variables held constant, by an increase/(decrease) of $3.7 million (2008: $2.6 million).
72
72
73
notes to the financial statements
30 June 2009
abacus property group
20. FinAnciAL inStruMentS (continueD)
21. contributeD eQuity
(vi) Fair values
As at 30 June 2009, the carrying amounts and fair values of financial assets and financial liabilities are:
CONSOLIDATED
Financial assets
Cash and cash equivalents
Loans and Receivables (current)
Loans and Receivables (non-current)
Derivatives
Investment in securities - listed
Investment in securities - unlisted
total financial assets
Financial Liabilities
Trade and other payables
Interest bearing loans and borrowings
Derivatives
total financial liabilities
net financial assets / (liabilities)
PARENT
Financial assets
Cash and cash equivalents
Loans and Receivables (current)
Loans and Receivables (non-current)
Derivatives
Investment in securities - listed
total financial assets
Financial Liabilities
Trade and other payables
Interest bearing loans and borrowings
Derivatives
total financial liabilities
net financial assets / (liabilities)
CARRYING
AMOUNT
2009
$’000
9,124
122,050
321,592
-
6,187
17,452
476,405
22,948
391,384
37,035
451,367
25,038
CARRYING
AMOUNT
2009
$’000
275
10,851
31,483
-
6,082
48,691
137,025
3,238
313
140,576
(91,885)
FAIR
CARRYING
VALUE
AMOUNT
2009
$’000
2008
$’000
FAIR
VALUE
2008
$’000
46,777
182,433
245,426
11,272
18,831
17,217
521,956
46,777
182,433
245,426
11,272
18,831
17,217
521,956
67,973
646,895
-
714,868
(192,912)
67,973
646,895
-
714,868
(192,912)
9,124
122,050
321,592
-
6,187
17,452
476,405
22,948
391,384
37,035
451,367
25,038
(a) issued stapled securities
Stapled securities
- securities financed by APG under the ESLP
total contributed equity
(b) Movement in stapled securities on issue
At 1 July 2008
- treasury units
- equity raising
- distribution reinvestment plan
- less transaction costs
Securities on issue at 30 June 2009
22. cAPitAL MAnAGeMent
CONSOLIDATED
2009
$’000
2008
$’000
2009
$’000
1,009,577
(22,080)
987,497
793,999
(22,497)
771,502
47,064
-
47,064
CONSOLIDATED
PARENT
2008
$’000
33,116
-
33,116
PARENT
STAPLED SECURITIES
STAPLED SECURITIES
NUMBER
‘000
VALUE
$’000
NUMBER
‘000
VALUE
$’000
645,604
-
845,858
18,160
-
1,509,622
771,502
417
211,463
8,996
(4,881)
987,497
645,604
-
845,858
18,160
-
1,509,622
33,116
25
13,509
414
-
47,064
FAIR
CARRYING
VALUE
AMOUNT
2009
$’000
2008
$’000
10,851
31,483
-
6,082
48,691
2,340
21,912
-
134
14,651
39,037
FAIR
VALUE
2008
$’000
2,340
21,912
-
134
14,651
39,037
137,025
3,238
313
140,576
(91,885)
78,897
65,683
-
144,580
(105,543)
78,897
65,683
-
144,580
(105,543)
The Group seeks to manage its capital requirements through a mix of debt and equity funding. It also ensures that
Group entities comply with capital and distribution requirements of their constitutions and/or trust deeds, the capital
requirements of relevant regulatory authorities and continue to operate as going concerns. The Group also protects its
equity in assets by taking out insurance.
The Group assesses the adequacy of its capital requirements, cost of capital and gearing (i.e. debt/equity mix) as part of
its broader strategic plan. In addition to tracking actual against budgeted performance, the Group continuously reviews
its capital structure to ensure sufficient funds and financing facilities, on a cost effective basis are available to implement
the Group’s strategy that adequate financing facilities are maintained and distributions to members are made within the
stated distribution guidance (i.e. paid out of normalised profits).
The Group actively manages its capital via the following strategies: issuing new stapled securities, activating its
distribution reinvestment plan (presently active at 2.5% discount to VWAP but not underwritten), electing to have the
dividend reinvestment plan underwritten, adjusting the amount of distributions paid to members, activating a security
buyback program, divesting assets, active management of the Group’s fixed rate swaps, directly purchasing assets in
managed funds or (where practical) recalibrating the timing of transactions and capital expenditure so as to avoid a
concentration of net cash outflows.
74
74
75
notes to the financial statements
30 June 2009
abacus property group
22. cAPitAL MAnAGeMent (continueD)
A summary of the Group’s key banking covenants are set out below:
COVENANT
MEASURE
KEY DETAILS
NATURE OF FACILITIES
Secured, non recourse 1
The Group has no unsecured facilities
ICR
LVR 2
GROUP ICR 3,4
TOTAL GEARING 3,4
GEARING RATIO ON A LOOK
THROUGH BASIS 4
1.5
Net rental income / Interest expense (including fixed rate swaps)
55% to 67.5%
Drawn Loan / Bank accepted valuations
2.0
45%
60%
Group EBITDA (excluding fair value P&L) / Total Interest Expense
(including fixed rate swaps)
(Total Liabilities + Guarantees) / Total Tangible Assets
Total gearing plus gearing from proportional consolidation of
equity accounted investments
1 - There are no market cap covenants
2 - LVR stepped down from 70.0% to 67.5% under the terms of the Working Capital Facility
3 - Condition of the $550m CLUB facility
4 - Condition of the $150m Working Capital Facility component of the $550m CLUB facility
23. DiSPoSAL oF SubSiDiAry
On 29 December 2008,the Group disposed of 100% of
the voting shares of Abacus Storage Solutions Pty Ltd
(ASSPL) for a total consideration of $26.6 million. ASSL
was a company based in Australia that operated self-
storage facilities in Townsville and Brisbane as well as a
single self-storage facility in Hamilton, New Zealand.
Total cash inflow on disposal of
subsidiary is as follows:
Net cash transferred on disposal
Cash consideration received
Net consolidated cash inflow
2009
$’000
(1,186)
26,610
25,424
76
76
77
notes to the financial statements
30 June 2009
abacus property group
24. reLAteD PArty DiScoSureS
(a) Subsidiaries
The consolidated financial statements include the financial statements of the following entities:
EQUITY INTEREST
CARRYING VALUE
ENTITY
Abacus Group Holdings Limited and its subsidiaries
Abacus AAVT Pty Ltd
Abacus Airways NZ Trust
Abacus Bankstown Property Trust
Abacus Finance Pty Limited
Abacus Funds Management Limited
Abacus Hobart Growth Trust
Abacus HP Trust
Abacus Jigsaw Investment Pty Ltd
Abacus London Trust
Abacus Mortgage Fund
Abacus Mount Druitt Trust
Abacus Musswellbrook Pty Ltd
Abacus Nominee Services Pty Limited
Abacus Nominees (No 5) Pty Limited
Abacus Nominees (No 7) Pty Limited
Abacus Nominees (No 9) Pty Limited
Abacus Note Facilities Pty Ltd
Abacus Pitt Street Property Trust
Abacus Property Income Fund
Abacus Property Services Pty Ltd
Abacus Property Pty Ltd
Abacus SP Note Facility Pty Ltd
Abacus Storage Funds Management Limited
Abacus Unitel Pty Ltd
Abacus Unitel Trust
Amiga Pty Limited
Childcare Trust 2
Abacus Group Projects Limited and its subsidiaries
Abacus Allara Street Trust
Abacus Jigsaw Holdings Pty Limited
Abacus Northshore Trust 1
Abacus Northshore Trust 2
Abacus Repository Trust
Abacus Sanctuary Holdings Pty Limited
Abacus Ventures Trust
Abacus Villages Trust
Abacus Villages Limited
2009
%
2008
%
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
50
50
50
50
50
51
-
-
100
100
100
100
100
79
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
50
50
50
51
50
50
-
-
-
-
-
-
-
-
2009
$’000
-
4,750
-
-
8,448
-
-
90
-
17,500
908
-
-
-
-
-
-
21,321
37,725
10
-
-
929
-
11,867
-
-
500
-
-
-
-
-
9,162
-
-
2008
$’000
-
4,750
-
-
5,868
3,173
-
-
-
-
-
-
-
-
-
-
-
21,321
37,725
10
-
-
929
-
-
-
-
500
-
-
-
-
-
9,162
50
50
24. reLAteD PArty DiScoSureS (continueD)
(a) Subsidiaries (continued)
ENTITY
Abacus trust and its subsidiaries:
Abacus 1769 Hume Highway Trust
Abacus Alderley Trust
Abacus Alexandria Trust
Abacus Ashfield Mall Property Trust
Abacus Campbell Property Trust
Abacus Epping Park Property Trust
Abacus Greenacre Trust
Abacus Hurstville Trust
Abacus Industrial Property Trust
Abacus Lisarow Trust
Abacus Liverpool Plaza Trust
Abacus Macquarie Street Trust
Abacus Moorabbin Trust
Abacus Moore Street Trust
Abacus Mortgage Fund
Abacus National Boulevard Trust
Abacus North Sydney Car park Trust
Abacus Port Macquarie Trust
Abacus Premier Parking Trust
Abacus Shopping Centre Trust
Abacus Smeaton Grange Trust
Abacus SP Fund
Abacus St Johns Road Trust
Abacus Varsity Lakes Trust
Abacus Virginia Trust
Abacus Westpac House Trust
Abacus income trust and its subsidiaries:
Abacus Campbellfield Trust
Abacus Chermside Trust
Abacus Eagle Farm Trust
Abacus Independent Retail Property Trust
Abacus Lennons Plaza Trust
Abacus Mertz Apartments
Abacus Retail Property Trust
Abacus Stafford Trust
Abacus Tamworth Retail Trust
Abacus Wollongong Property Trust
(b) ultimate parent
AGHL has been designated as the parent entity of the Group.
(c) Key Management Personnel
Details of key management personnel are disclosed in Note 25.
EQUITY INTEREST
2008
%
2009
%
CARRYING VALUE
2008
$’000
2009
$’000
100
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
100
-
100
100
100
100
100
100
100
100
100
100
100
100
75
100
100
100
100
100
75
14,803
19,587
1,600
57,908
15,044
29,547
13,396
14,314
8,902
8,204
34,249
3,154
31,295
1,319
-
16,091
1,463
10,077
7,010
-
5,803
-
4,316
15,021
58,365
44,419
8,816
-
5,082
25,964
32,679
6,859
-
5,097
11,951
6,160
18,537
20,980
-
57,908
15,044
29,547
13,898
18,712
8,902
10,314
34,249
5,456
38,727
2,450
17,250
21,259
-
16,009
8,873
-
10,004
-
6,341
24,055
16,115
56,832
8,816
4,794
5,082
-
32,679
6,859
-
5,097
11,951
5,995
78
78
79
notes to the financial statements
30 June 2009
abacus property group
24. reLAteD PArty DiScoSureS (continueD)
(d) transactions with related parties
25. Key MAnAGeMent PerSonneL
(a) compensation for Key Management Personnel
transactions with related parties other than associates and joint ventures
revenues
Distributions received / receivable from controlled entities
Asset management fees received / receivable
Property management fees received / receivable
Other transactions
Current tax payable assumed from wholly-owned tax consolidation parties
Capital tax losses assumed from wholly-owned tax consolidation parties
Loan advanced from controlled entities
Loan repayments to controlled entities
Loan received from entities within the Group
Loan repayments from entities within the Group
transactions with associates and joint ventures
revenues
Management fees received / receivables from joint ventures
Distributions received / receivable from associates
Distributions received / receivable from joint ventures
Interest revenue from associates
Interest revenue from joint ventures
other transactions
Loan advanced to associates
Loan advanced from associates
Loan repayments from associates
Loan repayments to associates
Loan advanced to joint ventures
Loan repayments from joint ventures
Loan advanced from joint ventures
Loan repayments to joint ventures
Interest expense on loan from joint ventures
Purchase of unlisted securities
Sale of units in subsidiary
Terms and conditions of transactions
CONSOLIDATED
2009
$’000
-
5,218
1,044
-
-
-
-
-
-
641
-
7,322
17
1,559
(498)
562
-
(9,956)
(14,299)
9,260
-
(47,104)
-
(19,336)
8,245
2008
$’000
-
7,325
816
-
-
-
-
-
-
216
366
6,984
461
263
(1,173)
-
-
-
(13,131)
44,468
42,250
(534)
679
-
-
2009
$’000
PARENT
2008
$’000
30,000
-
-
(7,203)
6,639
122,699
(66,400)
68,574
(120,769)
-
-
-
-
949
-
-
-
(13,949)
372
-
(4,854)
-
-
-
-
-
-
(6,040)
6,991
151,090
(140,017)
118,612
(120,912)
-
-
-
-
263
-
-
-
-
(2,938)
7,725
-
(534)
679
-
-
Sales and fees to and purchases and fees charged from related parties are made in arm’s length transactions both at normal market prices and on normal
commercial terms.
Outstanding balances at year-end are unsecured and settlement occurs in cash.
No provision for doubtful debts has been recognised or bad debts incurred with respect to amounts payable or receivable from related parties during the
year. An impairment of $11 million was recognised by the Group during the year as part of the restructuring of ADIFII.
Guarantees provided to Joint Venture project related parties are disclosed in Note 26.
(e) Director-related entity transactions
A director, Mr Dennis Bluth, is a partner in the legal firm HWL Ebsworth and during the year a total amount of $0.2 million
(2008: $0.2 million) was paid to the firm for legal services relating to corporate issues, lease documentation and sales
contracts.
80
80
Short-term employee benefits
Post-employment benefits
Security-based payments
(b) option holdings of Key Management Personnel (consolidated)
Executive Performance Award Plan (“EPAP”)
CONSOLIDATED
2009
2008
2009
PARENT
2008
$
4,208,148
592,483
1,289,742
6,090,373
$
5,038,242
553,858
836,540
6,428,640
$
-
-
-
-
$
-
-
-
-
30 JUNE 2009
Directors
F Wolf
L Lloyd
executives
R de Aboitiz
T Hardwick
J L’Estrange
P Strain
E Varejes
total
30 JUNE 2008
Directors
F Wolf
L Lloyd
executives
R de Aboitiz
T Hardwick
J L’Estrange
P Strain
E Varejes
total
BALANCE AT
BEGINNING
OF YEAR
1-JUL-08
3,747,130
1,168,915
721,154
1,168,915
1,168,915
1,019,661
1,168,915
10,163,605
BALANCE AT
BEGINNING
OF YEAR
1-JUL-07
GRANTED AS
REMUNE-
RATION
OPTIONS
EXERCISED
CANCELLATION
ON TERMINATION
OF THE PLAN
BALANCE
AT END OF
YEAR
30-JUN-09
VESTED AND
EXERCISABLE
AT THE END
OF THE YEAR
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(3,747,130)
(1,168,915)
(721,154)
(1,168,915)
(1,168,915)
(1,019,661)
(1,168,915)
10,163,605
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
GRANTED
AS REMUNE-
RATION
OPTIONS
EXERCISED
NET
CHANGE
OTHER
BALANCE AT
END OF YEAR
30-JUN-08
VESTED AND
EXERCISABLE
AT THE END
OF THE YEAR
1,343,284
447,761
2,403,846
721,154
-
447,761
447,761
298,507
447,761
3,432,835
721,154
721,154
721,154
721,154
721,154
6,730,770
-
-
-
-
-
-
-
-
-
-
3,747,130
1,168,915
721,154
-
1,168,915
-
1,168,915
-
1,019,661
-
-
1,168,915
- 10,163,605
-
-
-
-
-
-
-
-
81
notes to the financial statements
30 June 2009
abacus property group
25. Key MAnAGeMent PerSonneL (continueD)
(b) option holdings of Key Management Personnel (consolidated) (continued)
executive Security Loan Plan (“eSLP”)
25. Key MAnAGeMent PerSonneL (continueD)
(c) Security holdings of Key Management Personnel
Securities held in Abacus Property Group (number)
30 JUNE 2009
Directors
F Wolf
L Lloyd
executives
R de Aboitiz
J L’Estrange
P Strain
E Varejes
total
30 JUNE 2008
Directors
F Wolf
L Lloyd
executives
R de Aboitiz
J L’Estrange
P Strain
E Varejes
total
BALANCE AT
BEGINNING
OF YEAR
1-JUL-08
2,881,728
785,925
654,938
1,309,875
654,938
1,309,875
7,597,279
BALANCE AT
BEGINNING
OF YEAR
1-JUL-07
2,881,728
785,925
654,938
1,309,875
654,938
1,309,875
7,597,279
GRANTED AS
REMUNE-
RATION
OPTIONS
EXERCISED
CANCELLATION ON
TERMINATION
OF THE PLAN
BALANCE AT
END OF YEAR
30-JUN-09
VESTED AND
EXERCISABLE
AT THE END
OF THE YEAR
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(2,881,728)
(785,925)
(654,938)
(1,309,875)
(654,938)
(1,309,875)
(7,597,279)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
GRANTED
AS REMUNE-
RATION
OPTIONS
EXERCISED
NET
CHANGE
OTHER
BALANCE AT
END OF YEAR
30-JUN-08
VESTED AND
EXERCISABLE
AT THE END
OF THE YEAR
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,881,728
785,925
2,881,728
785,925
654,938
1,309,875
654,938
1,309,875
7,597,279
654,938
1,309,875
654,938
1,309,875
7,597,279
30 JUNE 09
Directors
J Thame
F Wolf
W Bartlett
D Bastian
D Bluth
M Irving
L Lloyd
executives
R de Aboitiz
T Hardwick
J L’Estrange
P Strain
E Varejes
total
30 JUNE 08
Directors
J Thame
F Wolf
W Bartlett
D Bastian
D Bluth
M Irving
L Lloyd
executives
R de Aboitiz
T Hardwick
J L’Estrange
P Strain
E Varejes
total
BALANCE
1 JULY 08
DISPOSED
VIA ESLP
NET
PURCHASES
BALANCE
30 JUNE 09
55,378
9,718,341
8,000
4,503,497
20,000
35,387
795,925
-
(2,881,725)
-
-
-
-
(785,925)
145,378
7,236,610
8,000
496,503
266,953
45,264
45,925
200,756
14,073,226
16,000
5,000,000
286,953
80,651
55,925
695,535
1,710,526
1,309,875
654,938
1,309,875
20,817,277
(654,938)
(1,700,000)
(1,309,875)
(654,938)
(1,309,875)
(9,297,276)
342,640
89,474
-
100,000
309,875
9,086,622
383,237
100,000
-
100,000
309,875
20,606,623
BALANCE
1 JULY 07
ACQUIRED
VIA ESLP
NET
PURCHASES
BALANCE
30 JUNE 08
50,000
9,710,274
-
4,486,352
-
30,014
785,925
654,938
1,750,000
1,309,875
654,938
1,309,875
20,742,191
-
-
-
-
-
-
-
-
-
-
-
-
-
5,378
8,067
8,000
17,145
20,000
5,373
10,000
55,378
9,718,341
8,000
4,503,497
20,000
35,387
795,925
40,597
(39,474)
-
-
-
75,086
695,535
1,710,526
1,309,875
654,938
1,309,875
20,817,277
All equity transactions with key management personnel other than those arising from the exercise of remuneration
options have been entered into under terms and conditions no more favourable than those the Group would have
adopted if dealing at arm’s length.
(d) Loans to Key Management Personnel
There were no loans to individuals that exceeded $100,000 at any time in 2009 or in the prior year.
82
82
83
notes to the financial statements
30 June 2009
abacus property group
25. Key MAnAGeMent PerSonneL (continueD)
(e) other transactions and balances with Key
Management Personnel and their related parties
During the financial year, transactions occur between
the Group and Key Management Personnel which
are within normal employee, customer or supplier
relationship on terms and conditions no more favourable
to than those with which it is reasonable to expect
the entity would have adopted if dealing with Key
Management Personnel or director-related entity at
arm’s length in similar circumstances including, for
example, performance of contracts of employment,
the reimbursement of expenses and the payment of
distributions on their stapled securities in the Group and
on their investment in various Trusts managed by Abacus
Funds Management Limited as Responsible Entity.
An executive, Tom Hardwick, has a 20% interest in the
issued capital of Redstone (NSW) Pty Ltd which owns
CCG1 Pty Limited, the operator of the childcare centres.
During the year the Group lent $0.47 million to CCG1
Pty Limited and the balance at 30 June 2009 was $19.08
million. Interest of $2.44 million has been charged on the
loan for the year.
Amounts recognised at the reporting date in relation to
other transactions with Key Management Personnel:
Assets
Current assets
Trade and other receivables
Non-current assets
Mortgage loans
total Assets
revenue
2009
$’000
2008
$’000
1,040
2,127
19,081
20,121
3,405
17,722
19,849
1,183
executive Security Loan Plan (eSLP)
Executives were offered limited recourse loans to
acquire Group securities on market. The Executive
entered into a salary sacrifice arrangement under
which base remuneration approximately equal to a
notional interest amount on the loan was foregone by
the Executive. The interest rate for a financial year was
equivalent to the Group distribution rate for that year.
The securities acquired under the Plan were purchased
on market and were fully vested.
The loans will be repaid with the proceeds of securities
that were acquired under the ESLP.
This plan is accounted for and valued as an option plan,
with the contractual life of each option equivalent to the
estimated loan life. A repayment of the loan is treated as
an increase to Contributed Equity.
The ESLP is no longer in operation.
26. Security bASeD PAyMent PLAnS
(a) recognised security payment expenses
The expense recognised for employee services received
during the year is as follows:
CONSOLIDATED
2009
$’000
2008
$’000
PARENT
2008
$’000
2009
$’000
1,542
1,038
-
-
Expense arising
from equity-
settled payment
transactions
The security-based payment plans that were cancelled
effective 30 June 2009 are described below.
(b) types of security-based payment plans
executive Performance Award Plan (ePAP)
Security options were granted to executives employed
on or before the first day of the relevant financial year.
Under the EPAP, the exercise price of the options was
set by reference to the market price of the securities
near the time of each annual grant and performance
is measured by comparing the Group’s Total
Securityholder Return (TSR) (security price appreciation
plus distributions reinvested) with a group of peer
companies. The performance measurement period was
three years.
The cancellation of the EPAP has resulted in the bringing
forward of any remaining share based payment expenses
to the current year.
The EPAP is no longer in operation.
84
84
85
notes to the financial statements
30 June 2009
abacus property group
26. Security bASeD PAyMent PLAnS (continueD)
(c) Summary of options granted
The following table illustrates the number (No.) and
weighted average exercise prices (WAEP) of, and
movements in, security options issued during the period:
2009
No.
2009
WAEP
2008
No.
2008
WAEP
23,180,139
1.87
14,598,406
1.79
-
-
8,870,195
2.01
(584,458)
1.81
(288,462)
2.01
-
-
-
-
-
-
-
-
(22,595,681)
1.87
Outstanding
at the
beginning
of the year
Granted
during the
year
Forfeited
during the
year
Exercised
during the
year
Expired
during the
year
Cancellation
of the plans
outstanding
at the end
of the year
exercisable
at the end
of the year
(d) option pricing model: ePAP
The fair value of the equity-settled share options granted
under the EPAP is estimated as at the date of grant
using a Binomial Model taking into account the terms
and conditions upon which the options were granted.
A Monte Carlo simulation is applied to fair value the
TSR element. In accordance with the rules of the EPAP,
the model simulates the Group’s TSR and compares it
against the peer group over the three-year period of
each grant. The model takes into account the historic
distributions, security price volatilities and covariances of
the Group and each comparator company to produce a
predicted distribution of relative share performance. This
is applied to the grant to give an expected value of the
TSR element.
The following table lists the inputs to the models used
for the year ended 30 June 2008 when the last grant of
options was made:
Distribution yield (%)
Expected volatility (%)
Risk-free interest rate (%)
Expected life of options (years)
Option Exercise Price ($)
Weighted average share price at
measurement date ($)
EPAP
2008
7.00
22.00
5.93
10.00
2.01
1.95
-
-
-
23,180,139
1.87
Model used
Monte Carlo /
Binomial
-
10,479,003
1.91
The effects of early exercise have been incorporated
into the calculations by using an expected life for the
option that is shorter than the contractual life based on
historical exercise behaviour, which is not necessarily
indicative of exercise patterns that may occur in the
future.
27. coMMitMentS AnD continGencieS
operating lease commitments – Group as lessee
The Group has entered into a commercial lease on
its offices. The lease has a term of three years with an
option to renew for another three years.
Future minimum rentals payable under non-cancelable
operating lease as at 30 June are as follows:
Within one year
After one year but not
more than five years
More than five years
CONSOLIDATED
2008
$’000
640
2009
$’000
741
PARENT
2008
$’000
-
2009
$’000
-
1,491
2,458
-
-
2,232 3,098
-
-
-
-
-
-
operating lease commitments – Group as lessor
Future minimum rentals receivable under non-cancelable
operating leases as at 30 June are as follows:
Within one
year
After one year
but not more
than five years
More than
five years
CONSOLIDATED
2008
$’000
2009
$’000
2009
$’000
PARENT
2008
$’000
66,748
57,446
334
1,538
131,601
165,937
558
6,999
146,512
196,510
20
6,991
344,861
419,893
912 15,528
These amounts do not include percentage rentals which
may become receivable under certain leases on the
basis of retail sales in excess of stipulated minimums
and, in addition, do not include recovery of outgoings.
86
86
87
notes to the financial statements
30 June 2009
abacus property group
27. coMMitMentS AnD continGencieS (continueD)
capital and other commitments
At 30 June 2009 the Group had numerous commitments and contingent liabilities which principally related to property
acquisition settlements, loan facility guarantees for the Group’s interest in the jointly controlled projects and funds
management vehicles, commitments relating to property refurbishing costs, unused mortgage loan facilities to third
parties, and certain property put option arrangements.
Commitments contracted for and other contingent liabilities at reporting date but not recognised as liabilities are as
follows:
Within one year
- gross settlement of property acquisitions
- property refurbishment costs
- net equity contributions to joint ventures
- unused portion of loan facilities to outside parties
After one year but not more than five years
- net equity contributions to joint ventures
- property refurbishment costs
- other
Longer than five years
CONSOLIDATED
2009
$’000
2008
$’000
2009
$’000
PARENT
2008
$’000
49,500
1,820
-
5,544
56,864
-
-
1,535
-
58,399
25,500
11,119
9,000
4,500
50,119
-
-
453
-
50,572
-
-
-
-
-
-
-
-
-
-
-
-
9,000
-
9,000
-
-
-
-
9,000
(1) Gross settlement of property acquisition commitments excludes bank debt or other external funding available to settle the transactions.
In accordance with Group policy, the fair value of all guarantees are estimated each period and form part of the Group’s
reported AIFRS results. There has been no other material change to any contingent liabilities or contingent assets.
28. AuDitor’S reMunerAtion
the auditor of the Group is ernst & young.
Amounts received or due and receivable by Ernst & Young
Australia for:
- an audit of the financial report of the entity and any other entity
in the consolidated entity
- taxation related services
- other assurance and compliance services
CONSOLIDATED
2009
$
2008
$
2009
$
PARENT
2008
$
456,000
-
34,500
490,500
429,847
-
44,455
474,302
135,000
-
-
135,000
259,056
23,351
26,667
309,074
29. 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 financial year that has or may affect the Group’s operations in future financial years,
the results of those operations or the Group’s state of affairs in future financial years.
88
88
89
directors’ declaration
30 June 2009
DirectorS’ DecLArAtion
In accordance with a resolution of the Directors of
Abacus Group Holdings Limited, we state that:
In the opinion of the directors:
(a) the financial statements, notes and the additional
disclosures included in the directors’ report
designated as audited, of the company and of
the consolidated entity are in accordance with the
Corporations Act 2001, including:
(i) giving a true and fair view of the company’s and
consolidated entity’s financial position as at 30
June 2009 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.
This declaration has been made after receiving the
declarations required to be made to the directors in
accordance with sections 295A of the Corporations Act
2001 for the financial year ended 30 June 2009.
On behalf of the Board
John Thame
Chairman
Sydney, 27 August 2009
Frank Wolf
Managing Director
90
90
91
corporate governance report
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
recommendation 1.1
The Board has adopted a charter that sets out the
functions and responsibilities reserved by the Board,
those delegated to the Managing Director and those
specific to the Chairman. The conduct of the Board is
also governed by the Constitution.
The roles of Chairman and Managing Director are not
exercised by the same individual.
The primary responsibilities of the Board and the
Managing Director are set out in the Board Charter.
Senior executives reporting to the Managing Director
have their roles and responsibilities defined in position
descriptions and are given a letter of appointment on
commencement.
PrinciPLe 2: Structure tHe boArD to ADD
VALue
recommendation 2.1
The board is comprised of two executive directors
and five non-executive directors. The majority of the
Board (Messrs Thame, Bluth, Irving and Bartlett) are
independent members. The board has determined that
an independent director is one who:
•
•
is not a substantial security holder or an officer
of, or is not otherwise associated directly with, a
substantial security holder of the Group;
is not employed, or has not previously been
employed in an executive capacity by the company
or another group member, unless there has been a
period of at least three years between ceasing such
employment and serving on the board;
• has not within the last three years been a principal
of a material professional adviser or a material
consultant to the Group; or an employee materially
associated with the service provided;
•
is not a material supplier or customer of the Group,
or an officer of or otherwise associated directly or
indirectly with a material supplier or customer; or
The Board Charter and Constitution are available on the
Abacus website.
• does not have a material contractual relationship
with the Group other than as a director.
recommendation 1.2
Each year the Board, with the assistance of the
Managing Director, and the Nomination and
Remuneration Committee, undertakes a formal process
of reviewing the performance of senior executives. The
measures generally relate to the performance of Abacus
and the performance of the executive individually.
The Managing Director is not present at the Board or
Nomination and Remuneration Committee meetings
when his own remuneration and performance is being
considered.
An annual review has taken place in the reporting period
in accordance with the process outlined above.
No non-executive director has a relationship significant
enough to compromise their independence on the
Board.
Given the nature of the Group’s business and current
stage of development, the Board considers its
current composition provides the necessary skills
and experience to ensure a proper understanding
of, and competence to deal with, the current and
emerging issues of the business to optimise the
financial performance of the Group and returns to
securityholders. Details of the skills, experience and
expertise of each director are set out on page 14.
92
93
corporate governance report
30 June 2009
corporate governance report
Directors’ independent advice
Directors may seek independent professional advice with
the Chairman’s consent, which will not be unreasonably
withheld or delayed, on any matter connected with the
performance of their duties, and which advice will be at
the Group’s expense.
recommendation 2.2
The Chairman of the Board (Mr John Thame) is an
independent, non-executive director.
recommendation 2.3
The roles of Chairman and Chief Executive Officer/
Managing Director are not exercised by the same
individual.
The division of responsibility between the Chairman and
Managing Director has been agreed by the Board and is
set out in the Board Charter.
recommendation 2.4
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 16.
The Chairman of the committee is independent.
The Selection and Appointment of Non-Executive
Directors policy sets out the procedures followed when
considering the appointment of new directors.
The Nomination and Remuneration Committee Charter
and the Selection and Appointment of Non-Executive
Directors Policy are available on the website.
recommendation 2.5
The Board has a documented Performance Evaluation
Policy which outlines the process for evaluating the
performance of the board, its committees and individual
directors.
PrinciPLe 3: ProMote etHicAL AnD reSPonSibLe
DeciSion-MAKinG
recommendation 3.1
The Group’s Code of Conduct promotes ethical
practices and responsible decision making by directors
and employees. The Code deals with confidentiality of
information, protection of company assets, disclosure of
potential conflicts of interest and compliance with laws
and regulations.
The Code of Conduct is available on the website.
recommendation 3.2
The Group Trading Policy restricts trading in Group
securities by directors and employees. The policy sets
out the periods in which trading in Group securities is
permitted.
The Trading Policy is available on the website.
PrinciPLe 4: SAFeGuArD inteGrity in FinAnciAL
rePortinG
recommendation 4.1, 4.2 and 4.3
The board has established an 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 16. Other directors
that are not members of the committee, the external
auditor and other senior executives attend meetings by
invitation.
The Audit Committee has a formal charter which sets out
its specific roles and responsibilities, and composition
requirements.
The procedures for the selection and appointment of
the external auditor are set out in the Audit Committee
Charter.
An annual review has taken place in the reporting period
in accordance with the policy.
The Audit Committee Charter is available on the
website.
PrinciPLe 5: MAKe tiMeLy AnD bALAnceD
DiScLoSure
recommendation 5.1
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.
The Continuous Disclosure and Shareholder
Communications Policy is available on the website.
PrinciPLe 6: reSPect tHe riGHtS oF
SecurityHoLDerS
recommendation 6.1
The Group aims to keep securityholders informed of
significant developments and activities of the Group.
The Group’s website is updated regularly and includes
annual and half-yearly reports, distribution history and all
other announcements lodged with the ASX.
The Continuous Disclosure and Shareholder
Communications Policy is available on the website.
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
recommendation 7.1 and 7.2
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.
The Group’s Risk Management Framework was
developed in consultation with an external consultant.
Under the compliance plan the responsible managers
report regularly on the risks they manage and any
emerging risks.
An Internal Auditor (independent of the external auditor)
has been appointed who reviews business processes
and undertakes formal assessments throughout the year.
These assessments are provided to the Audit Committee
for review.
The Audit Committee has responsibility for reviewing the
Group’s risk management framework.
The risk management framework is formally reviewed
annually. This review is initially carried out by the
Compliance and Risk Manager and then reviewed by the
Audit Committee and the Board to assess any necessary
changes.
recommendation 7.3
The Managing Director and Chief Financial Officer
confirm in writing to the Board that the financial
statements present a true and fair view and that
this statement is based on a sound system of risk
management and internal compliance. The statement
also confirms that the statement is founded on a sound
system of risk management and internal control and that
the system is operating effectively in all material respects
in relation to financial reporting risks.
94
94
95
corporate governance report
30 June 2009
ASX additional information
corporate governance report
PrinciPLe 8: encourAGe enHAnceD
PerForMAnce
recommendation 8.1
The board has established a Nomination and
Remuneration Committee.
The Nomination and Remuneration Committee is
responsible for assessing the processes for evaluating
the performance of the Board and key executives.
A copy of the committee charter is available on
the website. The Chairman of the Nomination and
Remuneration Committee is independent.
The Group’s remuneration policies including security-
based payment plans and the remuneration of
key management personnel are discussed in the
Remuneration Report.
The remuneration committee may seek input from
individuals on remuneration policies but no individual is
directly involved in deciding their own remuneration.
The members of the committee and their attendance at
meetings are provided on page 16.
Non-executive directors are paid fees for their service
and do not participate in other benefits which may
be offered other than those which are statutory
requirements.
ASX ADDitionAL inForMAtion
Abacus Property Group is made up of the Abacus Trust, Abacus Income Trust, Abacus Group Holdings Limited and
Abacus Group Projects Limited. The responsible entity of the Abacus Trust and Abacus Income Trust is Abacus Funds
Management Limited. Unless specified otherwise, the following information is current as at 24 August 2009.
Number of holders of ordinary fully paid stapled securities
Voting rights attached to ordinary fully paid stapled securities
Number of holders holding less than a marketable parcel of ordinary fully paid
stapled securities
Secretary, Abacus Funds Management Limited
Secretary, Abacus Group Holdings Limited
Secretary, Abacus Group Projects Limited
Registered office
Abacus Funds Management Limited
Abacus Group Holdings Limited
Abacus Group Projects Limited
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
Calculator Australia Pty Limited
one vote per stapled security
12,314
391
Ellis Varejes
Level 34, Australia Square
264-278 George Street
Sydney NSW 2000
(02) 9253 8600
Registries Limited
Level 7, 207 Kent Street
Sydney NSW 2000
(02) 9290 9600
None
None
number of Securities
413,824,287
96
96
97
ASX additional information
30 June 2009
notes
SecuritieS reGiSter
NUMBER OF SECURITIES
1-1000
1,001-5000
5,001-10000
10,001-100000
100,001 – over
toP 20 LArGeSt SecurityHoLDinGS
SECURITYHOLDERS
1. Calculator Australia Limited
2. J P Morgan Nominees Australia Limited
3. HSBC Custody Nominees (Australia) Limited
4. National Nominees Limited
5. RBC Dexia Investor Services Australia Nominees Pty Ltd
6. Investec Bank (Australia) Limited
7. Australian Executor Trustees Limited
8. Citicorp Nominees Pty Limited
9. RBC Dexia Investor Services Australia Nominees Pty Ltd
10. RBC Dexia Investor Services Australia Nominees Pty Ltd
11. ANZ Nominees Limited
12. Cogent Nominees Pty Limited
13. Kalambay Limited
14. ANZ Nominees Limited
15. Avanteos Investments Limited
16. Tricom Nominees Pty Ltd
17. Suncorp Custodian Services Pty Limited
18. Citicorp Nominees Pty Limited
19. Queensland Investment Corporation
20. RBC Dexia Investor Services Australia Nominees Pty Ltd
NUMBER OF SECURITYHOLDERS
305
1,272
1,891
8,050
796
NUMBER OF
SECURITIES
% OF ISSUED
SECURITIES
413,824,287
27.17
139,764,303
70,885,914
70,199,989
47,358,785
40,390,035
32,916,193
23,849,685
22,839,971
22,245,312
15,734,287
15,671,661
11,347,509
11,224,790
11,149,009
10,869,125
8,645,292
8,393,490
8,316,916
6,420,492
9.18
4.66
4.61
3.11
2.65
2.16
1.57
1.50
1.46
1.03
1.03
0.75
0.74
0.73
0.71
0.57
0.55
0.55
0.42
98
98
99
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
notes
100
100
www.abacusproperty.com.au